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Adopting a collaborative approach to budgeting - the secret to saving £1m

Published 27 October 2014

Charlotte Wynn from Cheshire West and Chester County Council says public sector organisations needing to collaborate in unprecedented ways can only do so if everyone is working from the same, up-to-date, accurate financial data

 

The full impact of the government's decision to cut funding by £11.5bn for 2015-16 will soon be felt by the majority of local authorities. These measures will add more pressure on already stretched council services which are edging closer to breaking point.

Absorbing these additional cuts, while trying to guarantee the protection of critical frontline services, is going to be a significant challenge due to tighter budgets and reduced resources. This is further exacerbated given how frequently requirements can change.

If local authorities are to continue to succeed in delivering more with less, maximising budgets must now become a problem shared across all individual departments, services and teams rather than resting with finance managers alone. To do this operational staff must be made more accountable for their own budgeting, planning and spending.

This doesn't mean that finance departments should be absolved of any responsibility. Arguably, finance now has an even greater role to play in ensuring that operational teams can appreciate the impact of their expenditure, while sharing the burden of identifying areas for reduced spending so that efficiency targets are met.

Now more than ever, local authorities need a clear line of sight across all financial activities to share information with operational managers. Yet many still use Excel as their default tool of choice for planning, budgeting and forecasting which creates several issues.

Manually entering data into spreadsheets invariably leads to inaccuracies and formulas have to be verified and rechecked, adding more unnecessary hours/days to an already protracted budgeting process. Having a number of budgeting spreadsheets in existence at any one time can also lead to confusion around version control resulting in more duplication of effort.

With so many opportunities for errors to creep into the budgeting process, this inevitably raises questions over the integrity of the financial information. Even if errors are avoided, there is a high probability that local authorities are basing vital decisions on information which is essentially out-of-date.

Like many public sector organisations, Cheshire West and Chester County Council was battling these common challenges in the midst of undergoing funding cuts while needing to reduce costs. A key priority for our consolidated finance team was to improve productivity, increase council-wide collaboration and provide tighter controls around spending. This was never going to be realistic while ever we were reliant on spreadsheets and manual quality-checking, consolidation and analysis tasks.

After evaluating the market, the organisation decided to invest in a budgeting and forecasting solution, after viewing a number of alternative products.

The chosen solution, Advanced Business Solutions' Collaborative Planning, uses data from the council's financial management system and has simplified the entire budgeting process by making it easier to input and analyse budgetary data. Budget managers anywhere in the council can access financial and budgetary information and compare budgets with forecasts through the single web-based system.

The improvement in our budgeting and forecasting capabilities has been vast; financial information is quick and easy to download; forecasts easy to enter and the resulting outturn position readily available. This has helped to reduce the budgeting reporting cycle by over a week. The ease-of use, combined with the system's flexibility, has also been instrumental in ensuring maximum take-up by budget holders which was a key requirement as responsibility for budgets becomes more devolved.

Since implementing the budgeting and forecasting system, the council has delivered £1m in savings by automating financial processes with further efficiency savings to follow.

When reflecting upon the scale of our transformation two areas have been critical. Abandoning spreadsheets and investing in a tailored budgeting and forecasting solution has streamlined the entire process whilst ensuring that budgets can be managed more closely. Operating from a 'single version of the truth' that everyone can access has also increased collaboration between council directorates. Staff now find it easier to query spending and are more willing to proactively address potential issues with accurate and timely data to hand - they have become more cost-conscious.

Public sector organisations are being called upon to collaborate in unprecedented ways to provide more joined-up and efficient services by improving transparency and devolving decision making. Most local authorities seem willing to embrace this vision by moving away from established ways of working in preference for creating greater clarity and control over forecasting, planning and spending.

However, this can only be achieved if everyone is working from the same, up-to-date, accurate financial data so that directorates are empowered to deliver changes with a clearer view of their budgets. Budgeting, forecasting and planning solutions are becoming increasingly commonplace among local authorities to drive new control over spending, and at a level that exceeds beyond the parameters of an individual department.

Transformation cannot come from technology alone. There are a number of intelligent budgeting, forecasting and planning solutions on the market which offer a powerful alternative to spreadsheets. In our experience, the investment we made has paid for itself many times over and has helped to transform efficiency, in addition to the way we manage all other spending.

Charlotte Wynn is Finance Manager at Cheshire West and Chester County Council







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