Financial forecasting and budgeting are essential tools for any organization that seeks to make informed business decisions. Financial forecasting involves predicting future revenue and expenses, while budgeting involves creating a financial plan for achieving specific goals. Together, these tools can help an organization set financial targets, allocate resources effectively, and respond proactively to changes in the business environment.
Dynamics 365 F&O is a powerful tool that can help organizations to streamline their financial forecasting and budgeting processes. One key advantage of Dynamics 365 F&O is its ability to provide a comprehensive view of an organization’s financial performance in real time, using advanced analytics and reporting tools. It enables organizations to identify trends and patterns, make data-driven decisions, and adjust their strategic plans accordingly.
Dynamics 365 F&O also includes various features to support financial forecasting and budgeting. For example, the system enables users to create detailed project forecasts, which include information about planned hours, expenses, fees, and items. In addition, the system allows users to set up multiple budgeting workflows, scenarios, and templates, with several dimensions to choose from.
Another key feature of Dynamics 365 F&O is its cash flow forecasting and budgeting capabilities. Users can navigate to Main Accounts and Legal entity overrides to populate cash flow forecast setup with general ledger-dependent accounts. Accurately projecting cash flow is an important aspect of financial forecasting, and Dynamics 365 F&O provides users with the tools they need to make informed decisions in this area.
While Dynamics 365 F&O does provide basic budget input functionality, organizations may want to consider more comprehensive budgeting and forecasting tools for a complete annual budget process or to produce a forecast. However, the system’s integrated features can still provide a solid foundation upon which organizations to build. Accessing data and analytics in real-time can be a significant advantage for organizations seeking to stay agile and responsive to changing market conditions.
Basic Budgeting Setups in Dynamics 365 F&O
Basic budgeting setups in Dynamics 365 Finance and Operations involve several steps. This section will cover budgeting parameters, dimensions for budgeting, budget codes, and budget models.
Budgeting Parameters: The budget parameters form allows you to enable budget transfers and specify options for revenue budgets and sub-ledger budget transfers. The budget journal selected here will be used for budget register entries.
Dimensions for Budgeting: Dimensions categorize financial transactions and help generate accurate financial statements. Once you have created a budgeting dimension, you can use it in budget register entries.
Budget Codes: These are used to categorize budget types. You can create a new budget code according to the business requirements. A budget model is a bucket where different budget codes are entered.
Budget Models: These are the identifier of the budget whose budget balance is affected by the processing of a budget transaction. You can create a budget model that has sub-models that represent various departments of the legal entity. For simplicity, you can create one model called Default.
To import or enter document information for budget register entries, the Budget Account Entries data entity in Data management can be utilized. The Budget register entries page provides an option to manually enter this information or use a Microsoft Excel template by clicking the Open in Excel button.
Creating and Managing Budget Plans in Dynamics 365 F&O
Creating and Managing Budget Plans in Dynamics 365 F&O can involve multiple processes and workflows. Let’s explore various aspects of budget planning, including analyzing and updating budget plans for multiple scenarios, fixed asset budgets, and project budgets, uploading and posting budgets in D365, comparing budget numbers against actuals in the financial reporting tool Management Reporter (MR), and advanced budgeting in D365, including budget sublevels, LY numbers, and budget approval processes.
Analyzing and updating budget plans for multiple scenarios: Dynamics 365 Finance allows users to create and manage multiple budget plans for different scenarios. Users can configure the budget planning workflow, which includes routing the budget plans through the organization for review and approval. Budget plan documents are tightly integrated with Microsoft Excel, allowing users to configure unlimited monetary data.
Fixed asset budgets: Users can create and post-fixed asset budget journals in the fixed assets module. They can also use the out-of-the-box capability to create a depreciation proposal for a date range, which can be reviewed and updated before being posted to the fixed asset budget.
Project budgets: Project budgeting in Dynamics 365 Project Operations integrates with forecast models and uses a single-entry form for original budget details and revisions. All original budgets and revisions must be sent for review and approval.
Uploading and posting budgets in D365: Users can upload budget plans from Excel to D365 Finance and Operations using the budget planning workspace. After the budget plans are uploaded, users can modify and update the data before posting it to the general ledger.
Comparing budget numbers against actuals in Management Reporter (MR): Users can compare budget numbers against actuals in MR by creating a budget report in MR. They can use the budget and actual report columns to create the report and then compare the budget numbers against the actuals.
Advanced budgeting in D365: Advanced budgeting in Dynamics 365 Finance includes budget sublevels, LY numbers, and budget approval processes. Users can create budget sublevels to better organize their data and add LY numbers to compare current and past budgets. The budget approval process involves reviewing and approving budget plans using the budget planning workflow.
Budget Planning in Dynamics 365 F&O
The budget planning workspace in D365 F&O is where budget planning tasks are performed, and budget plans are defined. According to Microsoft, budget planning workflows are automated and manual processes that move budget plans through the planning stages. The budget planning workspace can be configured through various parameters, such as security models, user roles, and budget planning scenarios.
To consolidate multiple budget plans from a lower level of the organization into a single parent budget plan at a higher level, D365 F&O provides functionality for budget control and budget registers. Budget plans approved in D365 F&O can be used to generate budget register entries to record expenditure budgets for an organization. To consolidate budget plans, follow these steps:
- Navigate to the budget planning workspace in D365 F&O and select the ‘Consolidate budget plans’ option.
- Choose the budget plan at a higher level that you want to consolidate the lower-level budget plans into.
- Select the budget plans from the lower level that you want to consolidate.
- Set the consolidation method, which determines how the amounts of the selected budget plans are added to the higher-level budget plan.
- Save the consolidated budget plan.
These steps will allow you to generate a single-parent budget plan that incorporates multiple budget plans from lower levels of the organization.
Financial and Budget Reporting with Dynamics 365 F&O
Dynamics 365 F&O offers several options for creating standard financial and budget reports, including Excel, Power BI, SSRS, and Embedded Analytics. To generate financial reports, navigate to General ledger Inquiries and financial reports, select a report, and click Generate. Once the report is generated, it will be available in the Reports section, where it can be viewed or deleted.
Budget information can also be viewed on financial reports generated from Dynamics 365 F&O. The system offers basic budgeting, budget planning, and budget control options. Budget codes and models can be set up to allow for uploading budgets to D365, and these budgets can be used to compare against actuals in the financial reporting tool Management Reporter.
Using D365 F&O for budgeting and forecasting offers several benefits, including access to most financial data in the system and the ability to schedule reports to generate on a recurrence. Reports can also be exported to Excel for distribution among the finance department. The platform additionally provides users with the ability to create various budgeting scenarios, templates, and workflows, which can be customized with a range of dimensions.
Conclusion
Financial forecasting and budgeting are essential for organizations seeking to make informed business decisions. Dynamics 365 F&O provides a range of features and capabilities that can help organizations to streamline these processes and make data-driven decisions.
From detailed project forecasts to cash flow forecasting and budgeting, Dynamics 365 F&O can provide organizations with the insights they need to plan effectively and stay competitive in today’s dynamic business environment.