Budgeting, Forecasting and Business Planning

1. Budgeting, Forecasting and Business Planning Chapter 9

2. Objectives • Create Budgets • Create Budget Reports by Customer/job or by Class • Create Forecasts and Forecast Reports • Utilize the Cash Flow Projector • Develop a Business Plan for your business 317

3. Creating Budgets • QuickBooks allows you to create a budget for each account on your chart of accounts • To create a budget: • Select the Company menu, then select Planning & Budgeting, and then select Set Up Budgets • Select Profit and Loss or Balance Sheet accounts • A budget can be created from scratch or from previous year’s actual monthly totals 317

4. Creating Budgets for Jobs • You can set up a separate budget for each customer or job which • On the Set Up Budgets window, click Create New Budget: • Select Profit and Loss Budget type • Select Customer:Job on the Additional Profit and Loss Budget Criteria window • Select thecustomer:job from Current Customer:job drop-down list • Enter budget amounts 320

5. Creating Budgets for Classes • If you use class tracking in QuickBooks, you can set up a separate budget for each class on your Class list • On the Set Up Budgets window, click Create New Budget: • Select Profit and Loss Budget type • Select Class on the Additional Profit and Loss Budget Criteria window • Select Class on the Current Class drop-down list • Enter budget amounts 324

6. Budget Overview • Use the Budget Overview reports to review your budget information and make adjustments to budgeted amounts as necessary • Select the Reports menu, then select Budgets & Forecasts, and then select Budget Overview • Select the budget to use • Select Account by Customer:Job from the drop-down list • Click Finish to create the report • QuickBooks enters This Fiscal Year-to-Date as the default dates for the report 327

7. Profit & Loss Budget vs. Actual by Account • Budget vs. Actual reports in QuickBooks allow you to measure the profitability of your company based on the budgeted amounts you set at the beginning of the year • Select the Reports menu, then select Budgets & Forecasts, and then select Budget vs. Actual • Select the budget to be used in the report • Select Account by Month report layout • Click Modify Report and then click Advanced • Click the box next to Show only rows and columns with budgets and then click OK • QuickBooks displays the modified report showing only customers and jobs for which you entered a budget 329

8. Profit & Loss Budget vs. Actual by Job • QuickBooks displays the Profit & Loss Budget vs. Actual report with a column for each Customer and Job • Select the Reports menu, then select Budgets & Forecasts, and then select Budget vs. Actual • Select the budget to be used in the report • Select the report layout Account by Customer:Job • Click Modify Report and then click Advanced • Click the box next to Show only rows and columns with budgets and then click OK • QuickBooks displays the modified report showing only customers and jobs for which you entered a budget 331

9. Profit and Loss Budget vs. Actual by Class • QuickBooks displays the Profit & Loss Budget vs. Actual report with a column for each Class • You can modify the report so as to include only those classes for which you have entered a budget 333

10. Creating Forecasts and Forecast Reports • In addition to budgets, QuickBooks allows you to create forecasts • You set up forecasts exactly the same way you set up budgets • Forecasts allow you to make predictions about future income and expenses and to run “what if” scenarios to help you make better decisions about your business • As with budgets, you can enter a forecast by Account, Account & Customer:Job, and Account & Class 335

11. Creating a Forecast for Accounts • QuickBooks allows you to create a forecast for each account on your chart of accounts • You can use forecast reports in QuickBooks and compare them to your budget and actual results • Select the Company menu, then select Planning & Budgeting, and then select Set Up Forecast • Select the year and proceed as for the budgets 336

12. Creating Forecast Overview Report • This report is used to review your forecast information and make adjustments, as necessary, to forecasted amounts • Select the Reports menu, then select Budgets & Forecasts, and then select Forecast Overview • Select the forecast to be used for the report • Select Account by Month report layout • QuickBooks enters This Fiscal Year-to-Date as the default dates for the report 338

13. Cash Flow Projector • Cash Flow Projector allows you to prepare a six-week preview of all your incoming and outgoing cash • Helps in projection of upcoming shortages and to plan disbursements of cash accordingly • It is system date driven, that is, it calculates from the date you use it and therefore it changes as time passes • Select the Companymenu, then select Planning & Budgeting and then select Cash Flow Projector 340

14. Creating a Business Plan • The basic components of a business plan include a current and projected balance sheet, income statement, and a cash flow analysis • The Business Plan Tool in QuickBooks allows you to develop a detailed business plan following the format recommended by the U.S. Small Business Administration • Select the Companymenu, then select Planning & Budgeting, and then select Use Business Plan Tool 347

15. Chapter Review • Create Budgets • Create Budget Reports by Customer/job or by Class • Create Forecasts and Forecast Reports • Utilize the Cash Flow Projector • Develop a Business Plan for your business 354