Budgeting. While the term may invoke headaches (especially when you’re working with spreadsheets), improving and optimizing the budgeting process is critical for organizations.
“Without a budget, you have no measuring stick to evaluate your goals and performance,” says Donna Conte, service area leader for accounting services at Warren Averett. “[A budget] is part of developing a business and its growth goals.”
There are a few common roadblocks finance teams come across in the budgeting process. The good news? Teams can overcome these challenges by saying goodbye to spreadsheets and relying on new forms of FP&A budgeting tools that make the budgeting process faster, more efficient, and more insightful.
Have your budgeting needs outgrown the spreadsheets you’ve been using? Studies show that around 95% of companies still rely on spreadsheets in some form in their budgeting and financial planning process, while 39% of companies use spreadsheets exclusively.
Sure, spreadsheets are simple to use, but they’re prone to mistakes since they often involve manual entry. According to a study, 88% of spreadsheets contain at least one error.
It’s not just small businesses that have to deal with these mistakes. JP Morgan, a top wealth management firm, lost $6 billion due to a spreadsheet error that resulted in a money-losing decision. And, a cut-and-paste error in a spreadsheet cost TransAlta, a Canadian power generator, $24 million.
When an error is made, even as simple as one wrong data point in one cell, it can affect the entire budgeting outcome. By automating repetitive data entry tasks and investing in a Continuous Planning FP&A platform like Planful, organizations can reduce these inaccuracies. Switching to a data-driven FP&A platform also helps to extract cost savings.
One such example is PS Logistics. After switching from Excel spreadsheets to Planful, PS Logistics identified $2.4 million in annual savings.
As Dwight Lloyd, financial controller at PS Logistics, says: “We really had no time left for analytics. We could either hire a lot more bodies to manage the close faster, or we could invest in good software that would not only speed up our close, but let us pull in operational data and improve our reporting to be more proactive.”
If you have multiple budget contributors manually working on multiple spreadsheets, data entry and consolidation will likely take some time. Inputting the information itself is a long process, and team members will need to wait for others to enter the data they need to complete the budget.
With today’s finance automation tools, manually sorting through budgeting data is an unnecessary waste of time. “When you talk to folks that are involved in [financial] planning processes, they say ‘It’s just too slow,’” Planful CEO Grant Halloran says. “For a lot of the folks we work with, an annual planning cycle might take four or five months, and that’s just outrageous in this dynamic business world that we operate in.”
You can make your budget planning process a lot more efficient by automating recurring tasks with budgeting software. It also helps finance teams switch from working on repetitive tasks to focusing on what matters more: data analysis.
At Room & Board, the budgeting and forecasting process for consolidating and updating data would take four to eight hours each cycle. And if consolidation failed, it had to start all over again. This was costing it a lot of valuable time and energy that could be spent growing its business. So it eventually decided to invest in an FP&A platform with robust business budgeting software that would automate all the tedious data entry tasks.
“My team isn’t spending as much time gathering and pushing data as we used to. With Planful, we have the ability to analyze and actually partner with our internal customers to help them make better, more profitable decisions,” shares Jean Dane, Financial Planning and Reporting Manager at Room & Board.
Investing in a Continuous Planning platform like Planful is an excellent idea for FP&A teams to speed up the budgeting process steps including the collection, aggregation, and validation of data across the organization.
The budgeting process requires input from multiple departments. But all too often, it’s challenging for different teams to work together on budgeting.
One reason? Spreadsheets are inflexible. They don’t make it easy for financial professionals to manipulate, share, consolidate, and make retroactive changes to budgeting data.
Another key factor is that companies often rely on email for collaboration during the budgeting process, which leads to siloed communication. Research shows that an average worker receives 122 emails a day. With multiple email threads, messages about budgeting can easily get lost.
Use an FP&A platform like Planful to collaborate with other divisions of the organization, work cross-functionally with them, and ease data sharing. It not only makes it easy to keep all team members on track with task management and gives everyone visibility into processes, but it also helps to empower departments within your organization with current and accurate data.
COVID-19 is a staunch reminder that external circumstances can change quickly. Therefore, an agile financial planning process is essential for businesses to remain competitive and profitable. As Jack Welch once said: “If the rate of change on the outside exceeds the rate of change on the inside, then the end is near.”
Year-old budgeting insights aren’t enough in a rapidly evolving business landscape and economy. You need to track your budgeting and forecasting KPIs in real time to regulate your company’s financial health.
This is where data-driven platforms come in. They can help you share insights quickly and remain responsive. They can generate projections for future sales and create accurate sales forecasts based on historical data and predict when fluctuations may occur to help financial advisors develop accurate budget plans.
Using a cloud-based, data-driven platform like Planful helps you remain agile and responsive with timely insights, reporting, and collaboration—a must for today’s fast-paced world.
With precise forecasting, accurate reporting, and modern budgeting solutions, FP&A platforms can empower finance teams and help organizations soar.
Organizations need a scalable budgeting software solution to their budgeting and forecasting needs, and that’s where Planful comes in. It’s an easy-to-use and customer-focused platform that accelerates the end-to-end FP&A process and fosters business wide participation in the budgeting process.