Top 5 budgeting Mistakes To Watch Out For

budgeting mistakes

Disorganization, illogical budgets, and only one budget owner are just some of the issues that can impact your company’s finances.

Not everyone likes budgeting. Even the people who like budgeting don’t like budgeting mistakes. Budgeting mistakes are the ones that often bite the hardest because you may not catch them until late in the game, so best to be on the lookout for them now. here are five budgeting mistakes to watch out for.

1. Leaving out the revenue forecast

It’s not about how much you spend – if you don’t have the money to spend, it doesn’t matter if you budgeted for it. Revenue forecasts are the starting point for making sure you aren’t budgeting too much.

2. One budget owner

Yes, your financial person is the one who keeps the budget, but he or she is not the one doing the majority of the jobs the budget is spent on. If you want purposeful, effective budgeting, make your team leaders budget owners. They know what line items are unnecessary and which ones are crucial.

3. Disorganization

Make sure your accounting for every dollar and where it should be spent and where it actually was spent. Don’t leave gaps – it should be simple, but it’s one that often catches smaller departments as they grow big.

4. Illogical budgets

Your budget should show you how your investments in time and money will lead to growth. What money do you expect to make, and what money do you need to spend to make it?

5. Include time

Yes, money is what a budget is tracking, but knowing how much time you have available and how much time you spend is a very good factor in knowing whether you’re on budget – ahead or behind.

People think of budgeting as a restriction, but when done well, it will let your company make more money, which hopefully lets you do more things that increase your budgets.

One way to improve your budgeting setbacks and ensure forecasting and financials are on track is to use an integrated system that looks at all departments of your company holistically. Dynamics 365 Business Central offers the capabilities to monitor your business in real-time, base business decisions on current and historical data, gain business insights from artificial intelligence and run your business from one central system. To find out more contact allonline365 on  info@allonline365.com or  +27 (21) 205 3650

www.allonline365.com 

Resource Credit | TechRepublic

How to harness Technology in finance rather than fear it

finance

The pace of change is overwhelming, but here are some ways for finance professionals to keep up – or catch up

It is the nature of the job these days: Most CEOs and accountants are adept at using sophisticated software and are among those leading tech adoption across their organizations. But as technology develops and diversifies at a rapid pace, hard-pressed finance professionals are seeking new ways to ensure they keep ahead of the game, both as part of growing companies and as individuals.

Maintaining technological savvy is a career, and business, imperative. Fall behind and lose out.

FM magazine spoke to some experts to find out how finance professionals and departments can up their performance in adopting and adapting to new IT.

Seek progress, not perfection

“One of the problems that finance professionals have with technology is they expect it to be perfect,” said Sydney based Kuba Tymula, CEO and managing director of Harris Partners, a tech-focused consultancy. “One of the first things that we try to preach when we come to clients is that it’s not about being perfect – it’s about starting.”

The saying that no battle plan ever survives first contact with the enemy is worth bearing in mind, according to Tymula. Complex tech projects often run into hitches. And this maxim applies as much to adoption at a personal level as at a corporate one.

It is best to start with simple analytics tasks, rather than to bite off too much. Initial learnings from successes and setbacks can then be applied later in the tech roll-out. Tymula is an advocate of agile planning, allowing departments to “sprint” in new developments for two or three weeks, so they can take stock, address issues, and adjust plans to suit.

Commit to change

In a fast-moving corporate world awash with technology, it is easy for finance departments and companies as a whole to adopt new tech in a burst of enthusiasm, but then fail to implement it fully as attention moves on to the next big thing or day-to-day tasks.

“It is really critical to building on initial progress,” said Ben Younkman, senior innovations manager at Village Capital, a US-based venture capital firm focusing on early-stage entrepreneurs. “This requires cohesive messaging and reinforcement by the management team, as well as aligning incentives to promote tech adoption.”

However, before committing to software, ensure that the new addition is relevant and worthwhile. “You have to make sure that technology solves problems without shifting the pain elsewhere in the company,” Younkman says. “There’s a level of tech burnout – you need to consider whether specific tech is worth adopting.”

Support learning

While the tech world may seem baffling in its variety and complexity to some, help is at hand. A wide and growing range of resources can help finance managers and their colleagues learn how to adopt and deploy the software most relevant to them. These include massive open online courses, YouTube, podcasts, blogs, and software consulting firms that can assist in the implementation, deployment and training staff.

Engage with sector experts

Engagement with specialists need not be entirely through the ether, however. Interacting with tech experts both within and outside the company can help CFOs and their teams get up to speed rapidly.

“I’d suggest reverse-mentoring with young trainees who can help senior colleagues learn the ropes,” said Brussels-based Gaspard Metzger, associate director at research and advisory company Gartner. “Then there are team-learning expeditions to discover and learn about products, or participation in hackathons to see in practice how you can use technology to solve challenges. Short course on AI with tech futurists are also available.”

Tymula recommended that financial management professionals attend tech conferences and other events to engage with experts who can help provide insights on adoption. This will give them a better idea of what technology is available and “the sort of questions they should be asking”. as well as an understanding of “how their businesses can operate in this new world”.

However, as Younkman noted, management urging employees to learn about tech and attend relevant events requires them to carve out time from their work schedule. Merely expecting colleagues to take on development activities in their own time us unlikely to be as productive, and the way learning is encouraged is also crucial.

“People start but don’t follow through,” he said. “You need to set aside time and money. Group learnings tend to increase completion rates and adoption.”

Showcase role models

One option that management in finance departments have to boost IT take-up across a company or division is to hive off a team that will first be adopters, road-testing new technology and acting as trailblazers for colleagues. This aims to create centers of excellence that can be replicated more broadly.

“Showcasing results is very important,” Younkman said. “You can explain to the rest of the company, here’s the rationale for what we’ere doing.” Choosing teams and individuals who are respected and influential can be useful; Village Capital applied this methodology to help a logistics company revamp its internal funding process in a controlled environment, and then apply the new process company-wide.

Technology can be daunting and cause companies to put off the adoption process. With the help of a software consultancy partner, there is no reason to not take the next step into the new technology space. allonline365 can help you choose the right software solution for your current business needs and future ones too. We offer consultancy, testing, deployment, and training services to ensure your new transition is a smooth process. Contact us on  info@allonline365.com or +27 (21) 205 3650 to discuss your next tech steps.

www.allonline365.com

Resource Credit | FM Magazine 

How SMEs can effectively manage cash flow

cash flow

Managing cash flow is an extremely critical aspect of financial planning for many businesses, especially SMEs. It’s an area that can often be difficult to control and could see benefit from tighter monitoring and planning. Many SMEs struggle to properly manage and maintain positive cash flow and research suggests that 63% of SME decision-makers worry about their business’ cash flow. Irrespective of industry size, one thing stands to reason, if the expenses generated by the businesses exceed the amount of cash coming in – then you have a cash flow problem.

Staying on top of outgoings and debtors requires a diligent and well-organized approach. In the first instance, it’s important for SMEs to look at areas of expenditure and try and identify where they can make long-term savings. One such area which tends to be overlooked time and time again is corporate travel and expenses. The proper management of expenses can give businesses a huge advantage, but when handled inadequately the management of corporate expenses can be crippling. As a starting point, SMEs should evaluate their current expense procedures and pinpoint the aspects which are easy to exploit and put sufficient policies in place to ensure they are not being taken advantage of.

Emptying the unofficial piggy bank

There are areas of the expenses process which are easier to manipulate than others and we tend to see the same pattern f claiming behaviour over and over again, across countless businesses. Typically, businesses will get four distinctive spikes in expense claims throughout the year. The first is around Easter, the second just before the school holidays and the last two before Christmas –  one at the end of November and the other halfway through December. During these peak periods, employees can often claim up to 8o% more than they would during a ‘normal’ week. For instance, if an employee regularly submits claims of around R200 a week were to stockpile their receipts over four or five months, the business could be hit with a claim of nearly R4,000. Stockpiling expenses is one of the biggest challenges SMEs face, especially employees who use the expense system as a piggy bank. Of course, employees should be able to easily claim back funds but it shouldn’t be to the detriment of the business’s cash flow.

One of the ways to get around the issue of “piggy banking” is to put expense policies in place which restrict the timeframe in which employees can submit their claims. Setting a time limit of around one to two months encourages employees to keep up to date with claims and stops them from building up large sums. This not only limits the financial impact on the business but also goes some way towards regulating cash flow.

Fraudulent claims

The second most common area of the expense process which is ripe for misuse is the submission of fraudulent claims. Now, of course, not all employees will manipulate the expense system in this way but it does pay for SMEs to carry out proper due diligence and check the information which is being submitted to them. Whether it’s creating fake hotel invoices then staying with a friend/relative and pocketing the accommodation allowance. Or claiming multiple reimbursements from the same train journey by submitting the ticket and collection receipt separately. SMEs should be making sure that the expense claims put forward by employees are in fact genuine, otherwise money is leaving the businesses needlessly and employees are tapping into money which they aren’t entitled to. Putting clear policies in place is key to helping employees correctly navigate the expense process but what if your business doesn’t have the time and resources to sift through and check countless receipts?

Tapping into technology

Most SMEs have already bought into the benefits of cloud-based applications and use them across various functions of the business. Implementing a digital expense management solution could be an alternative to manually checking claims and offers the opportunity to enhance control of employee spending by automating policy enforcement. This would mean that out of policy expenses would be instantly flagged upon submission. Whether they are claims which appear to be duplicated or those which go over the spending allowance, the system would raise these issues and return them to an administrator for extra justification.

With the expenses policy laid our clearly, employees are then able to make fully informed decisions before making a purchase to claim for. It also affords business owners the ability to watch what employees are spending in real-time, instead of waiting until the end of the month to read an expense report. With the digital expense system clearly spelling out policies and spending limits, employees are also required to take photos and upload images of their receipts. This additional layer of accountability can help SMEs tackle misuse of the expenses process and hopefully stabilize cash flow in this aspect of the business.

Introducing automated solutions into the expense process can also help SMEs to recover the maximum amount of VAT possible and take active steps towards positive cash flow. By prompting employees to correctly classify claims such as subsistence, travel, meals or accommodation, businesses can ensure they are paying the right level of VAT on expense items. It also offers up the opportunity to ensure employees are entering the correct VAT figures on purchase.

For SMEs it’s worthwhile identifying areas of weakness in the expenses process as they can have a large impact on cash flow. From the examples above it is easy to see how fraudulent claims can slip through the cracks and quickly add up. The ability to properly manage and control employee expenses, not only saves SMEs time and money but also ensures that the right processes are in place to maintain the business. Only by staying on top of outgoings and having full financial visibility can business owners stay in control, make informed decisions and support future growth.

If you are looking to explore cloud-based options, allonline365 can offer advice on the solution that best fits our business needs. Contact us on  info@allonline365.com or +27 (21) 205 3650

www.allonline365.com

Resource Credit | Finance Digest 

Allonline365 Newsletter

* indicates required
Business Software News
Call Now Button