Building better budgets refers to the methods developed by the financial experts to make the budget as error free as possible. In other words, these help in understanding the ideal process of budget making. There are several small processes that, when combined, make the perfect budgeting process. These include effective tools for budgeting, automation, strategic planning, dedicated resources and teamwork.
Connecting Budgeting and Strategic Planning
A way to build better budgets is to link the process of budgeting with the strategic planning. Strategic planning is the process of setting the destination of the company, and like any other journey, here also you need an efficient vehicle to reach that destination. Better budgeting helps you in achieving your goal by playing the role of the vehicle.
Distribution of the Responsibilities
During the process of finding ways to build better budgets some companies have come up with the idea of developing the strategic service centers and conferring the responsibility of making better budgets on them. Companies have asked every service center to make the budget and accounts. A detailed report is sent to each center to tell them about the charges to those accounts.
The results of this technique are very good because the budgeting process has involved more people than before, and from the lower level of staff too. Future projections have become more realistic in this process because of greater control and greater accountability of the people at strategic service centers. According to one expert there are several advantages to this approach and it is being appreciated widely. It not only helps profitability, but also helps you make better decisions. In the absence of this approach, getting input would have been very difficult.
According to some experts, promoting the internal cooperation is also among the proven ways to build better budgets. It is a general tendency among people to dislike the budgeting process. However, it is possible to gain some speed by making small pieces of the overall process and thereby making it somewhat understandable and interesting to the people. Providing information openly to every person in the company produces better results. If they have access to the information regarding expenses, labor cots, revenue, and the numbers you will observe significant improvement in their performances.
Make It Paperless and Automatic
People avoid budgeting because they feel it is a time taking process that requires a lot of paperwork. If you can make the overall process of budgeting automatic and paperless, it may also be one of the ways to build better budgets.