‘Don't tell me what you value, show me your budget, and I'll tell you what you value’ - Joe Biden.
Cost is the crucial factor in most commercial organisations, when it comes to office efficiency, and Office Managers will need to understand how their work activity fits within the overall business function of their organisation.
Some of you will have full budgetary responsibility for your department (drinks on you), while others will monitor performance and payments. Either way, to be a great Office Manager, you will need to understand budgetary principles, financial control and basic accountancy practices especially if you have further career aspirations in operations, finance, human resources or facilities.
To manage budgets effectively and efficiently, it is necessary to:
Budgeting is not a simple process that is developed and left as such, but it is an ongoing system that needs monitoring, controlling, recording and reporting, etc while following the organisation’s legal and regulatory requirements.
Managing financial resources effectively and efficiently is a standard for financial and performance management, and this means reasonable value for money. Efficiency in managing financial resources means that you are achieving maximum performance with minimum input and with very little waste.
You know the purpose of budgets. Now it is your responsibility to manage them.
Managing budgets requires you to constantly monitor, control and record income and expenditures to keep track of every financial movement and its outcome. How will you achieve this? Let us look at a few ways or methods.
MONITORING INCOME AND EXPENDITURE
Budget monitoring is completed to make sure that resources are being utilised as per plans on the budget.
Tracking or monitoring the way that financial resources are utilised or effectively used is imperative for every department and organization. It is a continuous process to ensure that objectives are being met as specified on the budget. It is through this monitoring that you will be able to make budgeting decisions and take necessary or appropriate actions whenever or wherever necessary.
MANAGING AND CONTROLLING BUDGETS
Income and expenditures need to be monitored to find any change in patterns so that appropriate actions can be taken.
This monitoring procedure can be done at regular intervals, for example every month. When monitoring data, take into consideration that the budget was probably planned for the year ahead and the expenses and income to date. Look at the balance remaining for the rest of the period in the current financial year and run a forecast of what the situation will be, at this rate, by the end of the financial year. Look at any variations, if any, both positive and negative, and take necessary actions to rectify them. In each step, it is important to document (record) all facts and actions.
You should be able to analyse and provide explanation for any variation from the proposed expenditure, be it positive or negative. This should be accompanied by an action plan. This will ensure that the resources were used economically, efficiently and effectively.
RECORDING INCOME AND EXPENDITURE
Recording income and expenditure can be done manually or electronically. However, recording should be done instantly and daily.
All the accounts related to income and expenditure, any income that is due in, any payments that were received, receipts and invoices issued, debts etc., need to be recorded clearly with date and purpose.
Recording income is a way of determining whether your organisation is making profit (big bonus for you) or not, because it includes details of money received and spent.
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