Introduction into budget management
General concepts
The budget management consists of planning an income and expenditure over a given period. It involves three concepts:
- Forecasting:
Historical data will provide a provisional budget plan for the future. It is also necessary to take certain factors into account (e.g. price, quantity to be sold/purchased, changes in the cost of raw materials, etc.).
- Budgeting:
Consists of making the connection between the objectives that are sought and the means that should be put in place in order to achieve them. The budget will therefore detail the expected expenses and future costs for carrying out the planned activities. On the other hand, it will also detail the income that will cover these expenses.
- Budget control:
Budget control allows for regular comparison of actual income and expenditure with estimated income and expenditure during budgeting, thus ensuring that the company achieves its financial objectives.
Features of version 8.0
The budget module has been redesigned and there have been several structural developments between version 7.2 and version 8.0 AOS. These changes include following points:
Change in the structure of a global budget:
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Version 7.2: a global budget contained groups, in the groups you had sections, the sections contained lines, and in the lines you could find the budget items (global budget → Groups → Sections → Lines → Items).
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Version 8.0: a global budget now contains sections (the number of sections is recursive and depends on usage), in the sections you have lines, which contain budget items (global budget → Sections → Lines → Items).
Introduction of the budget generator:
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Version 7.2: it was possible to generate a global budget from the ‘Budget model - scenario’ view. The budget is constructed from a budget model and a budget scenario.
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Version 8.0: new ‘Budget generator’ view was added. This view allows you to select a budget structure and a scenario. You can also select the years for comparison, with the possibility of previewing the result before generating it.
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Printing a budget scenario: a button in the scenario allows you to print a draft of the Global Multi-Annual Financing Plan, which is based on the budget scenario.
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Activate link to projects: a new ‘Activate link to projects’ option has been added. When activated, it becomes possible to associate one or more projects with a budget, and conversely, associate one or more budgets with a project.
This option cannot be activated at the same time as the budget key.
Types of budget
Sale budgets: this budget is used for sales orders and sales accounting entries (income financial accounts).
Purchase budgets: this budget is used for supplier orders and purchase accounting entries (expense financial accounts).
Investment budget: this budget is used for supplier orders and purchase accounting entries (fixed asset accounts)
Purchase and investment budget: this budget is used for all supplier orders and purchase accounting entries (expenses and fixed assets).
Budget management by level
In AOS, the budget can be broken down into several levels according to user's needs.
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Level 1: global budget. It contains a second level of Sections.
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Level 2: sections 1, 1-N, sections 2, 2-N etc. This level is recursive, i.e. you can create as many sections as necessary.
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Level 3: budget lines. These lines allow you to define the various information that you do not have at section level. For example, you will be able to associate a budget key, a category and a manager. You will also be able to automatically generate the last lower level, i.e. that of the budget item. You also have an assistant. The assistant will help you to generate budget items according to selected periodicity (detailed further on). It will equally help to select a manager.
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Level 4: budget items. This level will allow you to define one to several periods with an initial amount for each parent budget line. This makes it easier to monitor purchase expenses / sales income by period when allocations are made to the budget.
Since version 8.0, a new feature has been added : validation by level.
Sections: once the global budget structure has been validated, it will become possible to validate the sections separately. In other words, the sections will have a Draft status unless you validate it. Keep in mind, it’s possible to validate them one by one with a new ‘Validate’ button.
Different menus in Budget Management
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Access: Budget Management → Budget → access the different types of budget (Sales budget / Purchase budget / Investment budget / Purchase and investment budget).
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Access: Budget Management → Budget → Import budgets and budgets templates. Using this menu, you can import budgets in Excel format.
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Access: Budget Management → Templates.
This menu offers two ways of generating the budget:
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Budget template: the first way of creating a budget is the Budget template. In other words, you can create a budget based on a budget template (this template must be configured beforehand).
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Scenario & Scenario variables: these are mainly used for budget generation.
General information about the budget form
In this example, a sale budget has been created.
Access: Budget Management → Budget → Sales Budget → +
On the budget form, you will find:
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Total amount (the global budget);
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Sections & budget lines: further down, you will find sections. You can click on a section in the ‘Section’ table to view its information. Inside, you will find budget lines (you might need to click multiple times on section lines);
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Clicking on a budget line will allow you to access its information.
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See details: click on this button to view the details. You can select from ‘Lines’ or ‘Sections’.
Fill in the general information on the budget sheet:
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The code and name of the budget.
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The company associated with the budget.
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The global budget period.
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The type of budget: sales, purchase, investments, expenditure & investments.
The initial planned amount is automatically calculated by adding the planned amount of the lower levels.
The available amounts apply the same logic.
Status
The budget can change status depending on its state:
Draft → Validated structure → Validated → Archived
- Validated structure: click on the ‘Validate structure’ button to change to ‘Validated structure’ status. In this case, the global structure of the budget becomes fixed and it is no longer possible to modify it.
Despite the ‘Validated structure’ status, it is still possible to modify the amount that will be allocated per level.
- Validate: changing to ‘Validated’ status means that it is no longer possible to modify the amounts directly in the budget. However, it will be possible to create a new version of the budget with new corrective amounts. To do this, click on the ‘Create a new budget version’ button.
You also have the option to validate the budget by level.
For example, by validating the ‘Grants and subsidies’ section, you will validate all the lower levels without impacting the rest of the budget.
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Click on a Section line in the Section table.
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Validate: in the Section pop-up window, click on the ‘Validate’ button.
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Status Validated: you will notice that the ‘Status’ column in the ‘Sections’ table for a Section line has now changed from ‘Draft’ to ‘Validated’.
Once validated, it will be possible to select this budget from an order, invoice or accounting entry.