What is a Top-down Profit & Loss Budget Form?
Top-down Profit & Loss (P&L) budget models are considered what-if, break-back or modeling (depending on who you ask) templates and are used by budget managers and analysts to quickly create budget or forecasts scenarios. One key functionality used in this type of budget model includes the ability to automatically calculate revenues and expenses for all departments and GL accounts. The user can enter the target profit on the top of the form. The formulas then dynamically calculate all the rows and spreads the annual amounts across the months. It can use a flat spread or follow calculations based on last year’s seasonality. Each account (row) can also be adjusted up or down if unique treatment is required. You will find an example of this type of budget model below.
Purpose of Top-down P&L Budget Forms
Companies and organizations use Top-down P&L Budget Forms to allow a budget manager to easily and rapidly create one or more P&L budget versions. When used as part of good business practices in a Financial Planning & Analysis (FP&A) Department, a company can improve its scenario planning capabilities as well as reduce the risks associated with classic bottom-up budgets that drag out the budget process, or when a company only has time to create a single budget scenario.
Top-down P&L Budget Form Example
Here is an example of a P&L budget input form with various features such as comments, spreading, and etc….
You can find 100’s of additional examples here.
Who Uses This Type of Budget Model?
The typical users of this type of budget model are: CFOs, Budget Managers, and Department Heads.
Other Budget Models Often Used in Conjunction with Top-down P&L Budget Forms
Most Financial Planning & Analysis (FP&A) Departments use several different Top-down P&L Budget Forms, along with classic bottom-up budget forms, often covering detailed templates for payroll, capital expenses, sales and other management and control tools.
Where Does the Data for Analysis Originate From?
The Actual (historical transactions) data typically comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Netsuite and others.
In analyses where budgets or forecasts are used, the data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions.
What Tools are Typically used for Reporting, Planning and Dashboards?
Examples of business software used with the data and ERPs mentioned above are:
- Native ERP report writers and query tools
- Spreadsheets (for example Microsoft Excel)
- Corporate Performance Management (CPM) tools (for example Solver)
- Dashboards (for example Microsoft Power BI and Tableau)
Corporate Performance Management (CPM) Technology Solutions and More Examples
- View 100’s of reporting, consolidations, planning, budgeting, forecasting and dashboard examples here
- Discover how the Solver CPM solution delivers financial and operational reporting
- Discover how the Solver CPM solution delivers planning, budgeting and forecasting
- Watch demo videos of reporting, planning and dashboards