According to Google dictionary, the term “budget” comes from the Old French word bougette, originally meaning pouch or wallet and then later its contents. In the mid 18th century, the United Kingdom’s Chancellor of the Exchequer was said: “to open the budget”, giving evidence that governments applied the concept of budgeting. Then, in the late 19th century, the use of the term was extended from government to private or commercial finances. If it’s been around for so long, why do people still hate doing them?
When it comes down to it, planning a business budget is not only complex and time-consuming, the process is also prone to inaccuracy. When relying on traditional budgeting methods, businesses often encounter an array of difficulties.
#1 Budgets are inefficient.
Between the need to create numerous iterations, the lengthy analysis cycles, and the resource-intensive nature, annual budgets are incredibly tedious and inefficient.
#2 Budget are inflexible.
Annual budgets are very rigid, and they can’t adjust to fluctuations in business processes, assumptions, or data. This leads to inaccuracies and a budget plan that can’t support dynamic business models.
#3 The data is unreliable.
The state of the business is constantly changing. The state of a budget can change the instant an email is sent. So when relying on data that is outdated or inaccurate, the budget quickly becomes unreliable.
#4 There is a lack of collaboration.
Due to poor data integration and poor internal collaboration, budgets often fail to take into account the needs of each specific department.
#5 They’re disjointed.
With annual budgets, there is often difficulty arriving at common semantics, and data can become siloed within operational, financial, and strategic plans.
If you are a budget owner or in finance you may have seen all or some combination of these issues throughout your careers. While no one has figured out the master key to solving each of these reasons for hating the budgeting process, there are ways to ease the pain and frustration.
Check out our on-demand webinar 5 Ways to Ease the Pain of Budgeting Season