So most companies have a big corporate office and a bunch of regional offices that they allocate money to, I get that. Let’s say a given office gets a $500,000/yr operating budget (just throwing out a random number). How do they spend exactly $500,000? Because they obviously don’t want to go over budget but they don’t want to have a surplus and lose $ next year. So is there wiggle room? Would they spend $499,995 or something?
In: 485
They don’t. They go over all the time and the manager in charge has to explain why they went over, gives a good and reasonable explanation, or gets disciplined.
Looking like you’ll go over the wages budget? No problem, a little bit of wage theft is common place.
My grandfather was in the military and talked about how his unit would go spend every penny before the end of the fiscal year, so it wouldn’t get cut the next year. He worked in hospitals, so they’d go buy new equipment, or one example he gave, they went and bought a shitload of vacuums for housekeeping. Anything to spend the money.
At the end of the year if not all the money has been spent some really expensive hammers are purchased from someone in management’s mate
They forecast or guess based on previous year + costed and uncoated expected and unexpected factors.
Over price everything so your don’t go over then pocket what’s left and pretend you know what you’re doing and have worked to budget.
Budgets are just last year’s financials with minor adjustments for the most part. Many costs are exact and known like leasing and salaries which make up a big chunk. Not always.
Obviously different organizations do things differently, but normally as a budget holder you put together a budget, which is a specific month by month account of where you are going to spend money; salaries, services, equipment and so on. That gets submitted and then usually it gets cut. So you then rework the numbers. (E.g. Can’t afford to replace 50 laptops this year, so we’ll replace 20) until the budget is accepted. Then you get a monthly report comparing your budget with your actual spend. If you are over you will have some explaining to do – you will normally be expected to bring it in line in the following month.
If you have a budget of 500 and you spend 400 then you’re going to be buying a hundred dollar coffee machine for the office. Never spend below budget, because then your next budget will be reduced.
Spend down! If your annual budget is $500,000 and at the end of the fiscal year you’ve spent $450,000, that’s where each department is gonna get its new office chairs or *totally necessary* work knives or what-have-you to ensure you don’t come in under budget.
On ramps and off ramps. Then you buy new office chairsand business supplies at the end of the fiscal year to get as close to the target as possible.
Latest Answers