As a business owner or the head of a finance department, you know that budgeting is an ongoing process. In order to reach your targets and stay on track of your goals, you must consistently monitor, evaluate and adjust your budget accordingly. Whether you perform these tasks yourself or employ a financial analyst that juggles these tasks alongside other duties, someone dedicated to budget analysis can take a substantial burden off of your team’s shoulders. As you create your budget, consider the question: what does a budget analyst do that can augment my current budget strategy?
What is a budget analyst?
A budget analyst is a financial professional who helps an organization prepare, track and evaluate their budgets in order to ensure better use of funds and help prioritize specific goals and growth opportunities.
While there is no set licensing for a budget analyst, a skilled budget analyst will have a background in finance, as well as experience specific to the industry or sector that the organization falls in—e.g., non-profit, healthcare, manufacturing, etc.
A professional may be hired under the budget analyst title, or they may also work under a different title. A budget analyst can simply be a financial analyst that specializes in budget analysis and focuses on budget-related tasks. Oftentimes, financial analysts are also accountants or CPAs (Certified Public Accountants). However, while an accountant can provide important budget insights, they may not have the time or specialized experience needed to provide deeper analyses. Therefore, to maximize results, it’s best to seek the support of one individual who can dedicate their time to the task.
What does a budget analyst do?
In scrutinizing an organization’s existing budget, the budget analyst will:
- Perform budget variance analysis to compare expected versus actual performance and evaluate the accuracy of earlier assumptions to refine models.
- Make budget recommendations based on economic conditions, cost-benefit analysis and other factoring data.
- Track and monitor spending to determine inefficiencies and create accountability across teams and departments.
- Assist in creating targets, identifying milestones and developing high-level and more granular goals.
In addition to these responsibilities, an analyst will be able to create and present reports that more effectively visualize your data. Tech proficiency is key to a budget analyst’s role, as the right tools can make a major difference in the quality of their reports.
What can a budget analyst tell you about your business?
An in-depth analysis of budget performance can answer questions like:
- What purse strings can be tightened to increase efficiency?
- Where does more capital need to be distributed in order to make an impact?
- Should I focus on a different product line or service?
- What assumptions from my forecast or financial model should be updated?
- Where can certain tasks or projects be outsourced?
- How will recent economic events impact my budget, and how can I adjust my budget to mitigate risk?
- Are new investments returning the results I anticipated?
Having these insights presented in a digestible manner can give upper management a leg up in the overall planning. An expert budget analyst will be able to present their findings in a comprehensible way to management and other project stakeholders, thereby decreasing the time and resources needed to make decisions and develop the budget.
How to get the most out of your analysis
Budget analysis adds significant value to a company’s financial insights. But more importantly, how effectively your team manages and communicates data—and its existing budget—will determine how much benefit you receive from working with a budget analyst.
For private and public companies, budget analysis can be an effective tool alongside other analytical tools, such as forecasting and modeling, KPI reporting or profitability and key driver analysis. These tools, in tandem with budget analysis, give a clearer picture of areas to focus on, how to measure success and how to allocate resources to get there.
For non-profit organizations, budget analysis is frequently used alongside grant tracking solutions, which manage grants from the application and research stage through the award stage. Budget analysis can also help evaluate grant programs and how grants are utilized across the organization.
Regardless of whether your organization is a private company or a non-profit, your budget analyst will not be able to provide a thorough report or recommendation without the most up-to-date and accurate information. As a business, you can achieve the best results by doing the following:
- Provide your most recent financial statements.
- Use an organized system or software for presenting your budget and financial information.
- Ensure that managers track and record any budget updates or revisions.
- Plan to update your budget on a regular cadence (e.g., monthly or quarterly).
Gain industry-specific expertise with a fractional budget analyst
Your business may not be able to justify a full-time budget analyst, which may be more appropriate for government entities and other similarly run organizations. However, a fractional budget analyst—or a fractional financial analyst with comprehensive budgeting experience—can be a beneficial option for a business that is planning a major project or campaign, looking for ways to cut spending or simply seeking support on an as-needed basis.
Fractional and remote professionals can offer you industry-specific knowledge from anywhere in the country, as well as additional time and cost-saving benefits. If your business could benefit from better budget projections, more efficient spending or general process knowledge, Paro offers budgeting solutions from highly vetted, fractional experts who understand your specific business and industry challenges.