General Tips on Budgeting and Forecasting
- Look at what you've done and make sure it makes sense.
- Remember that the revenues and expenses in your budget need to match.
- Preparing a good budget or forecast is a matter of being systematic, careful, logical, and thorough.
For example, work on one account at a time, or one type of expense or revenue across all accounts.
- Document assumptions, methodology, and special entries carefully and thoroughly.
For example, when budgeting in Pillar, you can enter Notes for individual line items or in the Memo module.
- Check the bottom-line for each entity (e.g. department, group of accounts, account...).
- Compare the budget or forecast to actual data (e.g. last year) or to the current year budget.
- There is actually a lot of consistency from year to year. The core components of the budget tend to be stable.
- As you make changes, keep track of the bottom-line.
- Budget at the appropriate level of detail. (Your dean or director's office will provide direction.)
- A good rule of thumb is to budget at the level that you want to be able to monitor actual revenues and expenditures vs. the budget.
- It does not mean that each and every account is budgeted at the same level of detail.
- Where appropriate, make use of summary GL codes to group revenues or expenditures together for budgeting purposes.
- Where appropriate, make use of pools to group accounts together for budgeting purposes.
- Determine what expenditures, revenues, and transfers are on-going vs. one-time; pay attention to whether on-going expenditures are being funded by
one-time revenues; and communicate with your School or VP Budget Officer as different units have different policies regarding
on-going vs. one-time.
- Be aware that on-going and base are not necessarily the same, either for income or expenditures.
- Make sure that the legal restrictions of various funds are being met (e.g. endowed chairs).
- Print a summary and ask yourself, "What will people who do not know all the details think when they look at this; will it look right to them?"
- Trust your judgment: If something does not look quite right to you, it almost certainly is not.
- Monitoring your actuals against the budget on a regular basis makes it much easier to forecast the year-end balance and budget the following years.
- Try budgeting monthly; salaries are already budgeted this way.
- Check one more time!