Budget Knowledge Base

Budget Module Knowledge Base

Overview

The Budget Module in Truebooks-ERP provides comprehensive budget planning, tracking, and variance analysis capabilities. It enables organizations to create detailed budgets by cost center, track actual spending against budgeted amounts, and generate variance reports for informed financial decision-making.

Core Features

1. Cost Center Management

Cost centers are organizational units used to track budgeted vs. actual expenses. Each cost center can be assigned to different departments, projects, or business units.

Key Capabilities:

  • Hierarchical cost center structure
  • Parent-child relationships for aggregated reporting
  • Active/Inactive status management
  • Integration with General Ledger accounts

2. Budget Headers

Budget headers represent the top-level budget document containing metadata and overall budget information.

Budget Status Workflow:

  • Draft: Initial creation, can be edited freely
  • Submitted: Sent for approval, locked from editing
  • Approved: Active budget used for variance tracking
  • Rejected: Returned for revision
  • Closed: Historical budget, no longer active

Key Fields:

  • Budget Name and Description
  • Fiscal Year
  • Start and End Dates
  • Currency
  • Total Budget Amount
  • Approval Status and Date

3. Budget Lines

Budget lines contain the detailed allocations for each cost center with monthly breakdowns.

Monthly Allocation: Each budget line supports 12-month allocation with:

  • Month1 through Month12 amounts
  • Total line amount (sum of monthly values)
  • Notes and justifications

Allocation Methods:

  • Even Distribution: Divide total equally across months
  • Seasonal Patterns: Higher allocation for peak months
  • Manual Entry: Custom amount per month

4. Variance Tracking

The variance tracking system compares budgeted amounts against actual GL postings to identify over/under spending.

Variance Types:

  • Favorable Variance: Actual spending below budget (positive)
  • Unfavorable Variance: Actual spending above budget (negative)

Variance Percentage Calculation:

Variance % = ((Budget - Actual) / Budget) * 100

Alert Thresholds:

  • Green: Within 5% of budget
  • Yellow: 5-15% variance
  • Red: Over 15% variance

5. Budget Approval Workflow

Multi-level approval process for budget authorization:

  1. Creation: Budget created by department managers
  2. Submission: Budget submitted for review
  3. Review: Finance team reviews allocations
  4. Approval: CFO/authorized approver signs off
  5. Activation: Budget becomes active for tracking

Reports

Budget vs. Actual Report

Displays side-by-side comparison of budgeted and actual amounts by cost center for a selected period.

Variance Analysis Report

Detailed breakdown of variances with drill-down to individual transactions causing the variance.

Monthly Spending Trend

Visualization of actual spending patterns compared to budget throughout the fiscal year.

Cost Center Summary

Aggregated view of all budgets and actuals for each cost center hierarchy.

Integration Points

General Ledger

  • Pulls actual posting amounts from GL journal entries
  • Maps cost centers to GL account segments
  • Real-time variance calculation based on GL data

Accounts Payable

  • Purchase orders checked against budget availability
  • Budget holds for over-budget cost centers
  • Commitment tracking for approved POs

Financial Periods

  • Budget periods aligned with fiscal year setup
  • Period-based variance calculations
  • Year-end budget rollover capabilities

API Endpoints

Budget Management

  • GET /api/budget - List all budgets
  • GET /api/budget/{id} - Get budget details
  • POST /api/budget - Create new budget
  • PUT /api/budget/{id} - Update budget
  • POST /api/budget/{id}/submit - Submit for approval
  • POST /api/budget/{id}/approve - Approve budget

Cost Centers

  • GET /api/budget/cost-centers - List cost centers
  • POST /api/budget/cost-centers - Create cost center
  • PUT /api/budget/cost-centers/{id} - Update cost center

Variance Reports

  • GET /api/budget/{id}/variance - Get variance report
  • GET /api/budget/variance-summary - Overall variance summary

Best Practices

Budget Creation

  1. Start with previous year as baseline
  2. Adjust for known changes (inflation, growth, new projects)
  3. Distribute amounts based on historical spending patterns
  4. Include contingency buffer (typically 5-10%)

Monitoring

  1. Review variance reports weekly/monthly
  2. Investigate significant variances promptly
  3. Document reasons for major deviations
  4. Adjust forecasts when permanent changes occur

Year-End

  1. Close out approved budgets
  2. Analyze full-year variance
  3. Document lessons learned
  4. Prepare baseline for next year

Troubleshooting

Common Issues

Variance not calculating:

  • Ensure GL postings have correct cost center assignments
  • Verify budget status is "Approved"
  • Check date range alignment between budget and GL entries

Budget locked for editing:

  • Budget may be in Submitted or Approved status
  • Create revision request or new version
  • Contact approver for rejection if changes needed

Missing cost centers:

  • Verify cost center is active
  • Check tenant isolation (multi-tenant environments)
  • Ensure proper user permissions

Security

  • Budget creation requires Budget Manager role
  • Approval requires Budget Approver or CFO role
  • View-only access for department heads
  • Audit trail for all budget changes
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