A Balance Sheet budget is an important part of any budget, particularly when forecasting cashflow or preparing a full 3-Way Forecast. If prepared manually, many aspects of the Balance Sheet budget can be complex, but thankfully Calxa removes much of that complexity by calculating many parts automatically (such as debtors/creditors, GST and super).
Even so, you may still be required to edit the Balance Sheet budget to include movements such as asset purchases, inventory movement, loan repayments or accruals and deferrals.
This video above outlines the concepts of Balance Sheet budgets in Calxa. The help note below
There are many transactions in the Balance Sheet that will affect your cashflow forecast. Some of them, such as your Trade Debtors, Trade Creditors, tax accounts and employee liabilities are calculated by Calxa. For others transactions you will need to enter some budgets, such as in the case of purchase or disposal of assets, or loan acquisition and payments.
Select your Bank Accounts, Trade Debtors, Trade Creditors and earnings accounts via the Financial Settings -> Bank & Equity screen.
Calxa is unable to determine which bank accounts will be used for which transaction, therefore for cashflow purposes multiple accounts will be treated as a combined virtual bank account.
If you have a Cash Management or similar account enter a positive budget amount when you transfer money into it, a negative amount when you transfer money out.
When you enter Balance Sheet budgets for accounts, it is important to understand that the budget values reflect movement in a period. A value in a specific period does not reflect the balance in that period.
A positive budget means that the balance of an account is expected to increase by the budgeted dollar amount in that period. A negative budget means that the balance of an account is expected to decrease.
Add positive budgets for the purchase of new assets and negative amounts for their disposal. Add a positive budget in a loan liability account for acquisition of a loan, and negative amounts for principal repayments.
Since the default cashflow setting for an Asset or Liability is Profile (100% Current), the effect of budgeting on the Balance Sheet is generally a direct relationship with the bank balance. In other words, whatever you budget in a month will be reflected in the cashflow in the same month. If this is not your intention for a particular Balance Sheet budget line, ensure the appropriate Cashflow setting is applied.
Accounting rules dictate that debits must equal credits, and the same can be said for your budget. Calxa will keep your debits and credits balanced for you in most cases, however there will be certain circumstances when this is not possible. Namely when budgeting on accounts with a cashflow type of None or Schedule (excluding nominated Financial Setting accounts).
For example, to handle Accrued Expenses you might have an Expense account with a Cashflow Type of None and a Liability set to be paid on a Schedule. In this example, Calxa will exclude the budgeted Expense from your cashflow forecast, however Calxa doesn't know where the balancing side of this budget belongs.
With other cashflow types like Creditor Days, the balancing side is a combination of your nominated Trade Creditors and Bank accounts and Calxa handles this for you. In this Accrued Expenses example, we know the balancing budget needs to be on our Accrued Expense Liability account, but there is no setting to tell Calxa which account this is. Instead you must enter the balancing budget manually. Setting the Liability budget the same as the Expense will balance the budget by increasing the Liability with the Expense. The Schedule cashflow type will handle the payment based on the budgeted Liability closing balance.
The most important thing to note is this: If you budget on accounts with a cashflow type of None or Schedule, then you must ensure the budget is balanced. The Budget Discrepancy Analysis By Debits/Credits report will check the balance of your budget. This report will isolate the accounts of interest and their associated budgets to help resolve any balancing discrepancies. For more information on this report refer to the desktop client help note – Balancing your Budget with the Budget Discrepancy Analysis Report. An online app article will follow in future.
For assistance to understand any unexpected values in your cashflow forecast or Balance Sheet, please refer to the Understanding and Troubleshooting Cashflow help note.