4 Budgeting Tips to Start the New Year Off Right

new year budgeting tips

Now more than ever, executives are pushing their finance organizations to more quickly and decisively make decisions. To do this, management requires timely and up-to-date budgets. Yet, achieving the agility leadership is looking for is no simple feat, especially when traditional budgeting processes are too slow and struggle to adapt to the pace of change.

Organizations cannot continue to use the same tools and processes for budgeting as they did two years ago or even last year. There is too much volatility, complexity and uncertainty right now. Indeed, as the economy reopened, the importance of scenario planning and forecasting quickly became apparent and remains so. So how do organizations move forward? In short, organizations need a flexible approach to their budgeting and forecasting processes.

Here are four tips for better budgeting in times of uncertainty: 

Don’t settle with “that’s how we’ve always done it”

It’s easy to choose the comfortable route and run the same budgeting process as last year, but 2020 made it clear that it’s time to change things up. Most planning and budgeting professionals can agree that collecting, consolidating and organizing data for budgeting is a painful process. We often hear that finance professionals spend hours aggregating and reconciling data before proper budgeting analysis can even begin. What aspects of your budgeting process absolutely need to change this year? Can you automate time-consuming manual tasks, create budget vs. actual reports faster or model multiple what-if budget scenarios? Now is the time to gather stakeholders and have a candid conversation about moving away from “how we’ve always done it.”

Focus on business drivers

To grow your business, it’s important to identify the key top-line and profit drivers to focus on. These factors are both financial and operational. Here are some of the common business drivers to look at to help you find the most important ones for your organization: variable costs, fixed costs, pre-paid expenses, sales volume, pricing and quality. For example, suppose that you manufacture soccer balls. If you see a drop in orders on a Thursday or Friday during the week, you’re not going to lay off employees then hire them back on Monday when more orders come in. But if you can predict soccer ball order trends in the future, you may be able to have the right number of employees on staff at the right times. The fixed costs then become variable ones.

Leverage rolling forecasts

Rolling forecasts are a trend in the world of financial planning and analysis, and they enable teams to have greater flexibility in their planning and budgeting process. Typically, a rolling forecast extends six to 12 months into the future, giving businesses the agility to better allocate resources in changing market conditions. Rolling forecasts help organizations manage investments or financing determined by available cash flow. In addition, rolling forecasts provide finance with better visibility into business performance using a time horizon that reflects the speed or seasonality of your business.

Use the right tools

Most of the challenges in the budgeting and planning process stem from using the wrong tools. Organizations rely too heavily on multiple Excel spreadsheets that are difficult to track and notoriously poor for collaboration. Budgeting software is purpose-built to help organizations make the budgeting process simpler and more efficient and bring together systems and stakeholders in one controlled environment. 

Here are key things to look for in a budgeting solution: 

  • The system directly connects to your source systems (general ledger, HR, payroll) so data automatically flows into your budgeting, forecasting and reporting processes.
  • Company-wide collaboration that gives stakeholders access to the parts of the budgeting process they absolutely need to participate in.
  • Budgets and forecasts that can be easily adjusted and updated for scenario comparison purposes.
  • Prebuilt dashboards with indicators that provide visibility into overall company business performance.

How NetSuite Planning and Budgeting can help:

NetSuite Planning and Budgeting provides a powerful, yet easy-to-use-and-deploy budgeting solution. Utilizing pre-configured data synchronization with NetSuite’s general ledger, your financial data is automatically pulled from NetSuite into the budgeting tool, manual data entry is eliminated, you refresh reporting at your fingertips and there is no need to worry about who got what data and when. Plus, you’re able to easily include everyone in the organization that needs to be involved in the budgeting process. This solution delivers the collaboration, control and visibility needed to better manage the complete budgeting process using one end-to-end solution.

Want to learn more? Contact us today to learn more about how NetSuite can help you prepare for a better new year.

Source: By Rami Ali , Sr. Product Marketing Manager at NetSuite

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