Budget in the Income and Expenses Accounting

The annual Budget is a tool that allows you to plan in advance the income and expenses of the year, to have a clear vision of the future and to be prepared to make the most appropriate decisions. During the year, it is possible to compare the budget with the actual values (final balance), in order to check the real trend compared to what was planned. 

Thanks to the budget you can:

• Make informed decisions: understand whether the conditions are right to invest in a project or if it is better to reduce some expenses.
• Monitor the financial performance: by comparing budget and final balance, it is easy to see whether you are spending more or less than expected.
• Manage responsibly: for associations, organizations and small businesses, it also represents a tool of transparency and good organization.

How to set up the budget in Banana Accounting

There are two operating methods:

1. Annual budget in the Accounts or Categories table
   A very simple and traditional method:
    
   • Enter the budget values directly in the Budget column of the Categories table.
     More information is available on the page Simple budget.
      
   • In the Accounts table you can also add additional columns to manage different types of budget.
     A useful case is the addition of a column dedicated to the budget of the following year, so you can plan the future while staying in the accounting file of the current year.
     More details on the page Budget next year in the current accounting.
      
2. Complete financial planning in the Budget table
   A more advanced and detailed approach:

• Activate the Budget table and enter the planned transactions, not only for costs and revenues, but also for liquidity.
• The Budget column of the Accounts table is updated automatically, based on the transactions recorded in the Budget table.

This method allows you to have a dynamic view of the financial evolution, month by month or quarter by quarter, including liquidity.