In many companies, the budgeting process can take months: one department may take weeks to provide its data, while another goes through rounds of reviews by the CFO. And even after that, the data still needs to be consolidated into a single report!
This article explores ways to shorten the budgeting timeline.
How to Speed Up Budgeting?
Broadly speaking, measures can be divided into two categories: technical and methodological.
- Technical measures streamline the business process without requiring significant changes to the methodology.
- Methodological measures, on the other hand, are more comprehensive and involve not just revising and implementing new budgeting approaches (a substantial effort in itself) but also fully modernizing all related business processes.
Technical Measures for Speeding Up Budgeting
1. Digitalization
Use specialized tools like financial applications or budget management systems (e.g., Spreadym) to simplify planning, automate calculations, and enhance transparency.
2. Clear Structure and Defined Roles
Divide the budget into categories (e.g., revenue, expenses, investments) and assign responsible persons for collecting data for each category.
3. Templates and Ready-Made Forms
Create templates to standardize data collection, minimize errors, and accelerate the process. For example, use spreadsheet files pre-filled with expense and revenue categories.
4. Automation of Calculations
Integrate with accounting systems for automatic data collection. Set up automatic mapping of analytics to save time on categorizing items into the correct groups within directories.
5. Planning and Deadlines
Set clear deadlines and intermediate milestones. Organize regular meetings to monitor progress and address bottlenecks.
6. Collecting Feedback
Conduct quick surveys or discussions to clarify departmental needs and promptly correct inaccuracies.
Use specialized tools like financial applications or budget management systems (e.g., Spreadym) to simplify planning, automate calculations, and enhance transparency.
2. Clear Structure and Defined Roles
Divide the budget into categories (e.g., revenue, expenses, investments) and assign responsible persons for collecting data for each category.
3. Templates and Ready-Made Forms
Create templates to standardize data collection, minimize errors, and accelerate the process. For example, use spreadsheet files pre-filled with expense and revenue categories.
4. Automation of Calculations
Integrate with accounting systems for automatic data collection. Set up automatic mapping of analytics to save time on categorizing items into the correct groups within directories.
5. Planning and Deadlines
Set clear deadlines and intermediate milestones. Organize regular meetings to monitor progress and address bottlenecks.
6. Collecting Feedback
Conduct quick surveys or discussions to clarify departmental needs and promptly correct inaccuracies.
Methodological Measures for Speeding Up Budgeting
There are also several budgeting techniques that can significantly reduce the time it takes to finalize the process. Here are a few popular approaches:
1. Incremental Budgeting
How it speeds up the process:
2. Rolling Budgeting
How it speeds up the process:
3. Activity-Based Budgeting (ABB)
How it speeds up the process:
1. Incremental Budgeting
- Uses the previous year’s budget as a baseline, with adjustments (increases or decreases) applied.
How it speeds up the process:
- Provides a starting point for calculations.
- Works well for stable organizations with predictable expenses.
2. Rolling Budgeting
- Budgets are created for a specific period (e.g., a quarter) with regular reviews and the addition of new time frames.
How it speeds up the process:
- Breaks the process into manageable phases.
- Enables quicker responses to changes without a full budget overhaul.
3. Activity-Based Budgeting (ABB)
- Focuses on key processes and activities that drive value. Each expense is tied to a specific action.
How it speeds up the process:
- Provides a clear understanding of where resources are being allocated.
- Simplifies the justification of expenses.
Why Reduce Budgeting Time at All?
Speeding up the budgeting process is important for several reasons related to business efficiency, risk management, and competitiveness:
A quickly finalized budget allows leadership to make strategic decisions more promptly, including investments, expense optimization, and resource allocation. In a fast-paced business environment, this is a critical advantage.
Lengthy budget cycles distract employees from their core responsibilities. A quicker process saves time and allows teams to focus on other critical areas of the business.
A faster budgeting process enables companies to adapt quickly to market shifts, macroeconomic conditions, or internal priorities. For example, sudden changes in raw material prices or currency fluctuations can be addressed sooner.
The quicker the budget is completed, the less likely it is for the data to become outdated by the time it is approved. This is particularly important for dynamic industries.
Companies that develop and approve budgets faster can seize market opportunities more quickly, launching new projects or products ahead of competitors.
Rapid budget approvals enable faster implementation of strategic objectives, such as business scaling, innovation initiatives, or entering new markets.
By streamlining both technical and methodological aspects of budgeting, businesses can not only save time but also enhance their adaptability, efficiency, and competitiveness.
- Faster Decision-Making
A quickly finalized budget allows leadership to make strategic decisions more promptly, including investments, expense optimization, and resource allocation. In a fast-paced business environment, this is a critical advantage.
- Reduced Operational Distraction
Lengthy budget cycles distract employees from their core responsibilities. A quicker process saves time and allows teams to focus on other critical areas of the business.
- Adaptability to Market Changes
A faster budgeting process enables companies to adapt quickly to market shifts, macroeconomic conditions, or internal priorities. For example, sudden changes in raw material prices or currency fluctuations can be addressed sooner.
- Data Relevance
The quicker the budget is completed, the less likely it is for the data to become outdated by the time it is approved. This is particularly important for dynamic industries.
- Competitive Edge
Companies that develop and approve budgets faster can seize market opportunities more quickly, launching new projects or products ahead of competitors.
- Strategic Goal Execution
Rapid budget approvals enable faster implementation of strategic objectives, such as business scaling, innovation initiatives, or entering new markets.
By streamlining both technical and methodological aspects of budgeting, businesses can not only save time but also enhance their adaptability, efficiency, and competitiveness.
