It seems that people never like working on corporate budgets. In fact, the term tends to have a negative connotation and is almost always followed with a loud sigh of desperation. Never fear! I have three keys to easy budgeting and all of them already exist in your organization! In just ten minutes, you can have a budget plan to present to your boss tomorrow morning that will look like you worked all night.
Here are the 3 keys to easy budgeting:
- Chart of Accounts
- Organizational Chart
- Budget Ownership & Accountability
The Chart of Accounts is your list of expenses. Go down the list and you shouldn’t have any unexpected hiccups. If your Chart of Accounts is well-designed and laid out to match your cost pools and allocations, then calculating your rates and developing your pricing will be easier, too.
The Organizational Chart lists the managers and supervisors – the same people who are budget owners and approve expenses. Get them involved in the process. Users of a system have valuable input and will take ownership if they believe they are involved.
You know who the budget owners are, now give them feedback in the form of monthly reports and hold them accountable. Have a system for explaining variances and require a written response for anything +/- 5%. You may go as far as incorporating corrective action plans for variances greater than +/- 10% or that persist for two or months.