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Version: Current

Deep Dive: Budgets Module

Introduction​

Zudello's Budgets module provides a powerful tool for financial control and compliance within the Procure-to-Pay (P2P) process. It allows businesses to define budgets across various dimensions, track spending against these budgets in near real-time, and automate approval workflows based on budget impact. This helps prevent overspending, ensures financial accountability, and provides valuable insights into spending patterns.

This guide covers the core concepts, configuration, evaluation logic, and automation capabilities of the Budgets module.

See also: Zudello v3 Architecture Overview

Core Concepts​

Budgets and Budget Lines​

  • Budget: A container representing an overall budget plan, typically defined for a specific period (e.g., Financial Year 2025). It includes header information like name, owner, period, and evaluation method.
  • Budget Line: A specific line item within a Budget, defining the budgeted amount for a unique combination of Dimensions (e.g., Department 'Sales' + Account 'Travel') over a specific period or interval. Transactions are evaluated against these individual Budget Lines.

Budget Dimensions​

  • Budgets are defined against specific business dimensions (e.g., Department, Location, Project, GL Account, Cost Centre, Supplier).
  • You configure which dimensions apply to a Budget at the header level.
  • Each Budget Line must have a value for each configured dimension to uniquely identify the budget allocation.
  • Transactions are matched to Budget Lines based on the coding applied to the transaction lines matching the dimension combination on the Budget Line.

Budget Types: Set vs. Interval​

  • Set Budget: A budget defined with a single overall amount for the entire Budget Period. The budget_interval is set to Total.
  • Interval Budget: A budget broken down into specific time intervals within the overall Budget Period (e.g., Monthly, Quarterly, Weekly). Each interval within a Budget Line has its own budgeted amount. This allows tracking spending against shorter timeframes.

Budget Evaluation Methods​

This setting determines how spending is compared against the budgeted amount, especially for Interval Budgets.

  • Current: Compares spending within a specific interval only against the budget amount allocated to that interval. Previous over/underspending is ignored.
    • Example (Monthly Budget): July's spending is compared only against July's budget amount.
  • Rolling: Compares cumulative spending up to and including the current interval against the cumulative budgeted amount up to and including that interval. Over/underspending from previous intervals is carried forward.
    • Example (Monthly Budget): July's cumulative spending (Jan-Jul) is compared against the cumulative budget amount (Jan-Jul).
  • Total: Compares spending within any interval against the total budgeted amount for the entire Budget Line across all intervals. Allows "borrowing" from future periods.
    • Example (Monthly Budget): July's spending is compared against the total annual budget amount for that line.

See Configure Budget Dimensions & Evaluation Method.

Budget Impact Categories (Spend Categories)​

Zudello categorizes the financial impact of transactions on a budget based on the transaction's type and status. This provides a more nuanced view than just "actual spend."

  • Actual Spend: Finalized costs hitting the budget. Typically includes COMPLETE status Invoices and Credits (reducing the actual spend).
  • Committed Spend: Spend that has been approved and committed (e.g., a placed Purchase Order) but not yet invoiced/actualized. Represents future obligations against the budget. Typically includes COMPLETE status Purchase Orders (minus amounts already allocated to Invoices).
  • Pending Spend: Spend currently undergoing approval. Represents potential future commitments or actuals. Typically includes transactions with an APPROVAL status type.
  • New Spend: Spend entered into Zudello but not yet submitted for approval. Represents the earliest visibility of potential budget impact. Typically includes transactions with REVIEW or READY statuses.

The specific statuses included in each category can be configured per team. See What are Budget Impact Categories?.

Budget Exceptions​

When a transaction's impact causes a budget rule violation, a Budget Exception is triggered.

  • Over Budget: The transaction causes the Allocated Amount (Actual + Committed + Pending + New) for the relevant Budget Line and period (based on Evaluation Method) to exceed the Budgeted Amount.
  • Out of Budget: The transaction is coded to a dimension combination that should have a budget line, but no active budget line exists for that combination and period. (Indicates missing budget setup).
  • Off Budget: (Less common) The transaction matches some, but not all, required dimensions for a budget, indicating potential miscoding or an attempt to spend against an unbudgeted activity within a budgeted area (e.g., unbudgeted travel for a budgeted project).

See Configure Budget Exceptions.

Configuration​

Budgets are configured via Settings > Budgets.

  1. Create Budget: Define Name, Owner, Period, Interval, Evaluation Method, and select Budget Dimensions.
  2. Add Budget Lines: For each unique combination of the selected dimensions, add a line and enter the budgeted amount(s) for the relevant interval(s). Assign Budget Line Owners if needed for approvals.
  3. Configure Spend Categories: (Optional) Customize which transaction statuses contribute to each spend category (Settings > General > Spend Categories).
  4. Configure Budget Exceptions: (Optional) Define rules for triggering Over/Out of/Off Budget exceptions (Settings > Budgets > Budget Exceptions). Configure warning messages and whether a reason is required on submission.
  5. Activate Budget: Ensure the Budget status is set to Active for it to be evaluated.

Budget Evaluation Process​

  1. Transaction Coding: A user codes a transaction line with relevant dimensions (Department, Account, Project, etc.).
  2. Budget Line Matching: Zudello searches for an Active Budget Line where:
    • All Budget Dimensions match the transaction line's coding.
    • The transaction's date_issued falls within the Budget Line's period/interval.
  3. Budget Impact Calculation: If a match is found, Zudello calculates the impact based on the transaction's total_exclusive_local amount and its status type, adding it to the relevant Spend Category (Actual, Committed, Pending, New) for that Budget Line.
  4. Budget Card Update: The Budget Card View displayed on the transaction updates in near real-time, showing:
    • The matched Budget Line(s).
    • The Budgeted Amount (based on Evaluation Method: Current, Rolling, or Total).
    • The Allocated Amount (sum of Spend Categories).
    • The Remaining Amount (Budgeted - Allocated).
    • A breakdown bar showing the contribution of each Spend Category.
  5. Exception Check: Zudello evaluates the impact against configured Budget Exception rules. If an exception is triggered (e.g., Remaining Amount becomes negative), the exception flag is set on the transaction.

See Budget Evaluation Process.

Budget Card View​

The Budget Card provides immediate visibility of a transaction's impact.

  • Access: Click the budget icon in the transaction header (if budgets are configured and matched).
  • Displays: Shows one card per matched Budget Line. Each card details the Budgeted, Allocated, and Remaining amounts, plus the spend category breakdown for the relevant period (Current, Rolling, or Total based on configuration).
  • Alerts: Highlights exceptions like "Over Budget".

See Using the Budget Card View.

Automating Budget Approvals​

Sentences can be used to create custom approval workflows based on budget impact.

  • Trigger: Typically "When a resource is submitted" or "When a resource status has changed".
  • Conditions:
    • Budget Exception | Is Set (or Equals | Over Budget, Out of Budget, etc.)
    • Remaining Amount (Budget) | Less than | 0
  • Actions:
    • Get Approval from:
      • Budget Owner: Routes to the owner defined on the Budget header.
      • Budget Line Owner: Routes to the owner(s) defined on the specific matched Budget Line(s).
      • Specific User/Group (e.g., Finance Team).
    • Set Field (e.g., set Status to BUDGET_REVIEW).

This allows routing transactions that exceed budget limits for specific review and approval before they proceed. See Automation with Sentences.

Reporting and Analysis​

(Note: Advanced reporting features are under development)

  • Current: Budget impact is primarily viewed transactionally via the Budget Card.
  • Future: Dedicated Budget Reports will allow:
    • Viewing overall budget performance (Budget vs. Allocated/Actual).
    • Drilling down into specific Budget Lines and dimensions.
    • Analyzing variances between budgeted and actual spend.
    • Filtering by period, dimension, exception status, etc.

See Reporting and Dashboards.

The Budgets module provides essential financial controls, enabling businesses to manage spending proactively, enforce compliance, and gain clearer insights into their financial performance throughout the P2P cycle.