In many companies, there’s this policy which requires awarded budget that must be spent completely once it’s approved. If the annual spend is below the allocated annual amount, there’s a chance next FY you won’t get the requested budget you asked for.
– why do such policy exist?
Isn’t it better to carry over unused expenses to the next FY? Saving expenses expenditure is a bad thing? Such a policy encourages employees to spend extravagantly the remainder amount nearer to FY-end.
In: 196
Budgets can be pretty big, and buying a few things extra to fill out the budget isn’t a big deal.
Budgets get changed all the time. If you don’t use it this year it may be gone the next. Getting authorization to exceed budget can be difficult, while spending what’s already authorized is easy.
Take the converse.. if everyone is hyper incentivized to come in below budget you get scrooges that pay poorly, understaff and remove free coffee from the office. You get a bad place to work.
Latest Answers