When is the right time to drop spreadsheets for budgeting? This article will help you, as we share 8 challenges that companies meet over and over in spreadsheet budgeting.
I love spreadsheets! An easy-accessible tool for simple tasks in the finance department, such as special reconciliations, ad-hoc data presentations, and prototypes.
However, Excel and other spreadsheets have limitations – especially when budgeting.
Many of the companies that we are in contact with have started budgeting in spreadsheets with the best of intentions – it seemed to be the fastest and cheapest solution. But over time the spreadsheets and the business tend to move in different directions, which makes the budgeting process difficult, incorrect, and insufficient.
In this article, I have taken eight of the most heard statements from companies contemplating a switch from spreadsheets to a dedicated budget solution. Maybe you recognize some of them?
1. When a DIY project ends up with you having to do everything yourself
“It is only me or a few other persons who understand the links, formulas, calculations, macros, and logics behind the structure of the spreadsheet. Consequently, it always rests on me to make changes in the budgets.”
2. When the spreadsheet master leaves
“We cannot develop or change our budget model, since the person who set up the spreadsheets has left. Either we must build something new or invest in a tool to do the job.”
3. When it is all in the detail (which is not an option)
“It is impossible for us to budget at the detail level we require, and it reduces our possibilities for financial planning.”
4. Once the budget follow-up is not worthwhile
“We spend too much time monitoring realised figures compared to the budget, as we ourselves draw data about customers and products from the ERP system.”
5. When consolidating a patchwork of spreadsheets
“Today, we budget in so many spreadsheets that I spend most of the autumn consolidating the budgets into one.“
6. When errors accumulate in the spreadsheets
“Our budgets are drawn up with errors, and therefore hardly any in the organisation trust them.”
7. When annual budgets have an expiration date
“Our annual budget is insufficient. We need to follow our business closely and plan successively with rolling budgets and forecasts.”
8. Once the budget process has gotten off track
“Our budgeting process is too long. Calendar-wise is extends over 3-4 months, but our ambition is to do it in one month.”
If you recognise just one of the challenges in your budgeting process, you will most likely be able to benefit from investing in a budgeting tool.