Budgeting Budgeting Processes Optimization with the Microsoft Dynamics 365 Finance Functionality
Essence of Budgeting
Budgeting is the process of developing, executing, controlling, and analyzing a financial plan that encompasses all aspects of an organization’s activities. It allows for comparing expenses and income with the results achieved during the planned period. Budgeting is a management tool designed to create and improve the financial justification for decisions made within the organization.
The main objective of budgeting is to provide the organization with the necessary resources, particularly financial ones. This involves allocating available resources and planning for new inflows in the future.
During the budgeting process, the future operations of the organization are planned, and the outcomes are presented as a system of budgets, which serve as the results of the budgeting process.
In this way, a budget is a numerical expression of the organization’s financial plan, consisting of various elements that cover all processes within the company.
The budget system allows for analyzing projected and actual indicators, not only across the entire company but also within individual departments, projects, or centers of financial responsibility. Commonly budgeted indicators include: sales volume, profit, expenses, revenue, taxes, contributions to various funds, credit burden, working capital, investments, and more.
Standard Budget System of an Organization
Essence of Budgeting Automation
One of the key elements in preparing a successful financial plan is building an automated system that will provide accurate and timely information about the company’s status to make important strategic decisions at the senior management level. This helps achieve sustainable growth and increased company profits, specifically:
- Receiving information to prepare plans for expected expenses, income, and net profit for a specific period.
- Performing financial forecasts for cash flows, receipts, and payments (cash inflows, accounts, securities, etc.).
- Forming a balance sheet plan, which clarifies the prospects for achieving the company’s goals by the end of the planning period.
- Building a management control system.
- Receiving information to prepare a report on the execution of the financial plan.
The system must ensure the following processes:
Integration with operational systems to gather forecast data (for example, data from a CRM system for a pipeline report or forecasted sales data from Demand Forecast, etc.).
For example, creating an OPEX budget plan, where each department prepares and submits its part of the budget for approval, which is then consolidated into the overall budget plan (bottom-up), or where the financial department proposes a consolidated budget that is distributed across departments (top-down).
Setting up a multi-level approval hierarchy.
The ability to create a Workflow process.
For example, control of procurement, control of projects and fixed assets, control of hiring and staff training within the budget, etc.
Organizing a notification system for budget control execution.
Overview of the Budgeting Module within Dynamics 365 Finance
Capabilities of the software for automating budgeting processes within the D365 Finance Budgeting module.
Creating budget forecasts based on historical data with the possibility of applying a factor coefficient to data from general ledger entries, other budget plans, fixed asset module data, personnel hiring forecast, project forecast, demand forecast, supply forecast, data from previous budget registers, etc.
Developing advanced financial analytics, flexible account structures for building forecast financial plans (Balance, CashFlow, P&L), as well as operational budget plans (OPEX, CAPEX, Pipeline).
Financial analytics sets for building Plan-Fact, Forecast-Fact reports using various combinations of financial analytics.
Building standard Forecast-Fact reports using different combinations of financial analytics.
Developing customized reports to reflect Forecast-Fact, Forecast-Plan information according to company requirements.
Financial analytics sets are used for building Plan-Fact reports with different combinations of data granularity.
Organizing the budgeting process using organizational hierarchy and workflow tools.
Aggregating information from various budget plans initially created by departments (e.g., for the OPEX budget plan), or distributing information among departments according to set rules (for initial creation of a budget plan for analysis at the beginning of the budgeting process).
Creating different schemes for displaying information according to various requirements: by month, by quarter, actual data, forecasted data, budget data, from the start of the year to date, etc.
- Top-down
- Bottom-up
- Across the organizational structure
- Partial approval of budget plans
Workflow processes for different budget scenarios, such as:
- OPEX budget being distributed among departments,
- Reviewed by departments,
- Approved at the departmental level,
- Returned to the initiator for review and finalization.
Establishing budget control for different company processes:
- Procurement control,
- Project control,
- Fixed asset control,
- Control of hiring and training within the budget, etc.
Implementation Scenarios for the Budgeting Module
Extension of D365FO
Supplementing the existing Microsoft Dynamics 365 Finance and Operations Applications ERP system (Dynamics 365 Finance, Dynamics 365 Supply Chain Management, Dynamics 365 Human Resources, Dynamics 365 Commerce) with Budgeting functionality.
Migration to D365FO
Migration from an old version of the ERP system to Microsoft Dynamics 365 Finance and Operations Applications with the priority implementation of the Budgeting module.
Enhancing the Existing IT Ecosystem
Expansion of the existing accounting system with limited functionality with the capacity of software for automation of budgeting processes, developed within the framework of the Microsoft Dynamics 365 Finance and Operations Applications ecosystem.
Impact on Business Indicators from the Automation of Budgeting Processes in the D365FO Budgeting Module
Data Accuracy
Data accuracy is improved, reducing the risk of errors related to manual data entry. The financial information remains up-to-date through integration with your company’s IT infrastructure.
Time Savings
Less time is spent on preparing and approving budgets at different levels of the organization. Quick responses to price fluctuations, changes in demand, and new regulatory requirements are possible, adapting budgets to the current situation.
Resource Efficiency
Resource efficiency increases by optimizing planning processes and cost control.
Decision-Making Quality
Fast access to accurate and up-to-date financial data enables well-informed strategic decisions.
Productivity
Budget planning, analysis, and approval processes are simplified and accelerated.
Process Optimization
Duplicated efforts disappear, and communication between departments improves as a result of the automation of budgeting processes and integration of different financial functions.
Features of the Budgeting Module for Improving Financial Planning and Control in Your Organization
Seamless Integration with Other Modules
Budgeting easily integrates with other modules of Microsoft Dynamics 365 Finance, Microsoft Dynamics 365 Human Resources and Microsoft Dynamics 365 Supply Chain Management. This ensures data consistency and optimization of financial operations across the organization.
Integration with External Systems
Budgeting automation software within the Microsoft Dynamics 365 Finance and Operations Applications ecosystem easily integrates via Excel with the IT environment, including other ERP and CRM systems.
Speed and Simplicity of Implementation
Achieve your D365FO ERP's Budgeting module implementation goals with minimal effort by automating the processes of forecasting, planning, preparation, modification, approval and control of budgets within the Microsoft Dynamics 365 Finance and Operations Applications ecosystem.
Real-Time Budget Control
Automation of budgeting processes within the Microsoft Dynamics 365 Finance and Operations Applications ecosystem allows you to monitor and control your budget in real time.
Advanced Reporting and Analytics
With the powerful reporting and analytics tools of the Microsoft Dynamics 365 Finance and Operations Applications ecosystem, your organization will be able to analyze budget execution in detail, identify deviations, and generate meaningful financial reports.
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