As a finance professional, you know that the best budgets are based data from across the company’s departments and subsidiaries. Collaboration and insight are two of the most important factors in the budget process. This is not breaking news.
Unfortunately, not all other departments within the company understand this. Department managers are unsure of why they must spend valuable time in a busy workday to submit data.
the office of finance is met with delay, hesitation or silence, no data and an unreliable budget.
In this article, we will look at the 5 obstacles that stand in the way of a great collaboration in the budget process – and give you five solutions.
Obstacle 1: The titan tsunami of data
Each day the amount of data grows. Every product launch, employee, law or process generates its own pile of data.
This tsunami of data makes it harder for the office of finance to collect, review and understand the company’s data.
At the same time, employees from all corners of the company have a hard time figuring out what information they should summit to the budget, forecasting and planning process.
The solution: Support and educate of the finance function
Since financial data is the heart of every successful organization, the leadership should allocate resources to support the finance function to handle the growing data amount.
This means having tools and training available which help the finance function collect data and develop suggestions for action.
Obstacle 2: Uncertainly about how to handle data
In ambitious companies, managers ask questions like
– When should the data be shared and how?
– And how do we ensure confidentiality?
It is natural that all parties want to know how to share financial and non-financial knowledge. If this process is unclear or cumbersome, the collaboration slows down.
The solution: Knowledge sharing with peers is the key
CFO’s need to look outside their company and discuss with co-workers from similar industries to find ways to improve work methods and data automation.
By introducing and mastering such initiatives the finance function creates trust to all parties involved and to the budget process itself.
Obstacle 3: Terror of the zero errors
Let’s face it. Being responsible for a set of numbers is always a bit scary.
No matter how much effort and time you put into generating them, there’s often still a tiny voice inside your head questioning if the numbers are incomplete or unprecise?
The reality is that the world is changing so fast that it is inevitable that some of the numbers only are relevant in a short period of time.
This is why managers can be reluctant with submitting and generating data, if the company does not have a general accept of change and that changing winds effect the numbers’ validity.
The solution: Be encouraging and constructive
You can adjust the culture of the company by encouraging departments to deliver data.
You do so by asking constructive questions like
“Do we understand why some of our KPIs are fluctuating?”
“To what degree do we accept or punish the variation of the numbers we receive from the managers?”
“Do we provide the finance function with the tools needed to understand the numbers better?”
Obstacle 4: Do they understand how data becomes actions?
Do your department managers truly understand the relationship between their submitted data and how these data sets actions in motion afterwards?
If this process is unclear, motivation to submit data drops and so does the following responsibility.
The solution: Sit down and explain the process
The finance function has to dedicate time to sit down with department managers and explain how their submitted data effects the company’s overall financial and strategic condition.
This must be supported by senior management, so all departments know how important this process is and why the collaboration should be the best it can be.
Obstacle 5: Office politics and assumptions
With budgets, forecasting and planning companies can choose what departments and initiatives need extra funding or has to be shut down.
Some employees get disappointed when their project receives fewer funds which again can make them question the decision process and the data based on the decision.
Especially those who think decisions are made from personal standpoints and not business perspectives will be uncooperative.
The solution: Be as transparent like glass
All planning processes can be improved. You reduce the number of decisions which can be seen as political subjective by actively involving coworkers in the planning process.
By shedding light upon how department’s numbers affect projects (and the overall plans of the company) you enhance the will to corporate.
When a company build a strong foundation to corporate though the entire budget process, you achieve better budgets, better planning – and in best case – better results.
We know all companies are different, but we hope these tips has been usefull.
If you want to know more about great budgeting processes, please contact us here.