With Payhawk, you can import your budgets from your Financial planning and analysis (FP&A) tool, share them with their budget owners, monitor their real-time utilization, and reforecast the data if needed.
In Payhawk, you can import your existing budgets by downloading the template file, filling in your budget data in the required format, assigning the budget owner by providing their company email in the file, and, then, uploading the file back to the system.
All purchase orders (PO) and expense requests that are linked to that budget in the system will automatically be utilized to a given budget when the expense is approved or reviewed with the respective budget dimensions. In the same way, approved POs will affect the committed spend of a budget based on their fields.
Corporate budgeting
Corporate budgeting is a detailed financial plan outlining the expected revenues, expenses, and capital expenditures of a company over a specific fiscal period.
Budgeting is about how much a company should spend, in what way, and on what. This makes it one of the most important strategic tools for helping businesses achieve their goals. With a well-crafted budget, your company can ensure that its financial resources are allocated to support its overall strategic objectives such as cost savings, revenue growth, or market expansion.
Budgets in Payhawk
The budgets feature in Payhawk is intended to work in unison with your FP&A tools by acting as their extension and providing Budget owners with visibility over their budgets and real-time utilization overview.
Benefits
Using budgets in Payhawk boosts productivity for your budget owners and Finance team:
Budget owners have a real-time overview of budget utilization and are spared the. back-and-forth on budget utilization alignment. The available custom breakdowns and analytics enable them to make the right decisions, which, in turn, leads to fewer variances for the Finance team to address each month.
The pressure on the FP&A team is alleviated and your Finance team can focus on strategic planning rather than administrative tasks as they can import and manage your company budget directly in the portal.
Combined with the powerful capabilities of the approval workflows in Payhawk, budgets empower your non-finance managers.
Payhawk's budgets can foster a culture of distributed ownership, decentralized accountability, and delegated financial responsibility thus helping your company establish reporting standards to drive consistency and align spend with strategic planning.
Budgeting with vs. without Payhawk
The following diagrams visualize how and where Payhawk's budgets fit in the bigger picture of corporate budgeting for your company.
The Budgets app
Payhawk's Budgets app is your centralized hub where you can import your budget, forecast, and create a new budget from scratch directly in the portal as well as reforecast an existing budget.
Criteria for assigning expenses to Payhawk budgets and forecasts
For expenses to be included in a budget or forecast, they must be either approved or reviewed.
The system prioritizes the service period when allocating expenses. If the service period is unavailable, it will use the document date. In the absence of both, the system will assign the expense to the appropriate budget based on the date the expense was created.
Utilized, committed, and available budget
Each Payhawk's budget comprises utilized amount, committed spend, and available funds.
Utilized amount
The funds that have already been spent from your budget. Payhawk administrators and Budget owners can view budget utilization as a percentage and as absolute values in the Budgets app. For example, you have a budget of EUR 100 and you have spent EUR 20. Your budget utilization is EUR 20 or 20% of your total budget.
Card expenses, bills, mileage, per diems, and reimbursements will be deemed utilized if an expense is approved or reviewed. The budget will be recalculated each time either of these happens in the system.
If an invoice is related to a purchase order, the committed amount based on the purchase order amount will be adjusted. For example, if you have a purchase order for EUR 1,000, the committed spend will be EUR 1,000. If a related invoice for EUR 300 is approved, the utilized amount will be EUR 300 while the committed spend will be reduced to EUR 700.
Committed spend
The committed spend is the money you have committed to paying at some point, which hasn’t left your account yet, including approved purchase requests and approved fund requests, as well as subscriptions:
Multiple lines of an approved purchase request can affect multiple budgets.
Subscriptions are included in the committed spend based on their due date and are related to the respective budget based on the last reviewed expense of that subscription.
Subscriptions with a due date of that month use the categorization of the last reviewed expense for this subscription. The amount will no longer appear in the committed spend and will move to the utilized amount once the expense is approved as it’s a card expense. Yearly or quarterly subscriptions will be deemed utilized based on the last reviewed expense.
Available funds
The funds that are left after the utilized amount and committed spend are deducted from the budgeted or forecasted funds.
Terms and definitions
Except for parent budgets, each budget in Payhawk has to have dimensions. All budgets can be adjusted and revised throughout the fiscal period.
Budget dimensions
Budget dimensions are the parameters or attributes based on which the budget is predicted. Payhawk administrators determine all budget dimensions in the template file they import into Payhawk.
Each budget has to have at least one and can have multiple dimensions. For example, a Marketing budget may use the Team, Region (sub-teams), and Category dimensions.
Forecasts
Forecasts are iterations on a fiscal-year budget, which you can make an unlimited number of times throughout that fiscal year - for example, you may change budget owners, add new forecasts, or remove existing ones. Whenever you want to create a new forecast in Payhawk, you can download the template file, fill in the desired data, and upload it again. Past forecasts will appear within the respective utilization amount.
For example, you have budgeted EUR 100 for each month throughout 2024, but on 1 April you notice that from January until March you’ve spent EUR 420 instead of EUR 300. Now, you have to edit your budget for the April-December period to make sure you don’t overspend. You can name your new forecast in Payhawk Revised Q2 2024, and then in Q3, you can use that template to create a new revision.