Relationship with the Financial Statements module

Learn about the link between the Financial Statements and Budgets & Forecasts modules.

Although Financials Statements (FS) and Budgets & Forecasts (B&F) are available as standalone modules, they are interdependent. When used together, these modules provide a Financial Planning and Analysis solution. The following diagram illustrates the workflow between the two modules.

1. Your Profit and Loss, Balance Sheet, and Cash Flow statements are created and managed in FS, based on the data in your Phocas financial database.

2. You start the budgeting process by creating a budget from within either FS or B&F, based on a Profit & Loss statement.

3. Then, in B&F, you manage the Profit and Loss budget, and create Balance Sheet and Cash Flow budgets. The structure (layout) of each budget is based on the underlying financial statement. From these budgets, you create forecasts. After completing the budgeting and forecasting processes, you publish the data to streams in FS.

4. Back in FS, you view and analyze budgets, forecasts, and other published data alongside your other financial information.

See the Compare actuals, budgets and forecasts to learn how to use the FS and B&F modules together to answer common questions.

Relationship between the statement and budget setups

The following image shows how the elements in the Profit and Loss statement setup in FS are carried through to the budget workbook setup in B&F. The matching elements have the same numbers and colors and are in the table described below.

As you can see, the statement setup strongly impacts the budget setup. Therefore, you should consider creating a custom statement for budgeting and forecasting purposes.

	Profit and Loss (P&L) setup in FS	Budget setup in B&F
1	Database: The financial database upon which the statement is based.	Database: The financial database upon which the budget is based (the same as the statement). This is where the budget data will ultimately be published.
2	User: The signed-in user (your initials).	Budget Owner: The user who created the budget workbook and has overall administrative control. If you create a workbook, you’ll see your name here. See Overview of users and data access.
3	Statement: The type of statement, which is always a P&L statement. There might be several custom P&L statements to choose from.	Statement: The particular P&L statement upon which the budget is based. This setting determines the layout of the budget.
4	Measure: The type of values that are displayed in the statement grid. If your organization uses multiple currencies, you might have this set to local currency or reporting currency.	Measure: The type of values that are displayed in the budget grid. See Customize the format of measures.
5	Current (stream): The source of the current data in the database. There might be multiple streams to choose from.	Stream: The source of data used to populate the initial budget values. This will also determine the dimension row combinations that are included in the budget.
6	Period: The timeframe for the financial period.	Period > Start and End: The start and end dates of the budget period.
7	Levels: Additional levels in the statement that you can expand to view the information in more granular detail. This has a big impact on the structure of the budget.	Levels: Additional levels in the budget that you can expand to view and budget the information in more granular detail. See Filter by dimension.

Nested calculation rows

The Profit and Loss statement created in FS typically includes calculation rows, such as Gross Profit, Gross Profit Margin, and Net Profit. These rows flow through to B&F by default, along with the other statement rows.

In B&F, you have the option to show nested calculation rows. This means the budget hierarchy is applied to the calculation rows, so they display as nested rows (just like the category rows) that you can then expand to see the lower-level detail underneath, as in the left image in the table below.

This feature is turned off by default but you can turn it on* when setting up a financial budget or adding one of these tabs that are based on a financial statement: Database, Reference, Balance Sheet, and Cash Flow. Switch the Nested calculations setting to Show, as in the image on the right image in the table below.

Nested calculations shown in budget	Nested calculations hidden from budget

*It's important to note that the presence of these nested calculations at each level in the budget hierarchy might be undesirable because:

• Many of them might be redundant from a budgeting perspective. As a result, the worksheet might contain a lot of white space and several rows you don’t need (often, they contain zero values).

• If the budget contains many levels (dimensions), its performance might be negatively impacted by the nested calculations (it might take a long time to load).

Please note that any cell references pointing to a nested calculation will break if you later hide these rows, so it's better to budget with them shown (on) or hidden (off) consistently.

If you don't need one or more of these calculation rows for budgeting and forecasting purposes, consider creating a custom statement that doesn't include those rows. Then, when you create the budget, the rows won't exist.

Hidden rows

When a budget workbook is created, the B&F module must know which account and dimension combinations to include in the Main tab. If all possible combinations were included, the Main tab of the workbook would potentially contain many redundant combinations and, therefore, rows. To mitigate this, rows are only created for the combinations present in the baseline stream. All the other combinations are excluded by default. If the budget is missing something you expected it to contain, you can add an entity (dimension) or account as applicable.

Even though some rows are hidden from a budget, any rows populated with values from the Actuals stream are automatically injected into a forecast. This is to ensure consistency between the FS and B&F modules.

Custom statements

In FS, you create custom statements to suit your business needs. When you create budgets in B&F, they are based on those statements. It's important to understand the impact of making changes in FS on the budgets in B&F.

Statements specifically for use in B&F

It's a good idea to create a custom Profit and Loss statement for B&F purposes. The uses and benefits of such a statement are as follows:

• Remove total and calculation rows to provide a cleaner view of the data entry rows.

• Remove dimensions and, therefore, levels from the hierarchy so it's easier to drill down into the data entry rows.

• Provide the ability to focus on specific accounts and ignore others. For example, you can set up a workbook to specifically budget for overheads.

• Add custom calculations, insights or validations that you want to use in B&F but are not required in FS.

After you create this statement, you can quickly create the corresponding budget using the one-click budgeting method.

Impacts of making changes to dimension groups and account groups

When you create a budget in B&F, the budget values are stored against the dimension entity and account group names in the underlying financial statement.

If you later make changes to these names (in FS), you'll lose the corresponding budget values. However, those budget values aren't lost forever. As the items still exist in Phocas, you can reinstate the budget values by reverting to the original name.

It might take some time to see the impact of your changes, as they are only applied during the next database build.

Publish your budget before you make any changes to the underlying financial statement. This ensures you have a copy of the original budget to fall back on in case of any missing budget values.

Example 1: Renaming account groups in a statement

Suppose that in a Profit and Loss statement, you have an account group called Sales. When you create a budget based on that statement, you’ll see the Sales group in the worksheet. If you later change the name of that group to Revenue (see customize account groups in FS), you’ll lose your budget values against the Sales group. The Sales group is no longer displayed in the budget because you've broken the connection between that dimension entity in FS and B&F.

To get the Sales group back into the budget, change its name to what it was originally.

Example 2: Renaming entities in dimension groups

As in example 1 above, if you rename a dimension entity (see Manage dimension groups in FS), that item will no longer be displayed in the budget in B&F. In the example below, changing the name of the dimension entity assigned to the Smarter Auto AUS Trading Entity will result in that trading entity being missing from the budget. Again, you can get it back into the budget by reverting to the original dimension entity name.