Learn about the link between the Financial Statements and Budgets & Forecasts modules.
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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.
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.
You start the budgeting process by creating a budget from within either FS or B&F, based on a Profit & Loss statement.
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.
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.
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. |
The Profit and Loss statement created in FS typically includes calculation rows, such as Gross Profit, Gross Profit Margin, and Net Profit. When these calculation rows are included in the budget in B&F, the hierarchy of the budget setup applies, meaning there are nested (derived) calculation rows underneath the top-level calculation row by default, as in the left image in the table below. Nested calculations are also displayed in the Database, Reference, Balance Sheet, and Cash Flow tabs when a financial statement is selected in the setup.
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).
If you don't want to see the nested calculations or you want to try to improve performance, you can turn this feature off in the budget setup or worksheet setup (as applicable). Switch the Nested calculations setting to Hide, as in the image on the right image in the table below. Please note that any cell references pointing to a nested calculation will break if you hide these rows, so it's better to budget with them shown (on) or hidden (off) consistently.
| Nested calculations shown in budget | Nested calculations hidden from budget |
|---|---|
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.
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.
In FS, you can create custom statements to suit your business needs. 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.
