The Basics of Budgeting Software

Understanding the basics of budgeting software and budgeting tools will help to form a foundation for you to make an informed decision on what application best supports your business needs.

Choosing the best budgeting tools for your organization is critical to ensuring your budgeting process runs as smoothly as possible year after year.

The market now boasts a large number of applications, both stand alone and plugins, that are enabling finance departments to shift from reactive operations to proactive operations.

This change marks an important evolution in finance departments, which have long been viewed as support and cost centers.

New applications are allowing finance departments to focus on value-add activities, and the budgeting and planning process is beginning to be adopted by departments across the entire organization.

At the heart of this change is new dynamic technology that allows users to access data in real-time and often visually stunning ways, taking the burden off the backs of finance departments to field ad hoc data requests.

Furthermore, enhancements in user-interface technology is allowing users to interpret information rather than relying on the analysis of the finance department staff.

Budgeting software specifically has changed drastically, migrating away from spreadsheets that are siloed and evolving into cloud-based systems that are easy to use and require less effort than before.

However, many of these cloud-based systems are still based on the spreadsheets that continue to dominate the industry—if they don’t actually integrate with spreadsheet software like Excel.

What this means is that finance departments that have long been used to working in Excel can continue to do so while still being able to take advantage of the benefits of cloud-based systems that are designed to increase efficiency and effectiveness, allowing finance departments to focus on more important tasks.

This translates into a finance department that is well equipped to handle complex budgeting and planning and even special projects, all of which add value to the enterprises they serve and allow everyone from department heads to the C-suite to benefit.

Budgeting Dashboard

What Is Budgeting Software?

Budgeting software is a blanket term used to describe any software application that helps build, manage, and monitor a budget. The term is used loosely to define a wide range of products and can include simple software applications like Microsoft Excel all the way to complex ERP systems like SAP.

The budget and planning process is typically a revolving process that takes place over the course of an entire fiscal year. It begins with a planning meeting and moves through various stages to the monitoring phase where analysis is performed.

Budgeting software is an important component to the process and can assist in the aggregation of historical data, building the budget, analysis, and modeling and forecasting. Some budget software can assist with building presentations or have interactive dashboards that are used for monitoring results.

Business Budgeting Software—Medium-Sized Businesses and Enterprises

The standard for budgeting software across most organizations is Microsoft Excel. This might not come as a surprise given its relative dominance in both business and academia. Students enter the workforce familiar with Excel, and organizations enjoy its cost, flexibility, and user-familiar interface.

One key reason businesses revert consistently to Excel is that it is easier to track data sources than some budgeting software. This makes the job of validating information easier on the analyst who is tasked with auditing the historical figures used in the budgeting process.

However, Excel has many downsides and limitations that more advanced software is capable of overcoming. Medium-sized businesses find themselves with a budget that is likely able to acquire a budget software package that can be extremely beneficial when used in conjunction with Excel.

Whereas enterprises might have a budget for higher-cost applications like SAP and NetSuite, medium-sized businesses might find those options too costly and robust for their needs. Conversely, applications like QuickBooks and Sage Intacct are too limited in their product offering.

The perfect middle ground is a budget software that has the ease and familiarity of working in Microsoft Excel with the capabilities of an advanced budget software—ideally, a software application that requires little additional IT infrastructure.

Systems like DataRails tick all of those boxes and make for an obvious top candidate for medium-sized businesses and enterprises alike for this reason. Migrating away from siloed Excel workbooks but having the ability to operate in Excel fashion is a huge advantage in an organization that might not have the resources to deploy entire end-to-end ERP systems.

5 Must-Haves for Budget Software

While all software applications might vary slightly, there are some core competencies that every budgeting application should have. This might not be exhaustive, and each organization has its own unique demands, but these are the definite must-haves for any budget software.

Easy To Implement

Any software application that is too complicated and difficult to understand might lend itself to error. When it comes to budgeting, the goal is to get as accurate as possible. This can be undone by software that is difficult to onboard and confusing to use.

And even though you might only need to do the setup once, many organizations have lasting issues related to poor software setup and installation. Take the time to explore various types of budget software by taking advantage of free trials.

Ability To Define Budget Categories Easily

Categories are used to define income and expenses in budget applications. This becomes the bedrock of a budget, and it is absolutely mandatory that budget software allows you to change, edit, add, and delete category names.

Default naming conventions rarely capture the unique aspect of every organization and force analysts to consolidate data points into categories that do not fully describe them or mask their importance.

As transactions are made, accounting teams will assign them to categories, and these categories are extremely important for creating budget reports and monitoring progress. They become even more important over time as the more the categories and subcategories are adhered to, the more they create a lineage of accurate historical data on which to rely.

Ability To Create Reports

Where budget software really pays dividends is in its ability to generate financial reports. Custom reports are even more valuable.

The budget reporting process takes an enormous amount of time and is subject to human error when created manually. Budget software that can generate and export easy-to-read budget reports is a must.

What is even more important is that the software has the ability to generate reports at regular intervals and have a dashboard interface to monitor budget tracking in real-time.

Good Data Security

Often overlooked, it is important that budget software has the ability to protect financial information on linked bank accounts.

Almost every modern budget application will interface directly with a bank account. Maintaining a secure encrypted connection is critical. The same applies to corporate credit cards.

Ensure that the software application not only protects your account information, but that it has the flexibility to mask account numbers and create usernames and passwords.

Ability to Export Data

This might seem obvious, but all budget software should have the ability to export data to familiar file types like .csv or .xls. The comfort and flexibility of Excel is often desired among analysts, and it provides the ability to manipulate data in a way that the software application might not be able to.

Other systems often use .csv or .xls file formats for uploading and importing data as well, so having the ability to export data in a similar file format allows for future system upgrades and backing up of data.

5 Critical Aspects to Consider When Choosing the Best Budgeting Software for Your Organization

While there are a multitude of things to consider when choosing the best software for budgeting in your organization, there are 5 aspects that are critical to consider and that should guide your choices whenever possible.

Cost Of Software

Ironically, when selecting budget software, it is important to start with a budget. IT and software implementations are notorious for being costly and running over budget. Furthermore, some software applications have licensing fees and subscription services that can add up over time.

More and more, applications are utilizing the use of “modules” that require paying for the primary system and then incurring additional costs for each “module” added in, making some functionality impossible without purchasing additional modules.

Then of course, there are system upgrades which might come at a cost or require investment in infrastructure. All of these potential costs need to be considered when seeking out budget software.

Hardware Requirements

Some software applications will not operate without investments in better servers, cloud-based storage, or better end-user hardware. There are typically always system requirements that the software will have that need to be examined closely.

Every user needs to have hardware that meets these system requirements and often needs to exceed the standard system requirements in order to support future updates.

End-User Requirements

While hardware is typically always scrutinized, what is easy to overlook is the ability of the end-users to easily use the system.

Budget software can range from complex to far too simple. Understanding the abilities of the primary users will help you identify a system that can be utilized to its maximum potential.

Software that is too advanced might consequently go underutilized and come at a steeper cost. Adversely, users who are too advanced might be frustrated and find some software too limiting and not helpful. Both situations create a cost sink that can be avoided.

Setup And Integration

Implementing major software applications can be daunting. Often, they can span months and sometimes years to fully implement. Budget software that takes too long to implement or is too difficult to set up lends itself to errors.

As mentioned above, the setup process is important to get right the first time. Arguably, it only needs to be right the first time if done correctly. A system that is too complex might be set up poorly, and a system that is not dynamic enough might limit the ability to categorize budget items correctly.

User Interface

Finally, it is important to identify budget software that has a user interface that is easy-to-use and is understandable. It needs to have some level of flexibility to accommodate the various needs of different users while still being easy to learn and adapt to. Ongoing budget changes should be easy to make, and establishing categories should be simple to do.

User dashboards should be available, and building custom sheets or interfacing with Excel is highly desirable. Having the ability to work in the familiar setting of Excel will give users much more confidence and allow them to adapt far quicker.

Using DataRails to Build Your Budget

Every finance department knows how tedious building a budget can be. Regardless of the budgeting approach your organization adopts, it requires big data to ensure accuracy, timely execution, and of course, monitoring.

DataRails is an enhanced data management tool that can help your team create and monitor budgets faster and more accurately than ever before.

By replacing spreadsheets with real-time data and integrating fragmented workbooks and data sources into one centralized location, you can work in the comfort of Excel with the support of a much more sophisticated data management system behind you.

This takes budgeting from time-consuming to rewarding and allows the user to focus on value-add tasks, like budgeting and forecasting, allowing the finance department to become more efficient, more effective, and more valuable to your organization as a whole.

To put it simply, DataRails is the best software for budgeting that your organization will find on the market today.

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