Budgeting overview

Important

Welcome to the documentation for Microsoft Dynamics 365 for Operations on docs.microsoft.com. We are migrating our content here from the Dynamics 365 for Operations Help Wiki.

Almost every company that uses Financials functionality in Microsoft Dynamics 365 for Operations will have to be able to create reports of budget vs. actuals. This article explains the minimum configuration that is required in order to create budgets in Dynamics 365 for Operations or load them from a third-party program.

Overview

The approved budget for a legal entity is maintained in a document that is known as a budget register entry. The lines in a budget register entry document are known as budget account entries, and contain financial dimension information, dates, and the amounts of the approved budget. The budget register entry document is integrated with basic financial reports and inquiry pages where ledger actual amounts are compared to budget amounts.

There are multiple methods for creating budget register entries in Dynamics 365 for Operations:

  • Manually enter the document information on the Budget register entries page.
  • Use the Microsoft Excel template that you can open by clicking the Open in Excel button on the Budget register entries page.
  • Use the Budget Account Entries data entity in Data management to import budget register entries. You should consider using this method and turning on the Set based **processing **parameter when you must import many budget account entries into the system.
  • If the company uses Budget planning functionality to prepare budget data, you can use the Generate budget register entry periodic process.

The budget register entry is considered completed when the budget balances have been updated. On the Budget register entries page, click Update budget balances for a selected budget register entry or multiple entries. After you update the budget balances, the status of the budget register entry changes to Completed. Completed budget register entry can't be re-opened for edits. Therefore, if the budget data must be adjusted, you must create a new budget register entry instead of correcting data in the completed budget register entry.

Configuration

When you configure budgeting, start on the Budgeting parameters page. On this page, you must define the budget journal, the number sequence for budget register entries, and the default behavior in the workspaces.

Next, if there are policies that govern the approval of budget register entries, based on budget type (for example, transfers or revisions), you must create budget register entry workflows on the Budgeting workflows page. If there are scenarios where transfers might be allowed without workflow approval, you can define budget transfer rules to support those scenarios.

On the Budgeting dimensions page, you must select the financial dimensions that are used for budgeting, based on the dimensions that are used in the chart of accounts. You can select all financial dimensions or a subset of them for budgeting.

Define a *budget model *that corresponds to all or some of the budgets. You can use a single budget model for all budget register entries. Alternatively, you can create separate models that are based on the budget type, the geographical location, or some other way that a budget can be classified.

Note

If budget control is used, you can associate only one budget model with a specific budget cycle time span.

Create budget codes that identify the type of budget transactions to record and any related workflow. Budget codes can support the following budget types:

  • Original budget
  • Transfer
  • Revision
  • Encumbrance
  • Pre-encumbrance
  • Carry-forward budget

Budget codes let you have an audit trail of approved budget modifications throughout the course of the budget cycle. If a workflow is associated with a budget code, the workflow will be enabled for all budget register entries that use that budget code, and workflow steps must be completed before the budget register entry can reach the Completed stage.

You can also optionally set up budget transfer rules. To use budget transfer rules, select Use rules for budget transfers on the Budget parameters page. When budget transfer rules are used, if a user creates a document by using a budget code of the Transfer type, budget balances won't be updated if the budget transfer rules are violated. For example, you can allow budget transfer documents where the expense budget is transferred between the main accounts for the Sales and Marketing department, but can prohibit budget from being transferred from or to that department unless workflow approval has been granted for that type of budget account entry.

Using workspaces and inquiry pages to track budget vs. actuals

The budget manager can review the current state of a budget in the Ledger budgets and forecasts workspace. The Expense over budget and Revenue under budget tabs provide a quick view of the financial dimension combinations where budget targets aren't being met or are approaching the threshold. You can personalize the budget threshold percentage and financial dimension sets that are used on those tabs by clicking Configure my workspace. You can click Unit managers to see the workers who are responsible for specific financial dimension combinations that are selected on those tabs. For example, if you see that the expense budget of the Operations department is going over the budget threshold, you can easily find and contact the Operations department manager to discuss the issue.

Note

The Department manager field on the Organization Units page determines which managers support specific financial dimension combinations. Click See more at the bottom of the tab to open the Budget vs actuals inquiry page for more details about budget amounts versus actual amounts.

The Actual vs budget inquiry page lets you drill into the details of the budget versus actual amounts. Select a line on the inquiry page, and then click Period balances to see budget and actual amounts spread across fiscal periods. The Budget account entries page provides drill-through to the details of the budget amount in budget register entries. The General journal entries page opens the ledger transactions that are included in the calculated Actuals amount.

A company that is using Budget planning functionality can create and use budget forecasts in the Ledger budgets and forecasts workspace.