Budgeting best practice step 2 summary

• Senior leadership establishes top-down targets.
• Targets are automatically apportioned across business units and departments.
• Business unit management is automatically informed that the first draft is available.

The conventional way: Electronic paper pushing

Before conversations can happen with department and line of business managers, information about the top-level targets needs to be distributed to the appropriate people. Preparation and circulation of these documents is often handled manually, by individuals who are put under tremendous pressure to complete the task as soon as possible so as not to delay the budgeting process.

Much time is consumed separating large workbooks to create individual spreadsheets before reconciling for accuracy and completeness. Numerous spreadsheets create an environment ripe for later accumulations of errors that pose operational risks.

Usually distribution occurs by email, another manual task. Ensuring that the right data is sent to the right people in a timely manner is cumbersome and risk-prone. One particular risk involves data being sent to an incorrect recipient, which nearly always has a negative impact on internal morale and motivation, and can compromise the integrity of the entire budgeting process for the year.

The Connected Planning way of circulating top-down targets among business unit leaders: Course of action

1. Distribute budget targets automatically. Senior leadership uses the Connected Planning solution to automatically release individual business unit or departmental top-down targets to relevant stakeholders. Out of habit, it might be tempting to print hard copies and circulate them among select people. This should be avoided. Instead, senior leadership should, at the outset, establish the practice of handling notifications and communication electronically, within the Connected Planning solution.

2. Move quickly. Initiate distributing the target information as soon as the first budget roundtable discussions have concluded, to maintain the pace of the process and promote briskness as the process transitions to this step.

3. Avoid manual interventions. Let the Connected Planning solution do the work of automatically apportioning top-down group target information across business units and departments based on customisable reports and models.

4. Establish lines of communication. Business unit managers are informed directly through a notification that the first draft of their target has been made available. Senior leadership should follow up with pertinent commentary within the Connected Planning solution, thereby initiating a digital paper trail, and, more importantly, encouraging communication and setting expectations for turnaround time.

5. Think business partnering. More time is given back to Finance to engage with the rest of the organisation in a business partnering capacity. This is an excellent time for business unit managers and Finance to connect with one another, and for the latter to treat questions posed to them as an opportunity to begin building a business partnership, rather than a nuisance to clear from their desks as quickly as possible.

Giving everyone some of their time back This stage of the budgeting process is where the organisation can really begin to experience efficiency gains, releasing significant amounts of time for people managing the process. Time is not wasted reconciling business units to department targets or separating linked spreadsheets into single flat files for email distribution. And, because the risk of a business unit or departmental target being sent to an incorrect recipient is eliminated, no time is wasted on damage control and multiple follow-ups to rectify the situation.

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Our next blog will explore circulating top-down budget targets among business unit leaders. Follow us on our social channels for the next blog announcement.