To save means to realize everything that was planned, but at a lower cost. However, it must be done correctly. For example, you should not refuse to buy new equipment and spend many times more to pay for downtime. Or order research from an unverified inexpensive expert and then lose market share.
If you are having financial difficulties, you can always contact Payday Depot and solve your problems. Let’s look at 5 situations where a downward deviation from the plan in the budget only seems like savings. And most often, the reason is not that your employees lie but the inability to count to the end.
Deliberate Overestimation of the Plan
Such a story occurs when costs are forecasted with a margin. Usually, they overestimate the plan within 10%, so it is not very conspicuous when approved. However, sometimes plans are overstated openly and officially. There is even a separate name for such a situation – a reserve in the budget. For example, fluctuations in the foreign exchange rate.
This is a factor that the manager does not influence himself. But, when we calculate the amount of savings, we remove the reserves. And most importantly, when we work on a budget, we look to see if we can do without the amount of the reserve. To determine the real savings, reduce the plan by the amount of the reserve and see the deviation from the fact.
Calculation Error that was Not Immediately Detected
Such inaccuracies are often found by accident. How to identify? Check and analyze the components for the calculation of each article. It is better to do it yourself and before the approval of the plan.
Error in Reporting
In these circumstances, on the contrary, there is inaccuracy in the actual data. The reasons are different. Perhaps the accounting department forgot to post the document. Or the marketing manager might accidentally show part of the costs for another line item.
How to detect it in a timely manner? Control and analyze the budget. When you realize that the SMM manager has been working with you for a whole year, then such a deviation will surprise you. We must immediately find out the reason.
Execution Error
Outwardly, it is very similar to situation 3. Also, part of the costs is missing from the budget, but for other reasons. For example, they forgot to do it, and they didn’t remember it in time, they changed the conditions, etc. Everything is reflected correctly in the report and in the plan – mistakes were made in the actions.
Matching Error
If you look at each of the marketing budget items in our example, everything is fine – even where the deviations are greater than the plan. It is common practice to reallocate costs. Moreover, as a result, there is no excess in the budget. It is important to understand that marketing research could confirm all the assumptions of company X. But it is incorrect to say that it could not have been carried out at all. When comparing costs, you need to act logically.
