Chapter 5. Foretelling - Budgeting and Cash Flow Management

Accounting rules are based on faits accomplis but companies need to anticipate/predict events. Dynamics NAV offers some tools that can help to accomplish this, which we will cover in this chapter:

  • Budgets
  • Cash flow management

Budgets

Budgets are an overview of planned costs, revenues, and resources over a specified period of time. Dynamics NAV allows you to create budgets for fixed assets, items, sales and purchases, and projects. But we will focus on general ledger budgets in this section.

With the general ledger budget feature, you can create multiple budgets for the same time periods, simple or complex budgets by selecting combinations of G/L accounts, periods, and dimensions. You can also copy budgets from previous periods or create your budgets outside the application, with Excel, and then import it into Dynamics NAV.

Creating budgets

Let's create a new budget for the first quarter of 2017. Perform the following steps:

  1. In the Search box, type G/L Budgets and select the related link.
  2. Once on the G/L Budgets page, click on New on the ribbon bar. Create a new budget with the values shown in the following screenshot:

    Creating budgets

  3. Click on the Edit Budget option found on the ribbon bar.
  4. In the View by field, select Month.
  5. In the Data Filter: field, write 01/01/17.12/31/17.
  6. We will enter the sales budget for the SALES department for the MERCEDES project, so add these dimensions as filters:

    Creating budgets

  7. In the Budget Matrix tab, type in the budget amounts for each period, as shown in the following screenshot:

    Creating budgets

    Note

    When you type in the amounts in the Budget Matrix tab, the system creates G/L Budget Entries with the given information. You can view them by double-clicking on the Budgeted Amount field for account number 44110.

  8. Leave the Filter field empty. Then double-click on the Budgeted Amount field for the account 44110.
  9. On the G/L Budget Entries page, create the following lines:

    Creating budgets

  10. Back to the budget page, you will see that the created lines are summarized in the corresponding periods. You can refer to the Budget Matrix page.
  11. Remove the filter from the Department Filter field.
  12. Click on the Copy Budget option from the ribbon bar. To run the Copy G/L Budget job, select the following options, as shown in the following screenshot:

    Creating budgets

  13. We have filtered the G/L Account No. field to only include the two accounts we were working on. In the Date field, we have selected the same period from the previous year. Therefore, in the Date Change Formula: input box, type 1Y in order to add one year to the dates. We are creating budgets for the CUSTOMERGROUP and AREA dimensions, so we have checked them on the Dimensions field.
  14. Finally, we want to apply a 10% of sales increment, so we choose 1.1 as the adjustment factor. We choose to compress movements on a monthly basis and to round amounts to hundreds.
  15. Click on OK. The system will create new budget entries based on real general ledger entries from previous periods. We have already created the budget for two different areas. For the rest of the areas, we will create an Excel template and ask the area director to fill in the budget for us. Then, we will import the Excel sheets to complete our budget.
  16. Click on the Export to Excel option from the ribbon bar. Run the report with the following options:

    Field

    Value

    Start Date

    01/01/2017

    No. of Periods

    3

    Period Length

    1M

    Column Dimensions

    CUSTOMERGROUP; DEPARTMENT

    G/L Account No.

    41100

  17. The director of the America area has filled in the following Excel sheet:

    Creating budgets

  18. On the budget page, select the Import from Excel option from the ribbon bar and select the Excel file.
  19. Select Add entries in the Option field and click on OK.
  20. The system will create new budget entries based on the amounts introduced in the Excel template.

Using budgets

You have already seen three methods to create budgets. Now, we will see when budgets can be used. Budgets are mainly to compare reality versus budgeted amounts to measure performance. Budget entries can be also used as a source for the cash flow management. We will cover those in the next section.

The Trial Balance/Budget report, found under Departments | Financial Management | General Ledger | Reports | Financial Statement, compares the balance of each account in the charts of accounts with its budgeted amount for a given period.

You can also use budgets on Account Schedules to measure performance in an aggregate way. In the Column Layout definition, in the Ledger Entry type field, you can select the Budget Entries value to base the calculation on budget entries. To see an example, navigate to Departments | Financial Management | Setup | General | Column Layouts and analyze the definition of the ACT/BUD column layout.

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