Mastering the Budget Cycle

February 4, 2022 Mimi Torrington

accountant putting in practice what was learned in a budget cycle mastering course

Improving & mastering the budget cycle is critical for any company, large or small, particularly in a world that's changing so quickly and unpredictably. While many agree that budgeting is essential for financial leaders, but the process can be a time-consuming and ongoing -- and one that includes several factors.

For example, How often should you readjust budgets? What’s the best way to set a budget? How far out should you forecast a budget? Who should be involved in the budgeting process?

If you’ve ever stopped and asked yourself any of these questions, you’re not alone. Particularly if you’re the CFO or a finance professional in the SaaS industry.

On this episode of CFO Weekly, we got a chance to sit down with Clint Jackson. Clint is the Chief Financial Officer at BombBomb, a SaaS company that enables anyone, but primarily sales professionals, to record, send, and track video messages, and he steered us in the right direction when it comes to managing the budget cycle.

Our conversation centered on all the ways in which SaaS companies get the budgeting process wrong, the steps they take at BombBomb to set the revenue portion of the budget, and advice for companies looking to break down their budgeting silos.

Read More: Breaking Down Barriers: How To Take F&A Out Of The Enterprise Silo

How a Lot of SaaS Companies Get Budgeting Wrong + What Can Be Done to Get Their Budget Cycle on Track

Clint Jackson, CFO

Budgets are complicated things, there’s no doubt about that. But just because things are going well, doesn’t mean you need to wait until later to think about budgeting.

“I have a pretty strong opinion that a good budget does not wait until budget season to do all the key activities," Jackson said.

One of the key metrics in the budgeting process is to meet regularly and to meet often. Your leadership team should be coming together on a consistent basis to discuss key numbers. That way, you walk into the budget planning cycle knowing what the key drivers are, knowing your KPIs, and knowing how your budget is going to impact revenue.

According to Clint, a lot of budgets fail not because they’re bad budgets, but simply because behind them, there’s a disjointed leadership team and a lack of strategy that makes the budgeting process difficult for everyone involved.

Take the Next Step. Read: How The CFO Role Has Evolved: Becoming A Comprehensive CFO

The Revenue Portion of Your Budget Cycle

budget planning quote

Once it’s time to start setting up the revenue portion of your company’s budget, what’s the best way to go about doing that? Who do you involve, and in what order do you involve them? Clint had some very practical advice from his experience at BombBomb. To be specific, he and his company utilize four steps.

“We walk into the budget planning cycle, knowing what the key drivers KPIs are, how they're trending, and how it affects revenue," Jackson said.

Steps to Budgeting - Improving the Budget Cycle

1. Setting Revenue

This is building your base plan. What you’re giving to your board, your investors, your lenders, and what you’re hiring against.

Combine the base plan with a stretch plan that drives short term incentives, and represents goals for your team, and you’ve got a hybrid budget where finance puts together the starting plan, then gets feedback and revision from department leaders, all while keeping an eye on the three year plan.

2. Allocating Investments

It’s all about setting the right financial targets. It’s your allocation strategy. Once you know this, you know what you have to work with and where you need to focus. The rest is just details. You’ll want to make sure and gather input from all stakeholders. From your CEO and President to your investors, to your lenders and your peers.

Once all these voices are present, you put it all together in a type of venn diagram, sketching out where capital will go. From there it’s given to the department heads, allowing them to make the best use of the dollars allocated to their departments.

3. Expense Plan

Once the departments are given their swim lanes, department heads can fill in the information for themselves, then once a budget is in place, the finance team can lock in the expense.

4. Consolidation, Iteration, & Reporting

Make sure it all fits. Check it for errors. Check it against the prior 12 months. Then put it together into some sort of reportable framework to give to leaders for approval.

When all is said and done, you should have a regularly reviewed budget that allows for some flexibility, emergencies, and shifts in strategies and priorities.


Want more information from Clint on improving the budget cycle? Check out the whole interview. Still having trouble making time for budgeting? We can help. Our team of accounting pros can take transactional work off your plate so you can focus on what matters most. Find out more or drop us a line and we will be in touch.

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