Discretionary expenses

In a business environment, we may come across various terms. One such commonly used term is Discretionary expenses. So what is a discretionary expense? The kind of cost which the company can get for purposes other than of the running of the company is known as a discretionary expense. That is, the company might not directly want this money for their proper running, but this money is used for the customer or employee satisfaction. There are certain times when a company sends its employees for a dinner or a movie in their expense. This is done to promote employee satisfaction and to create a good bond with them, as it is indirectly beneficial for the company. Keeping a track of these expenses is good for the company as it will help them in coming out of the financial crisis. This is why, whenever a company is going through a bad phase, the first thing to do is to cut down the discretionary costs spend by the company. A company spends two kinds of costs for an employee, Essential expense and discretionary expense. While essential expense is the cost which the company has to pay by law like the electricity bills, insurance, etc while the discretionary costs are on raw materials and for entertainment. The cost spend on discretionary vary with

    

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