Hi there, Budget Holder, let’s be candid, your finance department doesn’t to do a lot to help you manage your budget or spend. Perhaps more worrying is the fact that they believe everything regarding finance works just fine.
As you probably already know, this simply is not the case. There are no corporate systems to make it simple to capture and track everything you buy, manage your budgets, plan for future spend and manage costs against projects, so each of you must improvise.
- To manage spend against budget, you must create and then update your own spreadsheets with everything you order
- To plan for future projects, you must include them in your spreadsheets to see the implications on budget availability
- To create a project and then track spend against them, you need to set them up in your spreadsheets
- To check a supplier invoice and sign it off for payment, you must be in the office and painstaking check each one against your spreadsheets
- To check the status of a suppliers account, or whether an invoice has been paid, you must ask finance every single time
Then, if you’re luck, finance sends you the monthly management accounts 5 to 15 days after the month end, but use a completely different spend analysis from your spreadsheets. This makes reconciliation with your spreadsheets extremely difficult. The problem is exacerbated by the financial treatment of supplier invoices (depreciation of assets, accrual calculations of prepayments, cross-departmental cost allocations etc.), so your spreadsheets never reconcile with the management accounts.
As finance will tell you, their information in the management accounts is the correct information and your spreadsheets are simply wrong – not very helpful when the only information available. You only option is to plan and manage your budget on inaccurate information you create and manage for yourself.
To add insult to injury, supplier invoices are all on paper (despite the fact most of them now arrive as a PDF via email which finance print out), so you must be in the office to review and approve them. Once approved, the invoices are then hidden in the filing cabinets.
This is true for every budget holder in your business, or put another way, everyone who sits at the boardroom table and their respective management teams. Whilst finance believes everything works just fine, the rest of the senior management team is individually duplicating the entire accounts purchasing function to end up with information that is always wrong.
What a huge waste of time – providing there is a better way.
How about coming to a deal with your finance department for your mutual benefit by implementing purchasing and invoice automation? You undertake that you and your team will always use this new application to raise an order (and associated approvals) to capture everything you buy. Finance agree to get rid of all of the paper by electronically capturing the invoices on arrival.
The benefits for both budget holders and finance are simply huge.
Budget Holder benefits:
- Instant access to ALL supplier information (turnover information and the exact status of every order and every invoice, everything under query and even whether an invoice has been paid
- Instant budget and project budget availability, including checking of every request to buy against your budgets before they are approved
- Correct financial handling of every purchase, so budget availability is always correct
- Automated checking of every invoice against the relevant purchase order, highlighting differences before you receive them
- Ability to approve order and invoices from any device (including dedicated mobile approval App) to speed them through the process
- Ability to use your current spreadsheet analysis criteria to analyse spend, but also see the information in the finance chart of account format
- Ability to create future planned project spend to see the implications on budget availability into the future, then track actual spend against them to keep the projects within budget
- The ability to stop having to use a spreadsheet to track and manage your budgets!
- A single real-time view of the truth
Finance benefits:
- Full commitment accounting, seeing the committed spend as soon as the order is raised
- Formal approval processes for both purchases and invoices, validated against budget prior to the spend being approved
- Removal of all the paper invoices, so nothing can ever be lost and nothing ever needs to be filed again
- Much faster approval processes
- Fully automated month end accruals reporting
- Far more detailed analysis on planned future spending
- The removal of monthly discussions with budget holders on their budget availability, because the information is always correct
- A single real-time view of the truth
Our point is this:
Good financial management is about ensuring you – the budget holders – have all of the information you need to make the best purchasing decision possible, because every other aspect of the process is just accounting.
You can all spend the huge amount of time saved on something more important!
To find out more, simply contact us.