Sachin Sharma, founder of ProcureDesk, walks through three budget-control mistakes growing companies make: lacking real-time visibility into spending, manually tracking purchase orders and invoices instead of automating the match, and failing to check budgets before purchases happen.
Your company is growing in revenue. Congratulations. But are your budget controls keeping up with it? If you are a CFO or controller of a growing company, you might be dealing with budget control issues, revenue going up, but you're also dealing with budget overruns and constantly have to keep looking into, hey, why did we went over budget, have conversations with stakeholders and seems like a never ending, you know, back to back, right? If you are struggling with these issues, this video is for you. Because here I'm going to talk about three things on why your current budget controls might not be working and what you need to do to fix it. If you're joining for the first time, welcome. My name is Sachin. I am the founder of Procure Desk where we help growing companies automate their purchasing process. So let's jump in. Number one is you're probably tracking your budgets based on the last month data and it's not anybody's fault, right? Very common scenario is all the purchases happens. Let's say you capture all that in your accounting system, by the time you capture it or month end, it's 15 days past the past month. Then you take all that. That's when you will come to know, oh, all right. My budget is in a spreadsheet now. I need to look at my spending, try to match it and it's probably 45 days late. Right. So what you need to fix that is need a real time visibility whether it's in your accounting system or a procurement system where you can actually look at it anytime and sit. Where are we as compared to our budget? What is committed spend, what is invoice, what is yet to be invoice. So I can see how well we are tracking this and where we will be from a cash flow needs standpoint. Right. So that's number one. Number two is manual tracking doesn't scale. A lot of the companies have this process where you have an invoice coming in, you're going to have a review process. Once it is reviewed, only then it goes into accounting system, only then you can compare against your budget. Now if you have a manual process that slows down everything, that means invoices are not getting approved on time. You are probably trying to manually match invoices with purchase orders, trying to make sure you're not going over budget. Right. So you're committed to spend a hundred dollars. Are you spending 100 or are you spending under 50? That is also one of the reason for poor visibility into budgets. So you might be doing all this manually. Right? So if you do this manually Slows down the process. A easy way to fix this is to automate the matching process. So if you have your purchase order receipts and invoices coming in, have a system that automatically matches the invoice with the purchase order and the receipt and figure out exactly what is going on and only approve those that have exceptions. If there is no exception in the invoice, there's no need to route it for approval. It's as simple as that, right? So that's number two. Number three is the budget overruns. So even if you have visibility, even if you're able to put invoices in the system at the right time and track all that, one of the challenge with that process is the spend has already happened, right? So you're getting an invoice, you're trying to match it with a budget, but at that time you're obligated to pay. Or maybe, you know, you have a quarterly budget and it's, you know, let's say January the first of the month for enforcement of the year and 80% of the budget is gone. So are we going to be able to keep up with the remaining like 20% for the first two months as an example? And the reason why this happens is there's no proactive budget control. There is no way for you to kind of check and say, okay, do we even have the budget before we proceed? Right. So a best strategy in this case is to make sure you have a proactive budget check. That means every purchase that goes through a, like a system or a review process where you are actually checking and saying, oh, let me check the budget, budget, and so on. Now if you do not have anything, start with that and later you can automate the process. Right. Because that doesn't scale volume. So if you are a growing company, again, congratulations, that's, that's a achievement. Here are the three things you should do to make sure your budget controls scale with it. Number one is have a real time dashboard for budget visibility. Number two is automate the matching process so you're not doing this manually. Number three is have proactive budget checks to make sure you don't go over budget. So if you're dealing with any of these three issues, click on the link below to talk to one of our product specialists to see if procuredesk can help. Thanks me for joining me today and I'll see you in the next video.
