Budget Management

The power of budget management

Real time Budget Control should be a very powerful management tool.
To understand the value of a fully automated budget management process, consider the challenges of your existing manual purchasing process:

• Budget management: The majority of companies budget by department / activity and the responsibility for the maintenance of accurate spend records and budget availability falls on the department / budget owners. For many budget holders, it is impossible to keep an accurate track of expenditure moment by moment and overspend becomes inevitable.
• The management accounts are inaccurate: Because the purchase invoice approval process is so slow, the company raises an estimated accrual for the value of unprocessed expenditure after the month end and produces the management accounts and cashflows based on that estimate. The common approach is to accrue to budget, hiding any budget overspend from previous periods. This inaccurate estimate is then used as the basis of future spending, often compounding the budget overspend problem.
• Budget changes: If trading events determine that a reduction in expenditure is required, it is extremely difficult to use budgets as a means of doing so. The result is often the blunt weapon of stopping all major spending as the tools to enable very selective reduction of spend are not available and would take too long to implement.

The result for many organisations is that budgets become the guideline of expenditure, rather than a real time tool that enables the management to control spend.
Compleat Purchase to Pay software fully automates the budgeting process, removing all manual systems and delivering moment by moment budget availability. This is achieved because:

• Commitment Accounting: All purchasing commitments, delivery accruals and posted expenses to the ledgers (with the appropriate reversing journal) are retained by Compleat to deliver a real time budget checking facility.
• Formal purchase approvals and budget checking: Purchase requisitions are automatically checked at each stage through the approval process and again on purchase order approval. Over budget requests can be prevented, or go through additional approval steps prior to final approval.
• Budget Control: Because Compleat is tracking expenditure in real time, any changes to the central budgets on the accounting software instantly impact purchasing approvals. The management can increase, reduce or stop expenditure across any budget area on demand and in literally a few minutes.

Budget Management is a powerful spend control tool that enables spend to be managed at a very granular level. Management can increase expenditure to protect or accelerate key initiatives , reduce spending where appropriate to address short term challenges, or just turn spend off in an emergency.