Keeping your team’s spending in check isn’t always easy. With so many needs, projects, and ideas, overspending has a way of creeping in, especially when multiple people are doing the spending.
On top of that, everyone is able to justify their spending, which is great, but eventually leads to negative effects on overall expense reports. This is why it is so important to have a budget.
Budgets keep expenses on track and are meant to drive your business forward when it’s followed. To get buy-in on a budget and encourage your team to follow it, there has to be some level of accountability.
Here’s the kicker, not only can your budget be used to keep spending under control, but it’s also a great tool for creating accountability.
Here are a few ways your budget forecast creates accountability:
Sets Expectations
In short, a budget is a plan for spending. It is a compilation of previous expenses and what you expect to be spending in a given time frame (typically a month, quarter, or year). With a set budget, comes guidelines for spending. It is expected that you and your team spend within the guidelines you’ve set in your budget, which creates an accountability standard.
To further the use of your budget as an accountability tool, it’s important you and your team create the budget together. When you do this, it ensures:
- Everyone is on the same page with what is expected of them.
- Everyone is in agreement with where money will be spent.
Spending expectations will be clear and if there is any overspending, you’ll be able to hold your team accountable by reminding them the budget was agreed upon.
Measures Progress
Creating a budget is great, however, for it to be useful you’ll need to compare your actual spending to it frequently. This will help to measure progress and ensure you are actually adhering to the expectations you and your team set.
With consistent comparison, finding mistakes and areas for improvement will be much easier. It will allow you to catch the mishaps before they become a larger issue and you and your team will be able to make the needed adjustments.
Your budget variance will also point to areas where you’ve successfully stuck to your budget, which is equally as important as catching mistakes when it comes to measuring progress.
Your team is more inclined to stick to the budget when they know you are regularly checking in because:
- They do not want to be the team member who strays away from the budget.
- They want to be the team member who is recognized for staying on track.
Don’t just measure progress for your own gain, share it with your team to help correct and encourage sticking to the budget.
Provides Transparency
Creating a budget with your team is a great way to improve trust. There are no spending secrets when everyone has the expense reports in front of them with the mindset of creating a detailed and financially realistic budget.
All of the numbers must be visible and sharing that information is displaying how much trust and confidence you have in your team. With this level of transparency, each person on the team can see when there is overspending and on-target spending.
On a personal level, transparency makes each individual want to focus on adhering to the budget to avoid others seeing they were off track.
The same goes for teams as well. For example, the sales team will be more inclined to stick to the budget because the marketing team can see when they overspend, which consequently will affect them.
Sets You Up for Success
When you begin creating a budget, you have success in mind. Each area is picked apart and analyzed to select an optimal spending amount. Once you’ve completed that process, the idea is that you’ll have a comprehensive budget, that when closely followed, will set you up for a financially successful year.
Because you’ve gone through that process with your team, it sets the tone for a successful year for everyone involved. It’s a standard to follow and when everyone is in agreement that the budget will help get the business where it needs to be, it makes following it more desirable.
Work with an Experiences Accounting Partner
It’s no doubt your budget is a valuable tool for your business. Along with many other benefits, budgets are incredibly useful for creating team accountability. Budgets:
- Set expectations.
- Measure progress.
- Provide transparency.
- Set you up for success.
However, to get these accountability perks out of your budget, you have to use it correctly. That starts with the creation process, includes the follow-through, and even factors in the use of the current to create your next budget.
It can be a tedious job, which is why we suggest working with an experienced accounting partner, like Adian Profession Corporation. We will work with you to ensure your budget is in shape to be used as an accountability tool. To learn more about Adian Professional Corporation and how we can help you, request a consultation today!