Budgeting for Success with Divvy

One of the most important elements to maintaining a successful business is financial planning. This includes creating effective budgets and conducting thorough expense management to ensure profitability.

Joined by Divvy’s Senior Manager of Partnerships Dallen Ashby, PBO Advisory Group’s Consulting CFO Rick Dahlseid recently hosted a webinar about budget management, reviewing the benefits of Divvy’s expense management software while providing tips for successfully navigating the budgeting process.

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Dallen kicked off the webinar by highlighting the benefits of Divvy, a software that helps companies manage spending data and expense management in one place by integrating a variety of tools into one program. With enforceable budgets, dispute resolution, simple reimbursements, business credit, spend notifications, and more, Divvy allows executives to control spending, save time, and prioritize other important elements of a business. Described as “tech-to-end financial babysitting,” Divvy makes it easy for executives to prioritize speed and visibility while implementing tools like expense categorization that expedite important processes.

After an overview of the Divvy software, Rick gave an in-depth presentation about the budget process, providing tips on how to strengthen internal controls to support financial planning and measure budget performance. Here are some key takeaways:

  1. Budget development begins with understanding the expectations of your audience (i.e., the board, management, employees, and volunteers).
  2. To stay on track, create a timeline beginning 3 months (or 90 days) prior to the end of each year that clearly maps a course of action for every 15 days of the plan. This ensures that progress can be easily tracked and monitored.
  3. While developing budget objectives, it is necessary to create a financial summary of the upcoming year’s goals and expectations based on targeted growth, adjustments, and reality. To ensure these are effective, it is important to be realistic and conservative while also considering factors such as inflation, supply chain impacts, and personnel attrition.
  4. The foundation for the budget is derived from the income statement for the first 9 months of the year and then a projection for each month thereafter, to the end of the year. The most popular budget foundation is a “Zero-Based” method, which starts each year from zero and builds up from scratch to provide an accurate budget with more control over spending. This method forces the budget owner to justify each expense line item.
  5. The budget process should include a budget narrative and both recurring and nonrecurring revenue and expense patterns.
  6. While reviewing and seeking approval, test the budget to ensure it is reasonable and track any changes as separate adjustments to easily identify specific impacts on net income.
  7. After the budget has been uploaded to your system, utilize monthly reporting to keep track of the differences between actuals and budgets, and reforecast if necessary. Build a file for next year to help facilitate the budgeting process for the upcoming calendar year.

 
By following these tips and implementing software like Divvy, companies can simplify their budget-related processes to track their expenses with ease.

For more information or to receive help with your company’s budgeting process, contact Rick Dahlseid.


Rick Dahlseid

Consulting CFO
rick@pboadvisory.com
858-935-4855

 

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