When FTX, the now infamous cryptocurrency exchange run by Sam Bankman-Fried, went into bankruptcy, the legal process opened up exactly what was going on with the company in terms of financial operations. One of the discoveries made public was the fact that while the Exchange business was operating with millions of dollars, its financial software was basically a hodgepodge of social media tools and Quickbooks software. The revelation was shocking both in terms of the lack of operational accounting management as well as the missing depth of experience that would have blocked such a practice in a normal business right away.
Believe or Not, Good Budgeting Tools are Hard to Find
The fact is, both non-profits and profit companies need competent financial software both for decision-making as well as for accounting and record keeping. The problem, however, is that while there are plenty of accounting tools available in every format and type, actual budget and forecasting software is another matter entirely. A big part of this vacuum is attributed to the fact that not a lot of software makers see any demand for this type of tool, yet it is the most common financial resource to rely on aside from accounting software. So, many businesses, big and small, end up relying on other tools tailored to work, from databases to spreadsheets.
Budgeting is Both Knowing Now as Well as What Could Be
A key aspect most agencies and businesses need in business budgeting software is the ability to not just know where things are in terms of available funds and expenses already made or committed to, but to also be able to trend or forecast where the future will be if nothing is changed. Even more challenging, tools are regularly needed where factors can be changed or shifted to plan out various scenarios as well. Both aspects help decision-makers with short-term and long-term commitments going forward.
Don’t Rely on Home-Grown Tools
Home-grown tools such as extensive spreadsheet templates and stitched databases may work well for custom needs and nuances, but companies and agencies find out very quickly that these options can become corrupted very quickly. Time and again, people have built intricate internal tools only to see them fall apart with heavy data loads after a few months because they simply can’t handle organizational demands from multiple points.
High Priority Criteria for Good Budgeting Software
Effective budget and forecast software has to be both accessible as well as robust. That requires a solid data integrity design and a redundant approach so data is not lost. At the same time, a good budget and forecast software tool should also have:
- Designable reporting features that can provide either detailed or summary reporting
- Modeling capability for planning out options and changes to controllable variables
- Accessibility in different locations at different times and by multiple parties without compromising individual work
- Backup features so that work is saved and protected from accidental loss, as well as versioning so different points of development are protected from loss as well as for auditing
- Compatibility with major file formats so that information can be imported or exported easily
Finally, the last element to keep in mind is that cloud-based or online budgeting software provides added advantages of scalability (matching only those IT resources to actual need versus sunk costs), including maintenance versus having to have staff to maintain IT support for software and hardware, and accessibility (being able to work anywhere there is a secure Internet connection). In this fast-moving, remote, and flexible world today, IT tools utilized for budgeting and finance need to match modern demands, not the circumstances of the office from 20 or 30 years ago.