In budgeting for FY 2024, over 200,000 financial controllers across the US will build the fiscal foundations of both short- and long-term success for their organizations. From advanced security measures to cross-functional collaboration, they’re stepping into a brand-new era of control, visibility, and efficiency.
The 2024 corporate controller outlook: Top trends and insights
This September, Logica Research fielded a study for BILL, surveying 346 of these finance decision makers across a range of small and midsize businesses in the US. The results showed rising security concerns and a trend toward improving control and efficiency through AI-powered automation.
9 key budgeting strategies for controllers in 2024
Many of the budgeting strategies below are informed by the need for heightened oversight as controllers face new security threats amid a growing staffing crunch. Of the controllers surveyed, 39% reported talent availability as a staffing challenge heading into 2024.
1. Switching to zero-based budgeting
Instead of basing future budgets on past budgets, zero-based budgeting challenges controllers to re-evaluate every expense from the ground up, determining whether it’s still in alignment with company goals. By starting from scratch, controllers can be confident that every expense in the coming year is intentional, vital, and eminently justified—with resources allocated by strategic priorities instead of historical patterns.
To undertake that Herculean task, controllers are turning to new technologies for the time, resources, and tools they need to make zero-based budgeting possible.
2. The shift from budget monitoring to budget planning
Effective zero-based budgeting requires a fundamental shift from budget monitoring to budget planning. In traditional budgeting, target amounts are set at the beginning of the year and controllers then monitor spending from month to month, flagging anything that looks out of alignment as early as possible.
In zero-based budget planning, controllers determine ahead of time what's needed. To maintain ongoing control over those budgeting choices and priorities, controllers use modern tools that allow budgets to be pre-funded each month at set rates. If a department or project needs more than expected, the request comes before the extra money is spent, not after.
3. The rise of virtual cards
Virtual cards are key tools in this shift from budget monitoring to budget planning. These non-physical corporate cards give accounting operations significantly more control over their budgets, combining the ease and power of a corporate card with advanced financial software.
The beauty of a virtual card is that a controller can simply create one whenever it’s needed, with no need to request a physical card through the mail. Like other cards, a virtual card has a number, a security code, and an expiration date. It just doesn’t have an actual card.
Because of this extreme flexibility, controllers can use virtual cards to create and control distinct budgets. Say, one card (and budget) for utilities and another for subscriptions. Or even a unique card card and budget for each vendor—providing extreme budgeting visibility.
Controllers can even create a single-use virtual card for a specific one-time need—once that invoice is paid, the card will never work again. And, when something comes up that needs more budget than expected, the request can be made in real time and funding can be moved over immediately if needed.
Virtual cards (and even pre-funded physical cards) also help controllers manage employee spend and perks. A unique virtual card can be funded for each employee who needs a spend account—and defunded instantly if and when they leave the company.
When cards are connected to a spend management app, employees can select from approved spend categories for each transaction, even on the road. And they can snap a photo of each receipt as soon as it's in their hand, attaching it to the underlying transaction in real time, making cumbersome monthly expense reports a thing of the past.
4. New advances in data analytics
The field of data analytics has always been important to controllers, but recent advances in artificial intelligence are changing the game. Today's controllers are investing in tools and training that offer deeper analysis and reporting of financial data for new insights into budgeting needs.
With the help of data analytics, controllers can identify potential areas of inefficiency, forecast future needs more accurately (such as upcoming needs in hiring and payroll), and make more informed decisions about how to allocate resources for the coming year. This allows controllers to account for future growth in their budgeting process and improve financial performance.
5. Incorporating risk management
For today’s controllers, risk management is another integral part of the budgeting process. Controllers need to identify and understand any potential risks or uncertainties that could impact the budget—an analysis that requires a deep understanding of company operations.
- What supply chains are crucial to company performance?
- What's the break-even target for monthly revenue?
- If the company had to cut expenses drastically in the face of an emergency, what could be cut immediately and what couldn't?
- What would the company's bare minimum operating budget be in that scenario?
When controllers understand these kinds of risks and realities, they're in a better position to implement measures such as insurance policies and contingency plans. They also have a better understanding of how much needs to be set aside for potential emergencies to safeguard the company's assets and protect the organization's financial well-being.
6. Digging into scenario planning
As controllers dig into the biggest risks to company operations, scenario planning becomes an even more critical tool in the budget process. Controllers can run different scenarios based on each possible risk and develop contingency plans for each one, leaving them better prepared for potential challenges that may arise in the coming year.
Scenario planning also helps controllers identify and prioritize key financial metrics to watch for—metrics that could be early indicators of certain scenarios developing on the horizon. In this way, scenario planning and data analytics work together to help controllers allocate resources more effectively. By incorporating scenario planning into the budgeting process, controllers can help ensure the financial stability and success of the business.
7. Fostering cross-functional collaboration
By involving key stakeholders from multiple departments in the budgeting process, controllers are gaining new perspectives that can result in more accurate (and more realistic) budgets. Regular meetings and open communication channels facilitate collaboration and ensure alignment among different teams.
Is the product team looking for new testing tools that could provide valuable insights to marketing, too? Would the new tools eliminate the need for other tools that are currently in use across different departments?
Cross-functional collaboration ensures a more holistic approach to budget planning as different managers share their plans and goals. This helps identify opportunities to leverage shared resources, stronger positions for vendor negotiations, and better budget allocations for more finely tuned analysis and reporting.
8. Safeguarding budgets with advanced security measures and internal controls
When it comes to safeguarding financials, today's controllers are looking beyond two-factor authentication and 256-bit encryption. From using clearing accounts to building automatic audit trails, the following security measures and internal controls are providing new levels of assurance in the financial digital age.
Advanced security measures
- Keeping account info private. By paying and getting paid through digital networks, today’s controller’s can keep their banking information private—and more secure. Some payment providers (like BILL Accounts Payable) even send checks through a clearing account, so the routing and account numbers printed on the checks are from that clearing account rather than the company’s own checking account.
- Avoiding networks that depend on third-party issuers. Some AP automation platforms use a different third-party service to issue their payments. When choosing a digital platform, today’s tech-savvy controller’s are asking how their payments are being handled.
- Considering HIPAA compliance. For organizations in the healthcare industry, maintaining HIPAA compliance is critical. Controllers in these organizations need to ensure that their digital payments provider offers safeguards that are designed to the standards required for HIPAA's electronic protected health information (ePHI).
Internal controls
- Setting a clear separation of duties. Today’s digital tools can help controllers ensure the separation of accounting responsibilities—especially approval and payment responsibilities. Employees who record transactions should not have the ability or authority to approve those transactions. This minimizes the risk of human error as well as fraud.
- Ensuring strict access controls. Setting up strict user permissions in digital financial systems can reinforce this separation of duties. Requiring strong passwords and multi-factor authentication can further ensure that personnel only have the access for which they're authorized.
- Implementing standard operating procedures (SOPs). Well-documented procedures should outline the steps to be followed for all accounting tasks. Controllers can ensure that each step is followed with automated audit trails, periodic reconciliations, and regular internal audits.
- Keeping an automatic audit trail. Thorough documentation starts by recording each login and user session. When documentation is managed digitally, it’s easy to see exactly who did what when. Digital automation platforms can record every action taken throughout the organization’s AP, AR, spend, and expense processes in a timestamped audit trail.
- Speeding up the monthly close. Taking advantage of AP and AR automation, digital payment systems, virtual cards, and other technological advances can significantly speed up the organization’s monthly close. Fast closes and reconciliations help catch discrepancies early.
- Conducting regular internal audits. Whether they choose an internal audit team or hire an independent third party, many controllers are putting their finances on a regular audit schedule—using these opportunities to review KPIs as well as watching for any irregularities.
9. Embracing automation
Today's controllers can make use of several finance automation tools to streamline their budgeting process. Automation software can save time and reduce human error, allowing controllers to focus on more strategic tasks.
- AP automation can streamline invoice capture, approval processes, and payments—with multiple payment options for better control over cash flow
- AR automation can streamline billables and speed up incoming payments, for even more visibility into and control over cash flow
- Spend and expense automation offers tremendous control over budgets and employee spend
- Each of these automations also results in tremendous efficiencies, giving controllers far more time for budget initiatives like risk management and scenario planning
With the help of automation, controllers can streamline the budgeting process, easily track expenses and revenue, and make more informed decisions for the upcoming year. Automation also provides real-time insights and updates, allowing controllers to adapt their budget strategies as needed.
Leap ahead of the curve
To learn more about how today's controllers are leaping ahead, download The 2024 corporate controller outlook: top trends and insights.
Controller Appreciation Week is also approaching soon and the ultimate virtual finance event is almost here! Join BILL for Next in Finance: Innovation through Automation from November 20-21, featuring 6 CPE sessions from the best in the business.
