How to Define a Budget Approval Process
Learn why it’s important to have an optimized process for budget approval in place and what to consider when designing approval workflows.
Having an efficient budget approval process is critical for any growing organization. Executives and managers need to have a system in place for requesting, tracking, and approving budgets in order to move capital to the right areas and prevent wasteful spending.
Despite this, companies often struggle to create an efficient budget approval process. As a result, it becomes difficult for teams to reach their goals and serve clients most effectively.
Read on to learn why it’s important to have an optimized process for budget approvals in place and what to consider when designing approval workflows.
Why It’s Important to Have a Process for Budget Planning and Approval
From the outset, creating a process for budget approvals may seem like a giant hassle. However, there are many reasons why organizations should create and optimize a budget approval process.
Without a budget approval process, it’s easy to lose track of where your organization is allocating money on a daily basis. When this happens, companies can wind up in the red zone—spending more than they should. Creating a budget approval process makes it easier to control financial distribution and disperse money fairly for all teams and individuals.
When you have an official process for budget approvals, you create a single pipeline for all budgetary requests. This prevents teams from accidentally forming multiple budgets or submitting duplicate requests and receiving excess funding. In order for budgeting to work, everyone needs to be on the same page and using the same system. Otherwise, things can get messy.
If you don’t have a single budget approval system that everyone is using, team members may submit requests in different formats like Word documents, spreadsheets, or PowerPoint presentations. Creating a budget approval process provides an opportunity to request budget approvals in a single uniform format. This makes it easier to process, analyze, and approve budgets. And as a bonus, standardization also opens the door for workflow automation, enabling you to increase operational efficiency.
Keep Workflows Moving
Budget approval delays should never hold teams back from completing their projects and tasks. Unfortunately, this often happens due to simple administrative issues. For example, an executive may miss a budget request or an important email may go to someone’s spam folder by mistake, slowing things down.
Optimizing your budget approval process and using real-time alerts expedites financial requests and approvals. This, in turn, prevents cash flow issues from impacting operations.
What Are the Main Steps in a Budget Approval Workflow?
Of course, it’s important to consult with your company before creating a budget approval workflow to see if there are any existing rules or processes that you need to adhere to.
But in general, the following budget approval workflow can help most companies get more control over their finances.
1. Schedule Meetings
Before team members start submitting budgetary requests, department heads and managers should meet with their teams to discuss core initiatives. This is a good chance for teams to outline key objectives and prioritize spending for the forecast period.
2. Set Up a Request System
It’s also important to establish a single system for submitting, receiving, and processing budget requests. To do this, explore the various options on the market and use a system that best aligns with your organization’s unique needs. For example, many teams now use Slack to handle budget requests due to its powerful automation capabilities and convenient messaging functionality.
3. Submit Budget Requests
Once your team is ready and you have a system in place, team members can move forward with submitting budget requests from management. You may want to consider holding a brief workshop or lunch-and-learn session to walk team members through the submission process and answer any questions.
4. Review and Modify Budgets
In most companies, managers or analysts review budgetary proposals when they come through. During this process, you may grant preliminary approval outright or send back the budget with questions or feedback. As such, it helps to use a platform that makes it easy to respond to requests and provide direct input about each of them.
5. Analyze the Modified Budget
If you have to return a budget, the sending party should revise it accordingly and submit a new draft. This draft should address feedback or provide more evidence that supports the request. In some cases, the submitting party may want to request a meeting with the reviewer to explain their needs. This is where it pays to use a platform like Slack. By doing so, you can quickly jump into a meeting and go over the budget together in real time.
6. Submit a Modified Budget
Once the modified budget is ready, the manager or analyst should submit it to the executive board for approval. At this point, the executive board will either submit a proposal or approve the modified budget outright if it aligns with the company’s larger budget.
Key Considerations for Designing a Budget Planning and Approval Process
It’s important to avoid rushing into a budget planning and approval system without considering the implications. Moving forward with the wrong budget approval system can slow down budget requests and frustrate team members.
With that in mind, here are some tips for designing an efficient budget planning and approval process for your business.
Make Sure Your Process Is User-Friendly
The system you implement should make it easy for team members to submit and review requests. The system shouldn’t have a big learning curve or contain complicated procedures, as those could lead to pushback and complaints from users.
Use Customizable Forms
It’s also important to find a program that you can customize to fit your needs. For example, users should be able to modify form fields or create additional ones when they need to introduce a new subject or attach multimedia files. This prevents users from sending information separately by email or through the cloud and keeps the approval process more organized and secure.
Make Sure the System Is Reliable
Your team is going to use the budget approval process very frequently. As such, it’s necessary to use a system that will remain up and running. As a best practice, consider using a cloud-based budget process solution that’s reliable and efficient. The right solution should also enable you to conduct rapid-response troubleshooting in case something goes wrong.
Automate Approvals for Faster Reviews
Many teams are now automating budgetary process approvals to reduce manual workflows and streamline review cycles. For example, developers can build approval workflows into Slack for automatic approval notification and routing.
Set Up a Tracking System for Your Approvals
It’s very easy for budgetary messages to get overlooked or lost—even when using a platform like Slack. Workers typically receive thousands of incoming messages per week, making it difficult to respond to each one. That being the case, it’s a good idea to set up a tracking system to map requests and follow up when necessary.
Use Wrangle to Manage Budget Requests in Slack
Managing approvals in Slack alone can be challenging, mainly because the system doesn’t have a way to track status updates.
Enter Wrangle, a workflow automation software built for Slack. Wrangle allows you to build efficient budget approval processes that are available to your teams in Slack. You can automatically assign approvals and tasks, while receiving automatic updates on the status of a request. Wrangle prevents messages from getting lost in the shuffle and ensures important budgetary requests make it to their intended targets and receive the proper attention. Wrangle maintains a complete record of every request, which means you have a complete audit trail that can be exported as needed.
To learn how Wrangle can enhance your Slack workflows, request a free demo today. Or, start building automated workflows for our budget requests right now by adding Wrangle to your Slack workspace. Wrangle is free to try.
This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling.
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