The modern accounting team needs to do more than just record and report – and an accurate, simple and dynamic budget is the key.
It is the crux of commerce: the fundamental reason, unless you are a Non-profit Organization, for a business to exist is to make profit. There needs to be a return on investment, otherwise it cannot be sustainable. That is the bottom line, pun intended. But you simply cannot get there, and stay there, without a map. That map is your budget.
Budgets have always been crucial. It’s one of the first things that many entrepreneurs encounter, but one of the last things that many master. Your budget is an aerial view of all the cogs and gears at work within your operation – and it allows you to build a picture of which levers you can push and pull to get different results. It gives you a visible and numerical (therefore both guiding and trackable) benchmark.
This is not new, but a new mindset is needed for the future of business, one that will bear fruit in various ways. Let us start with those who feed into the budget, before getting to the accounting function itself. For starters, it is crucial for cost centre managers and anyone responsible for earning and spending to be adequately trained and financially literate.
At the end of the day, the data that feeds back into the budget – whether for comparison of previous figures or forecasting for the future – comes from people on the ground. These employees must be encouraged and empowered to feel like partners in the processes around the budget so that accurate and up-and-date information can flow to the accounting centre.
Though we need to consider the shift in mindset itself. It is time for the in-house accounting function to evolve its relationship with business to that of a business partner, rather than purely a reporting and recording function. The necessity for this is heightened by an increase in automation and digitisation in the field.
This shift in thinking encourages the function to not only report and record, but to find more effective and impactful ways to give information and trends back to the business in ways that help drive better, smarter, more agile decision making. We’ve seen major benefits to this way of looking at it, ranging from an alleviation in workplace conflict to greater exposure motivating and upskilling the accounting team in unforeseen ways.
These cultural shifts electrify the budget into a living entity, one that is owned by both sides of the reporting channel and one that is dynamic for the agility demands of modern businesses. The organisation of tomorrow needs to be able to re-map budgets in response to real-time factors coming at it from all sides. The key to designing functioning budgets lies in allowing for adaptability. It’s a stark contrast from the budget of the past. And that’s exactly what the business of tomorrow needs.
Altron Managed Solutions
20 Woodlands Drive, Woodmead
Gauteng, South Africa
PO Box 3591, Johannesburg 2000
Gauteng, South Africa
+27 (11) 373 4000