Basics of Budget Planning in Dynamics 365 for Finance and Operations.

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INTRODUCTION:

Budget planning is decisive in any organization to plan the future income and expenditures in different elements of business operations.

Dynamics 365 for Finance and Operations brings in extensive features to plan your budgets in different models,

  • Top down approach:

Creating your budgets at the organization level and allocate to a department or lower levels of your organization.

  • Bottom up approach:

Create your budgets from department level (lower level) and aggregate at the organization level to prepare final budget plan.

KEY ELEMENTS AND CONFIGURATION:

00-Budget Planning.png

In this blog, I will explain the key elements with basic configuration involved to work with Budget planning in Dynamics 365 for Finance and Operations.

1. Organization Hierarchy:

First and fore most element and configuration of Budget planning is Organization Hierarchy, we need to have at least one organization hierarchy defined with Budget planning purpose to work with Budget panning in Dynamics 365 for Finance and Operations.

The organization hierarchy is used to aggregate and allocate the budgets at different levels of your organization.

I have created hierarchy with just one Department as Budget’ to create simple flow and easy to understand,

Organization Administration > Organization > Organization Hierarchy

01-Budget Planning.png

2.  Responsibility Center:

Responsibility centers are those who administer and create Budget plan for respective department,

the department should be associated with Manager who is worker holding the position in that Department.

In this post, ‘Budget’ department is defined with Worker (Myself) and the Position(CFO) is associated with ‘Budget’ Department

  1. Organization Administration > Organization > Operating Units
  2. Select the Department “Budget”
  3. Select Manager of the Department02-Budget Planning.png
  4. Drill down to worker clicking on the Hyperlink
  5. Click on the Work Position Assignment in the Action pane.
  6. Further drill down to Positions clicking on the Hyperlink
  7. Make sure the Position is assigned with ‘Budget’ Department for which the budget plan will be created.03-Budget Planning.png

Notes:

  • This is important setup if the security model is defined as “Based on worker positions” in the Budget Planning Configuration.
  • If you are using the Security model as “Based on security organization” you should also add the Security purpose for the Organization hierarchy.
  • We will discuss more about the security model further in this post.

3. Budget Planning Workflow:

Budget planning workflow are used together with Budgeting workflows stages to manage the creation and progress of budget plans.

This workflow consists of Stage Transition elements to automatically change the stages of Budget plan when action is performed by the user.

The process resembles the process for creating other workflows in Finance and Operations. I have created basic Workflow with two Stage Transition automated task and an approval task.

We will discuss more on how this works together with Budget planning workflow stages further in my post

Note: It is mandatory to at least have one Workflow configured for Budget planning

 Budgeting > Setup > Budget Planning > Budgeting Workflows

04-Budget Planning

4. Budget Planning Configuration:

 Budgeting > Setup > Budget Planning > Budgeting Planning Configuration

 Parameters:

Security model: Security model defines the security rules to be applied to access the budget plans,

  1. Based on Worker position: As I have described in responsibility center section, if this option is selected the access to create the budget plan will managed based on the worker position defined for the operating unit which are assigned to Organization hierarchy.
  2. Based on Security Organization: If this option is selected, the access for the budget plan will be managed based on the security roles assigned to the users.

For this post, security model has been set to “Based on Worker position”

05-Budget Planning.png

Scenario’s:

Budget plan scenarios are used to maintain the multiple versions of budget plan to compare, analyze and prepare the final budget for the organization.

Budget plan scenarios can be defined as monetary or quantity based unit of measure, non-monetary scenarios such as Previous year support calls, number of FTE’s etc..

For this post, I have created two scenarios for monetary unit of measure,

  1. PYA: Previous year actuals to analyze the actuals posted in general ledger from previous year to prepare the final budget
  2. Final budget: To create the Final budget based on the previous year actual s posted in general ledger. This scenario will be used to create the budget entries in AX.

06-Budget Planning.png

Stages:

Budget planning stages defines the various levels of activities to be performed in budget plan process to determine the final budget for the organization.

I have created three stages for the Budget plan,

  1. Initial: Initial budget prepared for CFO review.
  2. CFO review: CFO review stage to review and approve the budget plan.
  3. Approved: Final stage of the budget plan.

06.01-Budget Planning.png

Workflow Stages:

Workflow stages is the platform to combine the stages and Budgeting planning workflow configuration. This configuration helps the Stage transition tasks added in the Workflow to determine the various stages in the Budget panning.

I have created “Demo- Budgeting” workflow stage,

  1. Budget planning workflow: Workflow created earlier in this post will be assigned to this form.
  2. Select Planning stages: Stages created above in this post will selected in this workflow stages.

With this configuration, AX will automatically change the workflow status of the budget plan.

06.02-Budget PlanningExample: Once the Initial budget plan is submitted, AX will automatically change the status of budget plan to ‘CFO review’.

07-Budget Planning.png

Columns:

Columns are used to define the budget figures in the Budget plan. To define a column, budget plan scenario created in earlier section of this post will be selected. The line amounts from that scenario are shown on the budget plan.

I have created two new columns for the two-budget plan scenarios created above,

  1. PYA: Previous year actuals amounts posted in general ledger.
  2. Final budget: Final budget amount column based on the previous year actual s.

09-Budget Planning.png

Layouts:

Layouts can be used to present the columns at various stages of Budget plan. ledger dimension set can be used to create the budget plan rows that you want to display, and select the columns as layout elements.

You can also designate whether each layout element (column) is editable, and whether it’s available in any worksheet template that is created for that layout.

I have created multiple layouts at different stages of Budget plan,

Initial Budget: Initial budget layout with both previous year actual and Final budget columns.

Element Editable Available in worksheet Ledger Dimension Set
PYA No Yes MA + BU + DEPT
Final Budget Yes Yes MA + BU + DEPT

10-Budget Planning.pngCFO review: CFO review layout with both previous year actual and Final budget columns.

Element Editable Available in worksheet Ledger Dimension Set
PYA No Yes MA + BU + DEPT
Final Budget Yes Yes MA + BU + DEPT

11-Budget PlanningApproved: Final stage with both previous year actual and Final budget columns.

Element Editable Available in worksheet Ledger Dimension Set
PYA No Yes MA + BU + DEPT
Final Budget Yes Yes MA + BU + DEPT

12-Budget Planning

5. Budget Planning Process:

Budget planning process is the last step for setting up the Budget planning in Dynamics 365 for Finance and Operations.

This setup combines all the above set of configurations created above in this post that determine how budget plans can be updated, routed, reviewed, and approved in the budgeting organization hierarchy.

Additionally, for every budget plan process we first need to select the budget cycle, legal entity and the account structure

I have created new Budget planning process “Current Year Budget- Demo”

Budgeting > Setup > Budget Planning > Budgeting Planning Process

Budget Planning Process Administration:

Organization Hierarchy Budget Planning Workflow
Demo-Budget Demo-Budgeting

13-Budget Planning

Budget Planning Stage rules and Layouts:

Budget planning stage Associate budget plans Add lines Modify lines Layout
Initial Yes Yes Yes Initial Budget
CFO review Yes Yes Yes CFO_Review
Approved No No No Approved_Budget

14-Budget Planning

CREATION OF BUDGET PLAN:

1.  Actual Entries:

Verify the account “600013”- Expenses has actuals posted with 50000 USD for the Fiscal year 2016

15-Budget Planning

2. Create Initial Budget Plan from Previous Year Actual s:

Budgeting > Periodic > Generate budget plan from general ledger

  • Action: Create a new budget plan, Aggregated total by: Fiscal year
  • Then select the source data information,
  • Fiscal Year: 2016
  • From Period: Period 10(As per the period when actual transactions are posted)
  • To Period: Period 10(As per the period when actual transactions are posted)
  • Account type: Profit and loss (As per the account type used in the actual transaction)
  • Then select the target data information,
  • Budget Planning Process: “Current Year Budget – Demo”
  • Enter Budget plan name: Current Year -2017
  • Budget Plan Scenario: PYA
  • Verify other information like Budget class, Responsibility center is automatically populated.
  • Click on Generate

16-Budget Planning

Budgeting > Budget Plans

Verify the PYA column in the budget plan is updated with 50000 USD

17-Budget Planning

3. Create Final Budget Plan based on Previous Year Actuals:

`Budgeting > Periodic > Generate budget plan from general ledger

  • Action: Update the existing budget plan scenario, and append new data, Aggregated total by: Fiscal year
  • Then select the source data information,
  • Fiscal Year: 2016
  • From Period: Period 10 (As per the period when actual transactions are posted)
  • To Period: Period 10 (As per the period when actual transactions are posted)
  • Account type: Profit and loss (As per the account type used in the actual transaction)
  • Then select the target data information,
  • Budget Planning Process: “Current Year Budget – Demo”
  • Enter Budget plan name: Current Year -2017
  • Select the Document number: USSI000072 (Initial Budget Plan #)
  • Budget Plan Scenario: Final budget
  • Verify other information like Budget class, Responsibility center is automatically populated.
  • Generation rules, Factor: 1.10 (To give the 10% increase in the budget from PFA).
  • Click on Generate

18-Budget Planning

Budgeting > Budget Plans

Verify the Final budget column in the budget plan is updated with 55000 USD

19-Budget Planning

Stay tuned…

Best Regards,

Namith

Disclaimer:
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. All content provided on this blog is for informational purposes only. This blog makes no representations as to the accuracy or completeness of any information on this site.

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