5 Budgeting Basics in D365

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Corporate budgeting, the process in which a business estimates its finances for the foreseeable future, is vital to plan a business’s operations. Budgeting for a mid- or large-sized business can be riddled with complexity. However, finding the simplest course of action can decrease the number of things that can go wrong. It can also focus staff efforts on what’s more important. Using a tool like budgeting in D365 for Finance and Operations can simplify how you create and manage your budget by fully leveraging the fundamentals of budgeting to benefit your organization.

Below are our five basics that the module for budgeting in D365 addresses that will help you improve the budgeting process, mitigate headaches and maximize positive outcomes.

  1. Budget Planning

A budget plan document supports both a long-term strategic planning and annual budget planning. Budget plans themselves encapsulates the budget data for a budget cycle. The process of budget planning outline how budget plans are routed, updated, reviewed and approved in the budgeting organization hierarchy. Your organization can configure budget planning, and then set up budgeting planning process to meet its policies, procedures, and requirements for budget preparation.

Budgeting in D365 simplifies the generation of the budget planning document. When creating a new budget plan, you are able to easily access data from areas of functionality such as the general ledger, fixed assets, project forecasts, etc.

First, we recommend that you create a schema that reflects your organization’s process for formulating a budget. In the module for budgeting in D365, you can create a schema that outlines the tasks and workflows that move within and between your departments.

Planning workflows are used in conjunction with the budgeting workflows to manage the development of budget plans. Planning workflows organizes the stages that a budget plan moves through. Then budgeting workflows routes the budget plans together with worksheets, justifications, attachments, through the organization for review and approval.

  1. Know how much has been spent

To form a successful plan of what needs to be spent in the upcoming year, you need an accurate panorama of how much has been spent among all your departments. Your financial tools should be able to consolidate data regarding revenue and operational costs.

Budget plans can be generated from the following resources natively integrated within D365 for Finance and Operation:

  • General ledger transactions
  • Fixed assets
  • Forecast positions
  • Project forecasts
  • Supply forecasts
  • Demand forecasts
  • Budget register entries
  • Other budget plans
  1. Budget Control

Budget control is fully integrated in D365. This allows you to evaluate the available budget for planned and actual purchases at any point in the budget cycle. You can make any required adjustments in the form of budget revisions or transfers.

Your team can configure budget control according to the following factors:

  • Financial dimensions – determine the dimensions that are needed to track budget and actuals
  • Time – demarcate the time frame used to evaluate available budget funds that you can use to align with your fiscal calendars
  • Source Documents—select documents that must be evaluated for budget control and if the documents should be evaluated per line or per document
  • Funds available calculation—decide if documents such as purchase requisitions and purchase orders be considered in the calculation of available funds and if documents that are in a draft state be considered in the calculation
  • Override permissions—assign permissions to certain staff to have the capability to exceed the available budget

Once these configurations are made active, users will begin to receive warning and error messages for actions such as exceeding budget funds.

  1. Position Forecasting

Position forecasting uses three main components to provide accurate budget amounts for position expenses. These amounts can be brought into a budget plan for budget calculations.

The forecast position, which is the primary component, represents all the cost data associated with a single position. Multiple versions are created by assigning a different budget plan scenario to each version. These multiple versions enable an iterative approach to budgeting and lets you compare what-if scenarios.

Budget cost elements and compensation groups are the other two components to position forecasting.

A budget cost element, a setup component, represents a specific cost related to a position (i.e. base pay, travel expenses, et cetera), which also includes the main account used for cost and options for calculations. Each budget cost element can be assigned to multiple forecast positions.

A compensation group is an optional setup component used to apply a set of budget cost elements and pay calculations to job positions that have similar pay characteristics.

Budgeting in D365 makes this basic process easier by giving you the option to copy an existing forecast position. However, if you need to create a completely new forecast position, Dynamics provides all the data fields, HR integrations and finance and operations functions you need to accomplish that.

  1. Budgeted Balance Sheet

To give you a comprehensive view of your overall balances, D365 for Finance and Operations offers two default balance sheet reports. The first balance sheet format shows sections as stacked, highlighting the organization’s financial position for the year. The other default balance sheets organize information in a side by side manner, providing the financial position for the year, but also showing assets, liability and shareholder’s equity.

Budgeting in D365 makes it easy to create a new report or modify an existing report. A report designer is available for you to download onto your device, in which you can create a new report that appears in the financial reports list for your company.


Setup, configuration and managing the development of budgets have a lot of moving parts. The technological aspect of creating and maintaining a budget should enable a strong financial department, not hinder it. This blog post only touched on a few of the budgeting basics that D365 enables, but to learn more and to get your questions answered in a live format, register now for our webinar on December 17.

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