You’re watching a Future Office of the CFO Minute – where you’ll find timely perspectives designed to equip financial executives for strong, future-ready decisions. In this episode, Wayne Sadin, an Acceleration Economy Analyst and experienced CEO and Board Advisor, gives insight on SG&A as well as including IT expenses into your COGS budget.
00:08 – With CIO experience in over 30 budget seasons, I think it’s important to discuss Selling, General, and Administrative expenses (SG&A) vs. the Cost of Goods Sold (COGS).
00:25 – If your IT reports to the CFO, then your IT is seen as SG&A. However, its primary delivery is COGS. It’s overhead to manufacturing, logistics, supply chain, and service. In other words, it’s overhead to the business you’re in.
00:48 – When putting together your budget, why are we trying to lump every IT expense into an SG&A bucket?
01:08 – Think about the projects that support COGS for your company. Then, consider putting those IT budget items into the budgets of the areas of business that benefit from them. By matching principles and accounting, we have the cost and benefits in the right place.
01:32 – Stop thinking of IT as a piece of the finance organization. Think of it as a business enabler and as an investment into each business unit.