5 Tips to Speed ​​Up Your Annual Budget Process »Small Business Fire

Many small business leaders fear the budget process every year because it can so often be a nightmare for them. Closing predicted spending

How to build a better budget for buying property
How to Prep for Hurricanes and Other Disasters on a Budget
Essential Strategies To Get the Most Out of Your OOH Advertising Budget

This post may contain affiliate links, which means that I may earn a commission if you click on the link & sign-up or make a purchase. You will NOT be charged extra for using the link, but it goes a long way in supporting this blog. I only recommend products or services that I have personally used or believe will add value to my readers.

Many small business leaders fear the budget process every year because it can so often be a nightmare for them. Closing predicted spending on new initiatives, reconciling financial data from any number of sources, comparing it to previous plans and projections, and double-checking for bugs can indeed be quite the hassle.

This feeling is so widespread that a recent survey of 500 chief financial officers of DataRails shows that a full 92% of professionals are frustrated with what they are going through to create budgets. According to statistics, if you are a finance chief who is happy with your annual budget process, then you are in an exclusive minority.

The operation apparently lasts on average for an exhausting five weeks, but it can vary greatly. About 11% of respondents to the survey revealed that it is necessary in three months at their companies.

This is partly due to the fact that financial teams do so much handiwork. There are consequences to this than simply irritating people in financial roles, as this means that there is less time available for the higher value work to analyze the financial viability of different projects. Reducing the time it takes to complete the annual budget process is critical to unlocking the full economic potential of finance teams to inform small business strategy.

To help finance teams and CFOs free up time for more valuable tasks, here are five tips to speed up your annual budgeting process.

Coordinate calendars well in advance

As your team expands, more people will inevitably become involved in the budget process. This can make coordination difficult, especially if different stakeholders want to make sure their views and spending needs are included.

Sometimes the budget can take a long time simply because one or two people become a bottleneck. For example, you may find that the CEO is caught up in back-to-back meetings and that the times they are free do not suit other members of the team.

The best way to get around this is to plan ahead and schedule meetings early. This is especially important for the busiest team members, as they can then arrange their other meetings around the budget meetings that have been set up. Preparing early can save a lot of pain and reduce time wastage.

Maintain a rolling forecast

A highly effective way to stop creating artificial injury periods once a year is to maintain a continuous forecast throughout the year. This means there is significantly less work in the overall budget process, and stakeholders are kept informed at all times rather than just in an arbitrary period.

What’s more, when a financial team has a “just-in-case” culture, ready to deal with unexpected contingencies by building buffers into plans, there is much less opportunity for shocks to surprise the business.

Ad hoc contingency planning then becomes something that happens all the time, to evaluate opportunities that arise in the course of the business, or to make sense of sudden shifts in market dynamics, and these models can then inform budgets.

It’s surprisingly easy to switch to a more agile financial management approach, given the technology available today. If your company automates the process of pulling data from original sources into the forecast, then there is no crafting for the financial team and everyone has the latest information.

Highlight goals

It is easy for people who are not from the finance department to recognize how much pressure there is on the chief financial officer during the annual budget process. They are busy with their own work, and it can feel like a distraction if it is not communicated to them how it affects them. They can then set a lower priority to convey their data and insights to the financial team.

For this mindset to change over your growing team, the message needs to come in a unified way from the entire top management. Keep your team informed by compiling a business email and sending regular newsletters to your employees.

If everyone realizes that a fast-paced annual budget means the financial team has more confidence to approve other projects, then other teams have more substantial purchases.

Use external benchmarking

For a small business that is scaling up fast, it can be difficult to know how accurate the annual budget is. When there are so many variables, stakeholders can feel uncertain about the numbers used, which can slow down the process. When the assumptions of every small decision are questioned, it is easy to see how the process can take months.

To increase confidence levels, you can use external metrics to see if the figures look realistic compared to competitors and other businesses of a similar size.

While it may have been difficult in the past, there are many services today that allow you to search for this information. However, this comparison must be made by the finance department before the figures are shown to other teams so that it can be adjusted if necessary.

Your entire budget, or aspects of it, can be an outlier compared to industry averages, and that’s fine as long as you can justify why your business’s circumstances are an anomaly.

Do not be afraid to invest in technology

Some businesses have a lengthy budget process because they rely on outdated technology. Yet the reluctance to update is understandable. That would mean retraining staff and losing time in the short term while everyone gets used to the new technology.

According to DataRails’ survey, 81% of businesses use Excel for their annual budget. Although spreadsheets out of the box have not been optimized to streamline the process, there are many companies that make add-ons that take out craftsmanship, prevent data theft, and speed up general processes.

It’s a sensible investment, as you get the best of both worlds – all the benefits of using the latest technology while not overwhelming your staff with software they are unfamiliar with.

Final thoughts

Small business leaders have to spend much longer on their annual budgets than they might want, but they do not have to accept it. You can significantly reduce the time it takes for your financial teams and free up time for higher value and more engaging tasks.

Here are the five tips you should follow:

  • Coordinate calendars well in advance – Make sure that all the key stakeholders set aside time for the annual budget months in advance.
  • Maintain a rolling forecast – Do not wait for budget season before updating your forecast. Automate the process so you can always use the latest information.
  • Highlight goals – To ensure the purchase of other stakeholders, clearly communicate why the budget is important to them.
  • Use external benchmarking – Refer to competitor’s figures and industry averages to add extra confidence to your estimates.
  • Do not be afraid to invest in technology – You can easily improve Excel to remove many of the manual processes from your budget process.


    error: Content is protected !!