What is the best online budgeting tool
Budget planning software in comparison
Every year not only comes the Christ Child, but also the budget planning. In every new financial year, companies of all sizes are dependent on reviewing the successes of the past years and using this to plan future financial years. This is a time-consuming and often annoying task, because the budget planning not only includes the data and figures from all individual departments, but also the desired target figures for the coming period. The result: the planning process takes weeks, if not months. It is faster and easier with the help of special tools. Budget software helps entrepreneurs accelerate budgeting through dynamic data collection. Interfaces to accounting and ERP tools make it possible. In the following guide, trusted.de presents the most common software solutions and gives you tips on how you can plan more efficiently for the future.
- The budget planning reflects the desired services, income and expenses for a financial year.
- In this respect, a budget contains a company's goals for the coming period and is therefore a very valuable instrument for operational planning.
- Professional tools simplify budgeting through high flexibility and dynamism.
What does budget planning mean?
Budget planning or budgeting is a sub-area of corporate financial planning. The aim and purpose of budget planning is to create one or more budget plans and use them to determine the budget for individual departments or projects. The budgeting always takes place before the start of a new planning period, which usually lasts 1 year.
With a target / actual comparison and a deviation analysis at the end of the planning phase, it is not only possible to draw conclusions about the previous planning period, but also to plan the coming period better and more effectively. This makes the budget plan an operational and short-term business plan that expresses the company's goals for the immediate future.
Create a budget plan - this is how it works
The budget plan basically has a simple task: it records what services the company should provide in the coming period, what financial resources must be used for this (expenses) and how much can or should be earned at the same time (income). Put simply: the budget planning determines how much money the company (and its sub-areas) will have available in the coming period.
Such planning is initially based on the current actual figures (which are also the actual figures of the last planning period), as well as on the target figures, which result from empirical values and the evaluation of the previous budget plan.
Budget planning in 4 steps
The budgeting process in a company could go something like this:
- The senior management / management, together with the department heads, defines the strategic corporate goals for the coming financial year. This also includes the needs, goals and plans of individual areas of the company.
- The individual goals are quantified for further planning, which means: they are expressed as measurable numerical values as possible in order to make them comparable.
- A cost plan is created for each cost center (usually a department or a sub-area of a department). The question is: How much do you have to spend to implement the company goals in the individual cost centers? How much is available for this and how much can you also take in the coming financial year?
- On the basis of these plans, further plans can be created, for example personnel or investment planning.
A simple example of budgeting
Imagine you are in the process of preparing the budget. You already have all the relevant data. The target / actual comparisons of previous years show that sales of a certain product have steadily fallen over the past three planning periods. Now you could assume (if you plan carefully) that this trend will continue into the coming period. In the budget plan for the next period, fewer funds will then be available from the sale of this product, so your budget will shrink. As long as you do not see any possibility in your planning to offset the additional expenses, you will have to lower the budget for the individual departments.
Criticism of classic budget planning
Budgeting based on the classic model is now repeatedly criticized and enriched with new approaches. The reason for this is the low flexibility of traditional budget planning. Therefore, companies are constantly striving to enrich the budgeting process with new approaches and methods. The following emerged:
“Better budgeting” relies on constantly questioning, adapting and further developing the original budget plan during the current planning period. Regular target / actual analyzes are necessary for this, which can be used to read how the company goals were implemented in a period of time (e.g. one month).
In order not to waste too many resources on this type of planning, strong and dynamic software is required that can analyze the relevant data in real time.
“Advanced budgeting” aims at much shorter planning periods than conventional budgeting. At the same time, however, it should not go into as much detail as a classic budget plan, but should keep an eye on the corporate goals as a whole. Another decisive factor is the assumption that certain corporate goals cannot be quantified or are difficult to quantify, but are nevertheless justified.
The supporters of this approach have already completely abandoned the idea of a budget plan. Instead, non-monetary aspects such as company-relevant KPIs (Key Performance Indicators) are brought to the fore and certain principles for management are established and tested.
Is there “correct” budgeting?
Which type of budgeting you prefer is basically up to you. There is no such thing as the “right” way. Instead, it always depends on what you expect and, above all, in which area you are active in your company. The choice of the right budgeting depends on the flexibility and complexity of your corporate environment:
Tips for a successful budget
Budget planning is often about a huge amount of money. In the worst case scenario, even small mistakes in planning can result in serious financial losses. Therefore, trusted.de gives you some tips to keep the risk as low as possible:
Overestimate your expenses
If you want to stay on the safe side with your budget, you should calculate your planned expenses generously. Although this reduces the individual budgets for the cost centers, it also gives you a buffer. So you don't get into the uncomfortable situation of having to claim ...
We haven't actually exceeded our budget. The budget was just lower than our expenses.
Especially if your company operates on a project basis, it makes sense to leave a little room for additional expenses. After all, no two projects are ever the same.
Use a dynamic tool
In theory, it is also possible to prepare and plan your budget using Excel spreadsheets. However, it is not effective - after all, collecting and acquiring the relevant data alone devours a lot of time, which you can save yourself by using professional software.
In larger companies in particular, it quickly becomes nerve-wracking when each department manager submits his budget planning to you in his own way and in a different form. Use one of the following tools to swear everyone involved by a clear method:
- Cost control software
- Financial performance management
- Marketing budget management
- Corporate planner
Plan big expenses early on
Short-term failures or purchases can hardly be planned, that is clear. If from one day to the next the office printer no longer wants to work or the wrench is missing for some inexplicable reason, nothing can be done. But you should, as far as possible, have large expenses such as the acquisition of a new machine or the hiring of new employees on your screen before the planning period - during the financial year you may no longer have the opportunity to divert sufficient funds for them.
Benefits of budget software
There are several good reasons to use professional budget planning software for budgeting:
- simplicity: By using budget software you are able to handle the often annoying budgeting process faster and easier than you could with a spreadsheet or an Excel spreadsheet. You list all relevant expenses and income clearly and in tabular form. This saves you time and resources.
- compatibility: Many of the tools presented here are compatible with other software solutions or have interfaces to them. By integrating your accounting software into your planning tool, you can, for example, import all relevant financial data and no longer need to acquire and transfer it manually.
- Competitive advantage: A study by the Business Application Research Center (BARC) shows that the best companies in the DACH region achieve a clear competitive advantage through faster data provision and processing. Those who plan faster are literally one step ahead of the competition.
- Evaluation and analysis: In order to simplify the monitoring of the current financial year and the planning of the next period, the most common budgeting tools are equipped with extensive analysis functions.
That costs budget planning
It is difficult to make a binding statement about the price of budgeting software for two reasons: First, because individual applications often differ greatly from one another in terms of their functional scope and are therefore hardly comparable. Second, because the providers themselves rarely give precise price information.
Basically, however, it can be said that budgeting software is offered in two different models:
- As Software as a Service (SaaS) in the cloud for a monthly amount of around 30 to 100 euros.
- As a licensed desktop program for a one-time fee of 200 to 600 euros. You host this on your company's own server.
SaaS tools have the advantage that you don't have to worry about maintaining the program. If you host the software yourself, you are more independent.
Creating a budget plan is an often annoying and time-consuming but also extremely important task in many companies. The detailed planning helps the management to coordinate the services, income and expenses of individual departments in order to work towards the common corporate goals. It can almost be said: A company is always as efficient as its annual planning. The software solutions presented by trusted.de ensure that your own budget planning will work faster, easier and more efficiently in the future.
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