Budgeting can be challenging. Formulating a strategy that incorporates new tactics, reduces costs, and improves bottom line profits can be a daunting task. As we approach the end of fiscal 2010 many organization commence their business planning process and culminate there 2010 actuals to their proposed budgets.
According to Mark Carsan a seasoned Controller and ERP Consultant, “the budgeting process is very simple for most companies – it gets complicated at the branch level where each branch is treated as a profitability centre. The challenge is in setting up the internal communication process to manage a wide spread cohesive system.”
If you’re in charge of corporate budgeting here are some tips that may just change the way you manage your business:
- Have a plan! Sadly many budgeting processes don’t make it pass step one. Pen to paper is a great reminder to where the company needs to be and helps to flush out many discrepancies early in the planning process.
- Expenses. These come in two forms variable and fixed. You can approximate your net income based on your rough costs.
- Budgeting doesn’t need to take place annually! Break it up into quarters. This allows you to set identify opportunities, eliminate potential problems early, and incorporate market changes.
- Revenue goals or targets. It’s critical to ensure you are basing this on a number of factors as it’ll be the foundation by which you measure your performance.
- Record keeping helps ensure you are organized with both your AR and AP ends of the equation.
Remember software tools, such as the ones in the Sage ERP porfolio, can enable you to effectively manage and create budgets but it’s up to your organization to empower to process!
photo credit: Steve Wampler