Overcoming the Nightmares of Excel-Based Budgeting and Planning

Budgeting and financial planning form the backbone of SaaS finance. As such, entrusting these two vital functions to spreadsheets can result in problems that are felt across your entire organization. 

In this post, we’ll discuss how to streamline and automate your budgeting and financial planning. Automated budgeting helps you stay on target, set realistic budgets, and much more. Let’s get started.  

Pitfalls of Manual SaaS Budgeting and Planning 

When you plan quarterly and annual budgets manually, you can expect to encounter a few repeating themes. 

These include: 

• Manual errors and oversights that employees need to go back and correct, wasting large amounts of time and capital. 

• Running dangerously close to–or even past–your budget deadline. 

• Lack of sufficient reporting detail from past budgeting periods to gauge proper allocations. 

These factors and others create further issues downstream. 

High budget variance (sometimes drastically high) 

Budget variance is one of the perennial fears of all department heads. 

Unfortunately, manual SaaS budgeting reliably produces higher variance than forecasts run with automated software. 

Since planning for upcoming quarters involves looking back at previous budget periods, variance is more than a problem in and of itself. It increases the difficulty of effectively planning for what’s ahead of you.  

Lack of confidence in your financial planning 

If you consciously or unconsciously know your financial planning is lacking, that shortage of confidence will affect your performance as a CFO. You’ll be timid and let opportunities pass by–you won’t be as enterprising.

Especially in a turbulent market like we’ve seen lately, confidence in your planning is vital.  

So what can you do to avoid the pitfalls of manual SaaS budgeting? 

Switching to cloud-based financial planning 

Moving your SaaS budgeting to the cloud allows you to eliminate most of the issues we just discussed. 

Let’s examine a few of the most compelling reasons why SaaS finance leaders are migrating to the cloud for their budgeting and FP&A activities.  

Your departments are connected with an SSOT

Data silos are one of the biggest obstacles to successful SaaS budgeting. When organizations silo their financial data, they spread it out across the company’s various departments. 

Each department is responsible for managing and updating its own data in spreadsheets and other manual formats. These are then manually sent to the appropriate stakeholder, usually as an email attachment. 

This exposes companies to multiple potential problems, including: 

• Exposure to hackers and cyber threats–as the CFO, you’ll be on the hook in the event of a financial data leak.

• High budget variance as the result of ineffective manual processes. 

In contrast to data silos, cloud-based accounting software uses a single source of truth (SSOT). An SSOT stores all your company’s information in a centralized data lake, rather than various silos that are widely spread apart. 

This approach has multiple SaaS budgeting benefits.

Data lakes for SaaS budgeting: 3 advantages 

Especially for medium-to-large SaaS organizations, budgeting can be somewhat chaotic–or, at the very least, a bit stressful and unpleasant. 

Much of that can be attributed to companies’ use of data silos. Data lakes offload a huge amount of SaaS budgeting stress in 4 significant ways. 

1. Completely removing manual data gathering from the budgeting equation. 

2. Providing security and regulatory peace of mind–all your firm’s data is safely encrypted in the cloud.

3. Cloud-based accounting software can also help you with automated budget forecasts, greatly increasing your team’s ability to plan for the future. 

How else does cloud-based financial planning simplify the SaaS budgeting process? 

More than a tool: an active partner 

An automated accounting suite is more than just a piece of technology. It’s another set of eyes that can keep close track of your budget while you’re off doing other things. 

With cloud-based software, you’ll get automatic notifications if you’re approaching preset budget milestones too quickly. 

This provides a superior level of financial control and oversight when compared to manual SaaS budgeting and planning. 

If circumstances change and you’d like to adjust your plan, you can always alter your milestones later on.  

Modern accounting suites serve as active partners in more ways than that. They also provide automatic updates about regulations that could impact your company, such as changes to ASC 606.

Role-based dashboards offer complete clarity 

Budgeting and financial planning depend on the right people having access to the right data when it’s needed. 

SaaS finance leaders use automated role-based dashboards to put all the info they need right at their fingertips. 

Role-based dashboards provide valuable budgeting and financial planning data such as: 

• Detailed SaaS metrics and KPIs 

• MRR, ARR, and churn rates 

• Revenue from different billing methods and customer segments

Dashboards eliminate many of the traditional headaches that finance leaders associate with budgeting season. 

Have the courage to grow

Just because you’ve always done your budgeting and planning in Excel doesn’t mean it’s optimal. One of the hallmarks of effective leadership is knowing when change is called for, and then executing it effectively. Allowing your department and workflows to evolve is a large piece of achieving success in business. 

Learn more on the best practices to overcome the nightmares of manual based processes as on the Modern SaaS finance academy, an online learning experience designed to help SaaS finance and accounting professionals deepen their industry expertise, and uplevel their skills for modern day finance and accounting demans

Join the academy today.