Company budgets and spend management are most often associated with finance teams. But budget managers are found throughout organizations - every department needs to keep eye on spending.
Whether they have specific training or not, budget managers are responsible for organizing and allocating company funds across specific areas, usually to drive business growth.
And the budget management process can vary greatly between roles and companies. Even the most experienced finance experts face difficult questions and challenges in their budgeting duties.
Effective budgeting can be the difference between a company's success and failure. That’s why it’s crucial for teams to have the right tools and processes for smart budgeting.
In this article, we’ll highlight the skills and focal points needed to successfully manage a company budget.
What is a budget manager?
Simply put, budget managers are people who handle company finances as part of their role. Naturally, this includes: financial controllers, FP&A, accountants, and the CFO. It can also include non-finance professionals like team leaders, department heads and other executives. Like the Head of Marketing, IT Manager, or COO.
Each of these roles execute budget management to varying degrees, but most have a similar range of responsibilities. Most budget managers:
- Develop and oversee budget planning and processes
- Review and approve individual/team budget requests
- Allocate funds to different functions, projects, individuals, etc.
- Analyze budget spending
- Optimize budgets based on spend data and performance
Good budget managers use quick critical thinking and analytical skills. But the best also use clear processes to develop and implement their budget plans.
That includes involving your team in new budget initiatives, and implementing software automation solutions to boost productivity.
How to manage budgets more effectively in 5 steps
1. Use bottom-up budgeting
Bottom-up strategies increase budget accuracy and incentivize team members to spend by the rules. As we’ve written before on the topic:
“Bottom-up budgeting refers to the flow of information from the ‘floor level’ employees in each department up towards senior management. Departments decide their own forecasted expenses, and then request approval from higher ups. It’s performed this way to accurately inform the resource allocation process and create a budget that’s as realistic as possible.”
Bottom-up budgeting ensures each team receives the proper funds, and enables budget managers to take ownership of their own spending. Senior leadership remains in control of the company finances, using software to monitor overall budget progress and enforce limits.
Using real-time data, bottom-up budgeting enables finance teams to accurately forecast the company’s future expenditures across all departments.
2. Ensure team buy-in
Companies grow faster and smoother when teams work in unison. But getting everyone on the same page on how to execute that growth takes patience and planning.
Cultivate Advisor defines team buy-in as an equation:
|Quality of the Idea x Buy-in Level = Quality of Execution|
This means budget managers must consider two questions when proposing new initiatives to their teams:
- What is the quality of the idea?
- What is the buy-in level of your employees?
To achieve high execution quality, you must actively listen and communicate with your teams. As Cultivate Advisor explains, this involves:
- Talking to your team and laying out the vision.
- Involving the team and personalizing tasks.
- Staying connected and scheduling follow-up.
- Addressing team resistance.
- Being prepared to pivot.
Ensuring a high level of team buy-in reduces friction and increases the team’s productivity and motivation to reach the company’s goals.
3. Track business costs in real time
Don’t wait until month-end to review budget activity. Relying on retrospectives of company spending risks overspending and hurting cash flow. Poor spend visibility also limits budget managers and finance teams to reactive strategy.
Yet many companies still review and analyze budgets only when closing the books.
With real-time spend tracking, you can monitor budget progress consistently throughout the fiscal period. It’s easy to identify problems in advance and proactively make budget adjustments to get teams back on track.
Real-time spend visibility gives you the flexibility to optimize budgetary control and budgeting plans, at any time.
And with a spend management tool like Spendesk, tracking spend is effortless and accessible to all team members from one central platform.
4. Update team budgets regularly
Every business is different, but one thing is certain: circumstances change. Great budget managers adapt to these changes–from market fluctuations or increased supplier prices, to a sudden jump in consumer demand.
It’s nearly impossible to prepare for these scenarios if you only review budgets at financial close. Regularly analyzing and adjusting budgets are key to healthy cash flow and financial stability.
Use real-time spend data to make sure your finances are on track, and update your budgets accordingly. Understanding how your team spends, and what they’re spending on tells you how you can improve your budget plan.
5. Use data and results to make smarter budgeting decisions
Improving your existing budget strategies also involves optimizing for future business scenarios. And all companies want to execute budget modeling and forecasting with more confidence and accuracy.
Making smarter budget decisions comes naturally when you have easy access to comprehensive spend data. Greater spend visibility enables budget managers to identify patterns, improve business cost savings, and capitalize on new opportunities.
For example: A marketing department doubles their advertising budget in Q1 and business revenue suddenly increases over the same quarter. Spend data can be used to attribute the increase in revenue to greater marketing spend. A budget manager could request the same marketing budget for Q2 to achieve similar results, or increase the budget to try driving even greater revenue.
How software automation helps budget managers
Many of the challenges budget managers face stem from slow manual processes. Incorrect data entry, slow approval processes, and misplaced documents are common problems that waste time and resources for everyone involved.
Spend management software solves these issues by automating traditional finance processes and streamlining team workflows. The result is more productivity and accuracy in finances, saving your company time and money.
Set automated limits for teams
Traditional corporate cards are a headache for teams that spend frequently. It’s nearly impossible to track individual spending and a hassle to reconcile payments. It’s no surprise that teams which lack control over their finances suffer from constant overspending.
Smart prepaid debit and virtual cards solve these problems. Managers can set automatic spend limits on every company card, assigned at the individual or team level. When additional funds are needed, employees instantly request a top-up, which managers can approve or reject in a click.
Track payments when they're made
No more chasing down team members for payment proof.
Real-time spend tracking automatically logs all payment information like purchaser, amount, vendor, and what the purchase was for. Employee expense management is a breeze with automated receipt capture and instant reimbursements. All managed from one easy-to-use digital platform.
Show team budgets in wider company context
It’s easier to work collaboratively when everyone knows what you’re doing, why it’s important, and how it affects the company in a larger context.
A centralized spend management platform enables every team to see how their allocated budget contributes to the overall financial structure of the company.
Motivate and empower your employees by showing them how the work they're doing makes a real difference.
It’s clear that proactive planning, transparency, and process automation are all keys to effective budget management. Spendesk’s 7-in-1 spend management platform gives budget managers and finance teams the power to do it all. Here’s how it works.