Traveling is always an adventure, regardless of the mode of transportation – especially during the holiday season. For some, just driving near a shopping mall can be exasperating. Having proper plans in place can make the roads more manageable. Still, we realize that unpredictable twists and turns await us on our journey. This rings true for businesses – of any size, in any industry – when year-end budgeting season kicks into gear.
Every December, accounting teams repeat the same steps they did one year earlier. They feverishly sort through numbers from multiple sources, correct manual data entry errors, and confirm that tasks are approved and properly executed. One question of years gone by echoes loudly: is there a better, faster way to prepare an annual budget so it can be confidently delivered – and on time? The answer is: Yes!
We have compiled a list of the top five best practices to help you prepare your budget and create an accurate forecast that will plant the seeds of a successful 2022.
Make use of the Historical Data
Your organization’s prior performance and historical data are pillars upon which you can build next year’s budget. You may have a vault filled with useful tools, but the value of historical data can’t be overstated. This critical information will help you better predict future performance and alert you when you may need to shift gears to drive growth. A Financial leader such as a CFO can ensure you capture the correct data.
Tap into the Power of Centralized Data
As noted, data is vital to budgeting, thus, it’s imperative that you connect the data dots. Siloed, inaccessible, or disconnected data makes it nearly impossible for businesses to properly leverage it. Centralizing data will reduce errors and provide you with an accurate picture. Connecting real time data in one location – and having easy access to it – will smooth out the rough patches in your budgeting journey.
Measure your Key Performance Indicators (“KPIs”), Gather Insights
Setting goals is essential but keeping an eye on the consistency of results can help you stay within your boundaries. These indicators should give you an accurate picture of what is draining your resources and what’s pumping oxygen into your organization. Keeping track of your KPIs will help you make smart data-driven decisions, enhance organizational performance, and guide you on how to allocate resources more effectively.
CFO experts can produce monthly financial analyses and KPI Dashboards to ensure your Cash Flow is strong.
Assess the External Factors and Build Agility
No one likes surprises when traveling. Perhaps you have forgotten to pack the essentials or learned that your luggage went to a different airport. Similarly, organizations don’t want to be blindsided by expenses or losses. It’s true that budgets are designed to keep you on the right course, but they are also living documents. If you weave flexibility into budgeting and forecasting, it will allow you to pivot when circumstances change. McKinsey’s research indicates that during the pandemic, agile organizations were the ones that adapted and outperformed competitors.
Put Financial Processes and Controls in Place
At some point during a flight, the captain may decide to put the plane on cruise control. Those in the cockpit can take a moment to enjoy the midair experience. Thanks to technology, they no longer need to be hands-on. Similarly, business leaders don’t need to always be involved in every detail. Travelers in their seats may not even be aware of this handoff – in all likelihood, the plane will still reach its destination.
Some major stressors leaders have are how to fortify and protect their fortress – both now and in the future. This can be successfully accomplished by outsourcing CFO services. This type of ‘delegation’ brings business leaders peace of mind knowing their financial processes and controls are being handled by a proficient team of financial experts. Instead of worrying about risks, they know that the CFO advisory team can improve processes, perform internal audits, and implement fraud detection controls. A bonus is that these services are not cost-prohibitive; funds that would have paid the salary of a full time CFO can be invested into the company.
Astute has helped many businesses in various sectors grow through our expert CFO services, which have deep roots in accounting and consulting expertise. We start by listening. We want to fully understand the vision for your business to ensure your financial strategies, plans, processes, and actions are in sync. Ready to get started! Contact Us today.
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