The chill in the air, the smell of brats and burgers wafting through crowded parking lots, the excitement on the painted faces of rowdy fans… it can only mean one thing: It’s time to kickoff Budget Season.
The quarterback sneak, the triple option, the end around, the hail mary and the punt – these are all moves managers make throughout the budget approval process with varying degrees of success.
What tools do you use for budgeting? Do you rely solely on Excel spreadsheets or do you use a more sophisticated budgeting software such as Microsoft’s Management Reporter or do you use a hybrid approach such as Vena Software? The advantages of going beyond Excel include the ability to manage workflow throughout the process, to make your individual budgets more consistent and structurally secure and to roll them up easier for automatic visibility to the big picture. Most companies start out using only Excel spreadsheets and eventually evolve to a more structured format.
Regardless of the software you use, your budget should typically include the following components:
(1) A schedule of dates and deadlines that clearly spells out who is responsible for what and by when.
(2) Payroll by employee including open positions and additional headcounts – this schedule should roll forward into the budget to calculate labor costs and benefits and may also be used to allocate expenses between departments.
(3) Fixed Assets and Capital Expenditures – this schedule should roll forward to the P&L for depreciation and to the Balance Sheet/Cash Flow Statement for capital expenditures.
(4) Comparisons to current year and long term plan.
(5) The aforementioned “Cash Flow Statement” should be part of your budget.
I have to get on a plane now. What other components should be built into a good budget?
The Middle Market CFO 