Completing the annual budget in a short time goes a long way in saving time and money across the organization. APQC finds that top performers (those at the 25th percentile) complete the annual budget in 28 days or less—nearly twice as quickly as organizations in the 75th percentile.
Creating your annual budget doesn’t need to be a herculean process. While it’s likely to include some frustration, APQC recommends these four practices to help CFOs and other finance leaders to avoid the back-and-forth of protracted negotiations and drive a smoother budgeting process.
1. Facilitate a Collaborative Budgetary Process
The budgeting process should not be a war of finance versus operations or executives versus managers. As a financial leader in the organization, it’s important to set expectations from the beginning that this will be a collaborative process driven by negotiation, communication, and problem solving.
2. Train stakeholders in the process
Well before the budgeting process begins, you should hold a kickoff that includes training for anyone with budgetary responsibilities. Every stakeholder should know the timeframe of when deliverables are due, what a good budget deliverable should look like, and what’s expected of them at different milestones in the process.
3. Start Later
Though it may seem counterintuitive, many organizations have seen substantive improvements in cycle times by simply starting the process later. Doing so enables you and your organization to observe more of the current year’s actual results rather than creating a budget that is dependent on many forward months of forecasts.
4. Use Cloud-based Budgeting Tools and a Single Version of the Truth
With so many hands shaping the budget, it’s critical to standardize the data and the processes that support it. Cloud-based tools can help you avoid multiple versions of the truth and the errors that come with them. Many of these tools update the data in real time, which helps everyone to see the immediate impact of changes to the budget and inputs made at the unit level or department level.
Dig deeper in to these four practices in APQC’s Cycle Time to Complete the Annual Budget.