Budgets

As a business owner, you are expected to develop goals to forecast how your company will perform, increasing income or reducing expenses. Budgets are the names for these goals.

Businesses, on the other hand, rarely go according to plan. Unexpected incidents might disrupt your company’s actual performance (also known as actuals), making it difficult for businesses to meet their budget goals. If you’ve been using Erpisto to track your receivables and payables, you’ll have an excellent idea of how your business is performing.

With Erpisto, you can now evaluate how your company operates by comparing your planned budget to actual performance using precise and insightful data. This process is also known as Budget Variance.

Create Budget #

  • Go to Accountant > Budgets.
  • Click + New Budget in the top right corner.

Enter the following details:

Field Description
Name Enter a name to identify your budget.
Fiscal Year Select the financial year for which you would like to create a budget.
Budget Period Choose a duration for your budget. Monthly, quarterly, half-yearly, or yearly budget periods are all options.

Next, you can record the budgets for your income and expenses. To record them, you can:

  • Enter them manually

Enter Them Manually #

You can manually input the budget amounts in the fields provided next to the various accounts if you choose. Erpisto will automatically compute your Net Profit and Loss once you’ve recorded your budget for your revenue and expenses.

Budget Summary #

After you’ve generated a budget, Erpisto will use it to generate the reports below so you can forecast your company’s finances:

  • Profit and Loss
  • Balance Sheet
  • Cash Flow Statement

Profit and Loss #

When you build a budget, the Profit and Loss report is generated based on the amounts you input for the selected revenue and expense categories. Based on the net income and net expense, your net profit and net loss will be determined for the period you choose. Knowing your budget’s profit and loss will help you make better financial decisions and make the required modifications to boost your profitability.

Balance Sheet #

A balance sheet is used to forecast your assets, liabilities, and equity for the coming year in a budget. It’ll always be calculated for the specified period (Monthly, Quarterly, Half-yearly, Yearly ). Based on the amounts set in the budget, this report can determine a company’s financial situation.

Because Erpisto is a double-entry accounting system, the following budget numbers will be recorded in the Balance Sheet:

Total Liability + Total Equity Equals Total Asset

Suppose the total asset account does not equal the total obligation and equity amount in the budget. In that case, Erpisto will create a new equity account called Budget Mismatch Account to balance your accounts.

Cash Flow Statement #

The Cash Flow Statement report is a thorough report that will show you your company’s overall cash flow based on the budget values. Based on the figures specified in the budget, you can use this report to understand how much money is coming in and going out of your firm. If your entire asset account does not equal the total liabilities and equity, this report will include the Budget Mismatch Account, just as the Balance Sheet report.

Compare Budgets Vs Actuals (Budget Summary) #

After you’ve generated a budget, you’ll be able to see how your company is doing compared to your projected budget. With Profit and Loss, Balance Sheet, and Cash Flow Statement reports, you’ll be able to compare your budget to actuals. To compare them, consider:

  • Go to Accountant > Budgets.
  • Click View Budget Vs Actuals next to a budget that you’ve created.

Delete Budget #

If you no longer wish to use a budget, you can delete them permanently. To delete a budget:

  • Go to Accountant > Budgets.
  • Click the dropdown next to a budget you’ve created.
  • Click Delete.

Powered by BetterDocs

WhatsApp us