Managing a budget is a key skill for a new manager. It’s not difficult, just like a personal budget, to stay in control you need to keep good paperwork, know your expenditure, plan ahead and keep it all written down.
Being given a budget to manage at work can sound daunting, but in many ways it’s one of the easier skills to acquire in the workplace. It’s mainly down to procedure, good practice and routine. With a few easy steps you’ll feel in control and confident.
So you have a budget to manage, here’s how to get on top of it.
Get the basics sorted first:
1) How much have you got in your budget?
Make sure your boss or the Finance dept confirm your budget, whether it be an annual budget, or a project budget. Get this confirmed via email for your records.
2) What is a cost code?
Finance should also confirm any cost codes you need. A cost code is basically a name or number that Finance have given to your pot of money. Every budget or ‘pot’ will have an individual code so that invoices get paid out of the correct budget.
3) What is your budget for?
Sit down with your boss and Finance and clarify exactly what is -and perhaps more importantly – what is not paid for out of your budget. Again, get this in writing too.
4) How long is your budget for?
Does the financial year run April to March, Jan to Dec or something else? Check this out, or you may come unstuck. You will need to know it for your planning.
5) What is the process for commissioning work?
Okay, so before you start spending you must understand how this works. A lot of companies will insist that you ‘raise a PO’ before you ask a company do any work for you. A PO, or Purchase Order, is basically a request from your company to another to do a piece of work. It sets out the exact nature of the work, the price your company will pay for it, and usually give a time period in which the work must be done. The company you are working must agree to the terms of the PO before they start work, and then stick to contents of the PO, including price.
A PO is a way for your company to be in control of the work. Each Purchase Order will have a PO number. When the company completes the work they will submit an invoice to your company, with the PO number included for your reference.
6) Paying invoices
Check with your Finance team how invoices are processed. Should suppliers send them directly to you, or to Finance. There may well be an online process
The last important thing to check with your Finance dept is how do you report back on the status of your budget. Most larger companies will require you to report back each month with an updated budget position, usually on a spreadsheet. You may also have to submit copies of your invoices and/or receipts. Ask if they have a an Excel template you should use to send over your reports.