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Budgeting Knowledge Center
ProfitStars > Knowledge Centers > Simplify the Budgeting Process and Make Your FI More Efficient
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Let’s be honest: budgeting is hardly anyone’s favorite thing. But with the right methods, your annual budgeting process can stop leaving you lost or wondering where you made the wrong move. When you follow these budgeting best practices, you can help your financial institution (FI) simplify the budgeting process and become more efficient:

Budget to Long-Term, Strategic Goals
It is important to remember your strategic plan as your guide to creating the fiscal budget. When you build your strategies first, you can then use your budgeting process to effectively align resources and processes to achieve your strategies in the most cost-efficient way possible. Strategy mapping is one of the best ways to ensure you are synchronizing your corporate strategies with tactics and success measures. Developing and monitoring a corporate scorecard will also ensure you stay on track, once your budget is tied to your strategies.

Develop Rolling Forecasts
Regularly forecasting your financial position over a 12 to 24 month period will enable your organization to take advantage of future opportunities to improve your financial performance rather than constantly reacting. Imagine how much easier your budgeting process will be once you start creating these rolling forecasts! You can then take your forecasting software into management and ALCO meetings to run what-if scenarios on the spot. This proactive approach can also give you a competitive advantage in your market.

Decentralize and Humanize the Budgeting Process
The budgeting process is most effective when you begin with a corporate-wide review of the organization’s strategic goals … so that everyone knows where you are headed. You can then discuss specific goals with managers to get a front-line perspective on the best tactics for achieving your strategies. After all, who knows your customers, products, and processes better than the people who interact with them on a daily basis? You can integrate their budget submissions for the items they can control (such as sales volumes) with key assumptions about cash flows and capital expenditures to produce your comprehensive budget. The results? Higher morale, increased fiscal responsibility, and a commitment to organizational goals.

Invest in Education
You can also increase the effectiveness and efficiency of your budgeting process by investing in the education of your managers. To get the best results from your education efforts, be sure to implement them on a recurring basis and include:
  • Strategy development – each manager should know how you develop your corporate strategies and be very clear on priorities.
  • Financial statements – understanding the components of your organization’s profitability is critical to getting accurate budget inputs from the front-line.
  • Budgeting – when managers understand how the entire budget process works and how the individual pieces fit together, they are better able to contribute to the process.
  • Financial reporting – managers should know what to look for in their financial reports, and what they need to do when their results are not on track with the budget.
Say Goodbye to the Spreadsheets
Spreadsheets are error prone and don’t support a complex budgeting process. They also are not collaborative, and your data isn’t secure when using them. With the right tools in place, however, you can simplify the budgeting process and create efficiencies.

Ready to make your annual budget an easier process? We invite you to further explore this Knowledge Center, which is designed to help simplify your budgeting process and enable your FI to be more efficient.