The What, How, and Why of the Business Budget Approvals

For an organization to run effectively, it needs to spend its money responsibly. Everyone agrees that budgeting is the best way to stay within your spending boundaries and make sure your cash doesn’t deplete too fast.

But as soon as you grow to have more than two departments, the budget approvals becomes so murky that it almost feels like a joke. With misinformation, slow processing, and archaic tools, it’s hard to believe in the accuracy of budgetary spending.

How can organizations abide by good budgeting principles and still manage to get their budget approval system to not last for months on end?

What Is Budget Approval?

In every organization, each department must set its own budget of projected expenses and revenues for the period. These budgets must be approved by the finance and leadership teams to make sure the numbers are in line with corporate projections and priorities.

Benefits of an Automated Budget Approval

Increased control.

When you automate the budget approval process , you ensure that it is always followed the same way every time without exceptions. If your process is unwieldy, adding automation gives you a much greater level of control.

Greater transparency.

If you handle budget approvals over email and spreadsheets, you almost never know who you are waiting for and what details are still pending. With an automated system, you can know instantly where the process is and how to move forward.

Fewer errors.

By including your budget proposals on an automated form, there is less chance that you will have errors that repeat through the process. Including more approvals also makes sure you have the most accurate data.

Integration possibilities.

In an automated budget approval system, you can link the process to other software you regularly use. This means you can pull or push data from accounting software, ERPs, CRMs, standalone spreadsheets, and many other options.

⋙ You're just a click away from creating your own customizable budget request forms in just 15 minutes!

What Are the Steps in the Business Budget Approvals?

Once a budget workflow is put together, it must be approved in a specific way. Here are some of the possible steps in the budget approval process:

Budget formulation

Each department head must sit down and figure out exactly how much he or she plans to spend for the coming financial year. This amount may be variable based on sales targets, but often includes predictable costs like labor, office expenses, technology, travel, and many others.

Finance approval

Once the department budget is set, the next step in a budget approval system is when it is sent to the finance team to review the budgets. The financial team will compare the budget with previous years and try to examine any discrepancies. Since department heads might have limited experience with finance processes, this is a chance to catch any common errors or address miscalculations.

During the finance approval, the team may also make notations where potential cuts could be made should they be required later in the process.

Executive approval

This step may include budget hearings where the leadership team reviews the budgets of each department. Department heads may be asked to justify certain expenses based on previous earnings and expenses. For example, if in the current year the leadership team has decided to cut spending by 10%, a department that requests additional expenditure will be required to justify the new costs.

Other companies may also include other steps including budget execution, oversight, and reforecasting. Also, sales projects might be shared before budgeting begins to align with the current level of revenue.

business budget request steps

Roadblocks for Budget Approval

While budget approvals may seem pretty straightforward, there are lots of chances for holdups that make the budget approval system drag on too long.

One simple problem with budget approvals is that they generally cascade spreadsheet data. This means that if there’s a small formula or data entry error in the first one, all of the subsequent spreadsheets will also include inaccurate information. When humans work with spreadsheets, there is a large chance for manual errors, and a spreadsheet cannot flag these errors on its own.

Another roadblock is versioning. If you are sharing Updated_New_IT_Budget_2.1_CORRECTED, there’s a high likelihood that you don’t have the right version of the numbers to review. The budget approval process is hard to control when many different versions of a spreadsheet are floating around.

Sharing budgets via email further compounds the budget approval system. When you submit a budget, if you send it via email, there’s no way to ensure that the correct file is used in the final version, especially if you make several changes along the way. Emails often get lost as well or buried under a sea of other messages.

Spreadsheets are also notoriously hard to protect private data on. Budgets often include salaries and this information is hard to protect from being seen by the wrong people. When sharing data and budgets, this information is easy to let slip.

Miscommunicated targets represent yet another roadblock. As department heads work to create budgets, they may not be aware of plans the executive leadership team has for goals. After discussion, budgets often need to be amended, meaning a redo of all the work already done.

Many budgets take a lot of time and effort to calculate, and sometimes different departments are dependent on different data that comes at different times of the year, making one department to always suffer from inaccurate details.

When your department heads don’t trust the budgeting process, they are more likely to not take it seriously and submit erroneous budgets, assuming they will all be changed later.

Overcoming Budget Approval Problems With Automation

The most important thing you can do when starting the budget approval process is determining the start and end events. Do you complete sales forecasts before other budgeting takes place? What about goal setting? What needs to happen before department heads can set their budgets.

By sitting down and modelling out the entire process with a business process modelling tool, you can figure out exactly how the process should function in an ideal setting. By automating the workflow, you can streamline the entire budget approval process.

An automated budget approval app also includes a form with validated details. This means that department heads will always be able to know exactly what details are necessary to submit their budgets. They can also restrict access to sensitive information like salaries.

When the automated process starts, each task is assigned to an individual and must be completed before moving to the next task. Whoever owns the process can see where the process is hung up and what help needs to be given.

Try KiSSFLOW for Your Budget Approvals

KiSSFLOW is an easy-to-use workflow automation tool that can transform any hazardous manual process into a streamlined, automated streak. By using KiSSFLOW, you can ensure that your data is correct and the right people get to sign off on every stage of the budgeting process.

Try KiSSFLOW for your budget approvals today and see what it can do for you!

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