What kind of budgeter are you? Do you see budgeting as a task that simply needs to get done (and then revisited throughout the year as things change) or are you the type who takes pride in budgeting?
If you’re the type of person who enjoys accuracy and pats on the back for a job well done, or if you get unreasonably excited when end-of-year numbers match your budgeting predictions, then you’ll appreciate a strategic approach to your budget creation. Using expense reporting software, it’s incredibly easy to come up with predictions for next year that are spot-on, using last year’s expenses as a guide.
If this kind of approach is new to you, here is a step-by-step guide to putting together a feasible small business budget for this year based on last year’s expenses.
Step 1: Determine average spend
Determine your average spend over the course of the year across different expense types, general ledger accounts, departments and so on. Expense reporting software will allow you to pull this data with ease.
Step 2: Meet with department heads
Meet with your department heads to gain visibility into where potential cuts can be made and provide your managers with visibility into the reporting and budgeting process. Doing so arms the decision makers at your company with the information they need to better control and predict departmental costs.
Step 3: Negotiate with vendors
Pull last year’s data from your expense reporting software to get better volume discounts. If possible, try to consolidate vendors for even better rates and less administration costs. Then include those lower cost projections in next year’s budget.
Step 4: Make adjustments
You’ll want to adjust your travel and expense policy based on data from your overspending/exception report. What did you forget to account for last year? Is the same thing likely to occur again this year? Now is your chance to ask about these things and include them in the annual budget, if necessary.
Step 5: Leave room
You’ll almost certainly need to do some flexible spending throughout the year, so leave room for it. These flexible spending amounts will be estimates; however, you can pull historical data from your expense reporting software to greatly improve the accuracy of your flexible spending allowances.
By allowing last year’s numbers to inform your spending decisions in the year ahead, you are setting yourself up for success. With the ease that expense reporting software provides, next year’s budget will be a thing of beauty – something of which you can be proud.
Do you need some help when managing your expenses reporting? Thanks to our partnership with Concur, we can offer you the best solutions for a smooth process. Just let us know!