Do you Really Know the Status of Your Budgets?
Of course you do! You have a budget in General Ledgers, all purchases and expenses are accounted for, and you have financial reports a report of actuals and budgets.
But wait…. do your General Ledger views and Financial Reports truly tell you what you have left to spend? Do you know what you have committed to spend for goods or services already on order? Received but not yet accrued? What about approved or pending requisitions? Do you know if your projects are on budget? Are you meeting the purchase commitments made to your vendors?
Effective Spend Management requires real-time budget enforcement and tracking to identify overspending before it occurs, with on-line visibility to:
- Fully booked expenses
- Pending commitments
- Available remaining funds
- Vendor contract commitments
- Blanket purchase orders
- General Ledgers budgets
- Project budgets
Let’s be honest: will you ever reject an expense report or refuse to pay a vendor invoice with the only reason that it is over budget? That would be like the U.S. Congress spending without an agreed to budget, and then arguing over the debt limit. Spending decisions are made when you approve a requisition, purchase order, travel request, or a time sheet.
To prevent overspending, your Spend Management Solutions and ERP integration must provide approvers with an accurate view of budgets, amounts spent and encumbered (committed) and any in process spending requests. You must be able to strictly enforce budgets for requisitions, purchase orders, travel requests, and expense transactions. Alternatively, you may choose to or allow overruns with warnings, or to enforce special routing rules for transactions that will result in an overrun.
Budget control is are an essential management function. Don’t let Accounts Payables be your company spending watchdog!
You can see more insight about Budget Management at the Paramount Technologies website
Blog Written by Urs Blocki