No matter how big or small, one thing every successful business has in common is effective budget management. Even the strongest sales performance doesn’t mean much if a business doesn’t know how to effectively handle its cash flow balance. Cash is King. Revenue is Vanity, Profit is Sanity and Cash is Reality.
What Should You Be Looking for In a Budgeting Tool?
When you decide to invest in a budgeting tool for your business, you want to make sure that you are getting the best tool for your organization. There can be so many variables to consider when picking a budgeting tool that it can be overwhelming. Following are the important checklists to consider before jumping for a Budgeting tool.
Budget
- How much can you spend on business budgeting software?
- How much money, time, and resources can you allocate for project implementation?
- What ROI timeframe are you comfortable with?
Organization
- Who is on the business software team?
- Who is the project implementation lead?
- How will the final decision be made?
Tech Requirements
- What current capabilities does your IT department have?
- What are your IT requirements?
- What type of security are you looking for?
- How many people in your business will be using this software? Where are they located (remotely, in multiple locations, or all in the same place)?
- What data source(s) would you want to connect to your budgeting tool?
Purpose
- What goal(s) are you hoping your budgeting tool will help achieve?
- What pain points do you want to eliminate from your current budgeting software?
- What is the long-term vision for your business?
- Are there any other business intelligence solutions you are interested in investing down the road?
During Research
- How much does the budgeting tool cost? Be sure to factor in hidden expenses, such as maintenance fees, taxes, or if you have to pay an ongoing subscription.
- What does project implementation look like? Does the software provider offer any assistance with it?
- How much training is required to get your team using this software? How long does the onboarding process typically take?
- What are the technical requirements for this software?
- Is it something your IT department can maintain, or does it require outside support?
- Does it integrate with your existing data sources?
- Is the budgeting tool cloud-based software? If so, is it hosted on a public cloud, private cloud, or hybrid cloud?
- What security does the software provide?
- What capabilities does the budgeting tool support? Does it meet your immediate needs?
- Does the tool have other uses that you might want to access? For instance, can your budgeting tool also be used for compensation planning or creating dashboards?
- Is the software customizable for your unique needs? Is it scalable in design?
Before You Commit
- What is the typical ROI on this budgeting tool?
- Can you see a demo of the product before buying?
- What is the customer support like?
- Can you contact other clients who use this software for testimonials?
To avoid project failure, at the very minimum organizations must develop high-level functionality requirements and principles for evaluating, scoring and selecting best business budgeting, planning, and forecasting software. Establishing these non-negotiables eliminates or drastically reduces barriers to project success.
FEATURES AND FUNCTIONALITY – Organisations must take care
BUDGET PREPARATION This includes the ability to define and update planning drivers and assumptions, distribute expenditures over the planning period, and allocate resources based on top-down, middle-out and bottom-up rules. The software should have the ability to maintain multiple versions of the budget across multiple parts of the organization, and should also have scenarios for different budget versions, with the ability to lock from entry certain budget elements by business unit and to set security to different rights/levels by scenario. Additionally, the software should have workflow capabilities to facilitate collaboration between budget process participants carrying out various functions and tasks.
FORECASTING, ANALYSIS AND DRIVER-BASED MODELING This includes the ability to forecast sales, revenue and expenses, and to run what-if analyses, to calculate the risks/benefits of various scenarios; to perform trend and impact analysis based on macroeconomic, operational and other types of indicators; and to analyze the root causes through activity-based or other cost management methodologies.
BUDGET ANALYSIS This is the set of activities carried out by financial analysts, which consists of analyzing previous years’ revenue and expenses trends and the operational context, defining a first set of assumptions, and using them to estimate revenue and expenses, and then providing support for discussions about the prioritization of strategies by simulating the outcomes of different scenarios, trying to find the most efficient way to allocate resources. To support this task the software should feature capabilities to create driver-based models and an extensive set of output views, reports and statements.
PERFORMANCE MONITORING The ability to support the creation of the financial and operational (non-financial) reports, scorecards and dashboards to see whether allocated resources have been spent efficiently and effectively.
REPORT GENERATION This includes the ability to generate (on paper and electronically) budget books, financial statements and reports that present all quantitative (e.g. tables) and qualitative (e.g. text and figures) details of the budget. Financial analysts should be able to update all the information on a short notice, with the ability to export data in various formats: Excel, PDF, HTML, XML, and comma-separated values (CSV) formats as well as to publish it on the organizational portals.
OTHER CAPABILITIES The software may include other helpful capabilities, such as: scorecards, strategy maps, drillable dashboards, predictive analytics, report broadcasting, and others.
Regardless of the size of your company, a great budgeting software should include several elements:
- Live expense tracking: Real-time budget monitoring ensures you always have a clear understanding of how much you have and how much has been spent. Not only does this prevent businesses from going into the red, it also gives a deeper understanding of how employees spend and how expenses can be optimized.
- Intuitive interface: Analyzing budget statements and reports should be a straight-forward process. Oftentimes, it’s not just finance teams that need to see the company ledger. That’s why a comprehensive yet easy-to-understand overview of spend and budgets is crucial to foster efficient collaboration between different teams.
- Process automation: By streamlining slow, manual tasks and eliminating redundancies, businesses can save time and money, while boosting overall productivity. Winning back hours or even days, means that finance teams can refocus their energy on more lucrative work.
- Cloud-based data: Reliance on paperwork or individual spreadsheet files is extremely limiting to business growth. Many online budgeting softwares enable you to access your business finances on-the-go, whether you’re at the office or on a business trip. Cloud-based software means you never have to worry about losing or misplacing physical documents again.
Choosing the right budgeting tool for your business can help improve more than just your cash flow management.
