Build better budgets and forecasts

Build the right plan for your company’s future

Building the correct budget can set your company up for the year ahead. However, budgeting can be a much-maligned process within many organisations. Too often, completed budgets are held back by errors and a lack of room for genuine analysis or insight.

In many organisations, it is often issues with the cross-team coordination that lead to problems, with inefficient and tedious processes that are reliant on too-complex spreadsheets that provide no opportunity for effective collaboration.

Traditional budgeting methods and why they need to change.

A budget takes a significant amount of work to set up. It relies on many different people working on the document, typically in a linear fashion. As a result, it is not uncommon for many important details to be missed if the budget is not taking your company’s full position into account. For example, if built from the top-down, budgets can miss out on the detail of your data and make forecasting from that budget inaccurate. But if built from the bottom up, it can miss the big picture and take far longer to put together due to the increase in input from various teams. The wider the field of inputs, the tougher effective version control becomes, and the higher the error rate gets. As a result, many budgets hold some errors, from a changed formula to missed data entry.

Due to the complexity of building a budget through a static spreadsheet, it can be almost impossible to review the figures and make changes. This means that your company will be unable to respond to significant market changes or variances from the forecast, be they good or bad, until the figures can be re-analysed at the end of the financial year. Forecasts are also primarily based on your previous years’ data, leading to inaccurate conclusions being drawn. The ability to review your figures with some more recent, actual data is key to maintaining your course through the year.

The new way to build a budget

There is a better, more modern way to do your budgeting and forecasting for the coming year. Having a simple cloud-based tool, like Phocas’ Budgeting and Forecasting module, manages workflows and processes to increase collaboration while ensuring that everyone is working from a single source of truth. It allows the balance of top-down and bottom-up detailing required to get the most accurate picture for the coming year.

Forecasting incorporates scenario planning so that you can be best prepared for the introduction of something new into your business. Reviewing your figures and re-forecasting is simple and can be done half-yearly or quarterly, allowing your business to remain dynamic and responsive to change.

These features lead to the production of budgets and forecasts that are more in tune with reality and can be used as actionable information, rather than just referred to at month-end.

The Future of Financial Reporting

In May 2021, we held a webinar in conjunction with Phocas that explored the future of financial reporting. In it, we covered the various processes that can hold your finance team back, as well as how Phocas’ Financial Statements, and Budgeting and Forecasting modules can simplify your processes and improve workflows.

Watch it here:

For more information about a modern reporting platform like Phocas Software and whether it is suitable for your business requirements, please send an email to sales@k-c.com.au or call us at 1300 857 464. Our team is happy to answer any questions you may have.

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