When do you start your budgeting process? How long does it take your firm to complete it? Is it really meaningful after all of that effort? More and more companies are grappling with these questions, especially in light of the constantly changing business conditions.
When the economic climate can swing wildly month over month and natural disasters on the opposite side of the world disrupt supply chains and financial markets, using an outdated process as the primary management tool for allocating resources ceases to make sense. It is now a management necessity to have more flexible and adaptable methods that allow resources to be redeployed and realistic scenarios to be built. These methods include embedding forecasting into the fabric of a firm, focusing on the key operational drivers of the business and developing financial models based on these drivers to make the data accessible to those who need it, when they need it.
However, as nirvana-like as this situation may sounds, it’s not realistic to expect to achieve that in the short-term or without some substantial change for your organization. What is more realistic is to create a long-term road map that embraces a series of interlaced and incremental changes. The first of these changes could – and some even say should – involve deploying a formal budgeting tool to replace the Excel spreadsheets that are the default standard in most firms. Simply replacing the manual Excel consolidation process with an automated tool can provide a number of benefits simultaneously: