Do companies sometimes overspend prior to EOY to make it look like their costs are higher than they actually are? So that next year they retain a higher budget, or keep their stock growth linear? I’m noticing a lot of wastage in budget with 3 of my clients (hiring more, keeping useless positions, etc) - especially in this economy. No layoffs or budget cuts yet..Not a finance guy sorry idk how any of this works.

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Definitely.

It’s a similar concept to military folks firing off bullets into the ground so they aren’t supplied with less ammunition the following year.

likefunny

That is one messed up system then

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Government definitely does

likefunny

Came here to say this. Always got a bunch of cool shit in September when I was in the Army waiting for that green light to send UFRs to spend that money

As a former budget & forecaster in industry for 15 years, yes. It’s incredibly hard to get additional headcount approved so you rarely ever give it up unless forced. But yes they also spend as much as they can to show they need the same amount of budget or more for next year. It’s a game.

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As a previous FP&Aer, it’s all about playing the game internally. The CFO/CEO wants to cut spend, so they look intensely. As a sub PnL owner, if you’re not spending what was approved in your budget, that’s easy cost that can be cut. So, those folks want to spend exactly to their budget, even if it’s not needed

likehelpful

Definitely see departments in banking do this with allocated, unspent funds for projects at EOY. Lot of 200k training projects in December to use up budget so they don’t get allocated less the following year.

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I'd think the opposite, trim fat ahead of earnings. The CFO sleeping on the job?

Ahh yes agreed there

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