Good budgeting practices are designed to minimize errors and inconsistencies, and spreadsheets are the de facto tool for budgeting. Spreadsheets are widely used for statistical analysis; and while they are incredibly useful tools, they are practical only to a certain point. As productivity tools, they lack the collaborative capabilities necessary in developing accurate, cohesive school district budgets.
Organizations need not settle for the limited functionality of simple spreadsheets when their financial planning process involves multiple units, requires real-time access to data and demands comprehensive security. Cloud-based budgeting software is emerging as a viable alternative to the traditional spreadsheet, and has empowered organizations to make cohesive budgets with immense savings in time and effort.
Why Spreadsheets are Losing Their Appeal for Budget Development
Creating a well-designed error-free spreadsheet is a laborious process that consumes countless hours of administrative time. Studies reveal that 90 percent of all spreadsheets contain at least one error. Types of spreadsheet errors include functional errors, outlier errors and stealth errors, which range in severity from low to high. Spreadsheet errors occur for many including logic mistakes, incorrect formulas, accidentally overwritten formulas and misuse of built-in functions. Many school business managers and administrators are not adequately trained on how to work with spreadsheets.
Coopers and Lybrand in England found that 90% of all spreadsheets with more than 150 rows that it audited contained errors.
The inability of spreadsheets to provide real-time feedback and reporting makes the process far more cumbersome and far less collaborative than it should be. Though some spreadsheet applications contain functions for predicting future trends and outcomes, these methods are often unreliable and inaccurate. There are many limitations of using spreadsheets for budget development. Some shortcomings include:
- Data distribution and consolidation is time-consuming and error-prone.
- Linking multiple worksheets or workbooks is difficult. Thus isolated sets of information are often disconnected, and information has to be shared by e-emailing spreadsheets back and forth.
- Balancing security and the need to share information is knotty. Sharing, protecting and un-protecting worksheets, workbooks, and cells involves wasted time and effort.
- Analyzing complex business trends is difficult and results are latent.
- Ensuring compliance is difficult. Spreadsheet tools were simply not designed for rigorous financial controls.
- With spreadsheets, there is never just one set of facts. Operating with critical information scattered around the organization in spreadsheets is a virtual guarantee that at least some key members of the management team will be working from old, out-of-date numbers.
- Re-forecasting is infrequent. Spreadsheets are not up to the task of budgeting in today’s dynamic K-12 environment.
- Spreadsheets are not very user-friendly to non-financial users such as school principals or administrative staff.
Budget planning with spreadsheets is a prime example of a cumbersome and inefficient practice that cannot keep pace with the rate of growth and change in the way school districts do business.
Cloud-based Budget Development Tools
Cloud-based software is emerging to present a viable alternative to the traditional spreadsheet, and organizations that have made the change are experiencing benefits, often beyond what they anticipated. Cloud-based budgeting applications empower your organization with more accurate budgets, faster planning cycles and foster a collaborative management environment in one integrated system. An alternative to spreadsheet-based budgeting, planning, forecasting and reporting enable school business officials, budget managers, budget directors and CFOs to respond better to today’s unprecedented financial and and operational pressures; and improve control over financial performance.
With cloud-based technologies, it’s now possible to develop a better budget in less time using the latest in cloud-based budget planning applications. There is no complicated software to install since these applications live online. They will let you design custom budgets that meet your organization’s needs, keeping you in charge of how your budget works and who has access to it. Here is a list of some of the benefits of cloud-based budget planning:
- Provides multi-user access yet presents a consolidated and single source of information
- User administration enables controlled access to users and teams
- Fewer errors due to standardized calculations for all budget groups
- Rapid, broad adoption and reduced learning curve
- Promote increased accountability in staff planning and an increased level of information and understanding
- Greater consistency and minimal training required
- Secure 128 bit encryption, which offers the same level of security as banks
- Scenario analysis permits the users to see the consequences of various decisions
- Lower maintenance and cost of ownership
Make the Right Choice for Your School District
Effective and efficient financial management is a critical function in any organization, regardless of size. Dynamic and growing school districts need to replace stadalone spreadsheets they now use in their budget development, planning, and reporting process with a dedicated online application. Organizations that want to use budgeting simply for fiscal control will benefit because they will make their process far more efficient, and valuable resources can be used for matters that are more important. School districts that decide to use cloud-based budgeting as a performance management tool will find that migrating from spreadsheets to a dedicated online solution promotes more effective management.
To learn more visit www.mybudgetfile.com.