The budgeting process can be a very complicated one. For many issues, businesses find they benefit from starting with a lot of detail. Then they summarize the detail into budgeted line items that correspond to line items on their financial statements. Using this method, it is easy to shift between looking at the budget tactically and looking at the budget strategically – seeing the trees, then viewing the forest.

To be honest most businesses, especially small businesses use Microsoft Excel or some other spreadsheet to manage the process. And if we really wanted to be honest it would probably be safe to say that even the largest enterprises use spreadsheets at some point in the budgeting process. Spreadsheets allow your business the flexibility to base budgeting decisions on tailored metrics; they make sense to you because you design them. So don’t feel bad about having an Excel based budgeting process.

But when is it time to rely on spreadsheets a little less and manage the process through budgeting software?

The answers to the following questions may be instructive in assessing whether you need more software horsepower.

Do you know when you are using the current version of the budget?

Do you know that there are no imbedded errors in your spreadsheets?

Can you tell that all cells in the spreadsheet workbook are properly linked?

Do you have a big-picture perspective on the budget?

Can you understand the detail of the budget?

Is your process siloed (meaning your departments are working independently of one another and are accountable for their own silo)?

Careful study of the answers to those questions will help you determine whether your budgets are out of control. If there is a problem that cannot be managed through spreadsheet management skills, it’s time to check out some budgeting software.


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