YTD (year-to-date) is a time-based metric term used in accounting and bookkeeping. We explain what it means, when it is utilized, and why it’s essential to manage your company’s YTD expenses properly.
What does YTD mean?
The term “year-to-date” (YTD) is a time-based financial management and investing measurement. In the UAE, businesses interpret year-to-date to refer to the calendar year, which aligns with the fiscal year (i.e. January 1st through December 31st). Other countries have fiscal years that do not necessarily align with the calendar year.
Why is specialized software beneficial in managing expenses?
It is time and cost-savvy. Using payroll software effectively automates calculations in the payroll process, resulting in a significant reduction of errors and revisions in the final output. Some 43% of organizations still use manual expense reporting, which opens these companies up to a lot of errors and inaccuracies in their calculations. These oversights in payments can cause delays in productivity and can affect staff morale, on top of possible fines the companies can face.
It can streamline the evaluation of payroll expenses. This cloud-based program can instantly consolidate and compare employee expenses with the budget for the particular YTD period. In addition, it can help simplify the process of complying with country statutory regulations and corporate policies in regards to additional expenses and reimbursements that need to be made. Management software helps keep calculations accurate to avoid delays.
It provides a simple, user-friendly form-filling interface. Any company document can be easily created, stored, edited, and accessed with this software. Automated systems help with streamlining the onboarding process, which makes the two departments involved, the HR and finance teams, more productive and efficient. Employees having access to their financial information, especially their YTD data, can help enhance their personal financial planning, especially in being able to accurately predict income projections.
Budget management is made easier. YTD payroll allows the business to provide access to multiple stakeholders, allowing for a smoother approval process for any requests, budget modifications, or reimbursements as it consolidates all budgeting data into one system. Because the expense reporting and review processes are automated, it becomes easier to make accurate projections on future expenses based on data from previous years. This can help a company properly identify areas where additional investment can be made available.
Create accurate tax liability projections. Having a clear-cut tax liability forecast is vital in creating a business’s financial planning process. As a prerequisite for effective financial planning, it is important to have an accurate calculation of your company’s tax liability with considerations made to the company’s finances and all applicable tax laws. Tax liability projections are calculated based on your company’s financial statements: net income, capital gains, and other information. Having YTD software means this information is already collated and can help with making predictions.
Who benefits from specialized software?
Management can use YTD information to quickly check on the company’s financial health. If the company is experiencing a time of unusual activity, YTD data can be very informative.
Financial planners and analysts
FP&A teams use YTD data in budgeting and planning, to standardize their data collection and decision-making.
Human Resources and Payroll departments
HR and payroll departments frequently use YTD reporting to determine how much the firm has spent on gross pay, net pay, deductions, benefits, taxes, and expense reimbursement since the beginning of the current fiscal year. Payroll teams and HR managers can use an HRIS system to get YTD statistics on hours worked, leave days taken, and leave accrued.
Your profit and loss statement summarizes your entire revenue, expenses, and profits or losses during a given time period. Most income statements are evaluated over a month, quarter, or year, but your P&L can also provide you YTD data. However, the days of calculating these time-period measures with spreadsheets are coming to an end. Time-period measuring is now quick and easy thanks to the development of accounting, bookkeeping, and spend management software.