Budgets

Income and Expenditure Budgets can be created, maintained and used in reports. Multiple budgets may be created at the total organisation level as well as at level of groups of accounts, Branches or Funds and Activities. The budgeting module offers the ability to prepare budgets quickly and easily without having to slog through using spreadsheets. If historic information is available it can be used to very quickly create a budget, alternatively a user can input data and then use rules to finesse a budget. Reports are available to compare actual results to budget. Multiple budgets can exist and when budget comparison reports are prepared any relevant budget may be selected.

Why prepare a budget?

A financial budget clarifies the direction of the operation. Those responsible will have considered the factors that are likely to impact the operation, made assumptions about the magnitude of those impacts and how to respond. They will have identified how to take advantage of opportunities and how to reduce threats; at the same time considering the strengths of the operation and its potential weaknesses. Using those insights, a budget evaluates the potential revenues and expenditures and is used to provide control and evaluation of performance.

Entities use budgets to manage and control expenditures by comparing what was budgeted with what happened. Understanding what caused the differences improves control, knowledge and the quality of assumptions. Success often comes from the entity being able to be flexible and responding to the differences.

Initiating Budgets

Budget processes are accessed via the Control menu.

Control - Budgets

If there are existing budgets they are displayed.

A Budget Build Settings section allows users to set some global level rules to quickly construct a budget. SEASONAL WEIGHTINGS accesses a screen to allow the setting up of seasonal weighting for income and/or expenditure accounts. See more below.

The ACCOUNT SETTINGS button allows a user to define those accounts that for which a budget is required as well as rules for calculating a budget from historic data if it exists. This is a powerful tool for creating budgets once the basics have been set. See below for more.

Click the red + symbol to add a new budget.

Seasonal Weightings

Seasonal weightings are particularly useful if budgets are being generated via user input either through choice or as historic data does not yet exist.

Where the organisation receives greater income or incurs greater costs in certain months then seasonal weighting is a useful tool to adjust your values automatically.

The default is 1.00 for each month i.e. values will be multiplied by 1.00. Adjust as required e.g. if there are twice as much income in January then enter 2.00, half as much in March enter 0.5 etc.

Account Settings

The account settings screen allows the user to set the level of detail required for budgeting. The screen displays the chart of accounts for the organisation in the hierarchy. Indicate those accounts that are to be budgeted by toggling the radio button adjacent to the account.

By default the budget basis is 'Input'. Click on the selected line item to open a dialogue screen for other configurations.

The dialogue screen allows the user to define the method of providing a basis figure for subsequent rule driven calculations of a budget amount for each budget month.

Basis

Basis - Input: The user simply inputs a basis figure into the Input Amount field
Historic Actual: When a budget is calculated from historic data, no input amount is required as each budget month is populated from history on a one for one basis. The actual month to month mapping is determined in the budget creation process (see below).
Historic Average: A basis amount is calculated as the average over the number of historic months determined in the budget creation process (see below).
Historic Last Month: A basis amount is taken as the value in the last historic month determined in the budget creation process (see below).

Rule

Once a basis amount has been determined the system is able to apply rules to extend the values over the budget months. The rules are selected at the time a basis amount is selected. The available rules are as follows: -

Not Applicable: No rule is applied and the basis amount is not changed
£+/-: A fixed amount is added or subtracted to the basis amount and applied to each budget month; the amount is set in the Vary by £/% field
%+/-: A percentage amount is added or subtracted to the basis amount and applied to each budget month; the amount is set in the Vary by £/% field.
Compound £+/-: A fixed amount is added or subtracted to the basis amount for the first month of the budget and compounded into each subsequent budget month; the amount is set in the Vary by £/% field.
Compound %+/-: A percentage amount is added or subtracted to the basis amount for the first month of the budget and compounded into each subsequent budget month; the amount is set in the Vary by £/% field.
Seasonal: The seasonal weightings are applied to the basis amount on a specific month basis, e.g.January Weighting is applied to a January budget month. Note that the default seasonal profile is a weighting of one in each month, i.e. a flat profile.

When all account settings have been set or accepted return to the Budgets screen.

Creating a budget where no historic (or insufficient historic) data exists

Budgets are created from the budget screen.

Control - Budgets

Click the red + symbol to add a new budget.

The budget builder screen is presented.

Enter a unique name for the budget in the Budget Name field.

Specify the budget horizon by selecting the first month of the budget in the Start Budget from field, followed by the calendar year and the number of months for the budget period; either 3,6,9,12 months. Provided all budget lines are to be input (rather than computed from historic information) ignore the Use Figures from selections.

A budget may be entered for a particular Branch/Fund or for All Branch/Funds, select as required. Equally a budget may be entered for a particular Activity or for All Activities

Click SUBMIT to generate a budget report showing a column for the each month of the budget horizon together with those accounts selected for budgeting.

The screen offers a number of screen display option buttons as well as output format options for hardcopy pdf or down-loadable as csv (Comma Separated Value) or xls (EXCEL) files. The screen display buttons include: -

Expand All: Expands the accounts screen to the lowest level in the accounts hierarchy
Collapse All: Collapses the accounts to the highest level in the accounts hierarchy
+ or -: Changes the accounts to the next level in the accounts hierarchy, "+" more detailed or "-" less detailed
Show Un-budgeted Accounts: When ticked, displays any accounts that are in the accounts list that have not been selected for a budget to be set.

In this case all budgets are to be input, click on an accounts line to open up an input screen. The Budget Input Screen is discussed below.

Budget Input Screen

The budget input screen displays the budget months for the particular budget. Tools are available to create a budget.

Figures may be input directly into each field

Navigate to any budget month and enter a value

Input a monthly base amount

A number of actions can be applied to this value to extend over the budget months

Compound £+/-: A fixed amount is added or subtracted to the input monthly base amount for the first month of the budget and compounded into each subsequent budget month; the amount is set in the Vary by £/% field.
Compound %+/-: A percentage amount is added or subtracted to the input monthly base amount for the first month of the budget and compounded into each subsequent budget month; the amount is set in the Vary by £/% field.
Seasonal: The seasonal weightings are applied to the iinput monthly base amount on a specific month basis, e.g.January Weighting is applied to a January budget month. Note that the default seasonal profile is a weighting of one in each month, i.e. a flat profile.

Click CALCULATE to extend the input monthly base amount into each month, if necessary make any changes and click SAVE to store the budget.

Creating a budget from historic data

Typically, historic data provides an indication of what may be expected in the future; so a user may choose to use historic actual data and apply a growth e.g. same as last year but growing by 5%. However, for organisations that are growing (or contracting) rapidly you might want to use the data from the last month as the starting point and apply changes from there.

The budget does not have to be created totally from historic data, the user may prefer to mix historic and inputted data

Where rules have been set in Account Settings these will be applied as the budget is created; they can be amended as required.

Budgets are created from the budget screen.

Control - Budgets

Click the red + symbol to add a new budget.

The budget builder screen is presented.

Enter a unique name for the budget in the Budget Name field.

As all (or perhaps part) of the budget is being prepared using historic information as the base, the user will need to specify the source of that data by choosing a start month (and year) and how many months of historic information are to be used. So for example: -

Historic Actual: If say a 12 month budget is being prepared then choose 12 months of historic information; If it exists a specific months information is applied to a budget counterpart, i.e.January historic information is applied to a January budget month.
Historic Average: Choose the historic horizon over which an average figure is to be computed.
Historic Last Month: The historic information for the last month is taken from the last month of the historic horizon. So if the last month has zero value then zero is used as the base figure.

A budget may be entered for a particular Branch/Fund or for All Branch/Funds, select as required. Equally a budget may be entered for a particular Activity or for All Activities

Click SUBMIT to generate a budget display showing a column for the each month of the budget horizon is displayed together with those accounts selected for budgeting.

Expand All: Expands the accounts screen to the lowest level in the accounts hierarchy
Collapse All: Collapses the accounts to the highest level in the accounts hierarchy
+ or -: Changes the accounts to the next level in the accounts hierarchy, "+" more detailed or "-" less detailed
Show Un-budgeted Accounts: When ticked, displays any accounts that are in the accounts list that have not been selected for a budget to be set.

Note that by clicking on any account budget line a dialogue screen is presented that allows a user to make changes as required.

Budget Dialogue screen

The dialogue screen displays the budget account name and the rule currently set. Note that if the account budget is set to be input then the screen is the budget input screen, described above in the Creating a budget where no historic (or insufficient historic) data exists section.

If the historic information is Historic Actual the screen displays the Calculated Monthly Base Amount as "Actuals", the rule is Not Applicable and no Vary By is set. Each budget month displays the amount taken from history; any budget month can be amended; enter a figure, tab out so the SAVE button is displayed and click it.

Where the historic information is Historic Average or Historic Last Month, the calculated value is displayed as the Base Amount and each budget month has that value. The user may make changes as necessary by changing (or applying) a rule and Vary By parameter. Click CALCULATE to extend the rule and then SAVE to store the budget.

See more on rules in the section above

Additionally any particular budget month may be changed by the user simply entering a figure as input and clicking SAVE.