Budget vs Actual

What Is Budget vs Actual Analysis?

Budget vs actual (BvA) analysis is the comparison of budgeted financial figures to actual results. This fundamental financial analysis helps organizations understand:

• Are we meeting our financial targets?
• Where are we over or under-performing?
• What’s driving the differences?
• Do we need to adjust plans or operations?

BvA analysis is typically performed monthly and covers revenue, expenses, and key metrics.

Components of BvA Analysis

Budget

The financial plan for the period:

• Revenue targets
• Expense budgets by department/category
• Capital expenditure plans
• Headcount plans

Actual

The real financial results:

• Recorded revenue
• Incurred expenses
• Actual spending
• Current headcount

Variance

The difference between budget and actual:

Variance ($) = Actual - Budget
Variance (%) = (Actual - Budget) / Budget × 100

Prior Year

Often included for context:

• Same period last year
• Year-over-year growth
• Historical trending

BvA Report Structure

A typical BvA report includes:

Line Item	Budget	Actual	Variance $	Variance %	Prior Year
Revenue	$500K	$485K	($15K)	-3.0%	$450K
COGS	$200K	$210K	($10K)	-5.0%	$180K
Gross Profit	$300K	$275K	($25K)	-8.3%	$270K
Operating Exp	$150K	$145K	$5K	3.3%	$140K
Net Income	$150K	$130K	($20K)	-13.3%	$130K

Parentheses indicate unfavorable variances.

BvA Analysis Levels

Summary Level

High-level performance overview:

• Total revenue vs. budget
• Total expenses vs. budget
• Net income vs. budget

Department Level

Performance by organizational unit:

• Each department’s spending vs. budget
• Department-level revenue contribution
• Headcount and productivity

Line Item Level

Detailed account-by-account analysis:

• Individual expense categories
• Specific revenue streams
• Supporting detail for drill-down

Dimensional Analysis

Cut the data different ways:

• By product or service line
• By customer segment
• By geographic region
• By project or cost center

Conducting Effective BvA Analysis

1. Prepare the Data

• Close the books for the period
• Ensure budget is loaded correctly
• Map accounts consistently

2. Calculate Variances

• Compute dollar and percentage variances
• Flag significant variances (material thresholds)
• Identify favorable vs. unfavorable

3. Investigate Significant Variances

For each material variance:

• What caused it?
• Is it timing or permanent?
• Is it controllable?
• What action is needed?

4. Prepare Variance Commentary

Document explanations:

• Clear, concise descriptions
• Quantify contributing factors
• Identify responsible parties
• Recommend actions

5. Present Findings

Share with stakeholders:

• Executive summary
• Detailed backup
• Action items and owners

Common Variance Drivers

Revenue Variances:

• Volume (more/fewer units sold)
• Price (higher/lower average price)
• Mix (different product proportions)
• Timing (deals closed earlier/later)

Expense Variances:

• Spending (more/less than planned)
• Timing (expenses earlier/later)
• Volume-driven (variable costs with activity)
• One-time items (unplanned events)

BvA Best Practices

1. Timely analysis: Complete within days of period close
2. Consistent methodology: Same approach each period
3. Materiality focus: Prioritize significant variances
4. Forward-looking: What does it mean for forecast?
5. Action-oriented: Every variance should have a response
6. Accessible format: Clear for non-finance audiences

How Go Fig Transforms BvA Analysis

Go Fig automates and enhances budget vs actual reporting:

Automated reports: BvA generated automatically when actuals are available

Real-time updates: See performance vs. budget throughout the month

AI explanations: Celeste analyzes and explains variance drivers

Drill-down capability: Click any number to see contributing detail

Multi-system consolidation: Combine actuals from multiple ERPs

Excel delivery: BvA reports sync directly to your Excel templates

Forecast integration: Compare to both budget and rolling forecast