Accountants/Finance folks: How do you help manage budgets?
October 22, 2015 4:56 PM Subscribe
I would like my non-Finance colleagues to be more involved in creating and owning their budgets. How do I accomplish this?
I'm the lone finance person in our manufacturing site. In the past, budgets were developed (by my predecessor in finance), but not really followed by the people who were actually purchasing or working with suppliers, so there wasn't accountability.
Expenses for the purposes of this exercise = labor cost, utilities, and spending for goods/services other than raw material (this is managed separately).
This year, I met with each functional lead and discussed spending, because I wanted their input. I then used my best judgement of their requests and historical spending to propose a budget which was approved by upper management. Now, I would like team members to actually own their budgets. Most of my colleagues seem to have a mentality of "spend spend spend", perhaps because they have never been accountable to meeting a budget.
My ultimate goal is to make sure our spending is controlled and not going over our approved budget. I feel that maybe I have been too passive with expenses coming through in the past, and I really don't feel knowledgeable or in control of our expenses.
So my questions...
> What info should I be providing to assist teammates with their spending?
> How can I make it easier to track? Our accounting system is easy enough to pull data from, but sometimes purchase orders are not properly classified or even created, which can really throw off my visibility into spending.
> What feedback should I be giving to my colleagues when I see excessive spending? I feel I've been too passive in the past.
> And... how do I keep constant sight of the big picture? I am prone to getting lost in the details of giant spreadsheets of data, and have many other tasks.
Any advice and examples appreciated.
I'm the lone finance person in our manufacturing site. In the past, budgets were developed (by my predecessor in finance), but not really followed by the people who were actually purchasing or working with suppliers, so there wasn't accountability.
Expenses for the purposes of this exercise = labor cost, utilities, and spending for goods/services other than raw material (this is managed separately).
This year, I met with each functional lead and discussed spending, because I wanted their input. I then used my best judgement of their requests and historical spending to propose a budget which was approved by upper management. Now, I would like team members to actually own their budgets. Most of my colleagues seem to have a mentality of "spend spend spend", perhaps because they have never been accountable to meeting a budget.
My ultimate goal is to make sure our spending is controlled and not going over our approved budget. I feel that maybe I have been too passive with expenses coming through in the past, and I really don't feel knowledgeable or in control of our expenses.
So my questions...
> What info should I be providing to assist teammates with their spending?
> How can I make it easier to track? Our accounting system is easy enough to pull data from, but sometimes purchase orders are not properly classified or even created, which can really throw off my visibility into spending.
> What feedback should I be giving to my colleagues when I see excessive spending? I feel I've been too passive in the past.
> And... how do I keep constant sight of the big picture? I am prone to getting lost in the details of giant spreadsheets of data, and have many other tasks.
Any advice and examples appreciated.
Definitely agree with the above. I would also suggest giving them a monthly or quarterly deadline for showing that they are on track to stay in budget. I can tell you that I was given a small budget this year with no accountability for maintaining it and (gulp) I went 6 months without even looking at it. So, guess how that worked.
posted by samthemander at 6:18 PM on October 22, 2015 [2 favorites]
posted by samthemander at 6:18 PM on October 22, 2015 [2 favorites]
also, I would clarify the process they should follow if they go over budget. They will fight the system if they feel it doesn't give them the flexibility to do their job. Finally (if appropriate) can you offer recognition to managers who stay in budget?
posted by samthemander at 6:20 PM on October 22, 2015 [1 favorite]
posted by samthemander at 6:20 PM on October 22, 2015 [1 favorite]
Be sure you don't give them incentives to pad their budgets -- if they go under budget this period, will their budget shrink the next? Do you have the ability to take purchasing away from them if they go over budget?
posted by jeather at 6:27 PM on October 22, 2015 [3 favorites]
posted by jeather at 6:27 PM on October 22, 2015 [3 favorites]
What I would love to see from my finance dept insofar as budgets — an explanation in regular English, not jargon, that helps me understand why this is important.
People don't wake up in the morning and say, 'Hmm, now how can I really piss off Finance?' and yet it happens all the time. For example, I had no idea I was making Accounts Payable plot my demise because I wasn't reviewing a report I thought was optional, but turned out to be mission-critical — no one had ever thought to call and explain to me why I needed to look at it, and that it was preventing vendors getting paid.
Figure out why purchase orders aren't being created correctly; ask people, in a non-accusatory way: are they too hard? Is the form easy to understand? Is there some other roadblock?
Remember, you deal with numbers and budgets all day. Other people have other skillsets, and generally don't know or care what happens in finance until it directly impacts them. I'm an art director, not a CPA, and I genuinely have NO CLUE what happens in Numberland.
posted by culfinglin at 7:13 PM on October 22, 2015 [5 favorites]
People don't wake up in the morning and say, 'Hmm, now how can I really piss off Finance?' and yet it happens all the time. For example, I had no idea I was making Accounts Payable plot my demise because I wasn't reviewing a report I thought was optional, but turned out to be mission-critical — no one had ever thought to call and explain to me why I needed to look at it, and that it was preventing vendors getting paid.
Figure out why purchase orders aren't being created correctly; ask people, in a non-accusatory way: are they too hard? Is the form easy to understand? Is there some other roadblock?
Remember, you deal with numbers and budgets all day. Other people have other skillsets, and generally don't know or care what happens in finance until it directly impacts them. I'm an art director, not a CPA, and I genuinely have NO CLUE what happens in Numberland.
posted by culfinglin at 7:13 PM on October 22, 2015 [5 favorites]
as a non-finance person, it really helps to have someone explain how it all works and what happens if you go over budget and how concerned are they with month to month versus the entire year.
For example, in one role we had say $40 per month to spend on office supplies. Over the whole year, this amount was fine but having it divided up month to month like that didn't mesh with how we ordered. And for that matter, the office supply company's minimum order was $50 or we'd have an extra charge for delivery. So to be cost effective we'd have a few months with no expenses against that item and then one when we'd do a big order of say $150 and everyone would freak out like we'd gone crazy and were planning on doing that every month.
If anyone had asked how our usual spend would look we could've explained this upfront.
posted by kitten magic at 8:16 PM on October 22, 2015 [4 favorites]
For example, in one role we had say $40 per month to spend on office supplies. Over the whole year, this amount was fine but having it divided up month to month like that didn't mesh with how we ordered. And for that matter, the office supply company's minimum order was $50 or we'd have an extra charge for delivery. So to be cost effective we'd have a few months with no expenses against that item and then one when we'd do a big order of say $150 and everyone would freak out like we'd gone crazy and were planning on doing that every month.
If anyone had asked how our usual spend would look we could've explained this upfront.
posted by kitten magic at 8:16 PM on October 22, 2015 [4 favorites]
Consultant here. My advice involves a loooot of meetings plus solid reporting. Plus meetings about the reports.
Plus POs entered in your ERP system for pretty much every budget line item, and received/invoiced against for every payment. That's how you teach people about their budgets, and that the money isn't imaginary fairy dollars.
Putting in the POs also lets you deal with issues like the monthly budget versus actual typical buying with things like office supplies. You can still, for budget purposes, split it out over the months of the year, but the PO is a real thing.
And then you have monthly meetings with department heads for budget review (yes, in a group, it's social engineering) and explaining every month how real money versus fairy dollars works.
posted by Lyn Never at 8:42 PM on October 22, 2015 [1 favorite]
Plus POs entered in your ERP system for pretty much every budget line item, and received/invoiced against for every payment. That's how you teach people about their budgets, and that the money isn't imaginary fairy dollars.
Putting in the POs also lets you deal with issues like the monthly budget versus actual typical buying with things like office supplies. You can still, for budget purposes, split it out over the months of the year, but the PO is a real thing.
And then you have monthly meetings with department heads for budget review (yes, in a group, it's social engineering) and explaining every month how real money versus fairy dollars works.
posted by Lyn Never at 8:42 PM on October 22, 2015 [1 favorite]
What info should I be providing to assist teammates with their spending?
A simple summary which is full time visible. Set aside a weekly meeting to review with the overall manager, and a bi-weekly or monthly to review with your folks with spending authority. You need management support ofr this, of course.
don't make them fill in forms which they will get wrong. Anything more than half a page is too much overhead. Give them something simple like credit cards for small stuff and aid or do the paperwork yourself for the POs and contracts. Use them to provide the inputs you need (quotes, justifications, etc..) but organize the forms so you know they are correct. This is the same amount of work for you cross checking a filled in form, and saves them getting coding wrong.
How can I make it easier to track?
Maintain a very simple interface that they can look through at a glance to see where they are financially.
We have a very complicated back-end system, which takes full-time specialization to run and use.
Our gem of a finance person maintains a spreadsheet with three or four columns: plain language descriptor, committed (ie. planned and fenced) expenses, amount spent and running total. We keep a new one for each financial cycle. That's all we need as spending managers. this serves as a sort of simplified general ledger for the whole account, and includes all sorts of expenses: POs, invoices, credit cards from multiple individuals, etc.. Real (but not outstanding) inputs/deposits are also included on the same sheet.
We have a separate page for each account/finance coding/pot of money/ledger we are responsible for. This is fully visible to all managers at all times (it's on a management shared drive).
Users of the system don't need to worry about how it works. We expense stuff by whatever means (around 6 or 7) and submit receipts to her. She manages the inputs into the system and exports the results back to the operational financial spreadsheet.
What feedback should I be giving to my colleagues when I see excessive spending?
Notify promptly, but let line management deal with it. A good finance person is a facilitator, not a gatekeeper. Your job is to provide information, clearly and to help get things done. Escalate only if necessary, and only if there are explicit triggers and instructions to do so.
And... how do I keep constant sight of the big picture?
Our simple spreadsheet is our primary tracking tool to see budgets at a glance. Our scale is modest, 5 or so operational units and 20 or so separate project accounts to keep. The spreadsheet, combined with reconciliation meetings (as well as short discussions or emails to keep things straight) is more than enough for us. This system has worked great for more than two decades through migrations from an old 60s database to Oracle and this year to SAP. That's transparent to the users, and managed by the full-time financial staff.
The best advice I can give to someone in a support function is this: give your user exactly as much info as they need to know, BUT NO MORE. It's a hard balance to find, but one of the big differences between being competent and great at your job.
posted by bonehead at 7:27 AM on October 23, 2015 [1 favorite]
A simple summary which is full time visible. Set aside a weekly meeting to review with the overall manager, and a bi-weekly or monthly to review with your folks with spending authority. You need management support ofr this, of course.
don't make them fill in forms which they will get wrong. Anything more than half a page is too much overhead. Give them something simple like credit cards for small stuff and aid or do the paperwork yourself for the POs and contracts. Use them to provide the inputs you need (quotes, justifications, etc..) but organize the forms so you know they are correct. This is the same amount of work for you cross checking a filled in form, and saves them getting coding wrong.
How can I make it easier to track?
Maintain a very simple interface that they can look through at a glance to see where they are financially.
We have a very complicated back-end system, which takes full-time specialization to run and use.
Our gem of a finance person maintains a spreadsheet with three or four columns: plain language descriptor, committed (ie. planned and fenced) expenses, amount spent and running total. We keep a new one for each financial cycle. That's all we need as spending managers. this serves as a sort of simplified general ledger for the whole account, and includes all sorts of expenses: POs, invoices, credit cards from multiple individuals, etc.. Real (but not outstanding) inputs/deposits are also included on the same sheet.
We have a separate page for each account/finance coding/pot of money/ledger we are responsible for. This is fully visible to all managers at all times (it's on a management shared drive).
Users of the system don't need to worry about how it works. We expense stuff by whatever means (around 6 or 7) and submit receipts to her. She manages the inputs into the system and exports the results back to the operational financial spreadsheet.
What feedback should I be giving to my colleagues when I see excessive spending?
Notify promptly, but let line management deal with it. A good finance person is a facilitator, not a gatekeeper. Your job is to provide information, clearly and to help get things done. Escalate only if necessary, and only if there are explicit triggers and instructions to do so.
And... how do I keep constant sight of the big picture?
Our simple spreadsheet is our primary tracking tool to see budgets at a glance. Our scale is modest, 5 or so operational units and 20 or so separate project accounts to keep. The spreadsheet, combined with reconciliation meetings (as well as short discussions or emails to keep things straight) is more than enough for us. This system has worked great for more than two decades through migrations from an old 60s database to Oracle and this year to SAP. That's transparent to the users, and managed by the full-time financial staff.
The best advice I can give to someone in a support function is this: give your user exactly as much info as they need to know, BUT NO MORE. It's a hard balance to find, but one of the big differences between being competent and great at your job.
posted by bonehead at 7:27 AM on October 23, 2015 [1 favorite]
I don't know if you have the authority to make it stick, but in my experience the best way to get managers to own their budgets is to make them responsible for developing them, with oversight from finance.
posted by Short Attention Sp at 11:39 AM on October 23, 2015 [1 favorite]
posted by Short Attention Sp at 11:39 AM on October 23, 2015 [1 favorite]
Response by poster: awesome advice everyone, thank you so much!
It's very insightful to hear from non-finance perspective, even though I didn't ask for it (I realize I should have!)
posted by watrlily at 3:15 PM on October 23, 2015
It's very insightful to hear from non-finance perspective, even though I didn't ask for it (I realize I should have!)
posted by watrlily at 3:15 PM on October 23, 2015
« Older What skincare routine can help with my hormonal... | Global traditions in head/chest-cold remedies Newer »
This thread is closed to new comments.
posted by wilful at 6:15 PM on October 22, 2015 [6 favorites]