Finances are the blood of a company. How funds circulate through departments is a vital function, and a critical aspect of the survival of the business. Like blood as well, losing too much can be fatal, and rogue spend can be death from a thousand cuts. Reviewing cash that comes into and flows out of the company and seeing excess spending at every turn can be chilling, but there are ways to ensure that costs come in as predicted. Accountability, accurate reporting, clearly set goals and iron clad limits will all contribute to keeping spending under control. Working these principles into your business can help get your finances under control and keep your business beating along.
Accounting for Spend
It is always a shock to see costs have come in higher than predicated at the end of the month. But simply seeing where costs were high is not enough, the reasons for the rogue spend must be tracked down and explained so that they may be prevented in the future. Accounting for expenditures, be they new network servers or a new coffee maker for the break room, is the first step to ensuring a budget is being followed. Instate accountability by ensuring concise tracking of spend in every department. Eliminate vagaries wherever possible. Apply this to all spending and adjust wherever possible.
Accurate Tracking of Spending
Specificity is the first step towards improving accuracy in accounting. The next step is making sure that everything makes it onto the list. Double check automatic payouts like office supplies or employee payments and make sure that they are scaled appropriately. Paying staffing vendors you’re no longer working with or buying more office supplies at a time than are needed are overlooked more often than you think and can be potential contributors to rogue spend. Ensuring that all spending is suitable for covering the needs it addresses is a lengthy process, but this is why accuracy of accounting is key. Being able to look back at previous spending quickly and easily with as much detail as possible makes it simple to spot monetary haemorrhaging, and the extra work of organizing financial records in this way often pays for itself.
No More, and No Less
After sorting the books, it is time to turn to those who are recording in them. Making sure that all employees understand what the goal of the department is always encouraged, but instilling the idea of meeting that goal with as low a cost as possible as well will change the ways your employees go about their business. If searching for a new hire, finding an equally qualified candidate with a lower rate is now worth the extra searching. Investing in a vendor management solution will provide visibility and ensure vendor compliance and fair market rates. Negotiating a better price becomes second nature. Small changes in work habits like these reduce overspending and help reign in rogue spend.
Proper Business Cardio
Keeping finances strong is an exercise in patience. Even after putting these or similar policies in place, it may take some time to see a return on your investment, but smart habits always pay off. Keeping close tabs on incoming and outgoing resources is the first step to identifying problems, ensuring accuracy and conservation throughout the company is the only way to effectively deal with rogue spend over the life of a business. There is a cycle of information gathering and action, and the sooner you work to have as much information to work with as possible, the sooner you can start to make informed, effective decisions to keep finances in the black.