Most competent budget holders utilise their own “homegrown” spreadsheets to manage their corporate budgets, project-related spend and “other” spend.
The budget holders have their own spend analysis to justify and track spend that pertains to their departments. For example, a marketing spreadsheet will have a completely different set of spend analysis from IT’s spreadsheet. The level of analysis and the processes that surround it (e.g. the capturing of costs) will also reflect the diligence and aptitude of the individual budget holder and the time he/she can or is prepared to invest in maintaining the budget.
Spreadsheets have one further critical component. They capture the anticipated future costs for both recurring spend and more important, planned project spend as far into the future are they can plan. Bottom line, these spreadsheets are the only tool used by competent budget holders to manage their corporate budgets and deliver maximum value to the business from them spend.
Paradoxically, the finance department is either unaware of or not interested in this financial information. From finance’s perspective, the budget holders’ spreadsheets are always wrong. The problem is that these spreadsheets take no account of the correct financial treatment of purchases (accruals, amortisation, depreciation and cross department billing) and therefore do not reflect the same information as the management accounts, when they are eventually delivered.
The result is the business remains dependant on finance management reports that are 5 to 15 days out of date on arrival, utilising spend analysis that is completely different from the budget holders’ spreadsheets (making reconciliations difficult if not impossible) and totally ignore the information of planned future spend.
At the same time, the budget holder is forced to live in the dark, with no access to information on their suppliers, current or historic purchase information and real-time budget information because accounting / ERP software is incapable of providing this information in real time.
Budget Holder Management software is the glue that resolves these limitations to deliver a single real-time view of the financial truth and incorporating future planned spend into the financial management of the business.
It enables the next generation of financial management, being the ability to move financial management from an historic reporting activity that delivers little value to the people that spend the money, to a real-time view of the truth - where the business is right now and where it expects to be as far into the future as the budget holders plan.
Budget Holder Management is delivered through extending the capabilities of your existing accounting ERP software through tight real time integration and the automation of the entire purchasing process.
It enables the budget holders to use their own analysis criteria that is hard-wired to the correct general ledger account. Every purchase is captured, undertakes the correct approval process and the correct financial analysis treatment. Receipting against orders is optional, but a fully automated 3-way match to deliver “straight through” invoice processing with zero touch is available.
Every planned project can be captured in terms of cost and timescale and once approved, creates the budget to manage the spend and identify likely savings and cost overrun as they take place.
In Budget Holder Management software, all invoices are digitally captured, removing all of the paper from the process, and providing everyone who needs to know with full access to all supplier spend information in real time. The time savings are huge, but it is the ability to deliver a single real-time view of the truth on past, present and planned future spend that is transformational.
It heralds the next generation of financial management for every size of business. It is available today and it is only a matter of time before every finance department moves their organisation out of the dark ages.
The only question that remains is whether the initiative is driven by enlightened finance managers or demanded by the board of directors (budget holders) once they discover what is possible.
Either way, the decision to make the change is almost always a unanimous board decision, simply because it is fundamentally a far better way of working where everyone wins.
For more information, please contact us at: www.compleatsoftware.com.
If you are still interested in learning how to mitigate the disconnect between budget holders and finance teams as well as how Budget Holder Management can help you, then check out our free white paper below.