7 Painful & Costly Budgeting Process Mistakes Your Company Is Making

7 Budgeting Mistakes Companies Are Making

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This white paper was written for CFO’s and their finance team members seeking a better

and more modern approach to company budgeting. This paper will explore the top 7

budgeting, planning & forecasting challenges that are weighing down company

performance and explore proven and practical ways to embrace technology to reduce

pain, drive change, and achieve results.

Like Pulling Teeth

7 Painful & Costly Budgeting Process

Mistakes Companies Are Making

A CFO’s Guide to Better Budgeting, Planning & Forecasting

7 Painful Budgeting Mistakes Companies Are Making 
© 2018 Corporate Renaissance Group crgroup.com/better-budgeting 
 
1 
 
 
 
 
Table of Contents 
Why Budgeting & Planning is Like Pulling Teeth .................................................................................................. 2 
Top 7 Budgeting Process Mistakes That Companies Are Making ................................................................... 3 
Mistake #1: Not Ensuring Clear Understanding of the Budgeting Process and Cycle ........................... 3 
Mistake #2: Relying on Spreadsheet Budget Templates ...............................................................................4 
Mistake #3: Limiting Access & Collaboration to Budgets .............................................................................. 6 
Mistake #4: Relying Purely on Dollar-Based Templates................................................................................. 7 
Mistake #5: Not Synchronizing New Accounts or Cost Categories ............................................................ 9 
Mistake #6: Manual Reporting & Presentations ............................................................................................... 9 
Mistake #7: Not Re-Forecasting Throughout the Year ................................................................................. 11 
Conclusion ..................................................................................................................................................................... 12 
Explore Solutions for Better, Faster & Ongoing Budgeting, Planning & Forecasting ............................... 12 
 
 
 
About Corporate Renaissance Group 
 
Since 1989, Corporate Renaissance Group (CRGroup) has been providing expert financial consulting 
and leading business platforms to help companies grow. We are a group of financial, technical, and 
business professionals that committed to delivering end-to-end business processes and systems that 
transform vital corporate processes; including, enterprise resource planning, budgeting & planning, 
corporate performance management, business intelligence, customer relationship management, 
productivity, and sharing & collaboration. As a certified partner of leading business systems that 
include Microsoft® Dynamics™, SharePoint™, BOARD™, Adaptive Insights™, Tableau™, and 
Rapidstart™, we deploy, configure and support leading systems that drive results.  
 
Learn more at www.crgroup.com  
 
 
 
Like Pulling Teeth 
7 Painful & Costly Budgeting Process Mistakes Your Company Is Making  
A CFO’s Guide to Better Budgeting, Planning & Forecasting 

7 Painful Budgeting Mistakes Companies Are Making

Why Budgeting & Planning is Like Pulling Teeth

like pulling teeth: idiom. 1 Said

of something that is especially

difficult, tedious, requires an

extreme amount of effort, or is

done in the most difficult or

unpleasant way possible.

Without fail, any time we meet with a new

finance manager or CFO and ask, ‘are you

happy with your company’s budgeting

process?’ we get an array of facial

expressions and sighs - none of them good.

The reality is that every company in every

industry has to budget, and yet many are

not doing it properly or with any degree of

ease. Some will likely describe their

corporate budgeting, planning, and

forecasting processes to being about as

pleasant as a trip to the dentist and equate

gathering data from contributors as being

an exercise in pulling teeth.

Despite the advances in technology and

accessibility of data, CFO’s are still

struggling to bring everything together into

one cohesive and ongoing process. In fact,

according to a 2015 report from Grant

Thornton LLP and the American

Productivity and Quality Center (APQC),

only 37% of CFO’s surveyed say their

company’s approach to annual budgeting is

like pulling teeth. (n.d.) Farlex Dictionary of Idioms. (2015)

valuable

and even they admit that

improvements are needed. In order to

maintain board, investor, and stakeholder

confidence and provide actionable insight

to company managers, there is an

increased demand for CFO’s and financial

managers to deliver fast, accurate, and

valuable financial information that can be

trusted.

Today’s financial leaders need to

take control of the entire

budgeting process and invest in

reducing time-consuming

administrative tasks like gathering

data, consolidation, and

reconciliation, so that more time

can be spent on strategic

activities.

After more than 28 years working with

companies across the globe to diagnose

and optimize financial planning and analysis

(FP&A) processes and platforms, we can tell

you that these pain-points aren’t new and

they won’t go away on their own. There are

7 major mistakes that we have identified as

the root causes of budgeting-pain and

these mistakes are preventing companies

from providing real-time perspective on

business trends and drivers of performance.

Financial Planning and Analysis Influencing Corporate Performance with

Stellar Processes, People, and Technology. 2015 survey by Grant Thornton

LLP and the American Productivity and Quality Center (APQC)

7 Budgeting Mistakes Companies Are Making

Top 7 Budgeting Process Mistakes That

Companies Are Making

Mistake #1: Not Ensuring Clear Understanding of the

Budgeting Process and Cycle

Budgeting & planning cannot begin without

data collected from multiple people and

systems in the company. Even though

company budgeting happens around the

same time each and every year, we are often

surprised at the level of disconnect between

management, finance, budget managers, and

their staff surrounding the budget cycle,

requirements, milestones, and tasks. It is just

too easy in a lot of companies to delay the

internal planning processes when competing

priorities come up or for managers to get

confused about what they need to submit and

when. This mistake is often the result of

unclear expectations of roles, general

misunderstanding of deadlines, and a

historical lack of information and enforcement

from finance managers. Proper planning and

disciplined adherence to deadlines can help

condition a well-oiled budgeting & planning

machine and avoid this costly error.

So how do we avoid this mistake to ensure all

contributors know what they have to do and

when?

As a best practice, planning

must precede budgeting.

The CEO, board members, and

stakeholders should provide

clear guidelines on what is

expected from the enterprise in

terms of revenues as well as

costs.

For example, it could be that the maximum

allowable salary amount cannot exceed by

more than 4% next year – sometimes called a

top down target.

Once clear and actionable expectations and

measures have been allocated and defined at

the company level, proper communication is

needed to ensure they are cascaded and

disseminated down into the organization and

across business units. CFO’s and finance

teams should create a clear and consistent

communications plan that defines measures

and links the strategic plan to the operational

budget. This plan should outline assumptions,

necessary task lists with timelines, and define

the roles, responsibilities and delegation of

authority needed to execute the plan. This

task list is commonly referred to as the

“workflow” and/or approval process.

7 Painful Budgeting Mistakes Companies Are Making

A picture is worth a thousand words. Create a

FP&A Workflow Diagram to Ensure Complete

Understanding of Processes Across the

Organization. Top performing organizations

see the value in visuals and augment their

communication with a clear workflow diagram

showing milestones, deadlines, approval

steps, and any other key details that will help

users across the company understand and

embrace the budgeting process.

Figure 1 – Sample sales budget process flow diagram in BOARD.

Mistake #2: Relying on Spreadsheet Budget Templates

Administering and managing budget workbooks and Excel® spreadsheets is inefficient, painfully

time consuming, and often riddled with errors, no matter how well budgeting templates are

designed. And yet, despite the downfalls of this legacy process, studies show that 95% of companies

are still relying on spreadsheets in one form or other for budgeting and planning, with 39% of

companies using spreadsheets exclusively.

Although spreadsheets are relatively simple to use,

fast, and inexpensive, they are maintenance-

intensive, difficult to access, slow to consolidate,

inconsistent, prone to user-errors, and offer low

data security, especially if multiple versions are

flying back and forth in emails. Anyone who has

participated in the corporate budgeting process in

Excel is all too familiar with the myriad of templates

that are emailed and distributed around to the

company with the intention of smoothly gathering

the data that the company relies on for planning.

The reality, however, is that far too much time is

spent creating and maintaining these templates,

and they are often misused, resulting in even more time spent fixing and compiling data.

Figure 2 - 95% of organizations are still relying on

spreadsheets for budgeting and planning.

7 Painful Budgeting Mistakes Companies Are Making

Challenges with using spreadsheets for budgeting and planning:

Using spreadsheets for budgeting templates:

Too much time is spent by companies administering spreadsheet templates and maintaining

them. Budgeting templates require finance managers to meticulously create formulas, link

workbooks, and build-out formats for each division or department. If this was a one-time

exercise, it might work, but as business dynamics changes, so must these budgeting

templates, resulting in even more time spent adjusting and maintaining them. Changing

templates and models in spreadsheets is not an easy feat, especially when different

workbooks are linked. Adjustments often cause errors which can be difficult and time-

consuming to find.

Spreadsheet templates are often misused or altered. Not everyone is a master in Excel, and

even if they are, budget managers or contributors who are filling out templates with budget

data may overwrite formulas prepared by the finance team with hardcoded values or insert

rows and columns which inadvertently break linkages in the workbook. These alterations

eliminate any chance of standardization and lead to company finance leaders receiving

different formats and versions of data that might not be useful. Even if spreadsheets editing

rules are applied, users might find themselves re-creating the template and altering to suit

their own data. To make matters worse, contributors often save multiple versions of their

data, increasing the risk that the wrong data is being submitted.

Compiling spreadsheet budget data:

Finance teams find it time-consuming and frustrating to compile and reconcile multiple

templates. This is especially true if templates have been misused or altered by contributors,

as they often are. As contributors and budget managers submit their templates, finance

teams find themselves drowning in data.

For smaller companies, this spreadsheet-pain can be somewhat bearable, but workbook-based

budget models do not scale. The entire exercise of collecting to compiling can take weeks or even

months from start to finish, resulting in an enormous amount of administrative time, degradation of

data, and overall lack of confidence in the entire process. As a company grows in complexity and

size, a spreadsheet-based budgeting process is not a smart business practice and entirely

unsustainable.

7 Painful Budgeting Mistakes Companies Are Making

So what is the answer?

Excel was built for many things, but

sophisticated and fast company budgeting is

not one of them. There are readily available

budgeting software platforms and software-

as-a-service (SAAS) solutions that allow for

the creation of structured budgeting and

forecasting templates that can not only

incorporate custom data fields and inputs, but

can also be re-used without re-creating. Best

of all, because budget models are

automatically compiled into one system, all

data captured automatically updates an

underlying database.

The pain of having to recreate/copy the Excel

workbooks for every different division,

department, and or program each year is

easily addressed by “multi-dimensionality” of

budgeting software templates, something that

is not offered in “flat” spreadsheets.

Companies can define templates to capture

different data, for example, by Account by

Month by Department. This means that

contributors are actually using the same

template and the software is applying filters or

security in the background to control user

access and where the data is stored (e.g.

division/department, account, etc.) in the

underlying database.

Overall, spreadsheets are not meant for

company budgeting and planning and

software exists that was built exactly for this

purpose. Not sure which software solution is

right for your company? Click here to complete

CRGroup’s complimentary budgeting software

needs assessment

Mistake #3: Limiting Access & Collaboration to Budgets

The multi-contributor challenge. Budgeting is not done in a vacuum. It requires input, data, and

collaboration across the entire organization in a timely manner in order to be valuable. As many

financial leaders will attest, collecting data from multiple contributors is difficult, time-consuming,

and typically still results in each budget being created alone, and with no consideration of the

bigger picture. Modern companies have leaders and staff who are on the go. As such, access to

core business systems and processes from anywhere is a must.

Ideally, finance leaders should make it easy and accessible for budget contributors to edit,

collaborate and submit budgets on time and from anywhere. Even if a company is not using online

software for budgeting, it might still be possible to enable access and collaboration.

7 Painful Budgeting Mistakes Companies Are Making

How organizations can facilitate collaboration & access to budget templates:

Internal network upload: One method to address the access and collaboration challenge

is to place budget workbooks on a shared drive on the company’s internal network so that

everyone has access to it at any point in time, rather than sending the workbook by email.

This still requires multiple versions of workbooks to be saved and added but it limits the

amount of emailing needed and can facilitate access to team budgets.

Online document management: Another method is to upload budgeting workbooks to

a file sharing or document management platform such as Microsoft® SharePoint™. This

would allow multiple individuals to access and edit the same workbook at the same time or

“checkout” the workbook if they do not want others to make changes while they are working

on it. File sharing platforms often come with configurable security and access roles, ensuring

select users or groups can only see/access their budgets. Using platforms like SharePoint,

users can also open workbooks in a web browser, meaning they do not even require

Office™ (Excel) installed on their machines or devices.

Using budgeting software to enable easy access and real-time collaboration:

The easiest way to enable access and collaboration is to use a budgeting solution designed

for that purpose. Companies can find budgeting systems that provide a combination of

client installation (software installed on workstation) or in the cloud (a growing trend), web

access (online), Excel integration (for offline viewing and data collection), and mobile access.

This allows users to access updated budgets, collaborate and edit as needed. Just this basic

functionality can make a world of difference. Most modern budget platforms

collect/aggregate budget data in real-time, so that management can instantaneously see the

high-level output.

Mistake #4: Relying Purely on Dollar-Based Templates

To keep the process simple for finance managers, budget managers and contributors, financial

leaders often create budget templates that request dollar-only data.

Problems with collecting dollar-only data:

1. The first problem with this is that data on revenues and expenses alone provide little to no

insight and does not provide sufficient insight for improved planning.

7 Painful Budgeting Mistakes Companies Are Making

2. The second problem is that the process which was designed to alleviate workloads inherently

creates more work and even more disparity in the process. Often times, to get the requested

dollar values, budget managers perform separate calculations using underlying units and

rates. These separate calculations are often performed using yet another workbook that the

contributor builds and maintains, creating even more segregated planning and

administrative work.

A solution to address this is to make simple changes to your templates to allow for inputting units

and rates along with a line for a flat dollar amount for each expense. While this approach is not

overly sophisticated, making that small change can make a world of difference for budget managers

as they can be prompted to think through and prepare their budget while also being granted the

ability to show their work. This solution does not apply to all revenues and expenses since some are

much more complex and do require a detailed schedule; however, providing a more workable

standard format can alleviate a series of additional workbooks that contributors have to maintain

each year.

A good exercise is to review all detailed schedules/workbooks that

Budget Managers prepare and maintain each year, and see if there is

a common set of templates that can be created.

For example, the finance team can create a

travel expense template, which has a set of

standard rates for airfare, accommodations,

and per diems. The budget manager or

contributor can then input destination,

number of nights, and number of individuals

and the template would calculate the

expenses for them. These types of driver-

based templates can be easily

followed/understood and can be used to

make updates to the underlying drivers rather

than having to recalculate everything.

Could this be accomplished in Excel?

Certainly; however, on top of the

disadvantages already outlined, these

spreadsheets are not very conducive to do

what is called true “driver based” budgeting.

This means there is no linkage across revenue

models and cost models. An example would

be that a certain percentage growth

necessitates growth in some cost items that

are not in the same division or cost center.

This situation arises more frequently that one

thinks and is difficult if not impossible to

model in distributed Excel workbooks.

Most modern budgeting software solutions

allow setting up calculation-driven templates

with key unit-based rates, where the

budgeted financials are driven by volumetrics

(e.g. # of transactions, # of hours, # of

deliverables, etc.).

7 Painful Budgeting Mistakes Companies Are Making

Mistake #5: Not Synchronizing New Accounts or Cost

Categories

Accounts used in the budget model are not

synchronized with the accounting system.

Year to year, organizations typically add a

series of new accounts in their accounting

systems. As a result, the finance team has to

translate these new accounts into all

budgeting templates and ensure these are

properly linked. If a company is using Excel,

this can be a painful process and since this is

also a manual process, there is also a risk that

an account will be missed entirely and

potentially not budgeted for.

There are not a lot of options for fixing this

using a spreadsheet-based model. In some

cases, moving to budgeting at the “Account

Category” level (e.g. Telecommunications)

rather than the account level (e.g. Phone,

Internet) can address this to some degree.

The issue is that budget is no longer tracked

at the account level and thus cannot be used

for comparing with actuals at the account

level. An organization has to ask, ‘at what

level of detail do we need our budget

managers to plan and track (what we hold

them accountable for)?’ If you need them to

plan and track at that detailed level, then

there is no getting away from the challenge of

having to manually update the workbooks

with new accounts every year. Also, if

reporting is required at the detailed chart of

accounts (COA) rather than account

categories, then you have no option here as

well.

For organizations that are growing or are

rather large/complex, this manual process is

not sustainable. Budgeting software solutions

can dynamically (using ranges) link to the

COA structure and can provide integration

options to the Accounting/ERP system. A

routine “pull” of Chart of Accounts into the

budgeting solution will ensure all accounts are

available for budgeting, as well as Trial

Balances and Transactions are up-to-date for

variance analysis and comparative reporting.

Mistake #6: Manual Reporting & Presentations

Constantly Creating (and Recreating) budget reports and presentations is an onerous but necessary

task for the FP&A teams. Board members, shareholders, senior management and other stakeholders

require budget and planning reports that they can not only understand, but can provide an

accurate and timely picture of company financial health. These reports are usually the responsibility

of the finance team and are a lengthy exercise. Pulling together and compiling the data, formatting

numbers into charts, and pasting data into Word® documents and PowerPoint® presentations is

incredibly time consuming and non-value added for even the most experienced Microsoft Office

users.

7 Painful Budgeting Mistakes Companies Are Making

In almost all cases, after the presentations and reports are completed, there is requirement for

updates and scenarios, meaning the entire process of updating the underlying budget data and

re-creating charts and reports must start from scratch.

For years, Excel has been the primary tool used by many businesses to turn tables into visuals.

Spreadsheets are relatively easy to use and contain features for easy chart creation; however, cannot

intelligently process large volumes of data and require a significant amount of manual work to

produce one-off charts. Data stored in Excel and shared also does not provide the highest level of

security, tables often contain static data that has an expiry date (becomes quickly outdated), and the

integrity of the data can be a concern as it can be overwritten or formulas can be broken. The next

best option is to employ expert analysts or IT folks to create custom business analysis applications

and algorithms– a very lengthy and expensive solution not practical for small and medium-sized

companies.

Commonly used ways of compiling budget reports & presentations using Office:

Word and PowerPoint do allow for linking to an underlying Excel data file. This is a great feature of

the Office suite that makes it easier for finance to update various presentations when the underlying

data file is updated. This functionality has been around for a while and is commonly used to reduce

the time and work needed to produce essential reports. There are also great PowerPoint add-on

solutions like Markido® Engage™, which can automatically link presentations and values to Excel

data sources.

In reality, however, this never goes as smoothly as one would hope. Just like budget consolidation is

broken if templates are altered, any Word or PowerPoint links are broken if the underlying Excel

document is changed.

The ideal state is for companies to spend less time compiling budget

data and reports and more time on value-added activities like trend

analysis and insights.

To accomplish this, companies need one single source of budget data that can feed real-time

information into dynamic reports, useful presentations, and insightful visuals. For proper data

consolidation and reporting, modern businesses require the use of technology. While there are

budget software solutions available on the market that can provide either budgeting centralization

or reporting/business intelligence, there are more and more solutions available that integrate

7 Painful Budgeting Mistakes Companies Are Making

budgeting and reporting into a central corporate performance management (CPM) platform. In

well-designed CPM platforms, the budget and reporting data model is entirely integrated, meaning

as soon as data is updated at the detailed level, everything built off of that (reports, charts, and

presentations) is automatically updated. Robust CPM platforms also beyond budgeting and

reporting, allowing for dash boarding, scorecards, strategy maps, and analytics.

Mistake #7: Not Re-Forecasting Throughout the Year

Companies that rely on annual budgets alone,

risk identifying key trends that could lead to

better decision making and business results.

A classic problem with completing an annual

budget is that it quickly loses accuracy as the

year progresses.

Assumptions that are made at the beginning

of the year are typically not correct in the

middle of the year. There is growing evidence

that even the most carefully crafted budgets

become obsolete within three to six months.

This is not a reflection of the people involved

in creating the budget, but of the inevitable

and real changes in a company’s micro and

macro environment. For Canadian firms, for

instance, it might be because exchange rates

change significantly which then impact

revenues in export markets and conversion

from that country’s currency to CDN.

Too many companies fail to supplement the

annual budget with forecasting, with less than

50 percent currently practice continuous

planning and adjust resource allocations in

response to changing conditions

Financial Planning and Analysis Influencing Corporate Performance with

Stellar Processes, People, and Technology. 2015 survey by Grant Thornton

LLP and the American Productivity and Quality Center (APQC)

While not much can be done about it (even if

a company practices hedging), best practice

suggests that financial leaders re-evaluate

their annual budgeting model and instead,

implement quarterly reforecasting either up to

the end of the fiscal year (meaning a Q1

forecast for Q2, Q3 and Q4) or using a four

(or five) quarters rolling forecast where every

quarter, the company adjusts the last quarter’s

forecast and extends it to one more quarter.

An additional benefit of the rolling forecast

concept is that the third quarter rolling

forecast actually forms a solid basis for the

next fiscal year’s base budget – thus

streamlining the entire process.

The idea of going through the forecasting

exercise quarterly might seem like a lot,

considering most organizations struggle to

collect and consolidate the data and forecasts

from contributors on an annual basis;

however, business systems and budgeting

platforms exist for this reason. By

implementing modern budgeting and

forecasting software throughout the company,

contributors will have instant access to

incorporate rolling forecasts and make better

decisions.

7 Budgeting Mistakes Companies Are Making

Conclusion

Company budgeting & planning shouldn’t be painful and collecting and compiling budget data

doesn’t have to be like pulling teeth. For most companies, spreadsheet-based budgeting is more of

a handicap than a business tool, resulting in an unacceptable amount of wasted time, lengthy

budgeting cycles, outdated data, and frustrated contributors who cannot access or collaborate on

plans. However, tremendous strides have been made in world of budgeting & planning software.

Cost effective and scaleable solutions are now available to suit any company size or level of

budgeting complexity. These solutions are built for budgeting and are dedicated to taking the best

of Excel with the centralization and convenience of online access with corresponding security. Just

like all business processes must evolve to become streamlined and automated, so should the

company’s budgeting process.

Experts in Budgeting, Forecasting Corporate Performance

Management and Business Intelligence

If you would like to learn more about finding the right budgeting

solution for your company, contact us.

www.crgroup.com | 613.232.4295 | [email protected]

Explore Solutions for Better, Faster & Ongoing

Budgeting, Planning & Forecasting

Learn more at: crgroup.com/better-budgeting