To many in the organisation, budgeting can be seen as a chore, and oftentimes, a meaningless chore. The reasoning for this often lies in inadequate communication. If finance and operational professionals aren’t on the same page with executive management as to the purpose of budget preparation, or don’t feel like management care what they create as a budget, then motivating the team to create a quality, meaningful budget will always be hard.
A sound, well prepared budget is essential for every mining operation, providing the business with important benefits including:
- Developing sound cost and performance standards against which actual performance can be measured.
- Facilitating allocation of appropriate resources to projects.
- Allowing managers to reassess goals and objectives and the means for accomplishing them.
- Improving top management's ability to coordinate the overall operation of the organisation.
- Improving decision-making.
- Identifying problems before they occur - such as the need to raise finance or update reports to the stock exchange.
- Facilitating communication throughout the organization.
Key elements of good budgeting process
There are a number of factors that will help to enable a smoother, more valuable budget process.
- Clear communication of expectations: management and budget owners need to be on the same page right throughout the process.
- Ability to create budgets at a sufficiently detailed level to allow them to be challenged: for example, $100k monthly spend on contractors provides limited understanding. Reframing this as 10 drilling contractors at a rate of $10k/month on 2 defined drilling projects allows for robust strategic discussion between management and budget holder.
- Confidence in numbers: accuracy and auditability are crucial components of a good budgeting process. They provide a level of transparency and accountability that is essential for effective financial management. It allows for independent verification of the budget figures and helps to identify any errors or potential areas of risk.
- Integrated system facilitating rapid turnaround and clear visibility: users must be able to make changes and see the impact on budget. This is essential for the finance team to be able to rapidly compile management reports and means no more staying up till midnight building reports.
- Time to analyse and review: frantically compiling multiple budget spreadsheets to meet a budget presentation deadline is often a recipe for error. Budget holders and finance team need to be able to confidently review as the budget build is progressing,
- Ability to rapidly flow through management requested changes: these will always happen, it’s only a matter of how many versions of the budget will be required. If changes can’t be rapidly flowed through the user prepared budget, then budget owners can’t and won’t be held to account for the resultant budget – “those aren’t our numbers”.
Automating your Budgeting doesn’t need to take forever and cost the earth!
Whilst it often seems difficult to justify the effort and cost of a new system, the savings on employee time, the added confidence in the outputs, and the time saving in turning around versions more than justify the upfront outlay.
Implementing an automated process for budgeting doesn't have to take a long time. In fact, many software solutions are designed to be implemented quickly and easily, with minimal disruption to existing processes. Ramesys Global offer guided implementations that can be completed in a matter of weeks, rather than months or years.
Additionally, our budgeting software solutions are designed to be user-friendly and require little IT support. This means that financial teams can quickly get up and running with new technology, allowing them to start reaping the benefits of automation almost immediately.
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