We all know that spreadsheets can be very useful, but they are not the right tool for everything. Many businesses have counted on spreadsheets for financial budgeting, which works fine for simple budgets with only a few contributors. But as your budgeting process expands and becomes more complex, spreadsheet-based budgets become significantly harder to work with. Here we explore five significant challenges that occur when working with spreadsheet budgets.
As your budget process grows, using spreadsheet-based budgeting becomes more complicated. You end up with multiple workbooks being consolidated from other workbooks, with complex formulas and calculations that can break with one copy/paste error. This process makes it hard to keep your budget up to date and keeping your spreadsheets accurate.
Takes Excessive Time
When creating a budget, you spend a lot of time getting everything compiled, consolidated, and coordinated. Some CFO’s have reported spending more than 250 hours just on the budget process alone. Once a budget is created, if there are any changes needed, it adds additional time to make sure that everything gets updated and consolidated again. Some budgeting tools are not as time-consuming, and selecting the right solution for your company will save not only time but also money.
No Collaborative Communication
When running a business, there are often several departments that all need to have funds allocated to their specific budget. When starting the budget process, you have to get input from budget creators, contributors, and approvers, and then compile everything. Communicating between different departments can be difficult if you do not have the right tools in place. Not having a solution that helps your team collaborate makes it more challenging to reach the ultimate goal, which is a completed budget that doesn’t cause dread just thinking about going into budgeting season.
Having several departments with different budget requirements often means using multiple excel documents. This can cause issues with changes to formulas, changes to formats, and outdated data. As a result, your consolidated budget may be incorrect – without anyone actually being aware of the issue. You may also find that older copies of the spreadsheets you are working from get used – and now you are basing your budget on an amount that does not represent your actual financial position.
With all the problems that come into play with this type of budgeting, the biggest would be the cost that it brings. Time is money, and the labor costs associated with constantly correcting budgets, manually consolidating contributor information, or chasing down errors show how inefficient this process can be. It also takes focus away from other projects – potentially causing hidden delays in other critical business areas. Most companies don’t realize how much efficiency they lose through the budgeting grind.
There are several other methods to better budgeting that can save your company time and money. Spreadsheet-based budgeting is still commonplace. It’s how many companies handle their budget process. But just as everything else, technology changes, and so do best practices. Using newer, updated methods can help save time and money and make it easier to get through the budgeting process with accurate budgets and far less stress.