Budgeting with many budget owners, without emailing spreadsheets
When ten or fifty managers each budget their part, the budget process becomes a logistics problem. What takes time is rarely the numbers, but keeping versions together, chasing deadlines and adding everything up into a budget management can decide on.
In a company with one finance lead and a CEO, the budget can be built in a spreadsheet in an afternoon. When the business has many departments, stores, projects or companies, the budget has to come from the people who run them, and that is when spreadsheets start going around. Each manager gets a tab, fills it in, sends it back, and finance pastes it all together. Then an assumption changes and it starts over.
This guide covers how to set up the budget process when many people are involved: timeline, roles, how targets and detail meet, and what a budgeting tool needs to handle for the spreadsheets to go away.
Why Excel works badly with many budget owners
- Versions drift apart. The file sent out in September is not the one that comes back in October. Someone added a row, someone else changed a formula, and nobody knows which file is current.
- Consolidating takes days. Every returned tab has to be checked and pasted into a combined model before management sees the whole.
- Everyone sees everything or nothing. Either managers get the whole file with everyone's salaries and margins, or they get their own copy that is disconnected from the rest.
- Actuals are missing. Budget owners budget best when they see what they have actually done so far this year, by account and month. That takes a new export from the accounting for every tab.
- Changes are expensive. When management changes a target or an assumption, such as the salary review, it has to flow through every tab at once.
A timeline that holds
For a calendar year, budget work usually starts in September and is finished for the board meeting in November or December. The more budget owners, the more important it is that every step has a date and an owner.
| What | Who | When | |
|---|---|---|---|
| 1. Assumptions | Goals, targets, salary review, price increases | Management and finance | Early September |
| 2. Input out | Year-to-date actuals and full-year forecast | Finance | Mid September |
| 3. Bottom-up budget | Each owner budgets their part | Budget owners | September to October |
| 4. Reconciliation | Add up, compare with targets, adjust | Finance and management | October |
| 5. Decision | The budget is adopted and locked | Board | November or December |
Targets from the top, detail from the bottom
Most organisations end up with a mix. Management sets the targets: revenue goal, margin, headcount and the assumptions that apply to everyone, such as salary review and rent increases. Budget owners fill in the detail within the targets, since they know which customers are coming, which roles will be hired and which costs can be influenced.
The point is that it should show immediately when the sum of the detail does not match the targets, so the discussion happens in October and not in November.
Who does what
- Management sets goals and shared assumptions and decides when targets and detail do not match.
- Finance owns the model, chart of accounts and timeline, provides actuals and adds everything up.
- Budget owners budget their part: their department, store, project or company. They see their own actuals and budget, not necessarily everyone else's.
- The board adopts the budget and then follows actuals against it.
Budget at the right level
A common mistake is asking managers to budget every account in the chart of accounts. That gives hundreds of rows nobody can relate to. Let budget owners work with drivers they understand, such as headcount, hourly rate, number of customers or sales per store, and let the model calculate the accounts. That makes the budget easier to build and easier to follow up, because variances can be explained with the same drivers.
What a budgeting tool should handle
- Actuals pulled automatically from the accounting, so every owner sees what has happened so far this year.
- Everyone works in the same budget, and permissions control who sees and changes what.
- Changed assumptions flow through everywhere without anyone rebuilding spreadsheets.
- Totals per department, company and for the group appear immediately, even when the companies run different finance systems.
- You can see who changed what, and lock the budget once it is adopted.
- After the decision, actuals are followed against budget every month, down to account and voucher.
How it works in Fintower
In Fintower you build the budget on what you have already booked, per company and cost centre. Actuals come from the finance system, such as Fortnox, Visma or Business Central, and budget owners work on their part while management follows the whole. Permissions control who sees and changes what, so no spreadsheets need to go around.
If you already have a budget model in Excel, it can be uploaded into Fintower. After the decision, actuals are followed against budget automatically, and the rolling forecast is recalculated when new actuals come in. We set up the budget model and reports based on how you work today, and implementation and onboarding are included.