As the name suggests, 3-statement budgeting involves budgeting for three financial statements in a specified financial period:
TheAdd a tab in your Profit and Loss
(P&L) budget - 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 - 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.
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. You can take advantage of built-in mini drivers to represent the links between your three statements.
Image RemovedWhen the budgeting process is complete and you publish the P&L and Balance sheet budgets, you can create a forecast that includes all three statements.
Image RemovedCreate a Balance Sheet and Cash Flow budget
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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 |
Create or open the financial budget workbook.
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:
the worksheet 
Image RemovedSet up the Balance Sheet and Cash Flow as follows:
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Select the Balance Sheet Template. This template determines the layout of the Balance Sheet budget. The options available depend on the types of Balance Sheet statements your organization has created in the Financial Statements module. If your organization only uses one Balance Sheet template, it will be applied by default.
Set the Balance Sheet budget hierarchy Levels.
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cannot thisIf , you will not be able to add levels here. . Where levels are available, you can have fewer levels in your Balance Sheet than are in your P&L. For example, you might want to do your Balance Sheet and Cash Flow budgets at the company level but include your company and branch in your P&L. To add a level, click Add level, then select the dimension you want to add at that level. The dimensions that are available in the list correspond to the levels in the P&L budget setup. If you add multiple levels, you can reorder those levels to determine how the dimensions are grouped in your Balance Sheet budget. Click and hold the level's Move button (a blue box displays around the row), then drag the level up or down to its new position.
(Optional) Select the Cash Flow Template. This template creates a Cash Flow budget on a separate tab in the workbook. The values in the Cash Flow budget are automatically derived from the values in the P&L and Balance Sheet budgets. The budget hierarchy levels are inherited from the Balance Sheet budget but if available, you can add custom levels that will help you to group your Cash Flow statement.
Select the opening balance Stream. This is the stream from which your Balance Sheet values come. In most cases, this is the Balance Sheet stream but you might have other options to choose from. (Optional) Change the opening balance start date (previous Period End date). By default, this date is selected for you, as it is linked to the start date of your P&L budget setup. For example, if your budget period is April 2023 to March 2024, the Balance Sheet opening balance date is the month
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prior to before that period, March 2023. This date must be on or before your Balance Sheet budget period start date, as it informs the initial opening balance for your Balance Sheet budget and enables changes (movements) to be entered to create a sensible budget opening position. When the Balance Sheet budget starts in a future month, the opening balance helps you to form the bridge between the last closed period and the beginning of the budget period. You can change this date in the future. For example, when you're in the budget period, you can actualize your Balance Sheet by bringing in the actual opening position for that budget period.
(Optional) Change the Measure. By default, the measure is selected for you, as it is linked to the stream you selected in step 5. The measure is typically the same as the measure used in the P&L budget.
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Image RemovedSet the measure format (prefix, decimal, and suffix) to determine how the measures (numerical values) display in the grid.  Image Added(Optional) Select the Include mini drivers… checkbox
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if you want to add drivers to the Balance Sheet. For more information about this feature, see Use mini drivers
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to , then proceed to set up the mini drivers.Click Next.
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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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| title | Retained Earnings mapping |
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Map the entities in the selected dimension to the Retained Earnings account(s). This setting determines the General Ledger Retained Earnings account code(s) in the Balance Sheet budget to which the profit from the P&L budget is allocated. Retained Earnings represent the equity of the business (what the business is worth). If you have no levels in the budget, such as in the case of a consolidated Balance Sheet budget, you will only have one Retained Earnings account to map. Otherwise, you might have multiple accounts to map. Depending on your account structure, you can use the same Retained Earnings account for several entities or use different accounts as required. If you have a lot of entities, you can filter the list of entities and/or select the Not mapped option from the All dropdown list on the top right to help you complete the mapping.  Image ModifiedTo map one entity, click the yellow box on the right and select the account from the list that displays. To map multiple entities to one account, select the checkboxes of those entities or click the Select all button in the top left corner of the grid, then select the account from the list that displays.  Image Modified
Click Next.
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| title | Cash account mapping |
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Map the entities in the selected dimension to the Cash account(s). This setting determines the General Ledger account code(s) in the Balance Sheet budget that captures all the changes to cash. Depending on your account structure, you can use the same General Ledger Bank account code for several entities or use different
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codes accounts as required. Typically, you use a separate bank account for each entity. If you have no levels, such as in the case of a consolidated Balance Sheet budget, you will only have one bank account to map. Map entities on the left to the Cash account code on the right
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, in the same way Create Balance SheetProceed to explore your new Balance Sheet and Cash Flow budgets, which
display are displayed in separate worksheet tabs.
Create a 3-statement forecast
After you complete the budgeting process for the three statements, you need to publish both the Main tab and the Balance Sheet tab. You can then proceed to create the forecast in the usual way, with an extra step to cater for the Balance Sheet budget. In the forecast workbook, in addition to the main (P&L) forecast, you will see the Balance Sheet and Cash Flow forecasts in separate tabs.
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