Budgeting software applications coordinate financial planning activities, as well as track and report on actual financial progress. Corporate budgeting software offers a critical IT resource for improving business decision-making with accurate, timely, and relevant financial information. This guide provides a practical how-to for selecting the right budgeting software to improve the predictability of corporate expenses and create efficiency in budget creation and tracking processes.
Business budgeting software–also referred to as budgeting, planning, and forecasting (BPF) software provides a coordinated set of features for the creation and management of detailed corporate financial plans, which estimate a company’s future revenues and expenses.
Key benefits enabled by corporate budgeting software include:
|Departmentalized budgeting||Departmentalized budgeting provides the ability to create hierarchically categorized budgets organized by units such as business department, location, or cost center|
|Budgeted versus actual comparisons||The ability to compare budgeted figures versus actuals relies on the import of GL data and enables improvement monitoring of corporate performance against goals|
|Collaborative budgeting||Collaborative budgeting features supports document management functionality that allows multiple individuals to contribute to budget creation|
|Budget approvals||Budget approvals functionality allows for the authorization of budgetary plans by users at pre-defined user privilege levels|
|Versioning||Versioning capabilities allow for non-destructive storage of multiple budget versions and tracking features to document changes to budget plans|
|Rolling budgets||Rolling budgets allow for dynamic revision/extension of budgets to refresh budgets for a consistent period of time from the present moment|
|Predictive budgeting||Trend data from historical records creates automated predictions for financial performance|
|Workforce planning||Workforce planning capabilities offer specialized process support for anticipating growth of human resource requirements and their likely costs|
|What-if modeling||“What-if” or “driver” based budgeting features allow for modeling of how individual budget variables can impact overall budget outputs|
Companies facing critical questions about business development often look to budgeting software to get a better handle on expected revenues and expenses. Budgeting software modules use a combination of approaches to create financial forecasts. The key components of creating a budgeting are inputting accurate historical information and querying users for estimates of future financial conditions.
Budgeting software programs provide a framework for reinforcing budgeting best practices. Ensuring the inclusion of all relevant data and collecting information from distributed sources can be deceptively difficult tasks. Any budget relies on user-created estimates. Budgeting programs can help turn guesses into expectations by requiring estimates at a more granular level and integrating margin of error controls. Once data has been translated into predictions for financial outcomes, actual earnings and expenses can be compared against the predictions to monitor business progress.
Manually creating effective budgets can easily be hampered by a number of issues. It may be very difficult or time-intensive to resolve these issues.
Frequently, companies have limited confidence in hand-created budgets. This is often based on concerns that the historical information is incomplete or inaccurate. Budgeting software allows direct data imports from integrated applications such as the general ledger and other key accounting applications. Automatic data inputting provides the confidence that all relevant information has been considered and that it is free of the errors that often occur with manual re-keying. Planning for unexpected external factors is a difficult task. Budgeting software can provide helpful suggestions about making sure to correct for easily excluded external factors such as the effect of inflation.
One of the other main advantages of using budgeting software is seen in the cost savings. Creating budgets can be one of the most time intensive tasks for executives. Budgeting software will help you eliminate the reliance on cumbersome spreadsheets. For anything but the most basic budgeting needs, spreadsheets use dozens if not hundreds of formulas and macros. One weak link in the calculations can spoil weeks of careful preparation.
Budgeting software also promotes collaboration. If you need to receive input from a variety of different employees, who each may have responsibility for different segments of your financial data, using a manual approach to creating budgets can easily become impractical. The reality is that you’ll likely be spending unnecessary time standardizing information into normalized formats. Furthermore, creating a budget is often a process that depends on working through multiple versions. Passing the information back and forth multiple times, rather than having a single updatable version of the truth, can easily become a drain on resources and an opportunity for costly delays.