Budget Planning and Control

Budget is discipline. Monitoring targets and keeping costs under control are vital for businesses. Business functions that perform budget processing in Workcube create real-time budget records. These records allow you to monitor all planned or unplanned expenses and incomes. If you have planned your income and expenses according to Expense / Revenue centers, you can compare the results with the plans at any time.


To use budget tools effectively, you should know these 4 concepts:

  1. Expense / Revenue Center: It is a logical grouping approach that can have a special meaning for the business where income and expenses occur. Organizational units such as branch offices, departments, business units, and teams can be Expense / Revenue Centers. Expense / Revenue Centers can be designed according to product and service categories.
  2. Budget Category: They are logical groups that serve to separate income and expenses. You can create upper categories such as Human Resources, Production, R&D.
  3. Budget Item: They are logical groups that serve to separate income and expenses under budget categories. Budget items such as Stationery Expenses, Fuel Expenses, Manufacturing Revenues can be created.
  4. Budget Context and Dimensions: You can size the budget to track activity-based costs.

  1. In the transaction categories, the option to make a budget transaction must be ticked.
  2. The budget center and items of products and services must be defined. In some cases, automatic budget distribution records can be created by connecting the product-services expense and income template.

When these settings and definitions are made, the system makes the budget records of each transaction.


Example Case:
A company that manufactures centrifuge and welding machines has manufacturing, sales, service and finance-administrative departments.

If stainless steel is used in centrifuge manufacturing;

Expense / Revenue Center: Manufacturing

Budget Category: Manufacturing Expenses

Budget Item: Manufacturing Sheet Expenses

When the rent of the vehicle used by an employee in the finance department is paid;

Expense / Revenue Center: Finance and Administration

Budget Category: Transportation Expenses

Budget Item: Vehicle Rentals

When a welding machine is sold;

Expense / Revenue Center: Sales

Budget Category: Sales Revenues

Budget Item: Welding Machine Sales Revenues

When the catering company issues a meal invoice;

If 30 people work in Manufacturing, 10 in Sales, and 10 in Finance and Administrative Affairs, the cost is divided according to the number of employees.

Expense / Revenue Center: 60% Manufacturing, 20% Sales and 20% Finance and Administrative Affairs

Budget Category: General Expenses

Budget Item: Kitchen Expenses.

The expense paid for the transfer when a bank transfer is made to a supplier;

Expense / Revenue Center: Finance and Administration

Budget Category: Financial Expenses

Budget Item: Remittance EFT Expenses.


Tip: If you want to compare or report these results with targets, you should make plans using budget planning receipts.


What is Budget Planning Receipt?

These are planning screens created to compare spending limits and income targets for a given time period with what is happening at the end of that time period. Planning is done by entering Expense / Revenue centers, planner, target, and budget items in the planning receipts.

  • More information can be read in the article "Budget Planning Receipts".

What is a Budget Distribution Template?

These are distribution keys and rules on Expense / Revenue receipts and invoices that divide revenue and expense into Expense / Revenue centers.

  • More information can be read in the article "Budget Distribution Templates".

Warning: Products and services added to purchase and sales invoices create budget records. Therefore, it is necessary to set budget items for all products and services sold-purchased. You must make the accounting and budget definitions on the product registration screens.


Budget, Realization, Free Use, and Unplanned Expenses

Business units prepare the budget of all investment and expense amounts to be made during the year. Thus, before the expense is made, it is checked whether there is an equivalent in the budget. Expense is allowed if there is a sufficient budget. If there is not enough budget, the expense is blocked. Unplanned expense due to over budget are subject to approval.

Goods and services are requested by business units. At the request stage, the planned budget amount for the budget category or budget item is checked at the requested expense center of each good and service. The free usage amount is calculated by deducting the amount previously spent in this context. If the requested amount is below the free usage amount, the budget is reserved. The conclusion of the request process means the conclusion of a series of transactions such as getting quotes, choosing the right products and suppliers, placing an order, and making an agreement. Therefore, budget control works in the period from the approval of the internal request to the placing of the order.

Budget Compliance Control Chart
Planned
Amount saved and approved with budget planning receipts.
Reserved
The amount reserved when purchasing and internal requests are approved.
Used from reserve
If approved requests turn into orders, they are deducted from the reserve.
Realized
The budget is used after the invoice and expense receipt registration, 
Free
The difference between the budget plan and the actual amount of expense.
Requested
The amount of the claim in preparation or approval.

The Budget Control and Monitoring Report can be accessed from the budget detail and the Reports list. The Project Dashboard is accessed under the Dashboard list.

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