Evaluating and Streamlining your Budgeting Process

As published by Blackbaud for BBCON 2020

Mention the phrase annual budget review and you might hear a collective groan from department managers and the accounting department. On one hand, successful social good organizations need a thorough budgeting process. On the other hand, why do most participants consider it such a chore?

Budgeting certainly sounds simple enough, right? Use the current year‘s budget to date, project the remaining months, use a multiplier, include planned capital expenditures, and there you have it –  you’ve got a budget. Hopefully, you didn’t choke on your morning coffee reading this. If annual budgets were that simple no one would dread this annual task. Instead, you would throw a budgeting party!

Why are annual budgets a challenge?

Most managers are not accounting workbook experts

“Why do you need all this detail, and why now?†This common sentiment among department managers, expressed when the budget season rolls around, reflects the challenge they face adding another responsibility while juggling their regular duties. Consequently, budgeting and budget documentation tend to take a back seat to the daily requirements of the organization’s mission.

That complicated Excel file from accounting with Do-Not-Touch formulas elicits an eye roll and a filed under later status. When later finally rolls around, department managers, not known for being Excel power users, overlook, replace, or fail to use the built-in formulas in the document designed to help them.  Don’t be surprised if a well-meaning manager messes up those painstakingly-built formulas. No matter how many explanations you provide. Prepare for responding to ongoing confusion and frustration.

Version control issues and errors complicate the process

We’ve all experienced the scenario where multiple versions of an Excel file circulate during budget season, all with (unreconciled) changes throughout. How confident are you with the results? Which is the latest version? Do you even have the latest version?

The budgeting process can be confusing

Annual budgets include many components, from salaries to capital expenditures to multiple revenue streams. These components usually require different methods for capturing and reporting. Managers submitting a budget may also have varying ways of looking at their budget, and very different needs. Yet, these budgeting managers must report all these different needs and viewpoints using one, central budgeting document.

How to streamline your annual budget process

The annual budget is a very important document and will help guide an organization’s expenses and activities for any given year. By nature of its importance and complexity, the budget process is going to be involved. But the process can be improved. Here are some steps that could help you improve your processes.

Before you start your next annual budget review, meet with all your key stakeholders. In addition to going over the lessons learned from the previous year, take time to map out your entire budget workflow. Identify what needs to be submitted by whom along with the approval process. Standardize your workflow and address any potential bottlenecks. Also, use the planning meeting to identify the supporting information managers may need to complete their initial budget submission.

Be sure to clearly identify due dates and the supporting documentation requirements. If possible, provide examples so managers understand what kind of information they need to submit. To keep the process flowing, implement a notification system that alerts stakeholders and managers of next steps and expectations. This notification can be as simple as an email reminder of a pending deadline or a budget submission requiring approval.

Version control errors are challenging when using multiple Excel files distributed throughout departments. With every new version, the risk of errors increases exponentially. However, a single budgeting platform can easily eliminate the version-control nightmare. A single budgeting platform will help streamline your entire budget process, from initial budget submission through final approval. Most platforms include user-defined security to provide managers easy access to information for completing their initial budgets.

If you’re using a budgeting platform, make sure your solution includes the flexibility to attach supporting documents to any line item. Managers can simply attach these files when creating their initial budget. Moreover, these attachments are easily retrieved the following year.

A checklist for selecting a budgeting platform

All organizations have their own unique way of preparing budgets. When selecting a budgeting platform, be sure you choose a solution with the flexibility to conform to your workflow. Here’s a convenient checklist for evaluating and selecting the right budgeting solution for your organization.

• The solution seamlessly integrates with your cloud fund accounting solution to eliminate the need for dual data entry
• The solution allows importing position information from your payroll solution
• The solution allows budgeting by your fund accounting solution’s account, project, and any combination of transaction codes (all 5 tables) including percentage distributions
• The solution allows supporting documents and worksheets to be attached to any line item, including non-salary items
• The solution tailors the approval process to your organization’s workflow and includes email notification and security-controlled access

According to CFO.com, the time needed to complete a budget can range from 25 days to 56 days or more. In other words, some organizations take twice as much time to create a budget as others. Selecting the right budgeting solution will help you complete your budget process in a timely manner, leaving you with more time to focus on your organization’s mission.