Is Your Budget Bar Too Low?
In our recent study, we were surprised that more than three-quarters of companies gave themselves an A or B for overall budget effectiveness.
Previous article in this series: Over Your Business Budget? You’re Not Alone.
In our State of Corporate Budget 2018 survey, we asked nearly 250 business leaders how they would grade their company’s budgeting process.
The Larger the Company, the Worse the Grade
We found that larger companies tended to be more critical of their ability to manage budgets effectively, with 31% of large companies giving themselves a C or below, compared to 16% of companies with fewer than 100 employees.
Center Team Take
We were surprised by how many companies gave themselves positive grades. Our guess is that most people think of budgeting like dental exams—they dread having to do it but know it must be done. The grades may also reflect some complacency. Many who graded their companies an A or B also said that they went over budget at least sometimes. | Heather Singh, CMO
The Time Crunch
As to why companies felt they were doing an average job or worse, many of their reasons were time related.
- Too busy with other mission-critical items: 38%
- Process too labor- and time-intensive: 34%
- Lack of visibility: 34%
- Budget continues to spiral out of control with no plan to fix: 15%
- No formal budgeting process in place: 11%
- Other: 17%
It’s clear that budgeting is widely perceived as a manual, time-intensive process, yet evolving it is not a high priority.
Center Team Take
Note that those who believe their process is broken imply that the reason is lack of time (38% too busy with other things and 34% too time intensive). This is likely due to the time it takes to go through the process in a finance-centric fashion. The ideal process allows all constituents to make strategic changes in real time, without waiting for the finance department to control the exercise, which often results in multiple days of lag time for every iteration. | Jeff Drummond, VP of Finance and Accounting
TO THE POINT
77% of the companies we surveyed gave themselves an A or B for overall budget effectiveness, even though a healthy majority of them go over budget at least sometimes.
The next post in this series is Are Manual Processes Slowing You Down?