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As the name suggests, 3-statement budgeting involves budgeting for three financial statements; the Profit and Loss (P&L), Balance Sheet and Cash Flow. In Budgets and forecasts, you can actively budget for the P&L and Balance Sheet and from those budgets you derive (infer) your Cash Flow budget.
Image RemovedFor a specified financial period:
The P&L budget shows the expected value of your income and expenses. This is the main budget, for which you create the budget workbook initially.
The Balance Sheet budget shows the expected value of your assets, liabilities and equity. You can add this budget as a new tab in the main budget workbook.
The Cash Flow budget explains how you get from the start of your cash position to your ending cash position. You get to the end position by earning income (such as cash receipts from customers) and spending that income (such as paying for expenses) throughout the year. To put it simply, the Cash Flow shows where your money is coming from and what you are spending that money on. In Budgets and forecasts, your Cash Flow is entirely inferred; it is calculated automatically based on how the P&L and Balance Sheet move. This budget becomes available when you add the Balance Sheet budget. If you choose to include it, it displays as another tab in the main budget workbook.
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Please note that some elements in the video look different to how they currently look, due to design changes. However, the process is the same. Create a Balance Sheet budget.mp4 |
Add a tab in your Profit and Loss budget for your Balance Sheet budget tab and automatically derive your Cash Flow budget for 3-statement budgeting.
Create or open the financial budget workbook, then add the tab using one of these methods:
Click the Tab menu > Add tab > Balance Sheet.
Click the Add button at the bottom of the
workbook and select Balance Sheet.
Set up the Balance Sheet tab type and click Add.
Image Removedand Cash Flow as follows:
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This template creates a Cash Flow budget on a separate tab in the workbook.
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This step is applicable if you selected the Include mini drivers… checkbox in the previous step. Otherwise, you can ignore it and proceed to the Retained Earnings mapping step. You can add four types of drivers. This part of the setup can be complex, so see Use mini drivers in the Balance Sheet budget for detailed information. Image AddedAfter you add the drivers, click Next. |
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Proceed to explore your new Balance Sheet and Cash Flow budgets, which
are displayed in separate worksheet tabs.
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Please note that some elements in the video look different from how they currently look, due to design changes. However, the process is the same. Create a Balance Sheet budget.mp4 |