The introduction of budgeting is a fairly important process that is carried out at every enterprise. Its main goal is to draw up and plan budgets depending on the tasks facing the legal entity, as well as control over their implementation. Budgeting is one of the components of the management accounting system.
Budgeting in an enterprise using the example of production consists of the following parts:
1. revenue part – consists of all receipts from the company’s activities and is divided into three parts:
- income from core activities;
- income from investment activities;
- income from financial activities.
2. expenses – includes all expenses that need to be incurred to ensure the normal functioning of the company. 
To effectively use Excel in the budgeting process, it is necessary to create tables that must contain all the items of expenses and income necessary for conducting business activities (their unified values).
Budgeting in ExcelDepending on what tasks need to be solved, the following budgets are drawn up:
- financial;
- operating rooms.
The latter in turn is divided into:
- budget of income and expenses;
- cash flow budget.
The cash flow statement shows the main sources of income and areas of expenses of the company. When drawing up a report in Excel, it is necessary to take into account all three areas of activity: operational, financial, investment. Therefore, the tables need to provide detail for each of them. In addition, visualization of the cash flow statement should clearly demonstrate the volume of receipts and expenses so that cash gaps can be quickly identified and eliminated. 
The main goals of preparing the BDDS are:
- optimization of cash flows based on the forecast of cash balances;
- forming a spending plan taking into account future income;
- minimizing cash gaps.
BDDS is formed on the basis of:
- sales plan;
- standards for inventory turnover, accounts receivable and accounts payable (cash gaps are calculated);
- spending plan;
- financial and investment plan.
Considering that when drawing up budgets it is necessary to deal with a large amount of data, financiers use various automation programs to increase the speed and quality of their work. The simplest and most accessible among them is the Microsoft Office Excel application. Using the tables and formulas contained in the editor, you can carry out a large number of calculations, build various diagrams and graphs, etc.
Excel copes well with small amounts of data, but its use in medium and large enterprises is not recommended, since when working with large amounts of data it becomes very slow and clumsy. We can say that Excel is suitable for beginners who do not yet need to analyze large amounts of information.
Using the specialized module “Budgeting” will allow you to quickly and efficiently solve all the tasks: create budgets of any levels, taking into account the specifics of the enterprise, as well as exercise operational control over their implementation.
The budget for the next year is formed taking into account the functioning of the enterprise: sales, purchasing, production, storage, accounting, etc. Budget planning is a long and complex process, because it covers a large part of the operating environment of organizations.
For a clear example, consider a distribution company and draw up a simple enterprise budget for it with an example in Excel (an example budget can be downloaded from the link below the article). In your budget, you can plan expenses for bonus discounts for customers. It allows you to model various loyalty programs and at the same time control costs.
Data for budgeting income and expenses
Our company serves about 80 clients. The range of goods is about 120 items in the price list. She makes a markup on goods of 15% of their cost and thus sets the selling price. Such a low markup is economically justified by intense competition and is justified by high turnover (like many other distribution enterprises).
A bonus reward system is offered to clients. Discount percentage on purchases for large customers and resellers.
The conditions and interest rate of the bonus system are determined by two parameters:
- Quantitative limit. The quantity of a specific product purchased that gives the customer the opportunity to receive a certain discount.
- Percentage discount. The size of the discount is a percentage that is calculated from the amount the client purchased when overcoming the quantitative limit (bar). The size of the discount depends on the size of the quantitative limit. The more goods purchased, the greater the discount.
In the annual budget, bonuses belong to the “sales planning” section, so they affect an important indicator of the company - margin (profit indicator as a percentage of total income). Therefore, an important task is the ability to set several bonus options with different boundaries at sales levels and the corresponding % bonuses. It is necessary that the margin is kept within certain limits (for example, no less than 7% or 8%, because this is the company’s profit). And customers will be able to choose several options for bonus discounts.
Our budget model with bonuses will be quite simple, but effective. But first, let’s draw up a report on the movement of funds for a specific client to determine whether it is possible to give him discounts. Pay attention to formulas that reference another sheet before calculating the percentage discount in Excel.
Drawing up enterprise budgets in Excel taking into account loyalty
The budget project in Excel consists of two sheets:
- Sales – contains the history of the movement of funds over the past year for a specific client.
- Results – contains the conditions for accruing bonuses and a simple account of the distributor’s performance, which determines the forecast of the client’s attractiveness indicators for the company.
Cash flow by clients
The structure of the table “Sales for 2015 by client:” on the “sales” sheet:
Enterprise budget model
On the second sheet we set the boundaries for achieving bonuses and the corresponding discount percentages.
The following table is a basic form of an income and expense budget in Excel showing the firm's overall financial performance for an annual period.
Structure of the table “Conditions of the bonus system” on the “results” sheet:
- Bonus bar border 1. Place to set the level of the border bar by quantity.
- Bonus % 1. Place to set a discount when crossing the first border. How is the discount for the first border calculated? Clearly visible on the “sales” sheet. Using the function =IF(Quantity > limit of 1 bonus bar[quantity]; Sales volume * percentage of 1 bonus discount; 0).
- Bonus bar limit 2. A higher limit compared to the previous limit, which makes it possible to get a larger discount.
- Bonus % 2 – discount for the second border. Calculated using the function =IF(Quantity > limit 2 of the bonus bar [quantity]; Sales volume * percentage of 2 bonus discount; 0).
Structure of the table “General report on the company’s turnover” on the “results” sheet:
Ready-made enterprise budget template in Excel
And so we have a ready-made enterprise budget model in Excel, which is dynamic. If the bonus limit is at the level of 200, and the bonus discount is 3%. This means that last year the client purchased 200 items. And at the end of the year he will receive a bonus discount of 3% of the cost. And if a client purchased 400 pieces of a certain product, it means that he has crossed the second limit of bonuses and already receives a 6% discount.
Under such conditions, the “Margin 2” indicator will change, that is, the distributor’s net profit!
The task of the head of a distribution company is to select the most optimal levels of boundary strips to provide discounts to customers. You need to choose so that the “Margin 2” indicator is at least within the range of 7% -8%.
Download the enterprise budget-bonus (sample in Excel).In order not to search for the best solution at random, and to avoid making mistakes, we recommend reading the following article. It describes how to make a simple and effective tool in Excel: Data table in Excel and matrix of numbers. Using the “data table” you can automatically visualize the most optimal conditions for the client and distributor.
In conditions of growing competition and an unstable economic situation, an increasing number of companies are coming to the need to introduce budgeting. Budgeting in an enterprise is the process of planning, controlling and executing budgets in the process of financial management. In this article, we will try to figure out how to draw up an enterprise budget using an example.
Creating a budgeting system in a company or enterprise usually consists of several stages. At the first stage, the company needs to decide on goals, budgeting methodology, determine the financial structure (structure of financial responsibility centers - FRC), develop a budget model (composition, structure, types of budgets), approve the regulations and regulations of the budget process. At the second stage, you can directly begin planning the enterprise budget. It is convenient to automate the preparation of enterprise budgets using a special software product.
The regulation on budgeting at an enterprise may contain the following sections:
- Strategic goals and objectives of the enterprise;
- Budget model;
- Financial structure of the company, etc.
Based on the Budgeting Regulations in the company, it is necessary to develop an Enterprise Budgeting Regulation, which may contain the following sections:
- The procedure for forming functional and master budgets, the structure of subordination;
- Assigning responsibilities and deadlines for submitting budgets and reporting;
- The procedure for approval and amendments;
- Budget control and analysis, etc.
There are several ways to implement a ready-made budget model. The most common and relatively cheap ways are:
- Budgeting in Excel
Company budget example Excel
Budgeting in Excel involves creating budget forms in Excel and linking these forms using formulas and macros. The forms of budgets, including the budget of income and expenses, the cash flow budget, can be different, with consolidated items or more detailed, divided into long periods (for example, an annual budget by quarter) or into shorter periods (for example, a monthly budget by week ) – depending on the needs of financial management in the company.
Below is a Budget of Income and Expenses (an example of preparation in Excel) and an example of a Cash Flow Budget.
Figure 1. Budget of income and expenses of an enterprise Excel sample.
Figure 2. Cash flow budget example in Excel.
Drawing up BDR and BDDS example in Excel
The process of compiling the BDR and BDDS, using an example in Excel, may look like this. Let's build budgeting in a company or enterprise using the example of a manufacturing company in Excel (details in the files below):
Figure 3. BDDS example in Excel (Cash flow budget example in Excel).
Figure 4. Budget budget example in Excel (Budget of income and expenses example of preparation in Excel).
This example is simplified as much as possible. But even from it it is clear that budgeting in Excel is a rather labor-intensive process, since it is necessary to collect all functional budgets and write formulas and macros to correctly display the final results. If you take a real enterprise, or even more so a holding structure, you can imagine how complicated the process of budgeting in Excel becomes.
An example of implementing Excel-based budgeting has many disadvantages: single-user mode, lack of ability to coordinate functional budgets, no differentiation of access to information, complexity of consolidation, etc. Thus, budgeting in Excel is not the optimal choice for a company.
Budgeting in programs on the 1C platform
Automation of budgeting and management accounting based on 1C, for example, in the WA: Financier system, makes the budgeting process in an enterprise more efficient compared to budgeting in Excel.
The budgeting subsystem “WA: Financier” includes the ability to create and control operational and master budgets.
The solution implements mechanisms with which users can independently configure the structure of budgets, their relationships, methods for obtaining actual data and data for calculations. The implemented mechanism for interaction with external accounting systems makes it possible to use external data both for calculating planned indicators or generating reports, and for reflecting actual data on budgeting registers.
This system allows you to effectively build the budgeting business process at all its stages:
- development of a budget model;
- coordination of budgets and their adjustments;
- reflection of actual data on budgeting items;
- control over budget execution;
- plan-fact analysis of indicators using developed reporting tools;
- formation of business management decisions.
Figure 5. Interface “WA: Financier: Budgeting”. Budgeting section.
WA: Financier “Budgeting” includes the following business processes:
- Modeling – development of a budget model;
- The main budget process is the registration of planned indicators by departments. Approval of budgets. Adjustment of plans and coordination of adjustments;
- Subsystem for interaction with data sources – setting up the receipt of data from external sources (as a special case, access to system data).
- System reports – a set of analytical reports.
Planned indicators are entered into the system using a flexible, customizable “Budget” document. The budget input form (the income and expense budget form, as well as the cash flow budget form) is as close as possible to the format in Excel, which ensures a comfortable transition for the user to work with the system.
Some budget items that depend on another budget item (for example, cash receipts from customers depend on the income item “Revenue”) can be planned using the dependent turnover mechanism, which is presented in the system in the form of documents “Registration of turnover dependencies by item.”
If necessary, it is possible to adjust the approved budget using special documents “Budget Adjustment” and track the changes made in reports with the view “Output budget adjustments separately”. It is possible to configure budget distribution and keep records of budget requests.
Using special documents “Accounting for actual data on budgets”, facts are obtained from external accounting systems, for example, 1C Accounting.
Various reports allow you to analyze planned and actual data, thus managing budgeting in the enterprise.
Thus, the introduction of budgeting in a company in programs on the 1C platform is the most optimal in terms of time, money and efficiency of further work.
Budgeting of income and expenses (IB) is a management tool that must be actively used in every enterprise.
Each company has its own budgeting system, which depends on its goals and financial planning strategy. Therefore, the purpose of the existence of BDR is to achieve the goals of the management team of the enterprise, using the own forces and means of the business entity. In addition to this document, there are two more types of budget - BDDS and BDL.
The document is usually drawn up not only for the enterprise as a whole, but also for its individual divisions. The income and expense budget combines the work plan of all structural elements of the company and allows decisions regarding management decisions to be made in a single flow.
This document indicates total financial flows and profits. Thus, BDR can be called the result of coordinated activities of the management of each division of the enterprise, which is aimed at the effective management of the entire company as a whole.
Thanks to the calculations that are used when forming a budget, it is possible to accurately determine the amount of money that is needed to implement a particular project. This specifically concerns the sources of funds (for example, the company’s own funds or loans).
What is their purpose
There are three main goals for the formation of a BDR:
- determining how effective the enterprise’s activities are;
- identifying the most effective divisions of the company over a specified period of time;
- setting limits regarding major expense items.
The profit and loss statement is similar in its functions to the budget, but, unlike the financial statement, it indicates planned losses. In this case, only zero profit can be indicated in the BDR.
The budget of income and expenses allows the management of the enterprise to analyze profits and find ways to increase this indicator. In addition, this document makes it possible to optimize tax and other mandatory payments.
Another goal of BDR is the full disclosure of the company’s income, its expenses and the cost of production. This allows you to accurately determine the profit that the company receives in the selected period.
An exception may be the case when a company launches a new project, the profit from which is expected only in a few years. Then, in the selected period of time, losses will be inevitable, but the budget will ultimately show break-even.
Popular approaches
According to leading experts in the field of budgeting, there are two approaches to developing BDD:
| Top-down budgeting (top-down) |
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| Bottom-up budgeting (bottom-up) |
|
Both approaches have their pros and cons. It is believed that the most optimal budgeting option is iterative. Its essence lies in the use of both approaches: when forming a task by the company’s management for subordinates of the Central Federal District, coordination with managers “on the ground” is necessary.
Of course, approval is a process that takes time and involves several iterations. Each of them includes holding meetings and analyzing data for previous periods. But, in the end, such a document will be more meaningful than a list of numbers that management passed down to their subordinates.
State model
Each sovereign state has its own budget, the preparation of which is entrusted to the authorities. In this regard, the budget is a state document according to which financial resources are distributed in the country.
The Russian model of state budgeting implies the presence of a certain independence among the constituent entities of the Russian Federation. However, the government approves the main financial document in Russia, and the process of its development is subject to a unified legislative framework and common principles.
The state budgeting model implies that some regions require an additional injection of money. Therefore, the size of the federal budget also shows the degree of financial assistance to depressed regions and municipalities.
Main directions
Formation of expenses
Main directions of state budget expenditures:
- healthcare;
- the science;
- defense;
- public administration;
- social politics;
- law enforcement agencies;
- International activity;
- Agriculture;
- industry.
Profit control
The source of budget revenue is determined in accordance with the tax and budget legislation of the Russian Federation. Funds that have already been transferred to the account of the executive body are considered to have been received as budget revenue. Tax and non-tax revenues of the state budget are distinguished. Control of state expenses and revenues lies with the Ministry of Finance of the Russian Federation.
Classification of budget income and expenses
Revenue classification is a grouping of budget revenues from different levels of government (federal, regional and municipal).
There are four groups of budget revenues of the Russian Federation:
- transfers from state trust funds;
- free transfers;
- non-tax revenues;
- tax revenues.
The classification of budget expenditures is divided into functional, economic and departmental. The first is a grouping by management level and shows where financial resources are directed and how they are spent.
According to economic classification, expenses are divided according to their economic content. They distinguish between capital and current expenses and the provision of loans. The departmental classification of expenses includes three levels: federal, regional and local.
A balanced budget is one in which income and expenses are equal. If there is an excess of the former over the latter, then there is a budget surplus. Deficit is the opposite picture, when expenses exceed income.
Additional details
Analysis technology
BDD analysis is an indispensable part of any budget architecture.
The following types of analysis exist:
The basis of any method is the calculation of indicators (groups of indicators) with their further comparison with standards. The object of analysis is selected based on the goals of the enterprise and the characteristics of its activities.
The main indicators are:
The demand for these indicators is explained by the fact that the economic conditions of the enterprise have a significant impact on the costs associated with depreciation, taxes and interest payments. Therefore, there is no possibility of obtaining comparable data that characterizes the effectiveness of decisions made by the company's management. Analysis of these factors makes it possible to adequately compare the activities of enterprises operating in different countries.
Indicators and results
The formation of the budget revenue takes into account the following indicators:
- budget for services and goods sold;
- income related to other activities;
- forecasts of other income, as well as taking into account changes in the exchange rate for a given period of time;
- forecast of interest payments received for loans provided by the organization.
For the expenditure part of the BDR, the following indicators are used:
- a list of semi-fixed and variable costs for production and business activities;
- business expenses;
- interest paid on loans and borrowings;
- other expenses.
The company's financial statements make it possible to assess how efficiently it conducts its activities, as well as to determine reserves for profit growth and determine the cost limit. In the process of forming the expected profit (target indicator), forecast data is constantly changing. At the same time, there is a recalculation of the BDR indicators necessary to achieve the enterprise’s goal.
The purpose of budgeting is to create a final budget form, according to which it is possible to analyze the efficiency of the enterprise. It provides an opportunity to get a clear picture of the current financial situation and expected changes in the future. The assessment is based on three indicators: profit, cash flow results and financial balance.
The standard BDR form includes the following lines:
- revenue is an income item showing the amount of cash that a company receives over a certain period;
- transfers are revenue that is not yet indicated in accounting documents or revenue that is documented in the current period, but actually relates to another;
- net revenue – the sum of the first and second points;
- revenue from the main and other activities of the company;
- non-operating revenue is not related to the main activities of the enterprise. This includes interest on bank deposits, dividends, and so on;
- cost price;
- variable expenses;
- fixed costs;
- staff salaries and accruals;
- basic materials;
- general production and general business expenses;
- business expenses;
- taxes.
Instructions for formatting in Excel
Let's consider the structure of the budget of income and expenses in the form of an Excel table. At the top level (zero), three groups of items (indicators) are indicated: income, expenses and profit of the enterprise. This type allows you to create a budget for any company.
At the first level, income and expenses are detailed by the main areas of activity of the enterprise (for example, income from core activities, from other activities, and so on). At the same time, at this level, the types of profit that need to be analyzed are specified.
It is also important to determine the main direction of the company's work and find out which types of activities belong to others. If we take a metallurgical plant as an example, then the main thing for it will be the production of metal products, and the other will be transport.
Based on the information received, the directions of costs are determined. For this purpose, a study of production processes is carried out. These could be costs of raw materials, wages of workers, energy, etc.
Approximately according to this principle, BDR records are kept in the form of an Excel table.
We present OKFS codes with a decoding of the name of the form of ownership and its affiliation with economic entities
The head of a small business can easily manage the budget independently. CHECKED! If you manage your budget regularly, at least once or twice a week, then you begin to “feel” your enterprise and, as a result, skillfully balance between prudence and business passion.
So, budget. A budget is usually required in three cases:
1. You are a student and you need a classic BDDS.
2. You take out a loan from a bank, you need a plan for income and expenses and a cash flow forecast.
3. You have a real business and you want to earn more, spend less, and always see the full financial picture.
These are different budgets. In order not to torment students and borrowers with anticipation, we provide a link to the first two budgets. Download. Let's move on ourselves. Real business is much more interesting.
Download the classic cash flow budget. Sample.
Download the income and expense plan, cash flow forecast. Sample.
Let's try to approach such an important issue as studying the budgeting process the old fashioned way. Thus, the charter of the Smolny Institute insistently demanded that “children always have a cheerful, cheerful, contented appearance and “free actions of the soul.” Therefore, it was ordered not to make science subjects of boredom, grief and disgust, but to facilitate the assimilation of knowledge by all means. To begin with, we suggest downloading sample cash flow budget for a real business (hereinafter referred to as the “Budget”) Unlike the Budget of Income and Expenses, this tool does not focus on the planned profit, but on the ability to practically control cash flow.
Download Cash Flow Budget for Real Business. Sample.
This budget is suitable for a small manufacturing enterprise, an enterprise engaged in wholesale trade or construction and installation work. This is the case when it is better to track income and costs by orders or projects.
The budget was prepared in Excel spreadsheets. It is easy to use and does not require special knowledge of information technology. All calculations are made based on the SUMIFS formula and the "Data Check" function. The file includes two main sheets: the “DS Movement Budget” Sheet and the “Payment Register” Sheet.
The sheet "Movement budget of DS" includes cells with formulas (colored) with data on actual receipts and expenses and empty cells (white) for planned data.
You should start working with the Cash Flow Budget from the “Cash Flow Budget” Sheet. In the "Project" column you must enter data about orders or projects. You can adjust expense items in the “Fixed Costs”, “Financial Activities”, “Investment Activities” sections, and add lines from the “Project” section by copying them.
Then you need to fill in the columns with the planned data, including payments for inventory items, services, etc. for projects must be marked with a minus sign.
Now in the line “Start Bank” cash gaps (negative values) are clearly visible.
Let's move on to the "Payment Register" Sheet. You can enter documents planned for payment into the payment register in two queues.
In order for the actual data on receipts to be reflected correctly on the “DS Movement Budget” Sheet, you must not only select “Project”,
but also in the “Type of expenses” column, select “Payment from the customer”. The income amount must be entered with a minus sign.
Similarly, when paying for goods, materials, services that can be directly attributed to the project, you must not only select “Project”, but also select “Payment to supplier” in the “Type of expenses” column.
The names of general business expenses items can be changed, but to do this you should go to the “DS Movement Budget” Sheet.
You can work with several current accounts, a cash register, and accountable amounts, while the names of banks can be changed in lines 5-15, and the initial incoming balances can be entered in the “Balance” column.
It is better to start working on posting actual payments by comparing the Current balance of the table with the Opening balance of the bank statement. Similarly, finish the work by comparing the Bank Statement with the Outgoing Balance. This is a good habit, it allows you to control yourself.
So, the Budget is ready. After a week of work, the process of entering actual data and adjusting planned ones will take very little time. And you will be able to fully concentrate on developing your business, attracting new clients, increasing sales and other important and useful matters.
This Budget goes well with convenient Timesheets broken down by project and employee category and it is easy to adapt for purposes Separate accounting of state defense orders.
A budget can be the first step in learning how to develop a financial strategy. Having delved into the specifics of the business and sorted out all the costs, you can easily move on to more serious analytical procedures. So, with the help of the “Finance in a Fist” service, you can describe precise actions that will help solve business problems, reduce costs, increase profits and your income.
