Real-time budgets enable you to see how much you're spending against the defined budget you've made for your company. Using Budgets in Precoro can help you:
- Have access to up-to-date information regarding the procurement process and budget progress;
- Track over-expenditure of the budget for purchases;
- Understand how the budget funds for payments and whether these funds can be used;
- Set up budgets per Departments/Projects or Accounts to have more control over spending;
TABLE OF CONTENTS
- How to activate the Budgets module
- How the budget lines work
- How are Total, Used, and Reserved in Budget calculated?
- Let's dive deeper into how the Available Budget sum is calculated.
- How do our clients use Budgets?
How to activate the Budgets module
Please note: only users with the "Budget" role have access to the Budget module. These users will be able to see all budgets for the company.
Go to Configuration —> User Management —> Click the Edit button to open the "edit user" page —> Open the Roles tab and put a tick on "Budgets."
Budget functionality in Precoro:
- You can select what to include in your budget: Documents Custom Fields (for example, departments/projects) and Items Custom Fields (it can be your Chart of Accounts)
Please note: to include Custom Fields in the budget, it should be set as "Available in Budgets." You can
- The period and duration of the budget. Budget lines will also be divided into periods based
- Deducted Sum. This is the field to specify how your budget should be calculated.
You can set up whether the budget is calculated in Net Total, Gross Total, or by the custom formula:
- Net Total calculation means the totals of Purchase Order and Invoices will be subtracted from the budget, excluding the tax.
- Gross total calculation - the totals of Purchase Order and Invoices will be subtracted from the budget, including the tax.
- The custom formula allows youto set up your own calculation rules.
Here is an example to help understand how deducted sum works:
You created a Purchase Order with a total of $5000 and added a tax with a 5% value. After this order is confirmed, it is calculated in the budget in this way:
- If the deducted sum is Gross Total, the total subtracted from the budget will be $5000 + $250 (5% tax);
- If the deducted sum is Net Total, only $5000 will be subtracted.
How the budget lines work
- The budget line is a separate budget included in the main budget. You can set it for different locations, Documents Custom Fields, and Items Custom Fields.
- You can add as many budget lines as you wish.
- Subsequently, when creating a new or editing the existing Budget you can remove the period according to your needs.
Please note that once the period is deleted, all details about this budget will be removed from all the Purchase Orders and Invoices associated with it.
- It is required to set available locations per each line and this will limit access to budgets for users with different access to locations.
- You can make your budget limited by putting a tick on "Limit"
Once you mark the budget as limited, no one can spend over it. It would not be possible to create an order if there are no sufficient funds.
- Each budget line can be assigned to Purchase Orders and Invoices.
How are Total, Used, and Reserved in Budget calculated?
- Total. This is the amount you set for your budget and/or budget line. Total for the whole budget — the sum of all budget lines. Total of a budget line – the sum of amounts in periods.
- Used. It shows how much you have already spent on this budget.
It includes all confirmed Purchase Orders and/or Invoices created with this budget:
The sum of the Purchase Orders that do not have Invoices created + the Sum of the Invoices created manually (without Purchase Orders) + the sum of the Invoices created for a PO.
- Reserved. This is the amount of all your future recurring Purchase Orders and Invoices. These documents are not created yet, but we reserve a budget to track future spending for them.
- Available. It is calculated as Available = Total - Used - Reserved. Note that each budget can include its document amount - either Net Total or Gross Total or Custom.
Let's dive deeper into how the Available Budget sum is calculated.
Then, only approvers and budget holders will see the available amount.
To read more about hiding the available budget sum from the document initiators, see How to Hide the Available Budget Sum from PO/Invoice initiators.
How do our clients use Budgets?
The budget is created by the accountant to define the amount of money available for the purchase. A manager responsible for procurement identifies the budget that should be used in the Purchase Order. An accountant or any other responsible person can review the flow of funds for this specific budget. The budget information can be used in financial reports, audits, and planning future budgets.