A company must formulate a mid- to long-term budget for the entire organization and allocate the short- to medium-term budget appropriately for each business and department.
Proper budget management is essential to keep the cycle running as an organization.
This time, I will explain what budget management is and the benefits of budget management apps.
Table of Contents
- What is budget control?
- Types of budget control
- Purpose of budget control
- What are the benefits of using a budget management app?
- Much easier than budget management in Excel!
- Selection points for budget management apps
- 3 recommended budget management tools
- DivaSystem FBX
- CCH tagetik
- Workday Adaptive Planning
What is budget control?
Budget management is a type of accounting management and refers to “the work of properly managing the budget”.
Specifically, the work of budget management includes formulating the budgets required for each business of a company and compiling budgets to achieve the goals set by the company as a whole.
Types of budget control
There are four types of budget management.
① Sales budget management
② Cost budget management
③ Expense budget management
④ Profit budget management
①Sales budget management
A sales budget is an indicator for generating profit, such as a sales target.
Sales budget management is the task of managing and analyzing data in order to grasp sales on a regular basis and generate greater profits.
Through thorough sales budget management, you can identify the issues that need to be resolved in order to achieve your goals.
By managing the sales budget and visualizing the progress toward the sales target, it is possible to set appropriate target values and identify issues, thereby realizing a more efficient cycle.
➁Cost budget management
A cost budget is an estimate of the cost of materials required to produce a product or provide a service.
Cost budget management can be classified into three processes: “cost planning”, “cost maintenance” and “cost improvement”.
Cost planning is to set the target value of the cost to be spent on the product or service when planning the product or service.
Also, according to the set cost plan, the work of adjusting the cost is called cost maintenance, and the work of planning a method to keep the cost below the target value is called cost improvement.
Cost budget management is the task of managing costs through these three processes.
③ Expense budget management
Expense budget refers to an estimate of ongoing expenses for corporate activities such as personnel expenses and advertising expenses.
Expense budget management is mainly aimed at grasping expenses related to personnel expenses and advertising expenses.
We will check whether the expenses are being used correctly according to the set budget, and while grasping the usage information, we will perform business analysis and forecast the demand for funds.
④ Profit budget management
The profit budget refers to the company’s profit budget, which is obtained by subtracting (1) the sales budget from (2) the cost budget and (3) the expense budget.
Profit budget management is divided into “profit planning” and “profit control”.
In the profit plan, we will forecast the sales for the next term and calculate the necessary profit, and formulate a plan for the sales and expenses necessary to reach the target value.
Profit control is the task of analyzing the difference between the target value and the current situation.
Purpose of budget control
The three main objectives of budget management are:
① Clarification and sharing of
goals ➁ Formulation of policies and plans
according to goals ③ Formulation of management guidelines through continuous analysis
(1) Clarify and share goals
By managing your budget and quantifying your goals, you can communicate them clearly within your organization.
It not only serves as a target indicator, such as sales and profits, but also reveals costs that can be reduced, such as costs and administrative expenses.
(2) Formulation of plans according to goals
If you manage your budget, you can quantify it as shown in ① and make the gap between the target and the target visible.
Make a concrete plan to fill that gap. Know how much money you need to run your business and what costs can be cut.
In addition, since the necessary expenses are calculated for each role, it is easier to formulate plans for each department.
(3) Formulation of management guidelines through continuous analysis
Budget control is more effective with continuous analysis.
By comparing and analyzing the gap between sales performance and profit targets and the current situation, you can correct the course.
Since you can see how much profit you can get by how to proceed with management, it is also useful for formulating management guidelines.
What are the benefits of using a budget management app?
Much easier than budget management in Excel!
Budget management with Excel has issues such as “it takes time to collect budget proposals” and “difficult file management”.
Budget management requires a lot of man-hours and time because it is necessary to grasp the budget of each department in the company.
That’s where budgeting apps come into play.
The main benefits of using a budget management app are:
( 1) Aggregation can be done quickly
➁ Time and man-hours can be reduced
① Aggregation can be done speedily
Budgets can be entered from individual devices such as company smartphones and personal computers, and the app automatically calculates the budget, so the difference between the budget and the actual results can be quickly converted into data.
➁ Possible to shorten time and reduce man-hours
Since the budget management app is pre-installed with data analysis functions, it is possible to create a budget in less time and man-hours compared to data analysis using Excel.
Selection points for budget management apps
- Is it suitable for accounting standards?
After managing the budget, data such as results and variances must be summarized in financial statements such as profit and loss statements. Therefore, it is important to choose an app that complies with corporate accounting standards.
- Is it suitable for existing management indicators?
The management standards established by each company are diversifying.
When actually using the app, choose an app that matches the scale of the company and the management indicators that you have set up.
3 recommended budget management tools
This is an introduction to “DivaSystem FBX,” which automates the manual aggregation and history management and enables centralized management of collection and integration work. It has a track record of introduction by major companies, and has a wealth of functions such as aggregation, history management, progress management, and authority management for collection and integration work.
- Management of not only financial information but also non-financial information
- Information can be grasped visually by visualizing the organization chart
- Enhanced functions such as file distribution function, data check function, reporting function, etc.
Free trial available
Mitsubishi Estate, Asahi Kasei, ROHTO Pharmaceutical, Yamato Management Service, etc.
This is an introduction to the integrated business management software “CCH tagetik” built for finance. Consolidated accounting and settlement of accounts, financial planning, reporting/analysis, information disclosure, and other financial information and data from each business department are utilized and analyzed, enabling efficient work based on data at all times.
- Profitability analysis can be performed based on in-depth data
- Automate the entire consolidation process
Swarovski, Smartphoto Group, etc.
Workday Adaptive Planning
This is an introduction to Workday Adaptive Planning, a budget management tool that integrates all kinds of data and allows you to formulate plans for your organization from multiple perspectives. By integrating and managing information such as financial information and human resources, it is possible to comprehensively manage the organization and discover new business opportunities.
- Enables continuous planning
- Optimizing the organizational structure by matching skills and needs can be expected
- Enables efficient sales planning through market analysis
Free trial available
Netflix, Puma, Tokyo Electron, etc.
This time, I introduced budget management tools, especially budget management apps.
Use budget management tools and apps to formulate an appropriate budget and aim for more efficient company operations.