Costs control management
The idea behind this concept is that a firm should define a budget for a year for their income and expenditure for the year and then should be able to examine how they are doing from time to time in relation to their budget. The Legal Services Commission have been heard to say that they "believe in" costs control management. They consider it vital. The Law Society also consider that firms should define a budget and then see how they are doing in relation to it.
C-Law software has a system built in to assist with this. This allows budget figures to be entered and then will on demand produce an "actuals" summary and a comparison with budget.
After having chosen this from the menu items under Cashier" as screen is presented similar to that set out below:-
This is the basic "worksheet" that is used.
Across the top are menu items :
File - Setup - View
Under Setup you can either choose to setup budget figures or items and groups.
The items and groups are of course only needed to be set up once and are the expense items and the expenditure groups that they come under. This is a way of grouping nominal account items into one "group" for ease of analysis. For example "Staff" could include the Salaries nominal and the Wages nominal and the PAYE nominal and the NI nominal account.
If you click on this you will be sent to a setup screen as shown below:-
This contains in the top list box your nominal accounts. The first job is to sort them into groups. The groups can hold just one account or several. The groups have to be designated as either income (or loss) accounts (ie:costs commissions etc) or Trading Expenditure accounts (eg: stationery, wages etc.) or Capital items.
These are the items that will appear in your budget and analysis reports.
You need first to set up group names. For example "STAFF, PREMISES". etc
To do this click on the menu item GROUPS and then click on Set Up/Change Group Names
Another window will appear where you can feed in your chosen group names. You can have up to 24.
You could have for example CAPITAL EXPENDITURE, PREMISES COSTS, STAFF COSTS, CONSUMABLES COSTS, PROFESSIONAL COSTS, INSURANCE, to name a few.
These are added to the window by typing them in the text box and clicking on OK
When you have compiled a suitable list you click on QUIT
To delete an item from your list double click on it in the list and then click the "UNSELECT" button at the foot of the list.
You can change these groups from time to time but for obvious reasons it is wise to try to get them right first time.
When you click QUIT you are taken back to the main screen from where you need to set up the nominal account(s) that will participate in your groups and define the type of the group (see above).
To do this you need to understand the way in which the secreen "works". You will always have a Group Name "NONE". If you click on this any nominal accounts which are not in any other groups will be listed above. To assign an account to a group you must click on the account name to highlight it. Then double click on the group name under which you want the account to appear. It will be taken off the "NONE" listing and put in the Group listing.
To remove it to another group (or the NONE group listing) highlight the account name and then double click the chosen group name. In this way you can "shuffle" the account names into any chosen groups.
One other IMPORTANT job you MUST do is to define the Account Types. All accounts in any group must be defined as a type. To do this highlight the first account in the listing under each group. For each account make sure you click the chosen type for the group. Then select the menu item "Types" "Make all accounts in chosen group as first a/c type" and click this. All the accounts in your group will then be defined as the first account type and you can check this by highlighting each account in the list and making sure the Type indicator goes to the correct type.
This is important as it defines where in the budget and variance reports the group will be shown.
When OK click QUIT to go back to the Costs Control worksheet.
You will now have your group names down the left hand side of the spreadsheet. The months in your financial year are across the top. You can then feed in your budget figures in each cell in the spreadsheet by clicking on it and entering the figure. You need to do this for each month in the year for each item.
Bear in mind that some costs are recurring but only in one month or quarterly or half yearly etc. Make sure you choose the correct month(s)!
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