Budget, Income, and Expenses: - Essay Example

Budget, Income, and Expenses al Affiliation) The agency minimizes costs in the organization in various ways. Firstly, itreduces and controls the operating costs. This involves having a budget, planning, and monitoring the company’s expenses and revenue to predict the financial situation of the organization. In addition, it provides a benchmark for financial results of the future. Secondly, the organization reviews purchasing procedures of the organization. There are authorization processes to control spending limits and the number of people allowed to purchase.

Thirdly, the agency analyzes the supplier base both existing and new also reveal opportunities for cutting down on costs. This involves the reduction of administrative expenses by processing fewer orders, invoices, credit notes, and payments. The organization negotiates with the existing suppliers for best prices and considers proposals from new suppliers to lower costs. In addition, cancelling contracts with non-performing suppliers has helped reduce costs. Fourthly, the organization has identified and assigned a team of employees who can identify areas of reducing expenses.

They identify alternative items that are less expensive in meeting the set goals of the organization. In the effort to reduce costs, the best employee receives a reward for participation. The organization reviews and eliminates underutilized space in a bid to minimize the floor space costs (Barr & McClellan, 2011). Fixed income refers to an investment strategy projected to produce a stable or fixed income. It includes all kinds of bonds, preferred shares, money markets, and certificates of deposits.

These fixed incomes return the principal after the maturity period. Fixed expenses do not fluctuate with changes in sales volume or production level. Examples are payment of loans, rent, insurance, management salaries, and advertising. Variable costs respond directly to changes in volumes or activity level. For example, the costs that relate to raw materials, inventory, and packaging suppliers. The organization reconciles accounts regularly to ensure that expenditures and revenues are within the stipulated budget.

It has an income tracking system that tracks income from sales. Additionally, the organization has an expense tracking system that tracks all the money spent in building up the business as well as maintaining the business. It also has a well-planned budget that shows how much money the organization makes and how much is spent. The budget is one tool that builds a successful financial future. The strategies put in place for ensuring long-term financial health include, financial forecasting. This is where revenues and expenditures are projected using assumptions like economic conditions and future spending trends.

Forecasting provide insights of the future financial capacity to achieve long –term sustainability. The organization updates long term planning activities to provide direction to the processes of the budget. In addition, the organization analyses the financial environment, debt position, and affordability analysis in order to archive and maintain financial balance. It also helps plan the monitoring mechanisms like the scorecard of indicators of financial health (Finney, 2000). The organization performs annual financial audits that validate the organizations financial status.

The auditors communicate significant information and adjustments to the finance team. The management produces a summary of the expenses and incomes to the head of the organization. Interim statements and a budget tracker normally accompany this. The management of the organization measures the current year’s rate of financial performance.References Barr, M., & McClellan, G. (2011). Budgets and financial management in higher education. San Francisco: Jossey-Bass.Top of FormBottom of FormFinney, R. (2000). Office finances made easy a get-started guide to budgets, purchasing, and financial statements.

New York: AMACOM.