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5–14 Purchase Budgeting and Planning Software
elsewhere in the budget, such as completing automation projects or attaining
budgeted sales levels.
Also, some companies may want to include an acquisitions budget, which is
closely linked to the funding and investments budget, since this activity will have
a major impact on cash flows.
The preceding list of budget modules makes it obvious that the budget
process flows in a very specific sequence, with one part of the budget being used
as a basis for the next part. The budget procedure and timetable must be built
around this budget flow; specific dates of completion for one piece of the budget
tie into the start date of the next part of the budget that requires information from
the first part. It is wise to include a buffer of a few days between the completion
date of one part and the start of the next, so that inevitable completion troubles
can still be ironed out, leaving sufficient time to complete the overall budget by
the targeted date. Do not be surprised if the timetable is not accurate in the first
year it is used, since it is difficult to estimate completion times. Just be sure to
note actual completion dates in the first year and adjust the timetable accordingly
in the following year. Only by constant adjustment over a long period of time will
the budget procedure and timetable become fine-tuned tools for the efficient and
orderly completion of the budget.

Cost: Installation time:

5–14 PURCHASE BUDGETING AND PLANNING SOFTWARE

The vast majority of businesses create and maintain their budgets using an elec-
tronic spreadsheet such as Excel. Though this approach works fine for small
organizations, it is quite unwieldy for large ones. The trouble is that individual
departments create their own budget models using formats that vary from the one
used by the budgeting department. When the budgeting staff receives these mod-
els from the various departments, they must manually reinput the information
into a master spreadsheet, which is quite labor-intensive. Also, when any signifi-
cant variable is added to the model, all related formulas must be manually altered
and then tested to ensure that the model still operates properly. Further, it is diffi-
cult to track which department has submitted budget information or when it made
its last update. For these reasons, larger companies have considerable difficulty
using spreadsheets as the basis for a budgeting system.
The solution is to purchase budgeting and planning (B&P) software. This soft-
ware maintains a central database of budgeting information that is automatically
updated when users enter information. They can enter information in a variety of
ways—via dial-up modem, through a local or wide area network, or the Internet
(depending on what software is purchased). The software can also be maintained
off-site by an application service provider (ASP). In addition, the software gener-