This detailing is recommended for use when planning management expenses. It will help the financial director see where exactly and how quickly money is spent, how consistently the budget is spent, how the indicators of the previous and current year are related.
An important indicator in the financial performance report is the systematicity of management expenses, which must be analyzed if you are interested in reducing them. For example, funds spent on due diligence (a procedure for objectively assessing an investment object) are rather considered irregular expenses. As for regular expenses, it is advisable to make them limited (based, for example, on the size of the rented premises, the number of employees, etc.).
You can use the indicators for past years as a starting point. Irregular expenses should be added up for all the CFOs, for specific projects, and, having set priorities (from the most important expenses to the least significant ones), distribute the amounts of money.
Expenses are grouped according to priority:
The first group includes the most lebanon email list important ones, vital for the functioning of the enterprise.
The second group includes projects that promise high returns (you need to try to keep them).
The third group includes expenses on increasing the efficiency of the entire company or its branches. At first glance, each of the projects is not particularly expensive, but the total amount for all the CFOs is quite large.
It is important to pay attention to the priority of projects. When crisis situations arise that require cutting management costs, the first to stop funding low-priority projects.
Step 2: Establishing responsibility measures between the CFOs
A serious step that should be taken using a functional approach. That is, to form a separate plan of centralized expenses for each of the allocated CFOs. In particular, for the HR department (money for salaries), for the administration (expenses for maintaining the office), etc.
Establishing measures of responsibility between the Central Federal Districts
Source: shutterstock.com
Based on the functional purpose of each of the divisions, a plan of expenses is formed for them for individual items (these are non-centralized expenses) and for the activities carried out by this division. You can also add a reserve expense item (and call it: "Reserve") for unplanned actions.
The best way to reflect management expenses in the balance sheet is to form them from scratch. Moreover, each department head is obliged to provide justification for their budget requirements. Explanations like “it was like that a year ago” are not considered justified. Only regular expenses remain unchanged every year, so they are not discussed here.
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