Real-time budgeting

[jakebeer]

We have a recurring story at our company: department heads order services or software, confident they still have funds left over for their annual limit. But the accounting department doesn’t finalize actual expense reports until mid-month, and in fact, we regularly see overspending. We only find out about it too late, when the invoices have already been paid. I’m racking my brain trying to figure out how to see remaining limits not after the fact, but in real time – right when an employee creates a purchase order. How do you deal with this problem?

[tylerrjack2]

Post-factum expense accounting is a classic problem. Accounting takes too long to tally the numbers, and by the time you receive the report, the money has already been physically spent. Without monitoring limits at the time of expense approval, company overspending will continue indefinitely.

[rob]

We had exactly the same situation until the finance people started rebelling. Reconciling the figures in the middle of the following month was simply a statement of fact that the budget had already been blown. Ultimately, we set up a system that immediately slaps hands. The manager tries to submit a request, and the software tells them, “Sorry, limit exceeded.” Look at how it works at precoro . There, budget balances are calculated online, right when the document is created. Overspending stopped within the first month.

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