But I’m not an Accountant! – the departmental budget

Every year is the same. The need to do the department budget creeps up, reminders get sent out, and as the deadline approaches, you have to find time to complete it on top of doing your primary function. It would be great to delegate it, but generally that’s not possible. It’s on you, and if it’s not approved or it fails, well that’s on you also.

Although I am no expert, I have undertaken setting the departmental budget numerous times in various organisations over the years and there are a few lessons I have learnt. If you have never undertaken it previously the following are some thoughts and pointers to help you light the way.

So what is the budget?

Other than a yearly cause of anxiety, another way of looking at the budget is as a tool to forecast and track the operating costs (day-to-day expenses) and capital expenditure costs (assets) of your department.

It takes time

Plan it like any undertaking or project. Diarise time, plan the steps, gather the information you need and start early. When it comes to doing the sums, lock yourself away if you need. For some reason I used to allow myself to get distracted, by literally anything, which put me off until very close to the deadline. Rinsing and repeating last years budget with a proposed 5-10% increase is not acceptable and doesn’t showcase you at your best.

Be a reader of history

One of the quickest ways I found to get my head around doing a budget is to look at previous years. Even just getting your head around the method and software you may use will really help to get you comfortable. Look at those previous years and take note of variances and amendments that occurred.

Get very clear instructions

Depending upon the organisation and type of department you lead, there can be a range of priorities you will need to look at. Get clear instructions as to budgetary expectations and objectives. There always seems to be the direction to make savings, but that has to be balanced against providing departmental capabilities and expected outcomes. You may have to politely disagree with certain pre-determined budgetary directions, so be ready to put your business case forward against unattainable objectives and get it on the record. Given your accountability, being able to say ‘I told you so’ at a later time will help come review time.

Different strokes

A sales teams budget will be different to that of a compliance team. Depending upon the department or unit you head up, different factors and components will be more relevant.

Talk to the brains trust

If you need assistance, then ask for it. Most organisations have very clever finance and accounting professionals who are only willing to help, or it might cost you a lunch. Ask them stupid questions, they are used to it. Laying out the budget and finding out that you got it wrong at a later time and needs a redo reflects badly on you, or failing on an agreed budget. Asking stupid questions earlier is better than looking stupid to senior management or executives later.

Budgets can be fluid

Once you have finished and had your proposed budget approved (may take a few attempts), you need to regularly track progress on a weekly or monthly basis. Things can change or new issues arise throughout the year and revisions can be necessary. Also the old adage of ‘spend it if you’ve got it’ has some short term attractiveness, but isn’t really good practice.

The people

You need to remember that while budgets are really important and unacceptable failures are likely to cost you your job, the purpose of the budget is to cost the operation of your department. Your department consists of people who create the success, keep that in mind when you do the numbers.

Need more help?

The more you practice the easier it gets and there is always someone to ask for help. There are loads of online resources for developing your knowledge on budgeting. If possible get the training budget increased and take yourself on a relevant course.

Article by Charles Watson

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