There’s good news on the business budget front, and managers could use it if they’re facing a brutal department funding battle.
Billing Platform’s annual 2022 Trends in Finance Survey states that budgets should grow in 2022, with 79 percent of corporate finance executives saying their budgets will be larger in 2022 than in 2021.
Companies do not seem too skittish about a potential economic downturn, with only 21 percent of executives saying it’s “likely” that economic factors will have a big impact on the company budget, compared to 39 percent who said the same thing in 2021.
For managers who must prepare and negotiate a department budget, it can be a grueling process, even in boom years.
The trick, company budget experts say, is to get creative and even aggressive fighting for a bigger slice of the company pie. They say managers who assert themselves at budget time get more of what they want for their departments.
“A manager’s best-case budget is a business case where the manager makes and keeps promises,” said Trey Taylor, chief executive officer at Taylor Insurance Services, in Valdosta, Ga. “In a nutshell, a budget is a manager’s way of saying ‘If you task me with this, and give me this much money to achieve it, I will produce the results you want.’ “
If you can develop subject matter expertise so that other people begin coming to you for insights and strategies on budgets, you’re on the right track.
“That person, in any organization, never struggles to get a perfectly funded budget and get noticed, too,” Taylor said.
Budget Mastering Tips for Managers
With so much at stake during company budgeting time, what’s the best way for managers to play ball when looking for more budget money?
Here’s an inside look at how managers can set the table for success and beat the budget process time and again.
Tie money requests to business outcomes. When delivering a budget request to company financial officers, managers need to draw clear lines and say, “Here are the tools and resources I need to achieve.
our specific goals. “
“A manager’s budget is not just a list of wants and costs,” said Amy Spurling, founder and CEO of Compt, a human resources technology company based in Boston. “It’s tying those wants very clearly to the outcome of having each of those resources available.”
Spurling cited a real-world example. If you’re managing an engineering team and they want your team to build “X” new products, or there’s a product road map, it’s up to the manager to figure out the following:
* What does coverage look like? How many engineers will you need?
* What new tools can make you more efficient?
* What resources could you add to your process to get you to your goal of “X” new products?
According to Spurling, if you’re given a budget for less money than you think you need, a manager needs to say, “Okay, but with the resources available, we’ll then be able to accomplish 80 percent of what you asked for . “
In other words, it’s up to the manager to show a chief financial officer (CFO) the math when looking to get extra budget dollars.
“I’m not the subject matter expert, so I need you to show me the path,” Spurling said. “If you can show me what it takes to get to the outcome and what happens if you do not get the budget you need, then I’m more inclined to say, ‘Okay, the budget number requested makes sense.’ “
Talk to your team. Managers should also seek input from peers, staffers and higher-ups.
“This does not happen enough,” Taylor said. “A bottom-up conversation with your team [is one] in which you ask them ‘Where are we not spending money efficiently? Where could we do a better job? And where are we critically underfunded? ‘ “This, Taylor said, will produce greater insight into how capital actually flows to its highest and best use.
“Taking those insights to your peers and engaging in principled negotiations around areas of spending and management can inform a better budget for both parts of the organizations,” he added.
Leverage recent budget data. One of the best ways for you as a manager to handle the budget process is to do a post-mortem on the previous budget cycle. Ask what worked and what projects needed more resources.
“Once you have that data, you can move forward with an idea of where your priorities are operationally and see where it can intersect with your budgetary needs,” said Gates Little, CEO at Southern Bank Company, in Gadsden, Ala. “With that knowledge, the budget executive team knows that regardless of numbers, they can see which projects are highest priority at the company and budget accordingly.”
Be prepared and be organized. Jean Hopkins, chief revenue officer at OneScreen.ai, a Boston-based digital advertising firm, recommends being a “good partner” with the finance team over the course of an entire year. That means being organized and treating the budget process with respect.
Hopkins offers three tips to win a company’s budget battle that any manager can embrace.
Always submit your travel and business expenses in a timely manner. “Nothing irks a finance team more than the inability to accrue monthly costs,” Hopkins said. “Getting six months of receipts [all at once] is painful for them and earns you a terrible reputation. “
Talk to your finance people regularly. Schedule monthly meetings with your controller and quarterly meetings with your CFO to review your plans for your department: hiring, programs, investments in your team, or software.
“When finance leadership is part of your planning process, they know that you take budgets seriously and will give you more slack during negotiations,” Hopkins noted.
Know where your budget leaks are. If you’re consistently overbudget for programs, events and tools, you’re likely to have a budget negotiation problem.
That’s why it’s vital to focus on every budget detail as a manager.
“Even noting that there are 14 Harvard Business Review subscriptions within a company that few are using will earn you goodwill with the finance team, “Hopkins said.
Brian O’Connell is a freelance writer based in Bucks County, Pa. A former Wall Street trader, he is the author of the books CNBC Creating Wealth (John Wiley & Sons, 2001) and The Career Survival Guide (McGraw-Hill, 2004).