By Alan Hart
In the first installment of this article, I wrote:
If every iteration of the budget requires many hours or even days of work to recompile the budget and its derived forecasted reports and financial statements, you are not practicing Lean Budgeting!
If your budget model is overly complex and you’re using spreadsheets or even purpose designed software with spreadsheet-like modeling, every little change requires hours or days of programming, troubleshooting errors (those detected) is a major and frustrating, possibly futile undertaking and each time you need to produce a slightly different version of the budget or do a quick what-if analysis it takes hours or days to deliver – you need to implement a Lean Budget. I’m willing to speculate that many organizations without proper planning and budgeting tools simply don’t perform the required number of iterations or what-if analyses for the reasons above.
Another characteristic of a “Non-Lean” budget process is the limited or lack of proper collaboration among budget preparation participants across the enterprise. This is where consolidation of disparate sets of budget data (worksheets) becomes cumbersome, time consuming and often error prone. This in turn discourages performing adequate iterations of the budgets and testing various scenarios using what-if analysis.
These companies must realize they need to transform this process or they will lose their competitive advantage and experience shrinking market share and deteriorating financial health. Sadly, some of them will ultimately fail.
Going Lean means that all waste must be identified and eliminated. This typically starts in manufacturing and other operational areas of the company but must extend to all functions of the enterprise, including marketing, sales, finance and accounting. We saw that Lean also very much applies to non-manufacturers and even companies that do not buy, store and sell inventory.
How can waste be eliminated?
To practice Lean Planning, Budgeting and Analytics, you should implement a process supported by a software solution designed for such lean and streamlined operations.
I’ve been fortunate to work with Budget Maestro from Centage Corporation. To me, this is the ultimate Lean Planning, Budgeting, Re-forecasting and Analysis system, especially appealing for SMBs (Small and Medium Size Businesses).
I particularly like that Budget Maestro is delivered (either on premises or in the Cloud) as a turn-key, self-serve solution. This means that all business logic and accounting rules are already built into the solution and there is absolutely no programming needed when implementing the system or when making changes to the budget model. With Budget Maestro there are:
- No formulas
- No links
- No macros
- No other custom programming
- No expensive external consulting work
Not only can you implement this system in days or weeks instead of the usual months or years, you can maintain the system in house, and as stated above, with no or minimal help from outside consultants, while delivering the exact, up-to-date data that management needs, regularly, consistently and quickly. This means that data can be immediately evaluated and decisions made in response to current financial events or anticipated results as communicated by future-period forecasted financial statements and other reports.
How Lean Accounting and Go to the full article.
Source:: Business 2 Community