Budget Approval Rules

Modified on Sat, 07 Jan 2023 at 01:28 PM

Purpose of Budget Approval Rules:

Budget approvals are based mostly on the amount of money you have and are prepared to spend for specific purposes. They are meant to trigger attention and keep your budget safe from accidental over-spending.

Key Uses of Budget Approval Rules:

Once setup and implemented, budget approvals will:

  • Issue warnings or activate budget controls that will not allow more money out of your system than is planned.
  • Ensure that correct amounts of funds are being processed appropriately and within the boundaries of your budgets.

Special Vocabulary:

  • Approval Process – the method your organization uses to approve anything from documents, invoices, budgets and purchase orders to a new process you may want to implement once you?ve selected a software like Fundamentals. Automating approvals is an excellent way to make sure you maintain a consistency in the operation of your organization.
  • “Magic Formula” – When set appropriately the business rule uses this formula to check for budget availability before posting invoices, purchase orders or otherwise removing funds from an account. This is that formula:

AVAILABLE to spend = Budget — Commitments — Encumbrances — Actual – {Unposted journals and documents}

Budget Approval Rule Card

To access the Budget approval card, go to the Business Rules menu item and select Budget Rules. You’ll be taken to a page that lists the rules you put in place to avoid exceeding your budget limits.

From the list of Budget Rules you can select one to edit by double-clicking on the No. Column on the left side of the page. Or you can add a new Budget by clicking the +New option in the action bar immediately below the menu.

The Budget Rule Card has four tabs to help you calculate and determine responses to budgets and budget over-drafts:

  • General – The General tab is for supplying basic information used to identify the rule you are implementing. When setting up a new rule (+new in the action bar) on the General tab the first field is marked by a red Asterix (*) to indicate that the Number is a required field and you cannot continue without that field being filled in. This “number” can be alpha-numeric depending on the needs of your organization. There is also an on/off toggle switch that will allow you to enable or turn off your budget rule manually.
  • If the line matches all of the following – specifies the filter criteria to “capture” the data entered to determine how the available budget should be calculated
  • Then Calculate the budget as followsThis tab allows you to control how you will use posted transactions to calculate your available budget.This allows you to employ the “magic formula” for ensuring you do not exceed your budget for specific dimensions, amounts, or time frames in facing immediate expenses. You can also set a tolerance amount in this tab that specifies whether you’ll use actual amounts or percentages to calculate whether or not a budget is exceeded. Each field label has tooltip help that gives you more information.
  • If the Available Amount is ExceededThere are multiple fields that allow you to set notices, take action, send messages all automatically, so that you protect against accidental over-spending and keep management informed every time there is more need than money in your budget.
  • Use the following accounts instead of what was entered on the line allows optional override filters to calculate the amounts.  e.g. if the total compensation budget is stored in a summarizing account, then all sub-accounts for personnel expanses trapped above will look for the amount in the override account specified for either the budget or the expense calculation.

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