"What a waste of time! 3 months full-time on this budget and the whole thing needs to change!”
That’s what a client of mine said recently. Why? The whole budget process was a mess.
Here is what they used to do.
- 340 spreadsheets were emailed to the contributors. These were managers of the different areas of the business. This is a utilities company so there were many different budget spreadsheets with different models required.
- The spreadsheets were sometimes returned. This was a huge hassle. The amount of chasing finance had to do was crazy.
- The spreadsheets were changed!! Finance had locked down the spreadsheets so there were only certain areas people could fill out. Somehow, people always managed to change the spreadsheets enough to cause days of extra work.
- The CEO makes huge changes. 10% increase in revenue and 5% decrease in costs please. That meant the whole process had to happen another 2 times just to get the numbers right.
There is a better way. After some consultation with CALUMO, that energy company did this.
- Streamline your month end first! Step 1 was to ensure there was a common chart of accounts and reports were aggregated and updated automatically. Removing manual labor is important. Leave Excel in the mix, you don’t want to remove that excellent tool but you must have something, like CALUMO, to take away all of the risks and problems inherent in overusing Excel.
- Centralize your budget model. This process also means you have centralized your calculations and makes creating a budget model much simpler. If you have been using this method for a short while (web reports and/or dynamic Excel reports) for reporting, the move to budgeting with the same tool is easy. Rather than send out Excel spreadsheets with loads of calculations, send out input templates and have a central model do the heavy lifting. It’s so much easier to make changes, track progress and get visibility of the budget as it starts to develop. CALUMO lets you create your input templates with Excel with a special CALUMO formula for capturing data from people. You can convert the reports to web pages in seconds, which is even better for a budgeting process where a lot of your audience runs screaming from Excel.
- Get upper management buy in. To kick of the budget, create a 1 page summary of the P&L, Balance Sheet and Cash Flows – top-down. Have actuals and a suggested budget. Present this to the CFO and CEO and others who make up the decision process. Have them agree to the budget parameters first, before anyone else gets involved.
- Communicate, Communicate and then Communicate some more with the field. Set expectations. Don’t email spreadsheets and ask for input but send out the budgeting agenda with timelines and what you expect of people. Emphasize “why” the process is so important as much as you can when you communicate. It’s basic human nature for them to want to know why they should buy in. Ask for their feedback before, during, and after the process. This lifts the sense of engagement and reminds them their opinion matters and can make a difference in how the process works. Then, call as many people as you can while the process is in motion. This will make a huge difference. Talking to people involved in the budget process connects you both on so many levels.
I have personally been involved in these changes. Moving to a streamlined budget process will save you employee turnover, time, money and help you focus other organization on the outcome of the budget, rather the pain of the budget process itself.