Budgeting
Budgeting process is an event that most companies go through every year and with HoneycombERP® this very important task can be done with ease and superior visibility and control. The ultimate aim of performing budgeting process is to establish a financial target which set the company’s future direction. Most companies prepare a master budget every year. The master budget is used to compare against the company’s interim performance which could be in monthly or a few months interval. Some companies prepare interim budgets or forecasts in between the years. The forecast is a combination of actual results; based on the information of past months together with the budgeted figures of the future months to give a projected results for the year end.
The budgeting process varies from company to company. The technique, template and time taken also varies from company to company. Majority of the process is done by the Finance department. The rest are done by the respectively non-Finance departments respectively.
Module Features
Nature of Budget (Recurring Budget, Lapsable Budget etc.)
With HoneycombERP® the budget types can be managed with ease and effectiveness. Although recurring budgets varies slightly between industries, HoneycombERP® manages recurring budgets and each budget request line items that are funded each budget period to support the current level of service, as opposed to one-time budgets that are typically created for special purposes.
Type of Budget (Zero Based, Incremental etc.).
Like nature of budgets; HoneycombERP® manages types of budgets providing control and visibility. Whether Incremental budgeting or Zero-based budgeting is the approach of the business; HoneycombERP® provides superior control to handle both approaches.
Budgeting using Historical Trends.
Using HoneycombERP®; the financial budgeting which is an estimate of future financial outcomes for a company or country (for futures and currency markets) can be generated easily and accurately. With HoneycombERP®; using historical internal accounting and sales data, in addition to external market and economic indicators, a budget forecast is generated and is the best indicator or insight telling what will happen to a company in financial terms over a given time period—which is usually one year.
Using HoneycombERP® budgeting; companies can easily determine how to allocate their budgets for an upcoming period of time. Additionally; budgeting also provides an important benchmark for firms which have a long-term perspective of operations.
Budget Demand Generation
Demand for budget are generated in a systematic way in HoneycombERP®; where detailed information is associated against a demand. Specialized screens for budget demand data acquisition apply strict validations and against the active accounting cycle a budget demand is listed.
Budget Demand Revision and Approval.
Demanding a budget does not mean that every demand is fulfilled. In HoneycombERP®; each requested budget goes through a chain of approvals before the amount gets issued to the demanding personal. Recommendations and approvals against the budget demanded are assigned based on the company organizational structure.
Budget Allocation.
After approval only; HoneycombERP® assigns the demanded budget to the requesting member. HoneycombERP® allows the managers to assign flexible budget amount and does not compel to enter only the requested amount. After budget allocation; complete tracking is available against each and every expense made against the allocated budget.
Budget Transfer.
It may happen that one project in a responsibility area is running short of funds while another still has plenty. While using HoneycombERP® you can use budget transfers to place budget still available in one project at the disposal of another. This ensures that no project gets halted; and the transfer of budget will ensure progress. Additionally; the transfer transaction is well recorded and traceable and if at any later time it is required to track the reason for transfer; it can be achieved easily using HoneycombERP®.
Budget Re-appropriation.
In HoneycombERP®; Re-appropriation process combines balances in the Temporary Budget Ledger and the Actuals Ledger and carries forward the net amount in the Temporary Budget. The re-appropriation process is well guarded and secure as needs approval of a manager before the transactions are committed.
Master Budget.
With HoneycombERP® the master budget which is the aggregation of all lower-level budgets produced by a company’s various functional areas, and also includes budgeted financial statements, a cash forecast, and a financing plan; is maintained and managed in a way that the organization can have macro and micro picture in an clear manner. In HoneycombERP®; the master budget is typically presented in either a monthly or quarterly format, or usually covers a company’s entire fiscal year. For further clarification and explanation; HoneycombERP® also adds explanatory text with the master budget, which explains the company’s strategic direction, how the master budget will assist in accomplishing specific goals, and the management actions needed to achieve the budget.
Budget Variance/Monitoring.
The difference between the budgeted or baseline amount of expense or revenue, and the actual amount; (Budget Variance) is calculated automatically on the click of a button in HoneycombERP®. The budget variance is generally calculated when the actual revenue is higher than the budget or when the actual expense is less than the budget.