Performance Tracking & Budget Reviews

One of the most important roles a VP Finance can take on within the chapter is to track performance of the chapter and conduct budget reviews in order to support your chapter in achieving its goals! This emanual will walk you through how to do performance tracking, conduct a budget review & facilitate these processes with your exec team.

Performance Tracking
What is it:
Comparing budgeted performance (or budget goals) to actual performance throughout the year

What you’ll need:
Your budget, income statement & consolidated summary (all in the Budget Google Doc)

How it works:

  1. Input all of your chapter’s revenues & expenses into the income statement document
  2. Review the consolidated summary page (values will input directly from the income statement)
  3. Identify all areas of concern, such as:
    • Overspending
    • Underspending
    • Under achieving revenue goals

Overspending
There are three types of overspending: within a specific category, within a specific month and net overspending. In the case of overspending within a specific category, its important to figure out why that expenditure was above the budgeted amount, and talk with the relevant VP to make sure that they understand their budget for their activities. It may happen that you know a certain activity will go over budget, so you can make a note in the budget indicating this. If the activity goes significantly over budget (more than 10%), it may be necessary to cut expenses in other areas or in the future (see budget reviews for more on this).

In the case of overspending within a specific month, this commonly happens if an expense needs to occur earlier or later than it was originally budgeted for. If this is the case, you can simply make a note in the cell stating that this expense is using funds originally allocated to another month. Just make sure that if the expense happens earlier than originally thought, it isn’t spent twice.

Finally, net overspending is the most concerning of all. This is when your total expenses are above budget, meaning that you’re likely overspending in multiple months & multiple categories. If this occurs, your role as VP Finance is to figure out where the overspending is coming from and crack down on reimbursements that don’t stay within budget.

Underspending
You may think that underspending in a category or on the whole is a good thing. However, it is important to make your budgeted investments (expenses) into operations in order to achieve your revenue goals. Sometimes expenses are underspent because of funding and discounts, and this is totally fine. What you want to ensure is that the value budgeted is actualized.

A Note on Expenses
In general, expenses should be looked at as investments in your chapter that should return at least its value through increased revenue. The higher the return on investment, the better the investment itself is. For example, if you invest $50 in Facebook ads for Exam-AID sessions and that results in an increase of 10 students attending that session, then the return is 300% ($200-$50/$50 = 300%). As long as the return is positive, the investment is worthwhile.

Under Achieving Revenue Goals
This is one of the biggest red flags you should be watching for as VP Finance. If your chapter is constantly underachieving your budget goals for revenue, this is something you must bring up with your exec team. Ways to address under achieving revenue goals from your perspective as VP Finance can include focusing expenses on categories with higher return on investment potential, decreasing expenses in “extra” areas and re-forecasting revenue targets.

Budget Reviews
The next step in performance tracking is to conduct a budget review with your executive team. Budget reviews should be done at the end of each quarter with the aim of adjusting future targets in alignment from past performance. Before your exec meeting, follow the steps above and come into that meeting with your budget and performance analyzed, and ready to lead a conversation about changes that need to be made.

Any changes you make to your budget should be accompanied by a comment in the cell explaining the change. Remember that if you re-forecast your revenues to be less than originally budgeted, you may need to decrease your overall expenses as well (as expenses must fall between 10-20% of revenue). Once you have completed your budget review, you must email Nicole (ncliteur@studentsofferingsupport.ca) to have your new budget re-approved.

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