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Oct 21

Line item ownership: How we improved expense tracking for better budgeting & forecasting

Earlier this year, Choozle’s Leadership team embarked on a journey to gain better control of real-time expenses. The Sales team can track daily revenue, the Marketing team can look at their dashboard metrics, and the Support team can track tickets & stats in mere clicks.

The question was always asked: “Is there a way to get a better hold on real-time expenses?”

We can now answer that question with an emphatic yes!

Read on to see how we are able to do so.


How we sped up and improved our budgeting process

In order to get better control over our expenses (and to foresee any major variances before the end of the month), we assigned ownership of every account from our chart of accounts to a member of the Leadership team. The sales team leader would now be in charge of reviewing all travel-related expenses. The People Operations leader would take a closer look at payroll expenses, and the leader for the Engineering team would have more insight into cloud computing costs.

Every Monday, our Junior Accountant, Terry Rogers, uploads and posts bank, credit card, and expense reports to the general ledger. With help from Hannah Hoovler, our Senior Accountant, they create multiple monthly budgets versus actual reports that get sent out in the middle of the week to respective line-item owners.

A new process for all involved, Terry especially likes that line item budgeting allows us to spot trends and identify opportunities to save money. Assigning individuals to the accounts makes the budget review process more efficient and provides a sense of ownership. Terry sets aside office hours every Thursday to review budgets with the respective owners to update expenditures and make sure that transactions were coded correctly.

With only memo detail available, it can sometimes be challenging to choose which account to code the expense. According to Hannah, who is always looking for ways to be more efficient during the month-end close process, this is helpful when closing the books at the month-end and leads to better financial transparency and a better sense of understanding the financial statements.

The long-term benefits of creating line item ownership

Not only does this help with the present, but this process is also extremely beneficial when updating the full-year budget on a quarterly basis. If we are trending higher for cloud computing costs due to an increase in revenue, then we know to increase the budget for this line item in the upcoming quarters. This process also allows the owners to evaluate areas of savings, and the executive team challenges each line-item owner to find ways to cut or reduce expenses that aren’t absolutely necessary.

With more eyes on expenses, we have better controls, more understanding of the financial statements. We can now answer the “why” questions when asked why we had seen an increase or decrease during a given period. Ultimately, this leads to better decision making and more accurate forecasting.

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