A Telegram channel about accounting and HR outsourcing for those who want transparent, manageable business processes
We share case studies, explain legislative changes and show how automation and outsourcing help businesses grow.
Personnel cost budgeting is hard: you need to be a bit of a visionary and account for future market changes, salary dynamics and the cost of new ways to motivate and retain specialists. On top of that, the process of consolidating information for budgeting can take weeks. And while companies cannot influence the volatility of the world, automating the collection and processing of data is easy.
Using the example of implementing the Budgeting module at Russian Utilities Systems (RKS), we show what problems businesses face when planning personnel costs and how automation helps cut effort by 50%. Elena Terekhina, software developer at UCMS Group, the company that carried out the implementation, explains.
RKS used separate software for budgeting, into which an already prepared Excel budget had to be loaded manually. Besides manual data entry, it lacked flexibility and the ability to configure filters according to the company's needs.
But the main goals the RKS team wanted to achieve with automation were reducing the effort spent on budgeting and lowering the error rate.
Common problems with manual budgeting:
If a company has up to 100 employees, most of them office staff on a standard schedule, a well-configured Excel spreadsheet may seem enough for budgeting - but even then you are not protected from errors and legislative changes. If you need to account for shift work, bonuses, allowances and other variables, it is harder to do without an automated system.
The best option is to do budgeting in the same program in which the company runs payroll and HR, for example 1C, SAP or Oracle. This lets you work with a single database of salaries, bonuses, indexations and other parameters. This approach speeds up budgeting and improves its accuracy.
RKS uses 1C:ZUP CORP as its payroll and HR system, which is partly why the Budgeting module was chosen. It integrates with the current 1C:ZUP CORP configuration, pulls employee data automatically and accounts for changes in legislation.
Budgeting is based on the accrual reference book, the staffing schedule and the conditions set for the employee. Actual data from previous periods is also taken into account: if the system has monthly, quarterly or annual bonuses and allowances, the module uses this data for the calculation. This makes it easy to bring information from the payroll and HR system into budgeting without extra effort.
Let us look at which RKS business process specifics were taken into account when implementing a flexible, automated budgeting system. These examples will help companies with complex structures better understand the specifics of budgeting automation.
Personnel cost budgeting is carried out to IFRS standards with the ability to produce a budget of income and expenses (BDR) and a cash flow budget (BDDS).
The following mechanisms are configured: payroll fund calculation based on the hourly tariff rate taking into account all accruals set for the employee, calculation of vacation and annual bonus reserves, calculation of vacation pay and payment of the annual bonus.
Accounting for the company's complex structure. The budgeting process at RKS is quite complex, because the payroll fund has to be split by the following parameters:
That is, one salary or another item can be allocated as a percentage across several different categories by business type and expense area.
The report shows the allocation by expense area
Adaptation to different work schedules. The basis of personnel budgeting is the staffing schedule. The budgeting module accounts for different schedules or calculates salary based on hourly rates and the actual number of hours worked.
If an employee works 100 hours in January and 120 hours in February, the settings in the database are also analysed and salary costs are calculated for each month, taking PIT and other payments into account.
Automated calculation by indicators. For example, a standard bonus calculation may be based on a certain percentage of the employee's salary. This indicator is fixed in the module and used to calculate planned bonus data.
Each such calculation mechanism has its own rules, which can range from standard (for example, calculating the regional coefficient) to more complex (for example, special bonus logic). Indicators can be configured very flexibly in user mode, that is, without involving an IT specialist.
An example of indicators in reports
Planning headcount changes. For example, if a company has a vacancy but the employee has not been found yet, the position can be included in the budget using special mechanisms based on the staffing schedule. Planned vacancies can also include all the indicators typical for that position, for example a hazardous conditions allowance.
Planning based on actual data. Planned data includes the fixed part of the salary, bonuses, vacation pay, insurance contributions and allowances - what can be predicted. But there are also unpredictable payments, for example for weekend work, overtime, one-off bonuses and additional pay for combining positions.
To account for this information, an algorithm was added to the module that collects data for the previous period and applies the calculation results to the current one. That is, it analyses how much employees worked at weekends last year and takes that into account in the budget.
As a result, all the data already in the system can be used for budgeting. For example, accruals that appear on payslips and already exist in the payroll and HR system integrate easily into budgeting.
Salary indexation. The system has a mechanism for indexing calculated values, both across the whole company at once and by division from any month of the planned year.
You configure the analytics parameters and report detail yourself: by budget item, for the organisation as a whole or for each employee, by division, by accrual type. Any report can be viewed over time: before and after changes.
For example, it was important for RKS to account separately for the payroll fund, reserves and insurance contributions in budgeting.
The company also needed both BDR and BDDS:
An example report
Choose a system that integrates easily with your current solutions, especially the payroll and HR system. Make sure the vendor offers the add-ons and configurations needed to automate budgeting for your business processes.
When choosing a supplier, ask for implementation cases at similar companies and check the quality of technical support. It is also important that the system is flexible in its settings and that the supplier provides training for employees.
At this stage it is important to describe all the company's processes in detail and find out which data is already in the system and which needs to be added. This is critical for the system to work correctly.
When implementing the system, start with a pilot project in one division: this reveals possible problems and lets you configure the system around the company's real processes. Be sure to involve key employees at the configuration stage so that all important nuances are taken into account and other users adapt faster.
When configuring the system, it is important to provide several access levels: full rights for employees responsible for data entry and reporting, and limited rights for those who only use the finished information.
Ask the supplier for detailed instructions with examples so that users master the system's functionality faster and can make full use of its capabilities.
After implementation, analyse how the system works regularly using specific metrics (calculation accuracy, data processing speed and so on). When business processes change, make adjustments to the algorithms together with the supplier to keep the system up to date.
Automating budgeting reduces effort and improves the accuracy of analysis - this is especially important for companies with complex processes. When choosing a system, consider which tasks it solves in your company and pay attention to its ability to adapt to change and scale. Flexibility and the ability to customise it for your business are key criteria for choosing an automated budgeting solution.
Our cases
