The budgeting and forecasting process can be challenging – are you making these common mistakes?

Failing to adapt. When was your budget as it currently exists created – the process/system itself, not the numbers? If you’ve been following the same budgeting and forecasting process for years, you could probably benefit from an upgrade. For example, consider transitioning to rolling forecasts rather than annual. This is essential especially as we continue to move into an era when real-time information is even more critical.

Not asking for input. Last week we spoke about the difference between top-down budgeting and bottom-up budgeting, and the advantages and disadvantages of both. Once fact was clear with both approaches – input from various department is crucial to ensure the budget is accurate, realistic and based on actual day-to-day requirements. If you don’t communicate with those whose roles rely directly on the budget, you may find yourself dealing with various grievances.

Not holding people accountable for their numbers. If there is no responsibility for or commitment to the numbers, their accuracy, or how well they align with overall goals, participants may not feel inclined to put forth the effort. Part of this has to do with understanding the purpose behind the budget, how the various moving parts work together. By giving those involved a deeper understanding of the reasoning, this can help boost accountability.

Setting unrealistic expectations. If you don’t give people enough direction or time to complete a budget, the most common result is going to be a sub-par budget that doesn’t include all information, or worse, one that contains numerous errors. This may also result in frustration on behalf of those expected to fill in their spreadsheets within the given timeline. Additionally, if the budget overall is unattainable, this striving to meet it will inevitably fall short.

Making it too complicated. If participants feel like they’re drowning in data, the budgeting and forecasting process can quickly become overwhelming. Sometimes this boils down to hierarchy. Does everyone need to see everything? No, indeed most people shouldn’t see everything. By creating a hierarchy of access, determining what each department needs to see, you simplify the entire process by limiting the amount of information each person has in the system in front of them.

No matter your industry or business model, you can’t get away from budgeting and forecasting. In order for that budget to be most effective, you want to ensure the fewest mistakes possible are made. These are some of the most common – are you making them? It may be the reason your budget isn’t as successful as you’d like.

True Sky can help. We make the familiar interface of Excel more adaptable and flexible, giving you better visibility and less room for error. For more information, please get in touch today by calling 1 855 878 3759.