Service Charge Budgeting
Each year, budget season gets a little earlier, somehow with the thought that it will ease the deadline pain. The mad rush at the end of the year is seen as not having enough time, so the best thing we can do is just increase the amount of time we have. Simple!
Except you're treating the symptom, and not the cause, and it's not effective. Here's why:
The business ultimately doesn't really understand why you need certain information in a certain way. It's seen as extra, surplus to their requirements and too difficult. They are busy with their own operational pressures. None of these things are fixed by extra time. You could give them two years notice and they still won't prioritise it.
Certain important factors for judging the future costs (September inflation, which impacts pensions and benefits, the Bank of England's Monetary Policy Reports and the Autumn budget statement) haven't been released yet or will be replaced with more accurate figures. You simply don't have the right information to build your assumptions for future cost yet.
Moving the budget timeline to cross or run close to the delivery of actual demands causes challenges, distraction, the increase the use of S20B's (and a longer period of them being required) and worst of all, team burnout.
So what to do?
As hard as it can feel, engagement with the business is key. You need to build relationships across teams throughout the year to ensure the relationship is strong enough and there is enough understanding around why you need certain information by a certain time.
Service charge budgeting needs to dovetail with your full budgeting process; make sure there are no excess information requirements which frustrate operational teams and that you come in at the right points in the process. Independent processes create gaps and can lead to duplication of effort and significant variances between recovered service charges and committed spend.
You should definitely have that robust timetable, but consider whether bringing it forward each year is serving your requirements.
