Finance strategy 5 min read

Budget automation: how to pick the right budgeting tool

Jocelyn Ho

Some things are better automated. Budgeting is one of them. 

Even for the largest finance teams, budgeting is no easy task. Managing a company’s financial health and cash runway requires visibility and control over daily expenditure and revenue. 

Effective budgeting helps companies grow and scale profitably. But doing this process manually can take significantly more time and resources than it needs to.

Relying on spreadsheets to keep track of all business finances increases the risk of human error and miscalculations. Manually allocating funds, monitoring and approving employee expenses, and reconciling payments can be even more complicated and time-consuming.

Automating this work saves finance teams hours every month, freeing up time for more strategic work that grows the business. In this guide, we’ll explain everything you need to know about budget automation–including common struggles with traditional budgeting, how automation helps finance teams save time and money, and what to look for in a great budgeting tool. 

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What is budget automation?

Budget automation streamlines financial processes and workflows to increase the efficiency and accuracy of budgeting. This robotic process automation (RPA) optimizes tasks like:

  • Real-time spend data and tracking. No more waiting for end-of-month bank statements to review overall company spend activity. All transactions and purchase data are instantly logged and accessible, after every payment.
  • Expense management and reimbursements. Instead of filing out manual expense reports and collecting paper receipts, employees request manager approval for purchases in advance. They can reconcile purchases instantly with a mobile app and get reimbursed by managers in a click.
  • Invoice management and accounts payable. Automatic data entry and optical character recognition (OCR) technology eliminates human error and significantly reduces the time spent processing invoices–a common pain point for finance teams.
  • Bookkeeping and financial reporting. Automation tools can track and document real-time fiscal activity throughout the year and generate finance reports like the P&L statement in seconds. Accounting is far easier when it’s simply verifying the numbers, rather than reconciling every payment and writing each in manually.

Some finance teams fall into the trap of jumping between different tools to complete a single task. Budget automation tools often consolidate several, if not all, of these processes into one centralized platform. A single source-of-truth for company funds allows finance teams and budget controllers to increase internal transparency and collaborate more effectively

Clearly, budget automation isn’t just about saving money. It can be used to optimize how a company spends money, records transactions, processes payments, and reports its finances. In short, it focuses on streamlining all the critical tasks that help determine the business’s bottom line.  

Why are team budgets so tricky to manage?

Budgeting can be highly complex, especially at fast-growing and larger companies. Things like unclear job responsibilities and lack of team buy-in often contribute to budgeting inefficiencies. 

These are some common scenarios that make budgeting a challenge for many companies–and how to resolve them.

Conflicting expectations between different roles 

Generally, budget owners have more visibility over daily spend, but may lack the expertise to analyze long-term financial planning. On the other hand, finance managers are subject matter experts, but often lack the nuance and day-to-day context of specific projects. 

This dynamic can create confusion around whose insights are more pertinent when making major budgetary decisions. Transparent communication between team members can help them get on the same page and approach the budget in a way that is mutually beneficial for everyone involved. 

Lack of team buy-in

This isn’t just a problem for finance teams. In many companies, employees in other departments aren’t often invested in helping with tasks that lie outside their immediate work scope. For that reason, regular team members probably don’t think much about budgets while performing their day-to-day tasks. 

That means that when these same employees are making spending decisions big or small, they’re not always keeping the company’s overall financial interests top of mind. 

A well-written expense policy can encourage team buy-in for smarter spending and help your employees understand how their individual expenses affects the company as a whole. A built-in expense policy using a spend management platform like Spendesk makes it even more effortless and stress-free for employees to follow rules while making purchases for the company. 

Reliance on manual budgeting processes

Traditionally, finance teams spend a lot of time double checking and triple checking their work. When data entry and calculations are done manually, there’s a lot more risk for human error–increasing the need to verify accuracy and fix mistakes multiple times. 

Effective budgeting is also more difficult to achieve when budget models and forecasting are done with inconsistent data streams and outdated spend activity.

The most effective solution to this struggle is the topic of this very article: process automation. By automating your budgeting workflow, you can optimize cost savings and extend company cash flow, while improving your overall finance function.

How to choose the right budget automation software

Choosing the best budgeting tool for your business depends on your company size, revenue, expense policy, and business model. To inform your search, we recommend closely examining your budgeting process to assess its strengths and specific areas that need extra support. 

All that aside, there are certain features and benefits that make some budgeting tools stand out from others. Here’s what to look for in a great budget automation software:

Real-time updates

Limited spend visibility makes proactive budgeting hard, if not impossible. Real-time spend data logs all purchase details immediately, providing finance teams with both granular insight and a larger understanding of company spend activity at all times.

Every expense is attributed to a purchaser and their team, increasing company-wide accountability and transparency, while preventing fraud and shadow spending.

Collaborative work setup

Poor communication is a productivity killer. Look for a tool that allows your team members to easily share information and get input from others. Real-time updates also make both live and asynchronous collaboration smoother, as everyone is working with the same information, no matter when or where they’re working from. 

Flexible budgeting 

Avoid software redundancy. If your company regularly spends on a wide range of different expenses, prioritize one tool that can support budgeting functions for everything from individual projects to annual budgets.  

Simple and intuitive user experience

Intuitive user interfaces significantly reduce the learning curve of using new softwares. When everyone in the company–not just finance experts–can use the platform without hours of training, everyone can work more productively.

In-platform document processing

Long back-and-forth email chains with endless attachments aren’t fun (or useful) for anyone. Good news: many budgeting tools allow users to collect invoices, receipts, and issue reimbursements directly from a mobile app or online dashboard in a few clicks.

With features like built-in receipt capture and automatic data extraction, you no longer have to worry about manually hunting down every paper receipt or supplier invoice for proof of purchase and billing. 

Easy to scale 

Picture this: you’ve found the perfect software and your team loves using it. But as your workforces doubles, you realize you’ve outgrown the platform and have to look for an alternative. The problem? The entire company now has to find a new tool, re-sync data, and re-train employees. 

The best budgeting tools will adapt to your growing needs, whether you’re a single user, twenty, or two hundred. All while giving you the same amount of visibility over your company spending and finances.

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Smart budgeting starts with smart spending

Want to save time and money across your entire spending process? 

SaaS solutions like Spendesk help businesses spend and budget smarter using several robust features in one tool. If you have teams that spend frequently or on a large scale, a budgeting solution that combines automatic spend management and flexible payment cards can be transformative.

With Spendesk, you get a 7-in-1 software with corporate cards, invoice payments, expense reimbursements, approvals, budgets, reporting, compliance, and pre-accounting in one simple, scalable solution

Want to see how the magic works? Take our platform for a test drive right here.

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Jocelyn Ho

Jocelyn Ho is the founder of Newlance Consulting, a digital marketing consultancy in Paris. She's also a regular contributor to Spendesk as a part-time member of the marketing team.