Budget & Forecasting
Plan annual budgets, track actuals vs targets, and forecast year-end performance.
Overview
Budget & Forecasting gives finance teams and business owners a structured way to plan annual spending and revenue targets, then track actual performance against those targets in real time. The variance column immediately shows whether you are over or under budget — in green or red — so you can act before a small deviation becomes a large problem.
Actuals from Financial Accounts
Actual figures pull directly from Financial Accounts. Every posted journal entry, paid invoice, and approved payroll run is reflected in the Actuals column automatically. There is no manual data entry for actuals — just set your budget targets and let the system fill in reality.
Creating a Budget
- Click New Budget and select the Budget Year.
- The budget table pre-populates with the standard categories. Enter your Planned Amount for each category row.
- You can set planned amounts at the annual level and then break them down monthly by toggling the Monthly View. Monthly planned amounts must sum to the annual figure.
- Click Save Budget. The budget is stored and the Actuals and Variance columns begin populating from Financial Accounts data.
Budget Categories
| Category | Typical Accounts |
|---|---|
| Revenue | All Revenue-type accounts (4000–4999) |
| Cost of Goods Sold (COGS) | Direct cost accounts (5000–5099) |
| Operating Expenses | Payroll, rent, utilities, software (5100–5899) |
| Capital Expenditure | Equipment, property, long-term asset purchases (1500–1999) |
| Other Income / Expense | Interest, foreign exchange, one-off items (6000–6999) |
Reading the Variance Column
The Variance column shows the difference between Planned and Actual for each category. The sign convention depends on whether the category is an income or cost line:
| Category Type | Positive Variance | Negative Variance |
|---|---|---|
| Revenue | +15% — beating target (green) | -15% — behind target (red) |
| Expense | +15% — under budget (green) — spending less than planned | -15% — over budget (red) |
The percentage variance is also shown alongside the absolute figure. A 3% variance on a £500k budget line is more meaningful than a 3% variance on a £10k line — use both figures when prioritising action.
Material Variance Threshold
Most organisations define a materiality threshold for variance review — for example, investigate any variance exceeding ±10% or ±£5,000. Anything below that threshold is noise. Set your threshold at the start of the year and apply it consistently to avoid analysis paralysis.
Forecasting
The Forecast column provides a year-end projection based on the current run rate:
Monthly Run Rate = Actuals to Date ÷ Months Elapsed
For example: if it is the end of May (5 months elapsed) and you have spent £42,000 on payroll so far, the run rate is £8,400/month. With 7 months remaining, the forecast is £42,000 + (£8,400 × 7) = £100,800 year-end payroll cost.
The forecast updates automatically each time actuals change. It is recalculated on page load — no manual trigger needed.
Forecast Limitations
The run-rate forecast is a straight-line projection. It does not account for seasonal peaks, one-off items, or known future events (like a planned office expansion in Q4). For more sophisticated forecasting, export the data to Excel and apply your own adjustments. Use the forecast column as a baseline, not a final answer.
Variance Analysis
Click any budget row to open the Variance Detail view. This shows the monthly breakdown of planned vs actual for the selected category — useful for identifying whether a full-year variance is distributed evenly or concentrated in specific months.
Common patterns and their interpretations:
- Variance concentrated in one month — likely a one-off item (equipment purchase, bonus payment). Review that month's journal entries in Financial Accounts.
- Variance growing consistently month-over-month — systematic over/under-spend. Review the underlying expense accounts for a recurring driver.
- Variance reversed mid-year — a correction was made. Check for large reversing journal entries in Financial Accounts.
Export
Click Export to download the full budget vs actuals vs forecast table as an Excel spreadsheet. The exported file includes all categories, monthly columns, and a summary row. This is the standard format for board reporting and management accounts.
The export respects the selected year. If you switch to a previous year to review historical performance, the export downloads that year's data.
AI Assistant
Budget & Forecasting includes an embedded AI Assistant panel that reads the current fiscal year's forecast — total allocated budget, total actual spend YTD, global burn rate, projected year-end spend, total variance, and every department's burn-rate row — and answers questions directly on the screen.
Executive Summary
Ask for the overall budget health, which departments are trending over or under, and the magnitude of the risk.
Root Cause Detection
Identify which departments are driving overrun risk, flag unusually high burn rates, or surface data-quality gaps (insufficient history).
Quantified Recommendations
Get numbered reallocation, freeze, or corrective-action suggestions instead of vague advice — every recommendation cites actual figures.
Save as Report
Any AI response can be saved as a named report to My Reports with one click — the title is generated automatically from your prompt and the current month.
Open the panel from the vertical AI Assistant tab on the right edge of the screen. It uses the Writer Engine configured in Settings → General → Writer Engine (API, Local CLI, or in-browser engines) — no per-screen configuration is required.