A recent survey found finance leaders are not satisfied with their budgeting methods and the extent to which they rely on standalone spreadsheets.
As the proverb goes, “The time you want the map is before you enter the woods.” In business, and finance in particular, that map is the annual budget. New research has found that many executives at major companies are not satisfied with the maps their organizations are using.
Chief Financial Officers are not happy with budgeting methods approach
A recent survey by accounting firm Grant Thornton and the American Productivity and Quality Center found that many finance executives are not happy with the way their companies approach annual budgeting. As reported in Accounting Today, the executives polled noted that their organizations’ current budgeting methods did not allow for higher-value planning and analysis activities. The survey polled 130 finance managers and CFOs at companies with annual revenues of $1 billion or more, spanning all major industries, with more than half based in the United States with offices worldwide.
The Financial Planning and Analysis survey found that 37 percent of CFOs and finance leaders said that their organizations’ budgeting processes needed improvement, while 25 percent said their companies’ budgets quickly become obsolete. Only 40 percent described their current financial planning and analysis system as effective, and 62 percent claimed their staff was too busy in basic duties to make the changes needed to keep their budgets up to date. Perhaps most importantly, many companies simply do not rely on technology solutions to make the budgeting and forecasting process more efficient.
Budgeting and Reporting need to be modernized
The majority of finance leaders surveyed by GT and APQC indicated that they use budget data primarily to look at historical activity, with spreadsheets continuing to play a pivotal role in the process. Interestingly, 56 percent said they prepared budgets using a combination of spreadsheets and budgeting software, and an astounding 39 percent said they only used spreadsheets.
Such dissatisfaction with the status quo in budgeting and forecasting is largely due to the limited use of corporate performance management (CPM) software. The days of spreadsheet only budgeting should long been over, and it is curious why even top-performing large companies have not made the move to adopt modern CPM systems. Complex problems require enterprise-grade solutions that guarantee accuracy and efficiency in the budgeting process; the proverbial map in the forest.
Graham Tasman, principal of business advisory services at Grant Thornton, advises companies depart from their antiquated ways and embrace better solutions for budgeting.
“With more and more finance resources dedicated to regulatory compliance, too many companies fail to supplement the annual budgeting process with planning activities that could make performance more agile,” said Tasman, according to the news source. “The finance function must break away from overemphasis on managing historical data and move to enterprise-wide solutions that enable forward-looking analysis and free up talent for higher-value activities.”
Corporations looking to improve budgeting accuracy and efficiency need to look at the solutions offered by today’s CPM software. Having one streamlined platform – including existing enterprise spreadsheets – for all budgeting, reporting and forecasting will limit redundancies, improve analytics and save valuable time. Spreadsheets alone are no longer the map to lead you out of the woods.