If you are asked to manage a budget within your day-to-day job, it shows that you are trusted with a high level of responsibility. Most departments within an organisation will have their budget, and the aim is to keep your spending to a specific value and ensure you are spending responsibly. If you have never been responsible for budget management before, the prospect may seem a little daunting. These are some tips for how to manage your budget effectively and how to develop budget management skills.
Understand Goals
When you are asked to manage a budget, the first step should be to understand the business's goals. If you don’t know the expectations, it will be difficult to make positive changes. For instance, the objective might be to reduce spending by £5,000 a month or to reduce spending in a specific area, such as marketing. Ensure you know what is expected before you start the budget management process.
Review Current Budget
The next step in the process is to review the current budget to gain a better understanding of where the money is being spent. In doing this, you can get a clear idea of the areas of the spending that might need to be looked at more closely and where to make good financial decisions. For example, if the majority of the budget is being spent on marketing, it would be prudent to understand whether the areas of marketing are providing positive outcomes. If not, you might want to reduce spending within this area.
Assess Needs
Speak to colleagues within your department to ascertain any needs they have. As a budget management example, you might conclude that there is a lack of stationery within the department and as such, you might want to reduce your spending in one area and prioritise this.
Negotiate Terms
Analyse the current terms you have with your suppliers and try to negotiate the terms so that you can reduce your spending. For example, if you buy your stationery in bulk, can you get a discount? If you are using the same taxi firm frequently, can you agree to a retained fee that reduces your costs? It is always worth asking the question!
Monitor Budget
It is not enough to check your spending every month as costs can add up without even realising it. You should monitor your budget weekly to ensure awareness of any unexpected costs that may have affected your spending. Monitoring your budget regularly will give you a chance to make tweaks to it as and when required, and efficiently manage the budget management system.
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