Real-time budgets enable you to see how much you’re spending against the defined budget you’ve made for your company. 


TABLE OF CONTENTS


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 Account to have more control over spendings;
  • See the real-time budgets for each pending approval and decide whether to approve or deny the order;
  • Track spendings with the help of Budget usage and custom Budget reports;


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."

 

You can enable/disable the Budget module by going to Configuration —> Basic Setting —> Budgets tab.


Let's take a look at Budget functionality in Precoro:

  1. You can select what to include in your budget: Documents Custom Fields (for example, departments/project) and Products Custom Fields (it can be your Chart of Accounts)
    Please note: to include Custom Field in the budget, it should be set as "Available in Budgets." You can turn on the Budget on the Documents / Products Custom Field editing page. 
  2. The period and duration of the budget. Based on a chosen period and duration, budget lines will be divided into periods too. You can set a total for each period.
    • Monthly. Here you can choose the duration of your budget (1, 3, 6, or 12 months). You have to set totals for each period. 
    • Quarterly. The budget lines will be divided into quarters. For each quarter, there will be a total to set up. 
    • Custom period. It allows you to set up any custom periods. As usual, our users choose this type to record one amount per year.
  3. 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 gives you the possibility to 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 Products Custom Fields. 
  • You can add as many budget lines as you wish.


  • 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 + Sum of the Invoices created manually (without Purchase Orders) + the sum of the Invoices created for a PO.


  • Reserved. This is an amount of all your future recurring Purchase Orders and Invoices. These documents are not created yet, but we reserve a budget to track future spendings 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.
    Precoro calculates your budgets and allows you to create Purchase Orders and Invoices only for the available budget sum. This is made to restrict excessive budget usage and track resources available for future purchases.


Let's dive deeper into how the Available Budget sum is calculated.


The available budget sum is counted by the following form: 


Available sum = Budget sum - 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 on PO - the sum of Purchase orders available for further Invoice creation.


For example: 

The budget amount is 5,000 USD. We have Invoices for 500 USD created from Purchase orders, Invoices created manually for a sum of 250 USD, and we have Invoices created from PO's for 1,750 USD. Also, we have 1 Purchase order for the total sum of 1,000 USD and only one Invoice created for it with a value of 550 USD, although the PO sum for this Invoice was 500 USD. 


The budget sum will be:

5,000 - 500-250-1,750-550-500 = 1,450 USD


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 budge information can be used in financial reports, audits, and planning future budgets.