The main task of budget planning is to ensure that no more money is spent than is economically justifiable. Or to put it more clearly, budget planning ensures the survival of a company. This makes it one of the key tasks that executives, finance teams and senior management from all departments should work on together.
If you take budget planning seriously, you will benefit from the following advantages
A budget plan helps to communicate clear goals and expectations. Your budget makes assumptions about income and expenses that teams can use to align their work.
Without budget planning there is no financing. Before investors or banks offer you their money, they usually want to know what will happen to this money. And they will want to see if and how you have created and adhered to budgets in the past.
Budgets make priorities tangible. Chances are your teams set their own deadlines and goals to some extent. The budget provides them with a framework and a long-term perspective.
Budget plans help with uncomfortable conversations. If you hire the right people, you will constantly hear new and exciting ideas for promotions, events and campaigns. Unfortunately, not every wish can be turned into reality. A budget plan can be used to manage expectations and justify decisions.
Budget plans connect finance teams to the rest of the organization. When planning the budget, the finance department learns more about the priorities of the other teams and can provide targeted support.
The biggest benefit, of course, is that budgets give businesses more control and transparency over their spending.
Keep an eye on budgets through expense management
You probably rely on your team leaders to manage their own expenses as much as possible and ensure that budgets are adhered to.
Many companies rely on manual processes and hard-working employees who diligently enter their expenses in spreadsheets and dutifully keep receipts. Experience has shown that this leads to a number of difficulties. Excel spreadsheets, which in cases of doubt are even located locally on the team members’ computers, are often only updated after days or even a week.
An alternative to manual Excel spreadsheets is free app for budgets. This can help financial team set up budget for every area of the business. Financial matters will be tackled effectively and in timely manner.