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stiveooo t1_j2dwoyc wrote

Reply to comment by angrybird7677 in ELI5: Why do companies require annual budget be spent 100%? by angrybird7677

you are right, the budget comes from prev year so it was already taxed, so saving money is good, thats why the stock goes up when a company decides to fire people=saving money.

But the company wants to save money but the departments want to spend it all so they dont receive less next year.

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FireWireBestWire t1_j2e58wo wrote

The budget is derived from the previous year, but the money itself is not. It's not like they set up a savings account that ended on Dec 31 that they begin drawing from on Jan 1. Tracking cash flow is a job, and it goes from month to month and week to week. And business expenses count against your income in the current fiscal year, not the previous. Depreciation is also a thing, and it's why certain items would be paid for from different funds.

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