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ESTABLISH A TIMELINE
Managers and employees often wonder if there really is a need for a timeline. The answer is yes, as it enables the project to be much more efficient. In fact, a timeline is the first step of the planning process. Any process is incomplete if tasks are not completed in the time frame set for them.
A timeline can be as simple as a baseball schedule or as complex as a comput- erized manufacturing process. In a budget process, every individual must be aware of the timeline for his or her department and for the entire corporation. A manager could not possibly know when his or her budget was to be completed if the executive management did not provide a timeline for the task. Without a timeline, managers would not be able to research, plan, or execute their budgets on time; therefore, the budget would not serve much purpose since it would probably be put together at the last minute.
There are many programs that can help you design a project timeline, or it can just as easily be set up in Excel. The columns that we recommend in the design phase are: the task, the person responsible for completing the task, a start date, an end date, a completed date, hours budgeted, hours actually spent on the task, and any issues that developed along the way. If detailed logs are kept, then variance reports could be created at the end of the budget process. It is also beneficial to have an assessment meeting at the end of the budget process to determine how the process can be im- proved in the future.
It is also important to have an initial planning and strategy session composed of all employees involved in the process. Map responsibilities for each employee along with a timeline for each person’s processes. Doing this will prevent confusion be- cause all employees will be aware of their responsibilities, as well as those of their coworkers.
1. Set corporate goals. • R&D
2. Prepare standard forms. • Capital expenditures
3. Train employees. 5. Corporate budget—finance
4. Send the budgets out to department and overhead
departments: 6. Consolidate budget.
• Sales budget 7. Balance sheet budget
• Production budget 8. Calculate cash flow.
Materials 9. Review consolidation and
Direct labor request department changes.
Overhead 10. Consolidate after changes.
• Employee budget by 11. Distribute budget.
department 12. Monthly variance reports
• Marketing Expense 13. Review performances.
Sales administration Advertising and promotion
EXHIBIT 9.1 Budget Process Workflow Example
IMPROVE DATA ENTRY
Depending on your organization, not all managers and employees will have a lot of computer experience, which can lead to data entry errors. Research the type of er- rors that are being entered by the users and try to determine a plan to limit these.
Today, many budgeting software programs can be used to help limit the number of errors. Also consider the following for reducing these potential errors:
• Train all users on the proper way to use the software, through online demon- strations and training manuals.
• Create validation formulas within the software to ensure that realistic numbers are being entered.
• List prior-year figures so that users will have a comparable number for all entry lines.
EXHIBIT 9.2 Budget Breakdown Corporate Strategy
Department Sales
Economic Outlook Product/Service Mix
Increase/Decrease in Salespeople
Change in Advertising and Promotion
Marketing Costs
Cost of Sales Administrative/Employee
Expenses
Capital Expenses Other Expenses Department Expenses
P & L Budget Corporate Balance
Sheet Budget
Calculate Cash Flow Budget Corporate Sales Goal
for the Year
• Use corporate goals—such as cost of sales are approximately 30 percent of revenue—to serve as guidelines for all employees.
DO FORECASTING
A budget comprises an entire year of projected amounts. For example, a revenue budget will be predicted for all 12 months of a given fiscal year. A forecast encom- passes actual amounts for certain months and forecasted amounts for the rest of the year.
Note:For simplicity the rest of this section assumes that your company is on a calendar fiscal year.
If, for example, your organization has three months of actual data, then your or- ganization can forecast the amounts for April–December based on the actual amounts in the first three months. This is typically called a rolling forecast. The budget should be complete and should not be touched at this point; that said, it is still important to forecast the next months based on information that was unavailable during the bud- get process.
Forecasts, which are as important as budgets, have a couple of key differences from them. A forecast should not be as detailed as a budget, since the forecast will be redone every month if you are doing a rolling forecast (which may be done every month, every other month, or once a quarter). Some companies will use their annual budget as a guide or template and then update it every month after the actual numbers have been updated. Other companies may have a 24-month rolling fore- cast, while still others have a 4- to 8-quarter rolling forecast, which means that they will forecast each quarter.
There are two primary benefits to the rolling forecast: It persuades managers to plan on a continuing basis, rather than as a static event; it enables the company to pro- vide more reasonable numbers if there are events that the company did not plan for, such as a downturn in the economy.
There are also some negatives to using a rolling forecast. Like a budget process, managers and employees must forecast responsibly and not regard it as a chore, as it has to be completed possibly once a month. Companies may have trouble setting goals and communicating them to the employees because of the constant need to fore- cast; or the goals may change too often and cause confusion.
REPORT ON BUDGETS
There are numerous reports that a company can create to report on its budgets, but ultimately a budget should be used as a comparison tool. A budget is the prediction of a future year’s occurrence; therefore, it is best to compare the budget to actual amounts for the current and previous years. Some of the most popular reports include:
• A 12-month budget or 12-month forecast (Exhibit 9.3)
• Income statement with variance (Exhibit 9.4)
• Balance sheet (Exhibit 9.5)
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TEST COMPANY 2002 MONTHLY BUDGET SUMMARY Currency: USD($1000s) JanFebMarAprMayJunJulAugSepOctNovDec REVENUES Product 1510554540538531601605632621690701675 Product 2408443432430425481484506497552561540 Product 3230249243242239270272284279311315304 Returns and Refunds–38–42–41–40–40–45–45–47–47–52–53–51 TOTAL REVENUE1,1101,2041,1751,1701,1551,3071,3161,3751,3501,5011,5241,468 COST OF SALES Product 1107116113113112126127133130145147142 Product 2135146143142140159160167164182185178 Product 3343736363641414342474746 TOTAL COST OF SALES276299292291288326328343336374379366 PROFIT MARGIN8349058828798679819881,0321,0141,1271,1451,102 EXPENSES Compensation101101101101101104104104109111116111 Depreciation/Amortization757575767677778083838584 Utilities454545454545454545454545 Travel and Entertainment575760626262636370756565 Professional Services131313151513131315151515 Other Expenses555555555555 TOTAL EXPENSES296296299304304306307310327334331325 NET OPERATING PROFIT538609583575563675681722687793814777 EXHIBIT 9.3Twelve-Month Budget
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TEST COMPANY INCOME STATEMENT WITH VARIANCE Currency: USD ($000s) First QuarterSecond QuarterThird QuarterFourth QuarterTotals 20022001%20022001%20022001%20022001%20022001 BudgetActualVarBudgetActualVarBudgetActualVarBudgetActualVarBudgetActual Gross Operating Revenue Product 11,6041,5861.1%1,6701,700–1.8%1,8581,8003.2%2,0662,100–1.6%7,1987,186 Product 21,2831,2006.9%1,3361,3002.8%1,4861,4006.2%1,6531,6500.2%5,7585,550 Product 37227121.4%752762–1.4%8368113.1%9308667.4%3,2393,151 Returns and Refunds–120–140–14.0%–125–150–16.8%–139–160–13.1%–155–185–16.1%–540–635 Total Revenue3,4893,3583.9%3,6333,6120.6%4,0413,8514.9%4,4944,4311.4%15,65515,252 Cost of Sales Product 1337340–0.9%351355–1.2%3903754.0%434444–2.3%1,5121,514 Product 2423444–4.6%4414351.4%491550–10.8%545555–1.7%1,9001,984 Product 3108111–2.5%1131111.6%1251222.8%139140–0.4%486484 Total Cost of Sales868895–3.0%9059010.4%1,0061,047–3.9%1,1181.139–1.8%3,8983,982 Gross Profit2,6212,4636.4%2,7282,7110.6%3,0352,8048.3%3,3763,2922.5%11,75711,270 Expenses Compensation3032904.5%3062982.7%3173102.3%3383225.0%1,2641,220 Depreciation/Amortization2252221.4%229275–16.7%240250–4.0%252255–1.2%9461,002 Utilities135145–6.9%135145–6.9%135145–6.9%135150–10.O%540585 Travel and Entertainment174200–13 0%186210–11.4%196215–8.8%2051955.1%761820 Professional Services392556.0%432853.6%41402.5%453528.6%168128 Other Expenses1518–16.7%1516–6.3%15147.1%1517–11.8%6065 Total Expenses891900–1.0%914972–6.0%944974–3.1%9909741.6%3,7393,820 Net Operating Revenue1,7301,56310.6%1,8141,7394.3%2,0911,83014.3%2,3862,3182.9%8,0187,450 EXHIBIT 9.4Income Statement with Variance
TEST COMPANY 2002 BALANCE SHEET Currency: USD Assets Current Assets
Cash and Equivalents 3,891
Accounts Receivable 8,962
Prepaid Expenses 555
Deferred Taxes 150
Other Current Assets 85
Total Current Assets 13,643
Fixed Assets 5,123
Intangible Assets 12,231
Deferred Financing Costs, Net 1,895
Other Assets 85
Total Assets 32,977
Liabilities and Members’ Equity Current Liabilities
Accounts Payable 713
Accrued Expenses 3,657
Current Portion of Long-Term Debt 135
Other Current Liabilities 179
Total Current Liabilities 4,684
Long-Term Debt 6,789
Other Long-Term Liabilities 5,678
Deferred Taxes 7,654
Total Liabilities 20,121
Members’ Equity
Common Stock 2,159
Additional Paid-in Capital 5,109
Retained Earnings –11,013
Net (Income) Loss 11,917
Total Equity 8,172
Total Liabilities and Members’ Equity 32,977
EXHIBIT 9.5 Balance Sheet
• Exception reports (Exhibit 9.6)
• Key performance indicators (KPIs) (Exhibit 9.7)
• Sales detail budget (Exhibit 9.8)
• Three-line report (net revenue, expenses, margin, and margin percentage) (Exhibit 9.9)
• Capital expenditures (Exhibit 9.10)
• Foreign exchange variance (Exhibit 9.11)
• Headcount by department (Exhibit 9.12)
COMPLETE ANALYSIS
You must research the type of analysis that will be useful to all levels of manage- ment before starting the budget process. For example, let’s assume that Tom, a man- ager at a large company, wants to see revenue by product and by customer. Within this data, Tom wants to know the volume purchased of each product and the price for which each will be sold. However, Tina, the budget manager, never asks Tom about his needs. She designs a revenue entry form that only has monthly revenue by customer; she does not include product or volume information. So when Tom wants to view the volume and product information after the budget is complete, the data is not available.
Often, managers do not know exactly what they need; therefore, it is best to probe them during the research process and make suggestions on certain types of data that currently are not available. It will cause many delays if managers ask for additional information in the middle of the budget process. Many reports can be cre- ated for revenue budgeting, such as sales by customer or product, variance reports to previous year, percentage of total sales, and trend analysis. It is best to plan and design these reports before the revenue budgeting begins.
Many managers continually look backward by comparing and analyzing the prior month’s data. This is important if it is being used to determine future trends, but frequently it is only analyzed because it is “someone’s job.” Companies should also look forward to determine future trends, so that they spend time analyzing both the future and the past.
It is important to encourage finance employees to become, essentially, internal consultants. Consultants generally try to get their clients to buy into their solutions because they believe that these are the best improvements. Finance employees should be doing the same thing with their managers and with employees outside of their de- partment. Don’t argue with them; instead show them why and how you are going to make new analysis reports that will improve their jobs.
ENFORCE ACCOUNTABILITY
Accountability may be the most important aspect of budgeting, because all the hard work spent creating the budget will be for naught if the employees involved in the budget are not held accountable for their budget numbers. That said, there is some
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TEST COMPANY 2002 OPERATING EXPENSE EXCEPTION—GREATER THAN 15% Currency: USD JanFebMarAprMayJunJulAugSepOctNovDec BudgetBudgetBudgetBudgetBudgetBudgetBudgetBudgetBudgetBudgetBudgetBudget Group Health/Dental Insurance 2002 Budget6,5566,6226,6886,7556,8226,8906,9597,0297,0997,1707,2427,314 2001 Actual5,5555,3885,2275,4885,7625,7055,6485,5915,7595,9326,1106,293 Variance18.0%22.9%28.0%23.1%18.4%20.8%23.2%25.7%23.3%20.9%18.5%16.2% Long-Term Care Insurance 2002 Budget6,6876,7546,8226,8907,0287,0997,1697,2417,3147,3877,46184,809 2001 Actual5,8335,6585,4885,7626,0515,9905,9305,8716,0476,2286,4156,608 Variance14.6%19.4%24.3%19.6%15.0%17.3%19.7%22.1%19.7%17.4%15.1%12.9% Workers’ Compensation Insurance 2002 Budget4,0124,0524,0934,1344,1754,2174,1884,2304,2724,3154,3584,402 2001 Actual3,3833,2823,1833,3423,5093,4743,7363,6993,8103,9244,0424,163 Variance18.6%23.5%28.6%23.7%19.0%21.4%12.1%14.4%12.1%10.0%7.8%5.7% 401(k) Employer Match 2002 Budget4,2044,2464,2894,3314,3754,2444,1163,9933,8733,8733,3733,873 2001 Actual4,6004,6104,6504,8034,8094,8114,8334,9105,0015,0545,0104,950 Variance–8.6%–7.9%–7.8%–9.8%–9.0%–11.8%–14.8%–18.7%–22.6%–23.4%–22.7%–21.8% Employee Bonuses 2002 Budget10,000000020,000000000 2001 Actual7,500000035,000000000 Variance33.3%NANANANA–42.9%NANANANANANA EXHIBIT 9.6Exception Report
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TEST COMPANY KEY PERFORMANCE INDICATORS Currency: USD JanFebMarAprMayJunJulAugSepOctNovDec Salaried/Hourly Payroll Expense45,04544,91045,90845,90846,90647,90447,90448,90248,90249,90049,90050,898 2002 Total Salaried/ Hourly Expense 2001 Total Salaried/37,11137,11138,11438,11438,11438,11438,11439,11739,11740,12041,12342,126 Hourly Expense % Variance over Prior Year21%21%20%20%23%26%26%25%25%24%21%21% % Total Operating Expense15%15%15%15%15%16%16%16%15%15%15%16% Bad Debt 2002 Bad Debt4,9644,9865,3285,0035,1714,7834,5924,6005,3835,7455,6875,977 % of 2002 Net Revenue0.4%0.4%0.5%0.4%0.4%0.4%0.3%0.3%0.4%0.4%0.4%0.4% 2001 Bad Debt Expense5,1135,1365,7015,3535,5335,3105,0975,1055,9756,0906,0286,336 % of 2002 Net Revenue0.4%0.4%0.5%0.4%0.4%0.4%0.3%0.3%0.4%0.4%0.4%0.4% Total Operating Expenses (Includes Management Fees) 2002296,296295,704298,701303,696304,304306,306307,307309,690326,673333,666331,331325,325 2001285,926288,607297,265306,183315,369314,738314,109313,480312,853312,228311,603310,980 % Variance over Prior Year4%2%0%–1%–4%–3%–2%–1%4%7%6%5% EXHIBIT 9.7Key Performance Indicators (KPIs)
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TEST COMPANY SALES DETAIL—BUDGET Currency: USD CustomerProductJanFebMarAprMayJunJulAugSepOctNovDec A1120120120120120120125125125125125125 ABC1111213141516171819202122 B1158168180175170225225240240240225220 C1175180180185185190190195195200200205 ZZZ1467447444150485442105130103 A2858585858585909090909090 B2150155155155160165165165170170170155 C2100126130130130145145150150160160160 XYZ27377626050868410187132141135 A3657070707070707070808080 ABC3858585858585858585858585 B3505050505050505050505050 C3262820231820111315574949 ZZZ33044383734656779749610089 Total Revenue1,1741,2751,2351,2341,2131,3721,3721,4351,4121,6101,6261,568 EXHIBIT 9.8Sales Detail Budget
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TEST COMPANY THREE-LINE REPORT Currency: USD March, 2002Year-to-Date ActualBudgetVarianceActualBudgetVariance Product 1 Revenue603540631,5861,604 Cost of Sales106113(7)340337 Gross Margin497427701,2461,267 Gross Margin %82.4%79.1%78.6%79.0% Product 2 Revenue379432(53)1,2001,283 Cost of Sales135143(8)444423 Gross Margin244289(45)756860 Gross Margin %64.4%66.9%63.0%67.0% Product 3 Revenue231243(12)712722 Cost of Sales2936(7)111108 Gross Margin202207(5)601614 Gross Margin %87.4%85.2%84.4%85.0% Total Revenue1,2131,215(2)3,4983,609 Cost of Sales270292(22)895868 Gross Margin943923202,6032,741 Gross Margin %77.7%76.0%74.4%75.9% EXHIBIT 9.9Three-Line Report (Net Revenue, Expenses, Margin, and Margin Percentage)
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EXHIBIT 9.10Capital Expenditures
TEST COMPANY 2002 CAPITAL EXPENDITURE DETAIL Currency: USD Category/AssetPurchaseLife DescriptionMonthCompanyCostYrsJanFebMarAprMayJunJulAugSepOctNovDec Furniture New Furniture1110,0007119119119119119119119119119119119119 Chairs115,0007606060606060606060606060 Chris’s Condo31300,0007003,5713,5713,5713,5713,5713,5713,5713,5713,5713,571 Desks125,0007606060606060606060606060 Filing Cabinet122,5007303030303030303030303030 Chairs123,3337404040404040404040404040 Bill’s Hood Ornament42333,33070003,9683,9683,9683,9683,9683,9683,9683,9683,968 Bill’s Very Cool Sunglasses33500,0007005,9525,9525,9525,9525,9525,9525,9525,9525,9525,952 Total Furniture Depreciation3083089,83113,80013,80013,80013,80013,80013,80013,80013,80013,800 Equipment Really Needed Equipment110-51155,5555926926926926926926926926926926926926 Workstation for New FTE301-3305,00050083838383838383838383 Workstation for New FTE901-3305,0005000000008383838 Total Equipment Depreciation9269261,0091,0091,0091,0091,0091,0091,0931,0931,0931,093 Total Depreciation1,2331,23310,84114,80914,80914,80914,80914,80914,89214,89214,89214,892
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EXHIBIT 9.11Foreign Exchange Variance
TEST COMPANY FOREIGN EXCHANGE VARIANCE Currency: USD %Budget BudgetActualsVarianceChangew/Act. RateVariance REVENUES Product 17,1987,186120.2%6,838–348 Product 25,7585,5502083.8%5,470–80 Product 33,2393,151882.8%3,077–74 Returns and Refunds–540–63596–15.0%–513123 TOTAL REVENUE15,65615,2524042.6%14,873–379 COST OF SALES Product 11,5121,514–2–0.2%1,436–78 Product 21,9001,984–84–4.2%1,805–179 Product 348648420.4%462–22 TOTAL COST OF SALES3,8983,982–84–2.1%3,703–279 GROSS PROFIT11,75811,2704884.3%11,170–99 EXPENSES Compensation1,2641,220443.6%1,201–19 Depreciation/Amortization9461,002–56–5.6%899–103 Utilities540585–45–7.7%513–72 Travel and Entertainment761820–59–7.2%723–97 Professional Services1681284031.3%16032 Other Expenses6065–5–7.7%57–8 TOTAL EXPENSES3,7393,820–81–2.1%3,552–268 NET OPERATING PROFIT8,0197,4505697.6%7,618168
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EXHIBIT 9.12Headcount by Department
TEST COMPANY HEADCOUNT BY DEPARTMENT JanFebMarAprMayJunJulAugSepOctNovDec Sales Salespeople8.08.08.08.08.08.09.09.09.09.010.011.0 Administration2.02.02.03.03.03.03.03.03.03.03.53.5 Total Sales10.010.010.011.011.011.012.012.012.012.013.514.5 Marketing Managers2.02.02.02.03.03.03.03.03.03.03.03.0 Supervisors1.01.01.01.02.02.02.02.02.02.02.02.0 Analysts8.08.08.09.59.59.59.59.511.011.011.011.0 Total Marketing11.011.011.012.514.514.514.514.516.016.016.016.0 Manufacturing Managers6.06.06.06.06.06.06.07.07.07.07.07.0 Supervisors14.014.014.014.014.014.015.016.017.017.017.017.0 Workers90.093.093.093.098.098.098.0103.0103.0111.0115.0100.0 Total Marketing110.0113.0113.0113.0118.0118.0119.0126.0127.0135.0139.0124.0 Information Technology Managers2.02.02.02.02.02.02.02.02.02.02.02.0 Computer Analysts8.08.08.08.08.08.010.010.010.010.010.010.0 Total Information Technology10.010.010.010.010.010.012.012.012.012.012.012.0 Total Headcount141.0144.0144.0146.5153.5153.5157.5164.5167.0175.0180.5166.5
danger in being overly strict in regard to accountability. For example, a manager may try to defer a cost if he or she intends to go over budget, or to hold revenue for a later period if the manager has already met the budget for the current period. Managers’
reviews should include an evaluation of their budgets, which may affect their com- pensation if they are not meeting the targets of the organization.
Another issue is that while the budget variances may be reported on, they are not investigated. What is the point of creating variance reports if the variances are not going to be questioned and investigated? Organizations should try to create owner- shipof the budget numbers among the managers, to make them responsible for in- vestigating and explaining the variances in their budgets. Employees and managers must understand the impact that missing budget targets can have on an organization.
SUPPORT ENABLERS
The following are examples of important enablers that contribute to the improve- ment of your budgeting processes.
Human Resources
When hiring employees the human resources department should strive to hire ener- getic and competent people who will improve the overall organization. These em- ployees should be motivated to work on and to improve the budget. Also, human resources should ensure that the employees who are on the front line with the cus- tomers have an impact on the budget, as it is they who will have intimate knowledge of the future demand.
In Chapter 17, we offer many suggestions regarding the human resources en- abler, such as coordinating with the IT department, shared responsibility between departments, and open access to data.
Training
Training, unfortunately, is an area that is often overlooked. Proper training is essen- tial to ensure that the budget is accurate and completed in a timely manner. Training for the budget should entail:
• Giving all employees involved in the budgeting some knowledge of accounting basics
• Explaining the budget process to the necessary employees to ascertain that the budget process is consistently followed
• Training employees on the software that is being used for the budget, whether it is Excel or an ERP package
• Training more than one employee to administer the entire process in case something happens to the primary person.
• Explaining allocations to managers—they will be allocating costs, but they are rarely informed how those costs are calculated.
There are also some questions that should be answered regarding the training of your employees:
• Do the employees understand their jobs and the standards that they are expected to meet?
• Are there sufficient resources for the employees, and do they have a logical set of responsibilities?
• Do the employees understand the consequences or rewards of the outcome of their jobs?
• Are reviews regularly scheduled so that the employees get the feedback they need to do a good job?
• Do the employees actually have the necessary skills and knowledge to complete their jobs?
Establish Workflow
Workflow can be defined as “how the work gets done.” Organizations typically pro- duce their outputs through countless cross-functional work processes, such as the production process, the sales process, or the billing process. But many companies do not pay enough attention to the workflow, and an organization is only as good as its processes. Processes should meet customer needs, be effective and efficient, and en- sure that the goals and measures are driven by the organization and the customers’
requirements. There are three main variables in determining the effectiveness of a company’s processes: goals,design, and management.
Goals
The “internal” customers—employees, managers, or executives—in your corporation should drive the goals because budgeting is an internal (as opposed to an external cus- tomer) process. The budgeting process should be measured both on the way it meets the internal customers’ needs and for the value it ultimately adds to the external customer. Each organization should have goals for its budget process that meet the corporate vision and goals.
Design
Once the goals have been established, you should make sure that the processes are designed to meet the goals effectively. Processes should lay logical, streamlined paths to the achievement of those goals. The key functions of the process should enable the users to meet the process goals successfully. Budgets that eventually result from internal bickering, time delays, lack of ownership, and lack of knowledge effect budgets.
Management
The final variable is process management. A well-planned process that is not managed effectively will still fail. Managers should set the goals for each critical process and
ensure that they are being met. The management of the budgeting process should also entail asking for employee feedback. The feedback should involve process perfor- mance, identifying process deficiencies, and resetting process goals if the employee requirements have changed. Managers must also ensure that each step in the process has enough resources, whether that includes staff, equipment, or additional money.
Technology
In today’s complex times, it is virtually impossible to create an accurate and dynamic budget in Excel because spreadsheets were not designed for budgeting. The main problems that employees complain about before using a budget package are that the process takes too long, the data is inaccurate, there is a lack of control, and the system is not reliable. Fortunately, budgeting programs today can help users create more ef- ficient and accurate budgets; and they can eliminate many duplicate spreadsheets.
A budgeting program will enable you to standardize forms and reports, as well as minimize employee errors.
Before choosing budgeting software, you should spend enough time research- ing your company’s needs. Budgeting software cannot solve your current problems automatically and, in fact may only automate your mistakes. Many companies will try to fit software to their budgeting process rather than fitting their budgeting process to the software that is best for them. Typically, companies blame technology when a project does not go well, but the failure can usually be traced to an internal problem with processes or a poor decision in the software purchase. It is best to have a soft- ware “champion” to maximize its benefits for your organization.
The following list highlights some of the advantages of using budgeting software:
• There is a controlled data entry environment with business rules and validations that will ensure consistency throughout the organization.
• Currency conversion and consolidation are staples of budgeting software.
• Multidimensional analysis of your business can be done quickly and accurately.
• User security and access control are difficult in Excel, but easy to control in a software package.
• You can maintain a history of budget versions by copying the data to a new version.
Also, a central database offers the following benefits:
• Data collection improves because it will be available immediately after entry for reporting and analysis purposes.
• There will be no need to transfer files between employees.
• Maintenance is simpler because a change to a budget input form will be im- mediately available to all users.
• The system will have integrity because all users will be using the same model.
• You will be able to create more analysis reports because the data will be centrally located.