Benefits Of Budget Management Software 2022

Budgeting is an essential part of business and organisation finance activities. Even now, a lot of businesses still use manual processes to collect, compose, and analyse budget data. These manual processes are often low cost and easy to get started with, but they are severely limiting.

Manual processes generally take up substantial company resources and time, yet are still prone to human error. Moreover, it does not provide up-to-the-minute information that is expected in today's fast-paced business life. Storing records from manual processes on paper or in various forms of electronic documents can easily lead to data losses. That's why more and more businesses are switching to purpose-built budget management software in recent years. Such modern budget management software systems are easy to use, provide a central place of truth, and offer business insights to assist optimal decision makings.

In this blog, we will take a look at some of the key benefits of employing a modern budget management system. We will look at some examples on how they can help businesses improve budgeting process, gain efficiency and accuracy, and stay ahead of competitions.

Improved Planning Efficiency

Budget planning requires stakeholders, budget owners, and budget requesters to work together to develop appropriate targets based on company strategy and business goals, and is often an iterative process. With multiple functions and roles involved, the process can be complicated as different templates, formats, and standards are involved. This is especially so if the information is required from different disconnected places. This is where manual processes struggle, because it's hard for humans to handle collection, summary, standardisation, and revisions in large volume. Decision makers are often made to wait until a budget overview can be prepared and presented. And should changes be required, the whole manual process has to start all over again, making the whole budgeting process unnecessarily lengthy and inefficient.

Luckily, modern budgeting software systems are here to help. With purposely built software system, budget definitions are centralised and standardised, enabling the budget details to be prepared and presented in a familiar way. From the get go, budget sheet entries are much easier to summarise, compare, and understand. Budget management systems like Approvol also provide budget dashboards and reports, that draw a total picture in real-time as teams and departments build and shape their budgets. All changes required after submission are version-controlled in the system, making it simple to track the changes and their reasons.

Once an annual budget is approved, Approvol automatically analyses it and generates budget control limits based on either its departments and budget categories, or alternatively its budget line items. The budget control limits function as boundaries in the purchasing process to help identifying potential budget overruns.

With a system like Approvol, you have a central place for standardised budget information. Assisted with automation, your budget building will be much more efficient than before.

More Accurate Budgeting

Budget planning is an essential part of running a business. To run a business successfully, budgets must be accurate and meaningful. It's impossible to produce accurate budgets without knowing the requirements and the costs. For this reason, budget makers often need to refer to historic annual budgets and purchase records to understand how budgets from previous financial years performed, as well as to anticipate costs for acquiring services and goods.

Without a computerised system, it'd be rather challenging to gather such information. It's true that you can request the finance team to prepare it, but like all manual processes, there will be a lead time, and in the end the outcome will be in a fixed view, making it hard to search and look for the particular information you need.

Modern budgeting software systems are designed with easy data processing in mind. Budgets from past years budgets are presented to you simply with a click of a button. Budget figures and associated purchases records are bond together and evaluated to show you their performance. Should there be a gap between a budget and actual spending, you can drill down through various reports to determine the root cause.

With the understanding of how and why, you can make the right adjustments to improve the budget accuracy for the new year. When you need to know the pricing of goods or services, the highly customisable search engine allows you to quickly and easily find who supplied what goods at what price in the past.

With concrete and factual information in hand, budget makers are able to identify where and how to improve, and thus improving the confidence in the accuracy of their budgets.

More Effective Spending Control

One of the purposes for carrying out budgeting is to apply spending control through planning and approving expenditure items and caps upfront. However, setting up a budget is one thing but having an effective way to monitor and control spending is something else. Out-dated methods were rarely capable of providing up-to-date budget status when you need them. As such, business managers often did not know how approving of a purchase would impact the company budgets. Therefore, you could end up spending more than your originally planned, or in another word, lose control of your budget.

To eliminate such issues, modern budget management systems are designed to link budgeting and purchasing together and can easily provide real-time budget status with just a click of a button. Using such a system like Approvol, you are presented with budget caps, POs to date, and budget balance remaining to spend, all at the point you assess a new purchase request. If the new request is likely to cause budget overruns, the system will automatically issue a warning. Thus, you will know with confidence that your click of "Approve" button won't bring a negative impact to the budgets, and that everything is taking place as how they are planned for.

Keep On Track of Business Goals

For most businesses, the number 1 purpose is to generate profits. A well-made set of budgets should provide a good overview of the profit forecast at the beginning of the year. Afterwards, business managers need to monitor the budget performance, keeping eyes on the execution on both cost and income budgets, to ensure the business is on track to meet its profit target at the year end. Should any unexpected events occur either within the business or in the market, the budgets can be reviewed and revised to reflect such changes in order to stay on track to the planned targets.

It is for this purpose companies hire accountants to handle monitoring and reporting tasks. However, these are time-consuming tasks when done through manual processes. It takes a long while for the finance department to produce such reports, but as soon as they are made, fundamentally they are out-of-date.

Using a modern budgeting system such as Approvol, business managers do not need to wait for the arrival of the next monthly budgetary report from the finance team. Instead, they simply sign onto the system, at any time and from anywhere, and they can have the most up-to-date budget dashboards and reports right in front of them. The analytics give business managers a real opportunity to capture potential problems at an early stage, allowing them valuable time to make necessary adjustments in order to stay on the track to achieve the business target.

Improved Data Driven Decision Making

Senior business managers make a lot of decisions each day. Good decision making rely on good inputs. Manual systems are in no way proficient at pulling all the required inputs together for the decision makers. Making critical decisions without knowing the full picture can make you feel like walking in the dark.

Using Approvol or similar modern budgeting software, it’s easy to pull all the required information together. For a big ticket purchase or a critical budget request, all its details, comments, attachments, notes, and even audit records are presented side by side. Related orders, invoices, and budgets are all interlinked together, easily and readily accessible. All the information needed to make decisions is at one place. No more piles of paper or cumbersome spreadsheets to go through. This allows decision makers to see and understand requests clearer and quicker, freeing up more of their valuable time to focus on to the more value-adding matters.

Being able to infer from the analytics in Approvol, business managers gain a full and clear understanding on where the company stands financially at every decision point. The budgeting and forecasting tools that come with Approvol allow them to simulate and predict what the major investments and commitments would bring to the business. Guided by Approvol's insights, big business decisions can be made with full confidence.

Improved Transparency & Team Collaboration

Running your business with transparency helps you ensure that both employees' and employer's expectations are appropriately aligned and fulfilled. With clear and open information sharing, employees are less likely to make false assumptions about their tasks or the business plans. This is particularly true when it comes to budgeting.

With manual processes, information is scattered in various piles of paper and spreadsheets. There isn't a single source of truth. What follows is misunderstanding for those involved in the budget process. If the employees do not have visibility of the company's budget position and priority, it may lead to excessive non-essential budget requirements, making reviews and decision-making unnecessarily lengthy and complex. If decision makers do not have a clear and concise view of all the budget requests and status, it will be difficult for them to balance company resources across different areas, or to make big decision for signing off strategic items.

Using a modern budget system can largely improve transparency and help teams collaborate effectively. All the past and current budges are held in a same place and readily available. Once appropriate permissions are granted, from employees to directors, everyone has access to the same budget information. There is no more "oh no, we used a different budget version" scenario.

Dashboards and reports provide real-time analysis of budget performance so everyone in the business understands how well the budgets are performing. Having a clear understanding empowers people to think and to do the right things for the business. Likewise, aligning the vision will drive the effort from all teams to the same direction. As everyone works together towards the same goal, your chance of success improves dramatically.

Summary

Budgeting is one of the most important financial activities for a business. Good budgeting helps you keep spending within control, make decisions with full confidence, and ultimately achieve planned business goals. Manual budgeting process is timing consuming, hard to keep information organised, and difficult to provide up-to-date data. Modern budget management software removes the complexity of manual process, and provide an easy to use, centralised, and insightful platform for teams to collaborate efficiently on the budgeting process.

Approvol is a cloud-based solution for efficient budgeting and purchasing management. Approvol comes with flexible budget control and insightful analytics. If you are in the consideration of employing a modern budget management system for improved budgeting process, contact us today to request a demo and find out more.