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Overview of the Manage budgets business process area within the Record to report end-to-end scenario

Applies to: Dynamics 365 Business Central, Dynamics 365 Commerce, Dynamics 365 Finance, Dynamics 365 Human Resources, Dynamics 365 Project Operations, Dynamics 365 Sales, Dynamics 365 Supply Chain Management

This article describes how you can use the budget management features of Dynamics 365 to support your entire budgeting process.

Budget management is a cornerstone of financial planning and control, and holds profound significance for businesses across industries. It empowers organizations to allocate resources efficiently, make informed financial decisions, and chart a course towards sustainable growth. In an era marked by economic volatility and shifting market dynamics, a robust budget management strategy underpins not only fiscal responsibility but also the ability to adapt and thrive in changing circumstances. By using Dynamics 365 to streamline this critical business process, enterprises can harness the power of data-driven insights, automation, and real-time visibility, ultimately optimizing their financial performance, and enhancing their competitive edge.

The budgeting features of Dynamics 365 Finance or Dynamics 365 Business Central can be added at any point in your project or post go-live. However, we recommend that you consider including the basic budgeting features in your project at a minimum to harness the full flexibility and data visibility into budgets versus actuals. If Dynamics 365 Finance or Business Central isn't your system of record for financials, we recommend that you integrate your actual or the totals of your financial transactions into your system of record for financials where you do manage your budget. As part of a holistic implementation, budget management should be integrated into your organization's operations, enabling real-time insights, collaboration, and data-driven decision-making.

Stakeholders

Many people across the organization should contribute to the decision-making process and design of the manage budgets area. The following list provides examples of such stakeholders:

  • Finance leadership stakeholders include CFOs, controllers, and directors of finance. Finance leaders provide strategic input, aligning budget processes with overall financial goals. Their involvement ensures that the implemented budget processes meet financial planning and forecasting standards.

  • Budget owners/managers include people that are part of the finance team directly. They often include managers and leaders of different departments, cost centers, or business units. Budget owners contribute insights into departmental budget requirements, ensuring alignment with organizational goals. Actively participating in testing guarantees that budget processes accurately reflect departmental needs and constraints.

  • Financial controllers offer insights into financial policies, ensuring that budget processes adhere to compliance standards. Their involvement ensures the accuracy of financial reporting related to budgetary performance during testing.

  • Procurement stakeholders contribute insights into budget processes related to procurement activities. Their involvement ensures that budget processes accurately reflect financial constraints and requirements related to procurement.

  • Project stakeholders include project managers, directors, and project controllers. In service-based organizations who manage budget for each project, the project stakeholders contribute to budget design, ensuring that project-related financial planning aligns with overall organizational goals. Actively participating in testing guarantees that budget processes related to project management meet project-specific financial requirements.

  • Business intelligence / analytics stakeholders contribute insights into data requirements for effective budget reporting and analysis. Their involvement ensures that budget processes generate data conducive to meaningful financial analysis.

  • Audit stakeholders include external and internal auditors. Auditors provide insights into compliance standards related to budgetary processes. Their role is vital in validating that the implemented budget processes adhere to regulatory standards during the testing phase.

Manage budgets process flow

The following diagram illustrates the Manage budgets business process area. Each solid gray rectangle on the diagram represents an end-to-end business process. The solid blue rectangle represents the business process area. The diagram shows the subprocesses for the business process area. The arrows on the diagram show the flow of the business process in an organization. If a subprocess can lead to more than one other subprocess, the parallel subprocesses are shown as branches.

Diagram showing the connection between the Manage budgets business process area and other business processes.

  1. Define rules for budget consumption

  2. Plan a budget

  3. Allocate budgets

  4. Enter budget amounts

  5. Review and approve planned budgets

  6. Reserve budget for expenses (optional)

  7. Transfer budget amounts (optional)

  8. Purchase order end process (optional)

Manage budget benefits

There are many benefits that can be used to monitor and measure the success of implementing technology to support managing budgets. The following sections outline the key benefits that an organization might monitor and measure for managing budgets.

Optimized resource allocation through accurate budgeting

Dynamics 365 facilitates precise budgeting by providing tools for accurate forecasting and resource allocation. The system's features, such as budget templates and forecasting modules, enable organizations to create detailed budget plans aligned with departmental and project needs. This leads to improved resource utilization and cost control.

KPIs include the accuracy of budget forecasts compared to actual expenditures and the percentage reduction in budget variances.

Enhanced collaboration and accountability in budget management

Dynamics 365 promotes collaboration among stakeholders involved in budget processes through its integrated platform. Budget owners, finance leaders, and departmental managers can collaboratively contribute to the budgeting process, ensuring a comprehensive and transparent approach. The budget planning is completed through engaging with relevant business stakeholders, where the approach could either be top-down or bottom-up. Budgets are agreed upon before the beginning of the financial year while forecasts enable the business to track performance against the budget throughout the year. The system's role-based access controls and audit trails enhance accountability.

KPIs for this benefit include the reduction in time taken for collaborative budget planning and improvements in the visibility of budget contributions from various stakeholders.

Real-time monitoring and adaptive budgeting

Dynamics 365 empowers organizations with real-time monitoring of budgetary performance. Features like live dashboards and reporting tools provide instant insights into budget utilization, allowing for adaptive budgeting strategies. Organizations can make informed decisions based on current financial data, responding swiftly to changes in business conditions.

KPIs include the frequency of real-time budget updates and the percentage increase in the speed of decision-making based on real-time budget information.

Next steps

If you would like to implement Dynamics 365 solutions to assist with your Manage budget business processes, you can use the following resources and steps to learn more. (Links are added when the articles are ready.)

  1. Define accounting policies

  2. Manage cash

  3. Manage budgets (the article that you're currently reading)

    1. Plan budgets
    2. Define preliminary budgets
    3. Reserve budgets
    4. Allocate budgets
    5. Maintain budgets
    6. Approve budgets
    7. Transfer budgets
    8. Appropriate budgets

  4. Record financial transactions

  5. Close financial periods

  6. Analyze financial performance

You can use the following resources to learn more about the manage budget processes in Dynamics 365.

Contributors

This article is maintained by Microsoft. It was originally written by the following contributors.

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