Operational expenses budget line types

Understand the budget line types you use in Planning to reflect the operational activities of your company.

Expense

Used for a standalone expense, which can be either a one-time event, or a recurring event spread across an occurrence period: monthly, quarterly, or yearly.

Examples of recurring expenses are:

  • Same amount each period

  • Different amount each period

  • Growing amount each period

You can define the payment terms as required. For more information, see Amortization of revenues and expenses.

Your can also define the depreciation of an expense. The depreciation amount appears in the Sheets tab as follows:

  • Profit & Loss - Monthly depreciation amount

  • Balance Sheet - Total amount of depreciation as an accumulated depreciation with a credit balance. The credit balance is reported in the Property, plant & equipment section and it reduces the cost of the asset to its carrying value or book value (the asset cost minus the accumulated depreciation).

Group

The parent budget line you can use to organize a collection of budget lines with the same focus. Under this group you can find the following budget line types for expenses: Expense, Salary & Wages, Professional services, Per employee and Per new employee expenses, Reserve, Derived and Allocated expenses, as well as Expense adjustments and budget lines for Past balances. The numbers and amounts of the items within a group are aggregated to the group level, so you can see the total of all the budget lines within the group from the group budget line.

For example, if you have an expense of $4000 for computers purchased for your company’s Sales & Marketing group, the expense is displayed in the Computer expense budget line, as well as in the Sales & Marketing budget group line as part of the budget group line total.

Budget group lines and budget lines within the group can be viewed in your cash and P&L sheets.

Groups and budget lines within the budget group can also be populated with past data. A preview of the budget group reflects the sum of the past data from all of the budget lines within the group. For more information, see Populate budget groups with past data.

For more information how to easily modify your budget and add new budget groups and lines to your existing budget structure, see Create budget groups.

Per employee expense

Enables you use your existing headcount plan to generate budget lines per employee. The expense amount you enter, whether it occurs monthly, quarterly, yearly, or is a one-time expense, it is multiplied by the total number of employees under the parent budget line where this expense is entered.

For example, if you add a Per employee expense line for Lunch for the amount of $200 under your R&D department which has 10 employees, the amount shown in your budget would be $2000 per month (or $200*10=$2000).

You can choose to apply the Per employee expense to your overall budget, or to a specific budget group. You can also choose to apply the expense per dimension.

Per new employee expense

Directly related to new hires. The amount you enter is multiplied by the total number of new employees with hire dates under the parent line in which this expense is opened.

Expense from model

The expense generated from your expense model projections.

Reserve

Adds a buffer for unexpected or unforeseen expenses to your budget. The reserve is calculated as a percentage of the budget group in which it appears.

For example, a reserve line of 5% under Operating Expenses that are equal to $1,000,000 adds a buffer of $50,000 to your budget.

Derived expense

Drawn and calculated from the data in the Amount field of another budget line. You can select an existing budget line from the drop-down menu and set the percentage to calculate from the designated line.

For example, let's say you create a calculated expense line named Commission which you choose to be equal to 4% of the Revenue line. If the Revenue line shows $20,000 for Jan 2020 and $35,000 for Feb 2020, the Commission line will show $800 for Jan 2020 and $1400 for Feb 2020 in the preview window.

Allocated expense

An expense that is set aside from another expense line. Before you add this expense, the line you want to allocate from should already exist. The allocation method is available by percentage, or per capita. The chosen amount (percentage or capita) is subtracted from the designated expense.

For example, let's say you have a budget line under G&A for rent of $10,000. You can create an allocated expense for the R&D department for the rent cost which you may decide is 30% of the rent expense line. An amount of $3,000 shows up as a monthly expense in the R&D rent expense line. This amount is then subtracted from the rent expense line of $10,000 which leaves $7,000 a month.

Another option is to allocate the rent per capita. For example, if your company has 50 employees of which 20 are in the R&D department, then these 20 employees represent 40% of the company. The per capita allocation would be calculated as 40% of the R&D rent expense line as: $10,000*40%=$4000.

Expense adjustment

Used for crediting your budget, or for making adjustments to your expenses to the accounting period in which they occurred.

For example, if you receive a reimbursement from a vendor, you can make an expense adjustment as a one-time event, or as a recurring credit (monthly, quarterly, or yearly).

For more information, see

Salary & Wages

The parent budget line, or budget group line, of every employee budget line you define. The Salary & Wages group line is added under the Cost of revenues or Operational expenses groups in your budget tree.

Employee budget line types in the Salary & Wages group let you define and enter employee data and general assumptions for employee-related accounts relating to all of the components of employee salaries and wages; like benefits, payment terms, yearly vacation days, or additional compensation. You can capture employee-related expenses for one employee at a time, or you can create budget lines that represent expenses for multiple employees.

Employee budget line types include:

  • Employee

  • Multiple employees (existing and new hires)

  • Allocated employee

  • Transferred employees

Employee

Used to enter employee data per employee, like Role, Employee ID, and Base Salary. You can also use the employee budget line to add employee benefits and see a detailed or summary view in the cash or P&L preview pane. The Hire date and End date fields provide the employee date range to account for employees that are new hires, or employees that have left or have been transferred during the fiscal year.

Multiple employees (existing and new hires)

Used to enter one budget line to represent multiple employees in a group. From this budget line type, you can average out the estimated costs for a group of employees like, for example, Software engineers. As you enter data for the group, the salary and wages amounts are multiplied by the number of employees in the group. You can choose to add employee data for projected new hires, or for existing employees in your group.

Allocated employee

Used to split employee time and costs, by percentage, across different locations, departments, or multiple projects in your company. So, if you have an employee that works in two different departments, for example, the employee can be added in two different places in your budget tree. The first department is the primary position, and the second department is the allocated one. The Allocated from field of the budget line template lets you choose the location or department from where the employee’s time is allocated, and you can add the allocation percentage.

Transferred employee

Used to budget for employees that transfer to a different department or location during the budget period. The Transferred from field of the budget line template lets you choose the budget line from which the employee is transferring and the date of the transfer. The primary line displays the start date of the employee before the transfer.

Salary & Wages budget group lines and employee expense budget lines within the group can be viewed in your headcount sheet according to the number of employees and their costs. In addition, you can see your employee costs in the Cash and P&L sheets. You can also see your employee expense budget lines displayed in a table format from the Employees tab of the Inputs > Tables view.

For more information on working with Salary & Wages, see Get started with employees and Map and manage imported employee-related GL accounts .

Professional services

Professional services can be any organization or profession that offers customized, knowledge-base services to clients (an “expert”). The Professional services budget group line type represents the cost of hiring professionals with specific skills to help plan, design, implement and manage technology projects and systems.

Similar to the Salary & Wages budget group line, Professional services serves as its own budget group line in your budget and is viewed in your headcount sheet.

Contractor

A person that is external to the hiring company and is hired to perform work or to do a certain role and provide goods at a certain rate, or for a period of time. A contractor can be compensated by time (e.g. hourly), by hours per month, on a monthly basis, or even over an extended period of time with a yearly increase (if it applies).

The contractor budget line can be viewed in your headcount sheet, as well as under the Employees tab of the Inputs > Tables view.

Past balances

Payments that remained unpaid through a given period.

Pre-payments

Payments that are made in advance, before they're officially due.

Assets

Valuables and property owned by your company. Assets are resources owned by a company and which have future economic value that can be measured and expressed in dollars. Assets can be current or fixed (non-current). Current means that the asset is consumed within one year. Generally, this includes things like cash and inventory. Fixed assets are those that are expected to keep providing benefit for more than one year, such as equipment and real estate.

Accounts payable

Money you owe and need to pay to vendors.

Accrued compensation

Salaries that employees have earned, but have not yet been paid to them at the end of the reporting period. (This is considered a liability.)

Other current liabilities

A balance sheet item that refers to the group of liabilities that have not been assigned to other budget lines.

Other long-term liabilities

A balance sheet item that includes obligations which are not going to be paid off within the year or operating cycle, but are not included in the long-term liabilities category. For example, future employee benefits not requiring interest payments that need to be paid over a period of more than one year.

Other current assets

The company's assets that don't include cash, securities, receivables, inventory, and prepaid assets. These assets can usually be converted to cash within one business cycle.

Other long-term assets

The company's non-current assets, which aren't intended to be turned into cash or to be consumed within one year of the balance sheet date. Long-term assets include long-term investments, property, plant, equipment, intangible assets, and so on.

Other shareholders equity

Measures your company's net worth. It is the net amount of your total assets minus your total liabilities by which a company is financed through common and preferred shares.