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A balance sheet budget is an important part of any budget and some aspects of the balance sheet budget can be difficult to calculate. However with Calxa most of the difficult calculations such as debtors/creditors, GST and super are handled automatically. 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 help note will outline the concepts of balance sheet budgets in Calxa, however for general editing techniques you should refer to the help note – Edit Budgets using Budget Shortcuts and the Budget Grid.

Contents

  • Edit Budget Screen
    • Calculated or Default Accounts
    • Budget Values
      • No Budget
      • Positive Budget
      • Negative Budget
  • Example Budget Scenarios
    • Bank Accounts
    • Loan Establishment and Repayments
    • Credit Cards
    • Asset Acquisition
    • Asset Depreciation
    • Asset Disposal
    • Inventory
    • Accrued Expenses
    • Unearned Revenue/Income Recieved in Advance
    • Scheduled Payments

 

Budget Source


If you use Calxa to budget by Business Unit (Job, Project, Program etc.) then you probably use the Budget Source option when reporting to consolidate your Project or Department budgets. If you use this option then you will also need to make sure you do your balance sheet budget in one of your business units rather than your organisation budget, otherwise the balance sheet budgets will not be included in your budget source.

 

Edit Budget Screen


To edit balance sheet budgets you will need to display either All Accounts or Balance Sheet accounts in the view options.

 edit_a



There is also an option to Show Opening and Closing Balance, which toggles the display of the opening and closing balance in the edit budget grid. If the beginning of your financial year is in a previous period, the opening balance will be the actual value at that time. In future financial years, however, the opening balance will be a projected value using your current cashflow settings and the open budget version.

edit_b



Calculated or Default Accounts

As mentioned above, most difficult budget calculations are handled by Calxa. This means that the budgets for some accounts cannot be edited. This is because they are a calculated account which means Calxa will calculate this budget for you. Accounts that cannot be edited are greyed out in the edit budget grid and are tagged with the angled arrow as shown below for the Cash at Bank accounts. By hovering your mouse over an account, it will show the tooltip “Account nominated as default”. In this example these accounts are nominated as the default bank accounts and the default bank accounts have calculated budgets.

calculated 



If an account has been nominated as a default account, then the budget for that account will be calculated by Calxa. For more information on nominating default accounts and its effects please refer to the help note - Default Accounts for Cashflow and KPI Reporting. Calculated budgets will also not be displayed in the edit budget grid.



Budget Values

It is important to understand that the budget values reflect movement in a budget period. A value in a specific period does not reflect the closing balance in that period. All values are reflected in dollars and are exclusive of GST. 


No Budget

No budget in a balance sheet account simply means there is no expected movement in that account. An example of this might be an asset that will remain on the books at the original value (less depreciation) until re-valued or sold. You would expect this account to have zero budgets in all months until re-valued or sold. 


Positive Budget

A positive budget means that the balance of this account is expected to increase by the budgeted dollar value in that period. An example of this might be purchasing an asset or acquiring a loan. A positive asset budget could represent the purchase of an asset while a positive liability budget could represent the acquisition of a loan in the books. It is also important to understand that, depending on the Cashflow Settings on these accounts, budgets will have a cashflow effect in Calxa cashflow forecast reports. Using the asset purchase and loan acquisition examples, the bank balance will decrease, representing spending money on the purchase and increase representing acquiring a loan. If a budget should not have a cashflow effect this behaviour can be modified in the cashflow settings. For more details on Cashflow Settings please refer to the help note – Preparing a Cashflow Forecast


Negative Budget 

A negative budget means that the balance of this account is expected to decrease by the budgeted dollar value in that period. An example of this might be selling an asset or making payments on a loan. As above, depending on the cashflow settings, both of these budgets will have a cashflow effect, with the sale or negative asset budget increasing the bank balance, and the loan payment or negative liability budget decreasing the bank balance. 



Example Budget Scenarios


In all of the examples outlined below you will note we have included sample budget data for a six month period but also included a Cashflow Type for each account. These cashflow types determine the budget calculations on Calculated or Default Accounts. Where Profile is used the setting is assumed to be set to 100% in the current month and where Schedule is used you may choose any schedule that is appropriate to your payment frequency. Please note when using Cashflow Types of Schedule or None you will need to keep your budget in balance, by budgeting on both sides of the accounting equation. You will note in the examples shown below that there are always balancing budgets when using accounts with cashflow types set to Schedule or None. For more details on Cashflow Settings and balancing you budget please refer to the help note – Preparing a Cashflow Forecast


Bank Accounts

As mentioned above if your bank accounts are nominated as default accounts then you will not be able to budget on them directly. However there are occasions when you may need to budget on a bank account. In the example below we will use a Cash Management account and budget for money going in and money going out. The July budget represents establishing the account with $100,000 and you can see $5,000 going out in October. In the Calxa cashflow terms the July Cash Management budget would represent spending $100,000 from the default bank accounts. The October Cash Management budget would represent receiving $5,000 to the default bank accounts, however the addition of the Shares budget shown below would result in zero net movement in the default bank accounts and suggests that this money was spent to purchase shares.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Cash Management (Asset)
Profile
100,000
 
 
-5,000
 
 
Shares (Asset)
Profile
 
 
 
5,000
 
 



The same theory can be applied to any type of bank account. Let’s do another example with a 3 month Term Deposit with interest paid on maturity. In Calxa cashflow terms the default bank balance will decrease by $100,000 in July and increase by $105,000 in October. You can combine the theory in these two examples to handle all types of cash movement.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Cash Management (Asset)
Profile
100,000
 
 
-100,000
 
 
Shares (Asset)
Profile
 
 
 
5,000
 
 



Loan Establishment and Repayments

If you need to do budgets for a loan then the easiest method would be to use the Loan Wizard. The loan wizard will help you budget for both the Principle (Liability) and Interest (Expense), by asking a few simple questions such as the loan amount, term and interest. For more details on using the Loan Wizard please refer to the help note - Using the Calxa Loan Wizard. Otherwise the example below shows the required budgets for the first 6 months of a simple loan. In Calxa cashflow terms the July Loan budget will increase the default bank balance by $10,000 and the combined budgets in the following months will decrease the default bank balance by $888.49 to represent the monthly repayments.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Loan (Liability)
Profile
10,000
-788.49
-796.37
-804.34
-812.38
-820.50
Interest (Expense)
Profile
 
100
92.12
84.15
76.11
67.98


Credit Card

Credit card payment budgets are similar to loan repayments. In simple terms you really only need to think about how you expect your credit card balance to move. If you are making payments and the balance is reducing you need to have negative budgets for the payment amount. If you wish to include budgets for the interest expense you should remove this from the Liability budget amount as shown in the loan example above. This will just reduce your credit card balance by your payment less the interest, where the combined budgets will equal the payment. In Calxa cashflow terms the default bank balance will reduce by the combined amount. 


If however you intend to purchase something with a credit card and you expect your Credit card balance to increase then you will need a positive budget. In the example below we are budgeting for a $1,000 expense on the credit card in July. In Calxa cashflow terms the Credit Card budget will increase the default bank balance while the Expense budget will decrease the default bank balance with zero net movement of the default bank balance. Please note that the cashflow type on the Expense account is not important and may be some other setting. Asset acquisition is covered in the next example and can be combined with this example to purchase an asset by replacing the expense account with an asset account.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Credit Card (Liability)
Profile
1,000
 
 
 
 
 
Expense (Expense)
Creditor Days
1,000
 
 
 
 
 



Asset Acquisition

The example below represents the purchase of Plant and Equipment. In Calxa cashflow terms the July Plant & Equipment budget will reduce the default bank balance by $10,000 to pay for the new asset.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Plant & Equipment (Asset)
Profile
10,000
 
 
 
 
 



Asset Depreciation

The balance sheet side of depreciation budgets will be handled automatically by Calxa if you have nominated depreciation accounts set as default accounts. The accumulated depreciation budget will be a combined budget to balance out your depreciation expense budget. You can, however, budget for this directly to have a more accurate balance sheet budget with individual accumulated depreciation budgets. The example below outlines the expense and accumulated depreciation budgets required for each asset. Note there is no budget in the Plant & Equipment account and the Accumulated Depreciation and Depreciation accounts are set with a cashflow type of None. In Calxa cashflow terms the default bank balance will remain unchanged.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Plant & Exquipment (Asset)
Profile
 
 
 
 
 
 
Accumulated Depreciation (Contra Asset)
None
-100
-100
-100
-100
-100
-100
Depreciation (Expense)
None
100
100
100
100
100
100


Asset Disposal

Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Plant & Equipment (Asset)
Profile
 
 
 
-10,000
 
 
Accumulated Depreciation (Contra Asset)
Profile
 
 
 
7,600
 
 
Loss/Gain on Sale of Asset (Other Income)
Profile
 
 
 
600
 
 



You may have noticed in the example above that the Accumulated Depreciation account has a cashflow type set to Profile where earlier depreciation budgets required that this account be set to None. So in reality if you were doing depreciation budgets the above budget would not be possible. Unfortunately to keep your budget balanced in this scenario you will require an additional account so Calxa can differentiate the cashflow types in the budgets. Putting the depreciation budgets and disposal budgets together you would end up with something similar to below. You can see the depreciation budgets are occurring as normal however we have introduced another account called Accumulated Depreciation Disposal with an alternate cashflow type.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Plant & Equipment (Asset)
Profile
 
 
 
-10,000
 
 
Accumulated Depreciation (Contra Asset)
None
-100
-100
-100
 
 
 
Depreciation (Expense)
None
100
100
100
 
 
 
Accumulated Depreciation Disposal (Contra Asset)
Profile
 
 
 
7,600
 
 
Loss/Gain on Sale of Asset (Other Income)
Profile
 
 
 
600
 
 


NOTE – The Accumulated Depreciation Disposal account should not be used in your actual disposal. This account is for Calxa budgeting purposes only.


Inventory

In the simple example below we have regular sales of $2,000 where the cost of goods is $700. The Sales budget in this example has no effect on the balance sheet, however it has been included as part of the full inventory example. In Calxa Cashflow terms the Sales budget represents an increase in the bank balance of $2,000 per month. For each sale there is a Cost of Sales element of $700 and you would be forgiven for setting the Cashflow Type to None here, but this is incorrect. Although you have already paid for the goods, the cashflow type should be set to Creditor Days, or more importantly the same as the Stock on Hand account. More on that in a second, but let’s also analyse the stock purchases happening in July and October. You can see the positive budget of $2,300 but remember balance sheet budgets are movements in this account and there is actually a sale also which has reduced stock by $700 (the cost of sales value). Therefore the actual stock purchased was worth $3,000. So in July and October the cashflow effect is $3,000 coming out of the bank on creditor terms while in the other months there is no cashflow effect because the Cost of Sales and the Stock on Hand budgets cancel each other out. It is for this reason that the cashflow type needs to be the same on these two accounts.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Stock on Hand (Asset)
Creditor Days
2,300
-700
-700
2,300
-700
-700
Cost of Sales (Cost of Sales)
Creditor Days
700
700
700
700
700
700
Sales (Income)
Profile
2,000
2,000
2,000
2,000
2,000
2,000


NOTE – The cashflow type on the Sales account is not important in the context of the balance sheet budget and may also be set to Debtor days or some profile other than 100% in the current month.



Accrued Expenses

The example below represents an accrued expense that is recognised on the P&L in July but paid in Dec. In Calxa cashflow terms the two budget entries in July will result in zero net movement on the default bank balance while the negative liability budget in December will cause a -$1,000 movement on the default bank account.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Accrued Expense (Liability)
Profile
1,000
 
 
 
 
-1,000
Expense (Expense)
Profile
1,000
 
 
 
 
 


NOTE - You may change the cashflow types, for example to Creditor Days, however both accounts will need to be changed. By keeping the cashflow settings the same the two budgets entries in July will always balance each other out in cashflow terms.



Unearned Revenue/Income Received in Advance

Please note a more specific example is available as a separate Calxa help note – Handling Income Received in Advance. For many non-profit organisations this is a common budget requirement and you may find this help note helpful if you receive funds in advance of the actual period they will apply. The example below represents the budgets for receiving $12,000 in July and recognising it as $1,000 monthly income each month. In Calxa cashflow terms the Income in Advance budget will represent an increase in the default bank balance of $12,000 in July, while the other budgets are all set with a cashflow type of None so there will be no cashflow effect.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Income in Advance (Liability)
Profile
12,000
 
 
 
 
 
Income in Advance Allocated (Liability)
None
-1,000
-1,000
-1,000
-1,000
-1,000
-1,000
Income (Income)
None
1,000
1,000
1,000
1,000
1,000
1,000


NOTE – In this example there is an additional account called Income in Advance Allocated used. In general accounting terms this account is not necessary however in Calxa cashflow terms adding negative budgets to the Income in Advance account will result in spending money from the default bank account. This is why we must separate these budgets and set the cashflow type to None.



Scheduled Payments

In most cases these types of budgets will be handled automatically in Calxa by nominating the appropriate accounts and settings on the Default Accounts screen. However in some cases it may be necessary to budget for scheduled payments manually. The example below represents budgeting for Super Payable where you have not nominated the Superannuation or Super Payable accounts as default accounts. In Calxa cashflow terms there is no monthly payment however the Super Payable liability increases each month and a scheduled payment will be made to zero the closing balance on the liability account as per the details of the chosen schedule. For more details on Cashflow Schedules please refer to the hep note – Preparing a Cashflow Forecast.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Super Payable (Liability)
Schedule
450
470
425
510
455
480
Superannuation (Expense)
None
450
470
425
510
455
480



The following example does not involve a balance sheet budget, however it does result in cash outflows from the balance sheet, and for that reason it has been included in this support note. By setting the cashflow type to Wages Tax and setting a Tax Rate, Calxa will calculate the PAYG Payable budget for you and you will not be able to edit the PAYG Payable budget. As shown in this example, this may consist of multiple wages accounts with separate tax rates.


Account
Cashflow Type
Jul
Aug
Sep
Oct
Nov
Dec
Salaried Wages (Expense)
Wages Tax (25%)
32,000
32,000
32,000
32,000
32,000
32,000
EBA Wages (Expense)
Wages Tax (17.5%)
12,000
12,100
11,500
12,900
13,100
11,400
PAYG Payable (Liability)
Nominated Account