# Budgeting

* In ActiveBooks, you can set and manage budgets against a Cost Center or a Project. This is useful in controlling your expenses.&#x20;
* With version 12, you can also create separate Accounting Dimensions to tag transactions with different fields.

For example, if you are doing online sales, you can set a budget for search advertisements and configure ActiveBooks to stop or warn you from overspending beyond a set budget.

Budgets are also great for planning purposes. When you are making plans for the next Financial Year, you would typically target a revenue based on which you would set your expenses. Setting a budget will ensure that your expenses do not get out of hand at any point.

To access the Budget list, go to:

Accounting > Cost Center and Budgeting > Budget

### 1. How to Create a new Budget[ ](https://docs.erpnext.com/docs/v13/user/manual/en/accounts/budgeting#1-how-to-create-a-new-budget) <a href="#id-1-how-to-create-a-new-budget" id="id-1-how-to-create-a-new-budget"></a>

1. Go to the Budget list.
2. Click on '+Add Budget'.
3. Select what to budget against, Cost Center, Project, or an Accounting Dimensions.
4. In the accounts table, select an income/expense account for which a budget is to be set. Let's set a budget for telephone expenses for the year. ![Budget](https://429967333-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MgEi4gT9xOnYSAL1Pei%2F-MlSv7VSskqR6tfWbXfR%2F-MlTICkCM293FP0lwChs%2Fbu.png?alt=media\&token=6129fa25-a719-4b99-9459-fcbf7b310d21)
5. Enter the budget amount for that account.
6. Save and Submit.

### 2. Features[ ](https://docs.erpnext.com/docs/v13/user/manual/en/accounts/budgeting#2-features) <a href="#id-2-features" id="id-2-features"></a>

#### 2.1 Monthly Distribution[ ](https://docs.erpnext.com/docs/v13/user/manual/en/accounts/budgeting#21-monthly-distribution) <a href="#id-21-monthly-distribution" id="id-21-monthly-distribution"></a>

You can also define a Monthly Distribution record to distribute the budget between months. If you don't set the monthly distribution, ERPNext will calculate the budget yearly or in equal proportion for every month.

![](https://429967333-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MgEi4gT9xOnYSAL1Pei%2F-MlSv7VSskqR6tfWbXfR%2F-MlTIZMKLnmOsJM_sAUG%2FMD%201.png?alt=media\&token=e7c4b00a-e6b2-4627-a40e-5aa7cded1804)

#### 2.2 Control Actions (Alerts)[ ](https://docs.erpnext.com/docs/v13/user/manual/en/accounts/budgeting#22-control-actions-alerts) <a href="#id-22-control-actions-alerts" id="id-22-control-actions-alerts"></a>

Control actions can be triggered when:

* A Material Request is being submitted
* A Purchase Order is being submitted
* When an actual expense is being posted (through a journal entry or a purchase invoice).

You can set a control action in the Budget based on Material Requests, Purchase Orders, or on actual expenses. Further, you can set a control action for annual or monthly budgets.

![](https://429967333-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MgEi4gT9xOnYSAL1Pei%2F-MlSv7VSskqR6tfWbXfR%2F-MlTIvz3kZuj5UNT57D3%2Fca1.png?alt=media\&token=1b11866b-0fa9-4630-b7e0-7ece567bb7e9)

There are three types of control actions.

* **Stop**: This will not allow users to submit the transaction.
* **Warn**: This will show a warning message but lets the user submit the transaction.
* **Ignore**: This will neither prevent the user from submitting transactions nor show an error message.

You can set separate actions for monthly and annual budgets. If you exceed the budget, a warning will be shown:

![Budget Warning](https://docs.erpnext.com/files/budget-warning.png)

Note that a similar warning will be triggered for any type of transactions set in the budget for the particular Account heads.

### 3. Budget Variance Report[ ](https://docs.erpnext.com/docs/v13/user/manual/en/accounts/budgeting#3-budget-variance-report) <a href="#id-3-budget-variance-report" id="id-3-budget-variance-report"></a>

At any point in time, you can check the Budget Variance Report to analyze the actual expense incurred vs budget allocated against a cost center or a project.

To check the Budget Variance report, go to:

Accounting > Cost Center and Budgeting > Budget Variance Report

![Budget Variance Report](https://docs.erpnext.com/files/budget-variance-report.png)
