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A Guide to Budgets in Sage 50

Posted on 4th August 2020 - Sage

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Sage 50 has easy to set up budgets, allowing the reporting of budgets at both nominal and departmental level. These can then be reported against actuals and alongside prior year results if required.

  • Before you start you need to consider if you are budgeting against departments or just at nominal level. To budget at departmental level go to Company Preferences, Budgeting, and select Advanced under the Budget Method drop down (see image below). Departmental budgets take longer to set up as you are budgeting your profit and loss multiple times, but the result is more detailed budgets split by your business departments.

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  • To set up budgets by department go to Departments, then click on the Budgets icon. In here select your department, then your nominal code. You can either enter the budget for the year and Sage will split this evenly over 12 months or you can enter the figures month by month. Repeat for each department and nominal.
  • The default on Sage is budgeting by nominal. Enter your budget by going into Nominal Codes, click Edit on your Nominal Code and enter the budget figures in the budget column. You can enter the total for the year and Sage will spread the cost evenly over 12 months or enter the budget month by month. Alternatively you can set your budget up in excel and import directly into Sage using the File, Import, Nominal Account feature in Sage.
  • Sage allows you to set up one budget for each financial year.
  • To report on budgets at departmental level go to Departments, then click on Advanced Profit and Loss.
  • To report on budgets at nominal level go to Nominal Codes, then click on Variances (to see your actual results vs budget) or Comparative Profit and Loss (to see your actual results vs budget and vs prior year).
  • Budget Reports compare your actual results for the period to your budget. Remember that for this to be 100% accurate, your bookkeeping will need to be up to date. The report then shows your variance for each section of the profit and loss report.

Budget reporting is an extremely useful tool for managing your business, helping you understand your results at a more granular level rather than just looking at net profit. In the example below, the net profit is very close to the budgeted net profit but the actual results show that sales are down and cost of sales are up leading to a £20k reduction in gross profit. This happens to be covered by savings in overheads.

Looking only at the net profit for the period hides the reduction in sales and the reduction in gross profit.

Looking in more detail may reveal errors in the accounts. Are all the costs actually included/ do we need to accrue unbilled costs? Or is there a problem with production or sales generation? This can help generate the questions to better understand and run your business.

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