Regardless of your industry or the size of your company, these 21 points can help you strategically improve your business, take advantage of unexpected opportunities or buy time to solve operational or financial problems. Better yet, why not think strategically about the company budget process to plan for unexpected problems that could endanger the growth and survival of your business?
The steps below will show you how to escape Excel Hell and be on your way to a new kind of budget preparation that is heaven sent.
1. Determine the five to seven business driver metrics.
2. Use those metrics in a flash report logic that runs through the budget framework and philosophy.
3. Create a standard Excel input template to reduce Excel Hell.
4. Standardize charts of accounts and reporting formats.
5. Emphasize that budgets are done on a monthly basis, not as a total divided by 12.
6. Meet with departmental heads to help them see the budget as a tool, not as a weapon.
7. Build from the bottom up by department so departmental ownership is created.
8. Present results in a manner understandable to line management and department managers.
9. Involve department heads so they own the process and results.
10. Minimize the use of allocations where possible to increase user confidence in numbers.
11. Move toward some version of flexible quarterly budgeting process.
12. Use software packages that show underlying details so users can research and understand variances form budgets.
13. Use both realistic budget targets and stretch budgets to manage and incorporate with your incentive plans.
14. Integrate with some version of Balanced Scorecard.
15. Provide historical 12 month income statements for users to review for the budget process and then incorporate them in their ongoing review of budget comparisons to identify trends early on.
16. Hold people accountable for their budgets.
17. Create a transition path to move to budgetary software modules which are now becoming much more reasonable in price.
18. Create key inputs on the Executive Dashboard so you can refine what if scenarios.
19. Create at least one scenario that is far in excess of believability on both the upside and downside.
20. Watch out if your board does not understand the business risks the company is taking as identified in the budget.
21. Use the budget to support soft (read: non financial) goals.
Bonus Tip: Pull this list out every six months to see how you can better manage company operations and resultant cash flow. Feel free to add notes or comments and change any words to make it your own. After all, you gain when you internalize information. And in this case, you stand to reap some tangible benefits. Cash.
Put strategy and team work back into your budgeting process. Apply this information to improve your profitability, reengineer business models, and strengthen or gain competitive advantage in the marketplace.
About the Author:
Bottom line? Stop Profit Leaks Now. Apply this information to improve your profitability, reengineer business models, and strengthen or gain competitive advantage in the marketplace. And apply the free Fiscal Test at
http://fiscaldoctor.com/fiscaltest.html.
From Gary W Patterson Copyright 2008
No. of Times this article has been viewed :
791
Date Published :
Apr 9 2009