How to use Xero’s Budget Manager to plan your business finances
Xero’s Cloud Accounting Budget Manager is a powerful, yet easy to use, tool that can help small business owners better manage their finances. The budget manager allows users to track their income and expenses, as well as create and manage budgets. It also offers reporting features that can help users understand where their money is going and identify areas where they may be overspending.
With the budget manager, business owners can make sure they are staying on top of their finances and keeping within their budget. This can help reduce stress levels and free up time to focus on other aspects of running a business.
What is Xero?
Xero is a cloud-based accounting software that helps small businesses manage their finances. It is an easy-to-use software that can be accessed from any device with an internet connection. Xero has many features that can help businesses track their income and expenses, create invoices and bills, and manage their cash flow.
What is Xero Budget Manager?
If you’re like most small business owners, you understand the importance of budgeting and tracking your spending. But what happens when your business grows, and you can no longer keep track of everything yourself? That’s where a cloud accounting budget manager comes in.
Xero’s budget manager is a part of the Xero Cloud Accounting application that allows you to track your income and expenses, create budgets, and monitor your cash flow. This can be a valuable tool for businesses of all sizes, but is especially helpful for growing businesses that need to keep track of multiple bank accounts, credit cards, and other financial transactions.
With Xero’s budget manager, you can see where your money is going and make sure you are staying on track with your financial goals. You can also use it to create reports that show how your business is performing against your budget. This can help you identify areas where you need to cut costs or make changes to improve your bottom line.
If you already use Xero Cloud Accounting, consider using Xero’s budget manager. It can save you time and money by helping you stay on top of your finances and make informed decisions about where to allocate your resources.
How do I use Xero’s Budget Manager?
Setting up your organisation's overall budget
You can only have one Overall Budget per organisation, but you can use the Budget Manager worksheet to create additional budgets.
You'll need the adviser or standard + reports user role to create a budget.
The Overall Budget is the default budget worksheet provided for your organisation. You can only have one Overall Budget.
In the Accounting menu, select Reports.
Find and open the Budget Manager. You can use the search field in the top right corner.
Select:
Start – The month you want your budget to start from.
(Optional) Actuals – The number of actuals you'd like to show for comparison.
Period – The number of months in your budget.
Click Update to filter the budget by your selections.
Enter budgeted amounts into each account field, then click the green arrows to automatically fill out future months using a formula.
Click Save at any time to keep your changes.
Note that decimals will be rounded up to the nearest pound if 50 pence or over, or down to the nearest pound if under 50 pence.
How to fill out future budgeted amounts automatically.
Click into the box you want to base a formula on, then click the green arrow to start.
Select:
Apply fixed amount to each month, to fill other boxes with the same amount.
Adjust by amount each month, to increase by that amount each month.
Adjust by percentage each month, to increase by a certain percent each month.
Click Apply to update the worksheet.
To apply a formula to all accounts, click the green arrow next to a month name in the header, then select a formula. The formula will apply to the entire worksheet. You can also clear all months from that point on.
Setting up a new budget with or without tracking
You can use the Budget Manager worksheet to set up a budget for each of your tracking categories. You can also follow these steps to create new budgets without tracking.
In the Accounting menu, select Reports.
Find and open the Budget Manager. You can use the search field in the top right corner.
Under Select Budget, select Add New Budget.
Give the new budget a name, then select a tracking category. For no tracking, select Do Not Filter.
Click Save.
Select:
Start – The month you want your budget to start from.
(Optional) Actuals – The number of actuals you'd like to show for comparison.
Period – The number of months in your budget.
Click Update to filter the budget.
Enter budgeted amounts into each account field, then click the green arrows to automatically fill out future months using a formula.
Click Save at any time to keep your changes.
Create a new budget based on an existing budget
You can't create a copy of an Overall Budget, you can only copy additional budgets you've set up.
In the Accounting menu, select Reports.
Find and open the Budget Manager. You can use the search field in the top right corner.
Under Select Budget, choose the budget you'd like to copy.
Click Edit.
Enter a name for the new budget.
Click the Save arrow, then select Save as Copy.
Budget Summary report
The Budget Summary report provides a summary of your Overall Budget, or an additional budget you’ve created.
You need the adviser, standard + reports or read only user role to access this report.
In the Accounting menu, select Reports.
Find and open the Budget Summary report. You can use the search field in the top right corner.
Under Budget, select a budget. If you haven't set up additional budgets, your Overall Budget will be the only one available.
Under From, select the month you want the report to start from.
Under Period, select how many months at a time you want to display in each column. You can view each month individually or grouped in blocks of 2, 3, 6 or 12 months.
Under Number of periods to show, choose how many time blocks you want to show.
Click Update.
(Optional) Click Add Summary to write a description for your report, then click Save.
Click Save as draft to save the report. Or click Publish to publish the report, if you have the adviser user role.
View the report
The report will show any revenue or expense accounts that have amounts budgeted in the Budget Manager.
Click on an account name to view the Account Summary report for that account.
Depending on the status of the report and your role you will be able to export, archive or edit it.
NEXT STEPS
Run the Budget Variance report to compare actual figures against budgeted figures on a monthly basis once all of your bookkeeping for the previous month is complete.
The Budget Variance report lets you compare your actual revenue and expenses with budgeted amounts. Before running the report, you should create a budget following the steps above. You can change budgets within the report if you have more than one. You can also pick your own date range or choose from a list of set reporting periods, such as month to date.
The standard report includes variance columns, which highlight the difference between one amount and another. The arrow icons show whether the variance is an increase (up arrow) or decrease (down arrow), and whether it’s favorable (green) or unfavorable (red). The arrow icons don’t show for total rows, eg Total Cost of Sales.
You need the read only, standard + reports or advisor user role to run the report.
Conclusion
Xero's Cloud Accounting Budget Manager is a great tool for small businesses and startups. It is easy to use and can help you keep track of your finances. It also has a number of features that make it unique, such as the ability to create budgets based on past spending patterns. If you are looking for a budgeting tool that will help you save time and money, then Xero's Cloud Accounting Budget Manager is definitely worth considering.
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