Six ways to improve your local government budget process*
Wayne Wright, owner of Management Technology Solutions, who has over 30 years’ experience in accounting, information technology and business management at state and local government levels, shares six ways to improve your local government budget process.
- Undertake monthly analysis of financial performance with all departments.
A monthly discipline ensures that you remain focused on financial performance on an ongoing basis.
If you use modern financial analysis and reporting tools instead of complex excel spreadsheets completed by department managers, monthly analysis will take hours rather than days and will save a lot of time and frustration for financial managers at the end of the year.
- Undertake more than one budget review per year.
Many councils undertake only one budget review a year in December.
Consider undertaking two budget reviews during the year – in November and March, based on actual performance to 31 October and 28 February.
This will give a much better sense of financial control and the February review could form the basis for the preparation of the draft budget for the following year.
- Ban the contingency bucket.
Get into the habit of creating specific projects in the operating budget that have to be justified by line managers before funding is provided.
- Clearly identify and separate one-offs.
It’s very common for one-off projects such as a planning scheme review to be lumped in with other annual operating expenses.
Identify one-off activities as operating projects and distinguish them from base operating activities in the budget.
- Redesign your chart of accounts (COA).
Most finance teams inherit outdated COAs that have usually been added to in inconsistent ways over the years.
The only real option is to redesign your COA and though this might seem an insurmountable task, it doesn’t have to be if you leverage modern financial tools that enable you to do this in an efficient and effective manner.
- Move to the Cloud.
Cloud-based apps such as Financial Driver are ideally suited to councils because it provides them with easy-to-use, cost-effective financial management tools. Financial Driver enables financial managers to consolidate detailed information in one online database from which they can produce monthly reports, analyses and forecasts without having to consolidate hundreds of often-complex spreadsheets.
Management Technology Solutions is the Australian distributor of Financial Driver, a Cloud-based application that replaces spreadsheets to prepare and collate plans, budgets and forecasts and consolidates results for analysis and reporting.
The Shire of Bridgetown-Greenbushes and The Shire of Donnybrook-Balingup have recently subscribed to Financial Driver and Mr. Wright has set up easily adaptable frameworks to enable them to prepare their draft budgets and long term financial plans internally to meet statutory and management
To discuss your local government financial planning and forecasting needs or find out more about Management Technology Solutions or Financial Driver, contact Wayne on: +61 418 128 989 or email [email protected], or visit www.mtsolutions.com.au
*Copy supplied by Management Technology Solutions