By this time of year, most CFOs and their teams have buttoned up their budgets for the coming year, and are gearing up to present it to their executive team and boards of directors.

All due care is paid to ensuring the budget relates to the board’s strategic plan, and the level of preparation rivals that of the annual report. The presentations include the full package of financial statements (balance sheet, income statement and cash flow projection). The teams have spent countless hours consolidating the functional departments' and profit centers' expectations and ensuring that all joint resources and allocations are treated cohesively throughout the documents.

I’m not going to mince words: for many of us responsible for creating the budget plan, presenting our efforts to the board is the most visible and nerve-wracking task we’ll perform all year. Why the stress?

Just like any project plan, budget plans are built using a set of assumptions with revenue and expense drivers that define a limited number of situations. Then we get to the boardroom, the venue where tough questions are asked, new directions explored and pivots discussed. It’s not uncommon for board members to open up tenets of strategic plan for debate and expect you to provide insight on the risks and impacts that each change will have on the organization and its financial position. That means the presentation you spent weeks preparing may no longer be relevant to the discussion.

Budget plans should be treated as living documents that provide guidance and direction, and are updated and adjusted as actual results unfold. How do finance teams get there? I suggest three losses:

1. Lose the Spreadsheets

Part of the problem is that too many budget plans are still built using spreadsheets. It’s extremely difficult to build a spreadsheet that represents a complex company. Finance teams are forced to piece together multiple spreadsheets and rely on tenuous links, complex formulas and macros to arrive at answers. The result is a budget that’s difficult to manage and nearly impossible to manipulate in order to test the multiple business scenarios up for debate with the board. This is a critical consideration given that when building a budget model, it’s impossible to anticipate the variety of changes that might occur in the future.

2. Lose the Top-Down Approach to Budget Plans

CFOs and their teams build budgets, but the budget plans themselves are, in fact, the collective work of an organization's operational and business leaders. Because many of those functional leaders have little background in corporate finance, they wait to receive a budget number from the CFO and then work out the details as best they can. Once you receive the data, you need to validate and consolidate all inputs and massage it into a presentation to the board. This approach is, by definition, top-down, demanding too much input on the part of the finance team. And that, in turn, means the budget plan is wholly divorced from the day-to-day activities of the company.

3. Lose the Once-a-Year Mindset of the Budgeting Process

This is easier said than done since, as stated above, the finance team is far from the only owners of a budget plan. But budgets shouldn’t be documents an organization rushes to create every year and then puts on a shelf after the presentation to the board. Managing a business is a year-round activity, managing a budget should be too. (Admittedly, ongoing management would be a lot easier if your budget isn’t in spreadsheets.)

To succeed at changing the mindset within your company, you’ll need to convince the operational heads that your budget is a strategic asset to be used all year as a basis for performance measurement (actuals vs. plan), decision-making (what-if scenarios) and for keeping the business on track (forecasting).

(Of course, one of the reasons why budgets aren’t used year-round is due to the fact they’re often spreadsheet based, which are difficult to manage a budget in.)

A Huge Gain to Realize

I recognize the effort these changes require on the CFO’s and finance team’s part. It means sourcing a budgeting platform to replace your spreadsheets, and convincing operational heads they have an ongoing role in the budget plan. But the effort will deliver a huge gain: the ability to create and present boardroom-ready budget plans. When the board of directors wants to know —in the meeting—the ramifications of any number of business changes, you’ll be in a position to show them the impact on your P&L, balance sheet and cash flow statement. Put another way, the budget, and its creators, become much more essential to creating an organizational strategy.