Key Budgeting Challenges within the Public Sector when Using Excel

Economic austerity, declining tax revenues and increasing debt, has resulted in less money to pay for the full spectrum of government services, and deep cuts in expenditures. Such restricted government funding means there has never been a greater need for public sector organisations to gain a better understanding of the financial focus and precision of their forecasting.

With strict budgets and fixed funding allocated across each organisation at the start of each year, public sector organisations need carefully tracked and controlled management of their finances. This however can lead to many challenges, particularly with many departments and trusts still relying on Excel as a solution.

Here we discuss the key budgeting challenges in the public sector when using Excel and how best to solve them…

Key Budgeting Challenges within the Public Sector when Using Excel

Challenge 1: Monitoring and reporting expenditure against budget

In principle, this task seems relatively simple but with multiple budget holders across numerous departments and districts, collating data can be a significant, time consuming challenge. This is particularly so when you consider that budget holders often have their own unique ways of working on spreadsheets, leading to illogical and inconsistent processes throughout the company. Once reports are amalgamated, details can be difficult to analyse and understand because they’ve come from fragmented sources.

Challenge 2: Set allocated funding and efficiency targets

Many organisations work on an annual or a fixed number of years funding allocation, for instance the NHS currently work on a 5 year funding plan provided by HM treasury. The challenge is to allocate the limited funding out to the budget holders and reach an agreement. Departments may also require efficiency targets, which work in a similar way.

Challenge 3: Controlled transfer of budgets from one department to another

Throughout the year, funding underspending in some departments may result in transferring funding to other departments. This funding needs to be carefully tracked and controlled, something that cannot be approved or tracked via a spreadsheet.

Challenge 4: Forecasting staff costs and FTE numbers accurately

Staff costs make up the largest percentage (80%) of expenditure for public sector organisations so if you’re planning your FTE (full-time equivalent) numbers, it’s important to forecast staff transfers, staff leavers and recruitment in order to understand if you’re under or over budget. Additionally, when modelling staff costs based on pay deals, you’ll need to forecast how much potential salary increases will cost you.

Challenge 5: Yearly rebuild of the budget models

For many departments in both public and private organisations, having to re-build the Excel model each year is a physical effort. When moving into a new year, it’s customary for departments to have to create new spreadsheets, setup the calendar for the new year, setup new inputs, and update last year comparatives. This annual process can take weeks and is resource intensive.

Using Digital Technology Can Help…

Many public-sector organisations are adopting Enterprise Performance Management technology to help solve these problems. Cloud solutions such as Oracle’s market-leading EPM Planning and Budgeting Cloud Solution (PBCS) puts you in control and keeps everything connected with simple to use planning software that enables public sector, healthcare, and higher education organisations to simplify budget preparation, reduce time spent in the planning process by 38%, and improve forecast accuracy by 12%.

How to Solve the Key Budgeting Challenges

Implementing a Cloud based EPM solution such as Oracle PBCS instead of Excel, can help to avoid the key challenges that public sector organisations struggle with by helping to simplify and speed up common business processes, whilst preventing the management of multiple Excel spreadsheets and the likelihood of manual error. The solutions Oracle PBCS provide include;

  • A central system where all data is updated and collated immediately. Data can then be analysed and sliced as required. There’s no longer any need for manual consolidation of spreadsheet data, or different version headaches.
  • Set your targets by department or section corporately. This means you can compare to your bottom-up budget created by budget holders. You can also create iterations of the budget as conversations proceed, and agree and approve each departments funding for the year using the simple inbuilt approval system.
  • Budget holders can transfer funding between their budgets in a controlled way, so budgets stay balanced, and the history can be tracked. They can also request additional funding which can be approved centrally.
  • The complex modelling engine can provide controlled forecasting of transfers so FTE numbers don’t become out of sync. It also easily forecasts the impact of pay deals on grade steps using ‘what if’ analysis.
  • The model rolls forward simply to the next year in a few minutes, completely removing the weeks it takes to re-build the budget models for each year. With less time spent preparing the files required, the business can spend more time accurately reflecting their required budget for the upcoming year.

Conclusion

If you’re looking for a planning and budgeting solution to help develop detailed bottom-up operational and financial plans, and deliver annual objectives and targets, a cloud based planning system such as Oracle PBCS provides a great solution. For more information about the benefits of using Oracle PBCS, please visit our website.


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