Cost Centre Budgeting

Many people are confused by anything financial, especially accounts and budgets. This is as true for staff and trustees in not-for-profit organisations, as it is among the general public.

Financial literacy is not a skill that everyone possesses. This is partly because accounts are often expressed in language that many people just cannot understand.

Some people are afraid of taxes, particularly goods and service tax, and tax status, and do not know the government financial reporting requirement for their organisations.

Writing clear readable budgets are a specialty of the consultancy. We are particularly keen on producing budgets that work for an organisation.

Cost centre budgets are one really effective mechanism to spread overheads over the areas of activity for your organisation and provide accounts that Boards and Staff can understand.

These user-friendly accounts can make charities and not-for-profit organisations more accountable while at the same time make their accounting systems absolutely transparent and readable.

PSE Consultancy has developed a system of budgeting that enables organisations to spread their fixed expenses over all the different activities. We call this cost centre budgeting.

This system also gives the organisation a method that provides a resource that enables fundraising to be accurate, realistic and therefore more sustainable for the organisation.

The system is also really positive in the way it enables all the staff of any area of the organisation to understand the true costs of running their part of the mission or vision of the Trust or Incorporated Society.

One of the advantages to this method of budgeting and accounting is that the organisation can calculate the actual cost of running new activities as well as the activities that have been running for years.

When you know the actual cost of any activity, it is then possible to request the accurate amount of money for that activity. The indirect expenses (or overheads) are spread over the contract. When this doesn't happen the organisation makes a loss on some projects and then has to find extra money for administration.

What we know is that funding bodies do not like to fund administration. It is therefore helpful if the administration costs of programmes are spread over all areas of activity.