Managing Your Year-end Budget

year end budget tipsThe end of the year is always a challenging time for businesses. There’s a last minute rush to complete projects before the end of the year, employees are dropping like flies with winter bugs and everyone wants to take their annual leave over the Christmas and New Year break (including you – wishful thinking). Added to this you have to balance the end of year budget.

 

Depending on your business, you may be able to carry any left over budget into next year – which is great, no pressure there then. But you may find you have to spend what you have left in fear that your budget will be cut next year if you don’t – which is not so great and often leads to the stressful situation of deciding how to utilise the last of your budget to greatest effect. It largely depends on your business and their attitude towards the budget.

 

 

The ‘use it or lose it’ approach

 

 

Businesses annual budgets are often predictions based on events from the previous year. If your department has budget left over at the end of the year, then the financial powers that be may assume that you don’t need quite as much next year. This can lead to departments panic buying at the end of the year in order to justify their budget. After all, you may not have needed it this year but who knows what next year will bring? The ‘use it or lose it’ approach works well if you use the last of your budget wisely – your department could make good use of stocking up on essentials. But if you don’t need to then it can seem like you’re just spending to protect your budget for next year. The money may not be spent efficiently and you could even find yourself open to criticism for how you’ve utilised your budget.

 

The ‘improve the bottom line’ approach

 

 

Unlike the ‘use it or lose it’ approach, if you have budget left over at the end of the year, then some businesses will prefer that you simply make the saving. By doing this you are avoiding potentially inefficient last minute spending and using your left over budget to contribute to the overall profit for the business – which could be a winning situation all round. But again, it does depend on your businesses approach to managing the budget overall.

 

There are pros and cons to either scenario. If your business prefers the ‘use it or lose it’ approach, why not ask your colleagues what they would like to see the remainder of the budget spent on? Together you could come up with some good ideas that help ready the business for the coming year. Is your team silently putting up with poor or out of date equipment which could actually be affecting their productivity? Even something as simple as new computer keyboards can do wonders for productivity. If your business prefers you to make the saving, be careful that you don’t deprive the business of items that it needs or provisions that could make the business flourish in order to please the finance department. Either way it’s always helpful to use this time at the end of the year to review your expenditure and ensure that you’re getting the best deals for your available budget.

 

Which approach do you prefer and how do you deal with your end of year budget?

 

Post contributed by Shirelle Pexton and Rachael Pegram in collaboration with UK Office Direct

 

Photo courtesy of FreeDigitalPhotos.net.

 

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