Budgeting – the corporate world’s most exciting/exhilarating/amazing process.
Budgeting is, historically, a laborious and expensive exercise. And rightfully so, developing a comprehensive, nuanced budget takes time and resources. Sometimes, a detailed budget yields great results – buy-in from all the necessary departments and a commitment from the organization to periodically revisit the budget to ensure company compliance.
Other times, unfortunately, adherence to a budget (comprehensive as it may be) doesn’t happen. According to IBM’s Information Management division, typical symptoms of budget neglect are:
• Spending more time creating a budget than analyzing it;
• Budget bears little (or no) relation to the underlying business plan;
• Once a budget is approved, no one looks at it again;
• Management (or budget holders) dislike the tedious process of compiling and drafting a budget.
A couple of quick definitions
Before delving into how to help fix a troublesome budgeting process, it is instructive to review some critical term in this realm. The following definitions, like the lost above, are courtesy of IBM’s Information Management division.
• Planning: a strategic prediction of business performance at a summary level. Usually, planning the province of a few savvy managers charged with making sure the company responds to changing market conditions and opportunities, balancing assets with opportunities.
• Budgeting: planning distributed to individual areas of responsibility in a business. As a result, many more people are involved and work at a much greater level of detail. Budgeting is a slower exercise, often taking weeks and performed once – maybe twice – per year.
• Forecasting: essentially a re-casting of the budget – perhaps in summarized form – to reflect changing market conditions, strategic plan alterations, error corrections and revised assumptions in the original approved budget. Companies typically re-forecast monthly or on an ad-hoc basis. This process is executed by the finance department.
So…what to do?
Of course, disliking the budgeting process isn’t reason enough to avoid it. Budgeting is critical. And there is hope.
One option to ease the burden of compiling and drafting a budget is to implement budget tracking software throughout an organization.
Okay…great idea. But what is budget tracking software? Great question.
Simply put, budget tracking software is an electronic tool that records and tracks established budgets in an organization, in order to give managers, executives and decision makers a picture of which departments are spending what.
And the result of obtaining that data? Without a doubt, a better understanding of company expenses and finances.
How can e-procurement help?
A well-designed, robust e-procurement software solution often houses elements (or a complete version) of budget tracking software. Having the capabilities of budget tracking software combined with e-procurement features is a powerful combo – detailed knowledge of budgets and finances and electronically produced (and catalogued) purchase orders.
These features truly provide an added element of control over the financial health of an organization. And that, at the end of the day, is precisely what one should be after. The more knowledge, data and control one has, the better.
And budget tracking software, among other software solutions, will help get you there.
Procurify is an e-procurement solution that will get you there. With digital PO creation, a built in multi-level approval system to ensure each purchase is processed through the right channels, and real time budget tracking, Procurify can help take your budget management process to the next level. Learn more here, or start a free trial today!