Spend Categories Definition
There are a few key things to consider when defining your spend categories. First, think about what you want to track and measure. This will help you determine which categories make the most sense for your business. Second, consider how detailed you want your tracking to be. You can create broad categories or get very specific with sub-categories. Finally, tailor your categories to fit your company’s unique needs.
Now that you have a general understanding of spend categories, let’s take a closer look at some common examples. One common way to break down spend categories is by fixed vs. variable expenses. Fixed expenses are those that stay the same each month, such as rent or mortgage payments. Variable expenses can fluctuate from month-to-month, such as utilities or fuel costs.
Another way to categorize spending is by operational vs. non-operational expenses. Operational expenses are necessary to keep your business running, such as inventory costs or employee salaries. Non-operational expenses are not essential to the day-to-day operations of your business, such as marketing or office supplies.
Finally, you may also want to consider creating divisions within each category based on department or location. For example, you could have a separate category for each office’s rent expense or break down inventory costs by warehouse location. Defining clear and concise categories will help you get the most out of your spending data.
