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.
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Because, if one department isn’t spending all of their allocated budget, they means they don’t need the amount allocated to them. And if they don’t need it, some other department surely can use it because they didn’t have enough allocated to them.
So department’s try to spend their entire allocation so that when they actually do need it, it’ll be there.
You don’t need the money, right up until you do. And when you do need it, if you don’t have that allocation to your department, you’re SOL, you’ll have to **try** to get it for next year’s/quarterly budget.
Spending it just tells the people who make the budget that you do in fact need the amount allocated to you and to not give some of it to someone else.
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