Reviewing budgeted amounts

Because the budgeted amounts that accounts are charged under budget billing plans are different from their actual charges, it is important to monitor the plans to ensure that the budgeted amounts are as accurate as possible.

There are two main ways to do this in Review Budget Billing.

First, you can compare an account’s actual charges as of the current date to the total actual charges as of the same date last year. If these amounts are about the same, the budgeted amount is likely to be accurate.

Review Budget Billing shows the comparison as a percentage in the Actual % column, using the color codes defined for the budget billing plan. The percentage is the ratio of the current year’s actual charges to the previous year’s. For example, if the current actual charges are $250 and the actual charges as of the same date last year were $200, the actual percentage is 125%. Anything over 100% indicates that the current year’s charges are greater than last year’s, and anything under 100% indicates that the current year’s charges are less than last year’s. If the ratio is about 100%, the account is probably being charged the correct amount.

Review Budget Billing also shows the current variance for each plan. The variance is the cumulative difference between the budgeted charges and the actual charges for the current plan year. The variance is shown both as a percentage and as a dollar amount. The percentage is the ratio of the actual charges to the budgeted charges for the current plan year.

Again, anything over 100% indicates that the actual charges are greater than the budgeted charges, and anything under 100% indicates that the actual charges are less than the budgeted charges,. For example, if a plan’s total actual charges for the current year are $300, and the total budgeted charges are $400, the variance percentage is 75%, and the dollar amount is -$100.

When reviewing variances, keep in mind that the variance is expected to change throughout the year. For example, a variance of 150% during the fall and winter months will likely be balanced by high bills during the summer, so the time of year is an important consideration. By considering the actual percentage, the variance, and the time of year, you can get a good sense of which accounts must have their budgeted amounts recalculated.