If you are a manager in an organization, chances are that one of your key responsibilities is to manage a budget. Non-financial managers often believe that managing a budget is difficult. The reality is that just about any manager in any discipline can become a brilliant budget manager. So how do you do it?
1. Be actively involved in the budget setting process
When I worked in accounting, it never ceased to amaze me when managers, what performance was being assessed on a number of areas, including budget management, were related to get involved in the budget setting process.
Cancellation meetings with the accountants was all too common and some were even more reluctant to re-schedule. If you do not get involved, claims have to be made, probably by people who know a lot less about your function than you do. What would you rather be measured on. Something that you were involved in or something imposed?
2. Know your income and expenditure drivers
If you are managing a budget it is vital that you understand those things that you do operationally that contribute most to the levels of:
o Income generated
o Costs or expenditure incurred
On the cost side, a decision to hire someone or give someone a pay rise will affect on expenditure. What are the big drivers of income generation and costs incurred in your function?
3. Think about how your decisions impact on your budget
Every time you take a decision it impacts on your budget. It may be replacement furniture or getting some temporary resource or even a major purchase of equipment. If you are someone who looks at decision in terms of both the operational and financial impact, you will be in the top tier of budget managers.
4. Monitor performance and act at the earliest opportunity
Most businesses have some form of monthly budget report (more frequently in some organizations). You need to be carefully tracking your actual performance against the planned performance. In those cases when actual performance is not at the planned level, take action to do something about it at the earliest opportunity. It is much easier to deal with challenges when they are small.
5. Work with your accountant
Contrary to what most people think, the majority of accountants love to be involved in the business rather than just crunching numbers. Your accountant or finance manager is in effect a business partner or advisor who can help you with the financial challenges. Make a point of meeting with them on a regular basis and keep them up to date what is going on in your area of the business. It is even better if you invite them to management meetings.
Bottom Line- All managers have the potential to be brilliant budget managers. Those who can show that they are strong in this area will have greater opportunity to progress in their career. So what steps will you take to become a brilliant budget manager?