Best Practices for Streamlining Budgeting and Forecasting

Every finance team aims to build budgets that are both efficient and accurate. Yet the process often becomes time-consuming due to multiple iterations, manual data entry, and changing business needs.

In a recent webinar, finance experts from leading organizations shared how they use automation, cloud-based tools, and structured workflows to improve budgeting and forecasting.

Here’s what they had to say about building a more streamlined and reliable budgeting process.

How are businesses conducting their budget cycles?

Recent survey data shows 57% of respondents still rely on Excel for their budgeting, either standalone or with other systems. On the other hand, 49% were using a dedicated EPM solution. About 80% of respondents said they have to do about five iterations of their budget each year before it’s approved, which could be a key indicator that their budget cycle isn’t operating as efficiently as it should be.

The biggest challenges in budgeting and planning

The goal of every finance team should be to streamline the process. Many businesses have to do too many budget iterations, resulting in the budgeting and planning process taking much longer than needed. According to Jarrod Lemon, Team Lead of Budgeting & Forecasting at Interactive Intelligence, the biggest challenge his company faces is having to change strategies over time.

At the end of last year, his company introduced a new product to the market, which caused a lot of uncertainty in terms of its impact on sales. It required many different iterations and scenarios before they could settle on a final budget. Businesses require a dynamic solution that can keep pace with business fluctuations, such as shifting priorities, changes in products, or increasing staffing requirements.

Best practices for shortening the annual budget process

The key to improving budgeting is finding more efficient ways to conduct the annual budget without compromising accuracy in the process. Brian Chin, Senior Financial Analyst at iCIMS, says his business has implemented automation, which has greatly improved efficiency. Automation also eliminates manual error, requiring less proofreading. It streamlines data collection, data consolidation, and reporting, allowing his team to dramatically improve the efficiency of the budgeting process.

How investing in a cloud-based EPM solution can streamline budgeting and planning

Both Chin and Lemon are using a cloud-based EPM software solution for their budgeting and planning processes. Chin says that it’s excellent for reporting, allowing his team to load the actuals into the system and automate the actual vs. budget reporting process. The system does a lot of the work for them, minimizing manual data entry.

The cloud helps to automate the process for Interactive Intelligence as well, making data integration and collection much easier. According to Lemon, Excel doesn’t automate things effectively, so a cloud-based solution is essential for automation. Additionally, the cloud makes gathering inputs for the budget easier because analysts and managers can easily access the application, enabling them to make updates as needed.

The tools and techniques for handling “what-if” scenario modeling

What-if scenario modeling is an integral part of forecasting. Chin says his company relies on their EPM system to create a single source of the truth. Since the cloud allows for easy data integration, data accuracy improves. While what-if scenario modeling can also be conducted in Excel, it isn’t as efficient, and it lacks a single source of the truth.

What tools deliver the most accurate financial and operational results?

According to Lemon, this is where a solution like Planful truly shines. In his business, they have a single variance report, and then a series of automations that filter that single report for every department and manager that needs one. The EPM software then packages and delivers the report to each department, so his team doesn’t have to manually pull all of those packages together and email them out. In turn, this has resulted in tremendous time savings.

Cloud-based EPM software can greatly streamline the budgeting and forecasting process. With a variety of automation functions, businesses can drastically reduce their workload while minimizing manual errors. Cloud-based EPM software also improves the capacity for what-if scenario modeling, providing businesses with a single source of truth.