Add up anything in your budget that’s not a fixed cost. Track: A first step is to figure out how much of your budget actually is going to discretionary spend. How can you get a handle on discretionary spend? Here are a few ideas.ġ. And as a company grows, it gets harder to track-in our recent research, companies between 100 and 500 employees were most likely to say they had no idea how much discretionary spend they had. It’s a collection of small line items across multiple departments and cost centers, which makes it difficult to track and manage.Īnother trend to be aware of is that discretionary spend is on the rise as employees make more and more purchases from their own mobile devices and accounts-an Uber here, an AdWords campaign or an Amazon Prime order there. One tough thing about discretionary spend is that it’s hard to see. If you find yourself struggling to make your budget numbers, discretionary spend is a strategic place to focus. It’s also the easiest area for companies to exert short-term controls to manage cash flow. All told, discretionary spend can make up 25% or more of your company’s spending, which is -a pretty big number. But when you add them all up, they have a surprisingly big impact on your bottom line-and the bigger your sales team, the bigger the impact. These kinds of expenses often don’t seem like a big deal when you consider them one by one-especially when compared to big-ticket items like salaries or office space. Is it better to travel to your remote office for an all hands, or call in? Is it worth calling on that prospect one more time this quarter, or not? Should we splurge on a larger booth at the next trade show? Do we want to increase online advertising? Why does it matter? This kind of spending is discretionarybecause it involves some amount of choice.
It includes things like travel, meals, entertainment, subscriptions, and office supplies. It typically happens at the employee level, not at the company level. Discretionary spend falls outside of fixed costs like payroll and rent. One factor may be confusion about what discretionary spend is, because it’s not a term you’re likely to encounter on a corporate card statement or in a budget spreadsheet. Discretionary spend most likely isn’t a line item in your budget, but it can have a surprisingly big impact on your bottom line.ĭo you know how much of your company’s budget goes toward discretionary spend? If not, you’re in good company- 25% of the business owners and managers we polled recently had “no idea” how much of their budget goes toward discretionary spend.
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