July 29, 2014 – Vicki Pero –
How Many Pay Periods Are In March?
Many of our clients are in the thick of the annual budgeting season, and we have been developing and posting a number of helpful resources for these efforts on uDrive the past two months. All of this has led me to reflect back on the many budget seasons I have participated in. I recognized a theme when it comes to creating operating budgets, which is that typically there are four common pitfalls managers should avoid during this process.
How Many Pay Periods Occur Each Month?
Most companies pay employees bi-weekly, weekly or a combination of both. This means that some months will have 2 pay periods, some with have 3 and for weekly pay organizations there could be 4 or 5. Given that payroll is the singe largest expense item in most budgets, accurately planning for pay periods in your budget will make or break you. Obtain the payroll calendar for the upcoming year from Payroll during the budget process and make sure pay periods are accurately reflected.
Straight Lining Revenues and Expenses is So Much Easier!
While the above statement is true, it doesn’t always lead to an accurate budget. It’s a good idea to represent fluctuations in revenues and expenses month over month based on the anticipated timing of each. Many decisions are likely made based on the budget you submit, and the more accurate the information you provide, the better.
I Thought That Cell Formula Was F6*A3 Not F6+A3.
It is very common to use a standardized company Excel workbook to create budgets and once finalized enter these into the company’s financial reporting system. The challenge with Excel is that it is very easy to wipe out or change a formula. If a formula is removed or altered, it can dramatically impact the calculations in your budget and cause the numbers to be wrong. Keep an eye out for this and even better, highlight the cells that include formulas, so they stand out and can be avoided.
I’ll Just Cut and Paste Last Year’s Numbers and Add 10% to Everything.
This tactic might help you to create your budget faster than anyone else, but it won’t provide the accuracy you would like. Using this methodology ignores changing market conditions that could cause revenues to increase or decrease, doesn’t account for one time expenses in the previous or upcoming year and could cause pay period timing referenced earlier in this post to be off. The previous year’s budget and actual results contain valuable data and should be considered as you develop your budget, but other considerations should also influence your efforts.
Are you interested in more information about budgeting and other financial practices? uDrive subscribers have access to tools and templates that can help. These can be found in the HR Tools, Resources for the Parking Manager and Resources for the Parking Operation sections of the site.