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Why Manage Finances?
This is a realm that some leaders shudder. Budgeting and managing finances can be a rather hard thing to do. It’s tedious and requires reconciliation that can drive most individuals made. Unless you have an interest or a knack in accounting, budgeting will cause you a few issues as you run your department or organization.
We have to budget. We have to know where those dollars (or money) is going so that we can be able to accommodate the needs that we have. We have to plan how we are going to use those funds. Planning and budgeting will help us to be able to figure out new ways to increase the profitability of the system that we are in.
Budgeting is also rather important for those individuals that are in pseudo-leadership positions. They need to be able to address issues and make presentations on a system change. Knowing how this can impact the bottom line will make it easier to sell the change.
Financial management is also one of the most important skills that we can undertake and learn. When we learn how to manage finances, we become more responsible. When those above us see that we can handle responsibility, we can often undertake further responsibilities and gain new skills that we can take elsewhere. We can enhance our integrity as we learn how to appropriately budget.
Excel is a spreadsheet program if you are not currently aware of the program. There are a lot of benefits to the program. However, for this particular post, Excel is great for managing finances. Here is a list of reasons why you should use Excel for managing your department finances:
- It creates a record of what you are doing.
- As a leader, you have to CYOB (cover your own butt). When you have a record of the stuff that you have done and a record of where the money went, then you have a record in the event HR or other individuals get suspicious of what is going on.
- You have a record to reflect upon a year down the road. Sometimes it is rather nice to be able to refer back to something that happened a year ago. Being able to refer back to something makes it easier to see where you can improve in the year going forward.
- Excel can chart of the transactions.
- Having a chart of transactions allows you to take a stance on the things that are perhaps the largest expenditures. You have a glance to see where the bulk of your money is going and can rectify your expenditures.
- You can quickly compare different things. You could have the information to be able to justify why you spent money on X rather than Y. Leaders above you will audit that portion of the organization’s finances.
- Excel is great for comparisons.
- You can compare the various transactions. You have an idea about what you might need to reduce in the future. You have a ready-made list of what those expenses are.
- You can compare years. You can compare the current transactions to the year prior to see if there is any improvement.
How to Use Excel to Manage Department Finances
There are several ways to be able to manage departmental finances. It is important to note that there are several approaches and ways to do this. While we are here, we are going to cover a few of the different ways to manage finances.
1. Just keep a log.
Some leaders are just interested in keeping a log. And they do that. They record where they spent money and when and at what store. For what they do, it’s fine to do it that way.
2. Keep a log of the various transactions.
Some leaders like to have their transaction log broken down into categories. By doing so, leaders in this category are much more likely to have a more detailed record of what they are doing. They have a lot more of an idea exactly which of their department categories tends to consume most of their department’s budget.
3. Incomes v Expenses
Yet other leaders go a step further. They like to exactly know how much money they are bringing in to compare to how much money they are expending. This makes it much easier to cut out the fluff and focus on what is likely to bring in the best revenue.