Budgets are extremely important to the financial well-being and longevity of your business. Too often we have seen both small and large businesses neglect to have budgets. If you have a multi-department organization, be sure each department has a detailed budget and guidelines for spending. As a business owner, this gives you an opportunity to monitor how your money is being spent in relation to your vision and goals for your organization. You will make decisions throughout the year to move funds from one budget area to another based on the needs of your business. Monitoring expenses against your budget on a regular basis will give you a clear financial picture of how well the business is doing. It will also serve as historical spending for future budgets.
As Human Resource professionals, we have been asked many times what the budget is for everything from advertising open positions to total payroll to miscellaneous requests like sending flowers to a funeral of an employee’s loved one, or money for team breakfasts and lunches. It’s important to keep in mind that miscellaneous expenses are just as important as larger known costs and should have policies that guide, limit or prohibit these types of transactions. Depending on your industry, some purchases are also regulated by state and federal laws such as Fraud, Waste and Abuse, the Anti-Kickback Statute and the Stark law, to name just a few.