CORPORATE BUDGETING WITH EXCEL

Why use Excel for Corporate Budgeting?

In recent years, there have been numerous calls for company to move away from Excel-based Corporate Budgeting to Business Performance Management/ Business Intelligence (BPM/BI) systems. Reasons cited include:

1. Slow throughput time due to the complexity of the budget.
2. Challenges in maintaining data accuracy during consolidation.

Despite the repeated summons to move away from Excel-based Corporate Budgeting, today about 70% to 80% of all corporations (from big corporations to small companies) continue to make use of Excel for their budgeting. So what makes these budget managers stand behind Excel and remain loyal to using it as their primary budgeting tool?

The 6 Benefits of Using Excel for Budgeting

The current method of Excel budgeting is not without constraints. However, the advantages for using Excel as a primary corporate budgeting tool overshadow its limitations.

1. Excel provides budget managers with a lot of control on the format of the template. Budget managers can change the layout of template when the business environment changes. With a BMP/BI system, budget managers have to give up the control to design a template that meets their business needs.
2. Budget contributors are familiar with Excel spreadsheet that requires no or minimum training to complete the template. However, they are usually too involved in their operations to find time to learn another application which is used only a few times a year.
3. Budget managers and contributors could add new worksheets to store their workings and provide an audit trail on the basis for their budgeting numbers.
4. The number of people involved in the budgeting process is not limited by the number of licenses paid. Anybody who owns a copy of Microsoft Office can be involved in the process.
5. Companies do not have to constant upgrade their software so that it will work with the latest operating system.
6. It is expensive to own a BMP/BI, which cost at least $50K (conservative estimate) and beyond, not to mention that IT support staffs are usually required in maintaining the system. Using Excel for corporate budgeting would relieve the company the problem of finding IT staff to maintain the BMP/BI system in the midst of a worldwide IT staff shortage.

Limitations in the current method of Excel Budgeting

One of the key limitations in Excel-based Corporate Budgeting is in reporting. Consolidation of budget from various business units are usually done by summing the same expenses across worksheets, with each worksheet dedicated to each business unit. As a result, the detailed numbers submitted by the different business units are not readily available for analysis. While the data from individual business units are available in the respective worksheets, extracting the details require budget managers to link the cells to another new worksheet.

The heavy cell linking increase the likelihood of having broken links between worksheets and workbooks or newly added rows/columns not covering the ranges the formulations expect. These errors, once introduced, tend to proliferate and compound through the model. As such, budget managers have to spend extra time checking on the consolidated numbers to ensure that the final numbers presented tie to the submission and none of them are left out in the process of consolidation.

Budget managers also face a big challenge when there is a need to present the budget in different perspectives. For example, a budget manager in a retail company may need to get the budget endorsed by the channel manager as well as the product manager. The budget template can only prepare the budget based on the perspective of either managers but not both. To make sure that the budget gets the endorsement of both managers, the budget manager then has to develop the basic template based on the perspective of one of the managers and then re-construct the final output based on the other manager's requirements. The effort to prepare the budget is therefore doubled.

Revolutionary Breakthrough in Excel Budgeting

At the present moment, there is no other alternative software that could match the benefits brought by excel in budgeting. Budget managers assume they have to operate within the limitations of Excel if they want to continue using it as their budgeting tool.

Now, we have developed a revolutionary method of Excel-based Corporate Budgeting that we promise that will wow budget managers and make them want to lay their hands on. We believe it's a solution that every budget manager must know, even those who are currently using BMP.

In this revolutionary solution, we retain all the benefits contained in the current method of Excel Budget. We just added more benefits and also remove the limitations contained in the current method of budgeting.

1. Those who are working on the budgets do not have to follow strictly to the layout by the budget managers. They can change the sequence of the budgeting lines based on their preference. They could put advertising cost on the first line in the template followed by marketing cost and vice versa.
2. You can easily transfer the budgeted numbers from the template to another worksheet and form a database simply by using formula. The database can be used to create pivot table for analysis and reporting
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3. Analyze the budget numbers from different perspectives. You can analyze them by products, by channels, etc.
4. Prepare reports and charts by special links which don't have to worry which line the item is located. And even when the item changes row or columns, you will still get the right numbers for your report.
5. No loss of details during the process of consolidation. The details from the lowest level i.e. numbers submitted by the different business units are captured into the consolidated database. The consolidation will automatically update the budget numbers from different business units, add new rows, delete old items and also change the numbers as the numbers in the template changes.
6. Consolidation can be as quick as a few seconds to a few minutes, depending on the number of business units you need to consolidate.
7. Analysis can be done at the highest level with the lowest level of details. For example, you can analyze staff cost by departments or even on a country level. You can even prepare pie charts to show the contribution from the different business units or countries.