Discuss changes to income and expenditure priorities with appropriate colleagues prior to implementation
Discussing changes to income and expenditure
In most organisations, you will not be responsible for setting priorities and allocating funding alone; usually, you will be part of a team which discusses and negotiates a range of options, in order to establish the best route forward for the organisation.
Who do you need to discuss priorities with?
The colleagues that you need to hold discussions with will vary depending on the size of your organisation and how it operates (this should be clear in organisational protocols and procedural documents).
In most cases, you will need to involve all key stakeholders and financial decision makers, holding group meetings where appropriate. At the same time, you should be careful to only involve those who stand to be affected by decisions, or who hold specific skills, knowledge, or experience in the areas being discussed.
Having a discussion group which is too large can cause confusion, and decision-making can become a much more difficult process.
Normally, you will need to discuss priorities with:
➢ Managers from relevant departments
➢ Accounting professionals (internal and external)
➢ Supervisors from relevant departments
➢ Owners and directors
➢ Stakeholders
➢ Purchasing staff
➢ Marketing staff
➢ Specialists (internal and external)
➢ A spokesperson for employees.
Discussions
Usually, the best format for holding discussions is a formal, face-to-face meeting, which involves all decision makers and key stakeholders.
A formal meeting allows all parties to field ideas and raise concerns/disagree when necessary, as well as allowing those attending to ask questions and clarify points. Organised meetings generally improve chances of reaching decisions quickly and efficiently, and will ensure that all parties are aware of changes to income and expenditure priorities prior to their implementation.
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Expenditure changes
If your organisation is going to control its financial situation and stay within budget, it is vital that all managers and financial decision-makers are clear about expenditure requirements – Including how it requires them to change their practices and overall approach. All spending must contribute to the organisation’s goals and strategic direction in some way; any spending outside these goals is usually classified as waste.
Expenditure can be broken down into departmental spending – such as labour and wages, stock purchasing, general overheads, marketing and advertising, training, and wastage.
Other than general overheads, which will usually remain constant in order to keep the business running, the organisation’s other costs can change as priorities change. For example, priorities for one month may include training new staff; the month after may be more focussed on developing new products or improving customer services.
Remember: you won’t be able to spend on every area at once (if you are to stay within budget), which is why it is important to prioritise carefully.
All personnel will need to know:
➢ How to make expenditure choices that contribute to the organisation’s overall goals
➢ Which areas of the organisation require
reduced spending and cutbacks
➢ Which priorities will require extra funding and
why
➢ Time periods for priority funding and
expenditure
➢ Any budgetary changes made to support priorities
➢ Exact monitoring methods to finances are controlled
➢ How financial records need to be kept
➢ How financial information needs to be reported.
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Income
Although controlling expenditure will be your main priority, you should not forget about monitoring and managing sources of income. Colleagues will also have to be informed about expected revenues and sources of income during budgetary periods, so that they can work towards ensuring these areas are monitored and focused on.
You should communicate:
➢ Expected sales figures
o make sure colleagues receive a breakdown of expected sales figures for key services and products
➢ Expected investment
➢ Expected commission earning figures
➢ Expected donations
➢ Occupancy and gross income.
Note: the term yield is used to define the income return on an investment.
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Activity 1B
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1.3 – Consult with and inform relevant personnel about resource decisions
Consulting personnel about resource decisions
You must consult with all parties who were listed in chapter 1.2 about the exact uses of your organisation’s financial resources – Including departmental managers, supervisors, owners, accountants and other key stakeholders.
You will need to discuss how finances are currently allocated and how they need to be allocated in the future, in order to meet organisational goals without running over budget.
Consulting with other financial decision-making personnel will allow you to increase your knowledge of your organisation, including how money is currently spent and what extra needs and requirements there are. For example, a manager from a different department may identify that more staff are needed in a certain operational area, and may be able to provide details about the funding needed to achieve this. Another manager may be able to identify ways of reducing overheads, which in turn will free up funding to be used elsewhere.
You will only be able to find out about requirements in different areas of your organisation by consulting with a range of personnel.
Spending on resources
You may decide to invest more or less in any of the following areas.
Resource decisions may involve:
➢ Human resources
o expenditure includes:
wages number of personnel at each level of the hierarchy recruitment
➢ Physical resources
o expenditure includes: the buying of products the building and maintenance of infrastructure the buying and maintenance of equipment and technology
➢ Non-physical assets
o intellectual property
➢ Marketing and advertising
o expenditure may include: TV advertising magazine and newspaper space Billboards.
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Informing personnel about resource decisions
You will need to inform all personnel about resource decisions, so that they can make appropriate financial decisions in their own departments, and so that all parties can work toward the same organisational goals.
You may communicate resource decisions to employees in a number of different ways. If decisions affect personnel company-wide, then it is best to call a group meeting to announce decisions. If, however, information concerns specific personnel, then you may choose to arrange smaller meetings, send emails, make telephone calls, or send memos.
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