Responsiveness and rapid decision making are especially critical in a fast-paced business environment. Responding to variances and allocating resources quickly and effectively requires process optimization and, ideally, speed. As a result, businesses may be hesitant to explore the benefits of bottom-up budgeting, instead opting for a faster, top-down approach. But creativity in the process can help businesses rethink their approach, with technology and automation playing an important role in opening the doors for more strategic and efficient planning. 

The Business Shift to Bottom-Up Budgeting 

Bottom-up budgeting methods like zero-based budgeting, are looking more appealing to businesses combating inflation and economic volatility, according to the Wall Street Journal. These budgeting methods offer deeper granularity and often result in greater cost savings, but the objection for many businesses is a more intensive process compared to traditional, top-down budgeting. 

Conceptually, top-down budgeting places the burden and responsibility of establishing budget thresholds with senior management. Management sets the company’s strategic vision and creates a reasonable budget for each department. Bottom-up budgeting, in contrast, shifts budget creation to each department of the organization. This process is inherently longer, but often results in:

  • Increased accuracy from having boots-on-the-ground awareness of component costs and operational expenses.
  • Aligned strategic priorities when company objectives and strategic vision are shared and communicated at the start.
  • Enhanced relationships between departments, where financial models with different output levels can be viewed collectively to understand the impact on each division.
  • Higher chances of success in the planning process due to increased departmental engagement and ownership.

But the appeal of this approach is not always enough to justify the time and resource burden. And that’s where innovation in the budgeting process can help. 

What’s the Hold Up?

Being aware of—and addressing—the challenges of a bottom-up budget can help identify the areas where automation and streamlined efficiency can be most useful. These challenges often include:

  • Increased communication around strategic vision, timelines, etc.
  • Increased tie to gather inputs, aggregate data and review
  • Establishing a consistent level of granularity among departments and managers
  • Upskilling managers who are less experienced in preparing budgets
  • Taking time to train staff in new software or workflows
  • Monitoring the budget against actuals to adjust quickly

Assessing Modern Tools to Empower Bottom-up Budgeting

Excel spreadsheets have, and will continue, to be useful tools in business planning. However, it’s important to weigh the ROI of specialized planning software, as well as AI-driven tools that can improve planning speed and accuracy. 

Specialized software and intelligent technology can be a game changer for financial planning and, specifically, bottom-up budgeting. While businesses shouldn’t choose tools just for the sake of speed, consider how the advantages of these tools can justify the cost and time of implementation: 

  • Data consolidation: Automatically upload and integrate data from multiple sources into one place, including individual department budgets. It improves budget visibility and also allows you to save historical data to compare past and current budgets. 
  • Data security: Safely share financial data, rather than sending spreadsheets via an email link, and set guardrails or access limits for certain users. 
  • Forecasting: AI-driven software can improve predictability and perform in-depth scenario analysis to determine more effective resource planning. Unlike Excel, newer tools can manage and find patterns in larger data sets and help your financial forecasting with greater frequency. 
  • Automated reporting: When it comes to reporting and tracking data, planning software dashboards and reporting tools help you catch variances and track spending to update your budget with more agility.

When assessing a SaaS tool, consider software with an intuitive user interface for easier training and adoption. Your tool should also allow you to update variables when conditions change and ensure that information and assumptions are consistent across departments. 

Creative Workflow Solutions, Regardless of Your Tech Stack

Specialty budgeting and planning software can be ideal, but templates, calendars and other tools can also make a significant impact on your budgeting process. 


Setting up email templates, a Slack channel or providing talking points for department managers will help to create a cohesive communication plan. Schedule small-group town hall sessions to discuss your strategic vision and new initiatives and provide time for Q&A. Record the meetings and make them available on an intranet budget page.


Create a shared, dedicated budget calendar that includes all due dates in the planning process, meetings, notes and resources. Automate workflow alerts a few days prior to each due date so that participants can be aware and prepare for deadlines. 


Develop and share a set of three personas with amusing names and characteristics to describe the spectrum of detail that you want your team to aim for. This will help anchor the concepts and make them memorable. Participants will recognize the personas they have a tendency to mirror, therefore being more likely to self-correct if they’re digging too deep or just brushing over the surface.


Whether using spreadsheet templates or budgeting software, you can add notes, conditional formatting and protection to cells and fields that help transfer experienced budgeter knowledge to less experienced users. Hovering over a note can prompt novices to consider seasonal expenses or other items that they may not intuitively think about. Conditional formatting can highlight values that exceed constraints, and protection can save formulas from being inadvertently typed over.


When possible, include training sessions within your contract with budgeting software companies. Their teams work with a number of industries, and they can rapidly train staff on their software or preemptively answer common questions. If using spreadsheets, engage the natural trainers in your company to facilitate budget training sessions. 


The true value of budgets lies in variance analysis. Set up automated data downloads to generate weekly, unless a continual API (application programming interface) is available for integration with your budgeting software. Real-time KPIs can populate a dashboard with variance indicators to note the delta between actual and budgeted values.

Add Humans to the Equation

Automating processes can address many of the challenges of bottom-up budgeting, but all types of budgeting have their limitations. Humans are at the core of the relationships, decision making and system creation that enables automation.

Automatically generating emails that make discrepancies known to all departments is a sure way to build resentment rather than resolution. Likewise, programming systems to become smarter and follow rules we establish doesn’t remove us from the responsibility of the decisions that are made. Using judgment and humanity will continue to require responsible managers who make informed decisions while considering the many nuances that exist. 

Build Your Expertise Base

Lean management teams rarely have the luxury of in-house staff to build out new processes or transition to new budgeting methods. Paro was built to fill that gap. Our network of fractional finance experts are vetted and ready to help with software selection or manage your end-to-end budgeting process. Schedule a consultation to learn more.