Ignoring expenses budgeting is perilous to profits!
Two factors which define profitability of an enterprise is the accuracy of the costing for the resources required and budget for the expenses to be incurred in delivering the product or service.
Though an organization may have a good handle on the costing of its products or services there is often a tendency to not be as detailed with regard to expenses. Expenses are often taken as a percentage of sales, based on historic data; further, it is not uncommon that, expenses on particular heads of accounts far exceed the norms, well before the product or service has been delivered and over-runs are realized only after the money has been spent.
Thus detailed budgeting for all expenses is very important and control that the expenses remain commensurate with the progress on delivery of the goods or service is critical for the organization’s profits.
The BPMS program allows for budgeting on a monthly basis for each expense head (accounts ledger code); each item of expense can be pre-approved through creation of an ‘approval memo’ and payments made only when a ‘certificate for payment’ is generated. The payment certificate shows the budgeted amount alongside the already spent amount. All budgets have to be approved for the amount to be available for spending.
Call 91 9821610084 to speak with our consultant on how BPMS can help your business be more profitable.