The Budgeting and Forecasting Experts Blog

5 Signs Your Current Budgeting & Planning Solution Isn’t Working

  

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There are some clear and common signals that indicate your current financial budgeting & planning methods, processes and technologies are obsolete.  It’s time to consider a change if:

You spend too much time (and money) on mechanics.  Do you find yourself – or key team members – spending more and more time making your financial planning tool (or spreadsheet) work?  Does the amount of time needed to make the system work exceed the time you spend looking at the numbers?  If you find the amount of time you spend on financial activities is actually spent on software programming, writing mathematical formulations, defining relationships between various expense or revenue items, or laying out report presentations, it’s time for a change.

You don’t know what you can or can’t do.  Your financial solution should give you instant access to vital information; say, for example, if you can afford to buy something or not, and what the payoff would be if you do.  You should be able to get easy answers to questions like: If I spend money here, will that leave me with enough money to do what I want to do over there?  If there’s a lot of work in getting to those answers, or if you don’t trust the answer the budget seems to get you, you need to make a change. 

You can’t identify the low hanging fruit.  Some decisions are easy and some decisions are hard.  A budget should make it easy to answer questions like: Which employees, products or customers contribute most to my company’s profits?  How has this changed from last quarter?  If we end a line of business, how does that affect our overall profitability?  If I add salespeople in a particular territory, will the profit margins go up or down?  If your current system doesn’t make it easy to answer the easy questions, it’s time to make a change.

Your business is forced to accommodate your financial planning solution.   Maybe your business is growing, but you’re not certain if it’s a growth trajectory or a small blip.  You’d like to add some part-time, contract or seasonal employees.  But your system is too inflexible to let you foresee and plan those changes to payroll.  When your planning solution limits your business options, you need to make a change.

You can’t synchronize business views.  How often do you attend a meeting where each line of business manager has his or her own budget?  Or various managers each have a different view of the business, and management has no real insight into which view – or views – are most accurate?  Operations present one view of the business and finance – the “bean counters” – present another.  When you can’t get a complete and consistent view of the business, it’s time for a change. 

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