Create a budget workbook

Start the budgeting process by creating a budget workbook.

User permissions: Budgets & Forecasts and Manage Budgets & Forecasts

The budget creation is also referred to as the budget setup or budget configuration. The physical budgeting occurs after the workbook is created, using the workflow.

You base your budget on one of the Phocas databases to which you have access. There are two key types of databases, and therefore, there are two types of budgets: financial and operational. You create both types of budgets in the same basic way, however, there are a few different steps, so they are outlined in separate sections below. In both setup screens, the settings are organized into tabs, in which many options are automatically selected for you, to save you time.

Watch these videos:

• Phocas demo: Create a P&L budget in no time (brief overview)

• Phocas Academy: Create a budget

• PUG Training: Budgets & Forecasts 101 – revenue, Sales budgeting, and Demand planning

Prerequisites

Before you create your first budget workbook, it's important to:

1. Plan the budget structure: Get a clear understanding of how your organization currently budgets and at what level of detail. Consider if you want to make changes to the current process or if you want your budget to follow that structure.

   1. It is best to plan how you want to structure your budget before you create it. Read the Best practices for efficient budgeting page to learn more.

   2. Right after you create the budget workbook, you have the chance to adjust its setup but when you edit any of the budget values, you will not be able to make many changes to the workbook setup without losing those values.

2. (Financial budgets only) Ensure your Profit and Loss statement categorization is complete. Also, become familiar with the relationship between the Financial Statements and Budgets & Forecasts modules, and consider creating a custom statement for budgeting and forecasting purpose.

3. Identify who needs to access the budget: All users who access the budget workbook also need access to the Financial Statements module (to some degree) and permission to access the underlying database. You can then determine the level of access they need within the workbook.

Getting started

Rather than create a new budget workbook from scratch, you can clone an existing workbook and use it as the foundation for a new workbook.

Read the Best practices for efficient budgeting page before you start creating budget workbooks.

While you can create a financial budget from within the Financial Statements module (as explained in the next section), you can create both financial and operational budgets in Budgets & Forecasts, in two locations:

• On the Budgets & Forecasts homepage, in the top-right corner, click Create budget.

• Within an existing budget, in the top-left corner, click Budget > Create budget.

What happens next depends on your database access. If you have access to both types of databases, the Create budget screen displays, in which you need to select the type of budget you want to create, either financial or operational. If you only have access to one type of database, you skip the Create budget screen and go directly to the workbook setup screen for that type of database.

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If you plan on having both operational and financial budgets, it's better to keep them in separate workbooks. Not only will this help improve performance, it'll prevent interdependencies and improve access control.

Financial budget

The financial budget is based on a financial database, which contains data from your financial statements.

Although you can create a financial budget in Budgets & Forecasts, the best place to do it is from within your Financial Statements module. Expand the following section for more information.

Learn about the Financial Statements one-click budgeting method

In your Financial Statements module, set up the Profit and Loss statement, then click Budgets > Create budget to automatically create the budget. This method lets you skip the manual setup outlined below and jump straight to the Next steps section.

Watch this video and see Create a budget (Financial Statements) for more information.

See the Budget by region and branch page for a use case.

If you create the financial budget in Budgets & Forecasts, you must it set up as follows:

Workbook configuration

1. Enter a name for the budget. For example, Budget 2024.

2. Select the database on which to base the budget. This setting determines where the budget data and structure comes from. A default database is selected for you but you might have others to choose from.

3. Select the Profit and Loss statement. This setting determines the layout of the budget. A default statement is selected for you but you might have others to choose from if your organization has created them in the Financial Statements module.

4. Show or hide nested calculations as required. This setting determines whether nested calculation rows are shown in the budget or not. These calculation rows come from the selected statement. By default, Hide is selected, which means you'll only see the top-level calculation values in the budget. If you want the calculation rows to be expandable, so you can see the nested derived rows underneath, select Show. However, bear in mind that this introduces more data into the budget workbook, which might have a negative impact on performance.
5. Change the budget owner, if required. By default, you are the budget owner, as you are creating the budget. Typically, you would leave this as is but you can select another user if you want to delegate the workflow management to them. Learn more about the types of users in Budgets & Forecasts.
6. Add other budget administrators, if required. By default, you are a budget administrator, as you are creating the budget. You can add other users as administrators to help you manage the workflow. Ensure the selected administrators have full access to the database on which the budget is based.

7. Click Next.

Period settings

1. Select the period type for the budget: Year, Month or Custom (such as Quarterly).
2. Select the start and end dates for the budget period. For example, from April 2023 to March 2024. You can create a budget up to -3 years from the current date.

3. Set the measure format to determine how the measures (numerical values) display in the grid.
4. Select the baseline data structure for the budget:

   • Stream: Fill the budget with values from an existing stream of data in the database, as a starting point that you can later adjust. For example, you could use your current year's actuals or the previous year’s budget values. If you imported a budget file, it will display in this list. You can fix these baseline values later to stop them from automatically updating. A fixed baseline can also help with performance issues.
   • Zeros: Fill the budget with zeros ($0.00), so you can start with a clean slate.

5. Change the default Stream settings, as required:

   • Baseline (stream 1): The available options correspond to the streams that have been added to the database. You might prefer to select a different stream if its structure better matches the new budget you want to create.

   • Measure: The available options correspond to the measures in the database, such as Local Value or Reporting Value.

   • Offset (applicable to stream values only): If you're budgeting by year, the offset defaults to -1 and if you’re budgeting by month, the offset defaults to -12 but you can change this offset as required. For example:

     • If you're creating a budget for the period of April 2022 to March 2023, the actuals will be for the 12 months commencing April 2021 (the budget for April 2022 will include April 2021 data). If, for example, you want to build a budget based on an existing budget stream, you could select an offset of 0.

     • If you’re partway through the year and therefore, your actuals don’t yet include the entire year’s data, you’ll see a warning note telling you the actuals are slightly out of range. Any months not yet completed will populate with zeros in the workbook. For example, if you are currently in November 2020, the December 2021 budget will populate as zeros because December 2020 currently has no activity. You do not need to take any action here. When you get to the workbook, you can enter data manually in the zeros cells, copy forward data from the other months as a starting point, or use a comparison row to reference another stream.

6. Click Next.

Hierarchy settings and filters

The hierarchy settings determine how many levels of data are in the budget and how those levels are ordered. In other words, the hierarchy determines how the various dimensions in the database are grouped in the budget. The highest level (dimension) is always the Profit and Loss Category, which includes items such as Revenue and Expenses. The lowest level, where the workflow sits, is always the General Ledger account.

You can leave the default hierarchy as it is, or add levels and apply filters, as required. You have the option to filter the levels in the budget or apply a filter to the whole hierarchy. So rather than have one large budget, you could create multiple, smaller budgets instead, then publish each one to the same stream.

Read the Best practices for efficient budgeting page to see how levels can impact performance.

1. (Optional) Add a level: Click Add level and select the dimension you want to add as another level in the budget hierarchy. You can add up to four additional levels to sit between the highest and lowest levels. The maximum number of levels any budget can have is six. If you do not add levels now, you can add more levels later.
2. (Optional) Apply a level filter: Click the Filter dimensions button next to the level and select the entities you want to include, then click out of the entity list to apply your selection.
3. (Optional) Apply a budget filter: Select the Filter… checkbox > select the dimension that you want to filter (you can't select one that’s been added as a level) > select the entity you want to use as the filter > click out of the window to apply your selection.
4. Click Save and finish.

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Operational budget

The operational budget is based on a database that contains operational data such as sales, purchases, and inventory. This data has more detail, such as the sales breakdown (by customer, product, sales rep, channel), primary and secondary class products, pricing, expenses by provider, headcount numbers, payroll expenses, and so on.

The setup for an operational budget is as follows:

Workbook configuration

1. Enter a name for the budget. For example, Budget 2024.

2. Select the database on which to base the budget. This setting determines where the budget data and structure come from. A default database is selected for you but you might have other operational databases to choose from, such as a Sales or Purchasing database.

3. Change the budget owner, if required. By default, you are the budget owner, as you are creating the budget. Typically, you would leave this as is but you can select another user if you want to delegate the workflow management to them. Learn more about the types of users in Budgets & Forecasts.
4. Add other budget administrators, if required. By default, you are a budget administrator, as you are creating the budget. You can add other users as administrators to help you manage the workflow. Ensure the selected administrators have full access to the database on which the budget is based.

5. Click Next.

   

Period settings

1. Select the period type for the budget: Year, Month or Custom (such as Quarterly).
2. Select the start and end dates for the budget period. For example, from April 2023 to March 2024. You can create a budget up to -3 years from the current date.

3. Set the measure format to determine how the measures (numerical values) display in the grid.
4. Select the baseline data structure for the budget:

   • Stream: Fill the budget with values from an existing stream of data in the database, as a starting point that you can later adjust. For example, you could use your current year's actuals or the previous year’s budget values. If you imported a budget file, it will display in this list. You can fix these baseline values later to stop them from automatically updating. A fixed baseline can also help with performance issues.
   • Zeros: Fill the budget with zeros ($0.00), so you can start with a clean slate.

5. Change the default Stream settings, as required:

   • Baseline (stream 1): The available options correspond to the streams that have been added to the database. You might prefer to select a different stream if its structure better matches the new budget you want to create.

   • Measure: The available options correspond to the measures in the database, such as Local Value or Reporting Value.

   • Offset (applicable to stream values only) - If you're budgeting by year, the offset defaults to -1, and if you’re budgeting by month, the offset defaults to -12, but you can change this offset as required. For example:

     • If you're creating a budget for the period of April 2022 to March 2023, the actuals will be for the 12 months commencing April 2021 (the budget for April 2022 will include April 2021 data). If, for example, you want to build a budget based on an existing budget stream, you could select an offset of 0.

     • If you’re partway through the year and, therefore, your actuals don’t yet include the entire year’s data, you’ll see a warning note telling you the actuals are slightly out of range. Any months not yet completed will populate with zeros in the workbook. For example, if you are currently in November 2020, the December 2021 budget will populate as zeros because December 2020 currently has no activity. You do not need to take any action here. When you get to the workbook, you can enter data manually in the zeros cells, copy forward data from the other months as a starting point, or use a comparison row to reference another stream.

6. Click Next.

Hierarchy and filters

The hierarchy settings determine how many levels of data are in the budget and how those levels are ordered. In other words, the hierarchy determines how the various dimensions in the database are grouped in the budget.

You have the option to filter the levels in the budget or apply a filter to the whole hierarchy. So rather than have one large budget, you could create multiple, smaller budgets instead, then publish each one to the same stream.

Read the Best practices for efficient budgeting page to see how levels can impact performance.

1. Click Add level and select the dimension you want to add, such as Region, Branch, or Sale Rep. By default, there is where the workflow will sit unless you add other levels. You can add up to five additional levels to sit under the highest level. The maximum number of levels any budget can have is six. If you do not add levels now, you can add more levels later.
2. (Optional) Reorder the levels: If you add multiple levels, the order in which they display here determines the order they display in the budget, from highest to lowest level. Click the Move button on a dimension level, then drag it above or below the other level(s) to the new position as required.

3. Select where the workflow sits: Select the Workflow button on the applicable level. Often it's better to set the workflow at a higher level in the hierarchy.
4. (Optional) Apply a level filter: Click the Filter dimensions button next to the level and select the entities you want to include, then click out of the entity list to apply your selection.
5. (Optional) Exclude ### suspense items in the budget. By default, this setting is selected, which means unclassified items are included in the workbook. If you do not want to include them, clear the checkbox.
6. (Optional) Apply a budget filter: Select the Filter… checkbox > select the dimension that you want to filter (you can't select one that’s been added as a level) > select the entity you want to use as the filter > click out of the window to apply your selection.
7. (Optional) Include additional measures for driver-based budgeting. This option allows you to define additional measures to drive the budget data. Select the Include additional measures… checkbox if you want to do so. The Driver-based budgeting tab becomes available.

1. Either click Next to proceed to the Driver-based budgeting setup tab or click Save and finish, as applicable.

Additional measures

Read the Best practices for efficient budgeting page to see how the addition of multiple measures can impact performance.

1. Add rows to define the additional measures. There are several options available and this setup can be a complex task, so read the Include additional measures in the workbook page for detailed information.
2. Click Save and finish.

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Next steps

After you complete the budget setup, or automatically create and set up a budget via Financial Statements, you should consider taking the following actions:

1. Explore your new budget workbook to become familiar with its key elements and features. Expand the tip below to see how the budget setup corresponds to the output.

Tip: Learn how the workbook setup impacts the workbook layout and contents...

After you create a budget workbook, it opens on the Main worksheet tab. The layout and contents of the budget are determined by your setup. In the case of a financial budget, the budget is displayed in the Profit and Loss template that you selected, as illustrated in the image below, where the colors match the setup settings with the corresponding workbook elements.

See Create a budget from within a financial statement (one-click budgeting) to see how the financial statement layout matches the financial budget setup.

1. Edit the budget setup, if required, before you edit any of the budget values. For example, you might want to add or remove a level. Also, if you automatically created the financial budget, you’ll probably want to change the following items at least:

   • Name: This automatically generated name is Profit and Loss created [date], where the data is the date and time the budget was created. You might want to replace this with something more descriptive, such as Budget by Region and Branch 2025.

   • Period: The date range comes from the current period of the financial statement. Typically a budget looks at the time ahead, so you’ll probably want to change this current period to a future one and use the offset option. For example, enter an offset of -12 to use the previous year's actuals (January to December 2024) as the baseline.

2. Fix the baseline values, if required.
3. Proceed to add further detail to the budget workbook as required. For example, you might want to add worksheet tabs for your Balance Sheet and Cash Flow budgets.
4. Start the budget workflow.