Understanding Analytic and Financial Budgets in Odoo

Analytic budgets allow you to track specific activities, projects, and departments using analytic accounts. This helps you make better decisions about a particular group of transactions that you prefer. With analytic budgeting, you can track expenses and income in full detail, ensuring you always know if you are following the budget and not overspending, for example.

Your analytic budgets can be split into 3 categories:

• Expenses: Allows you to keep track of expenses linked to the analytic budget.
• Revenue: Keeps track of income linked to the analytic budget.
• Both: As the name suggests is a mixture of expenses and income linked to the budget.

Before starting to use the analytic budgets, it is important to keep in mind that the analytic plans and accounts need to be configured.

The analytic plans are a grouping of analytic accounts that will track expenses and revenue, and then these will be linked to the analytic budget. Make sure that the right analytic accounts are linked to the analytic plans for the budget to work. For more information about analytic accounts and plans, you can check the following article: https://www.erpgap.com/blog/analytic-accounting/

After configuring everything, it is time to create your budget. In the top bar, click in Accounting and select Analytic Budget.

This will open the budgets page, where you can see every budget that exists in the database.

You can create a new one by clicking on the New button on the top left of the page.

Analytic budgets in Odoo can be structured across multiple layers to provide detailed financial insight. Here is an example using a business that structures its budgets across three layers:

1. Sales Channel: This is the primary dimension of the budget. It is mandatory, meaning no transaction can be recorded without assigning it to a core revenue stream. This analytic plan tells us which core revenue stream a transaction belongs to. Every transaction must be linked to one Sales Channel analytic account such as Physical Retail, E-Commerce, Wholesale, Direct to Consumer, Trade, and Export.
2. Business Unit/Site: The second mandatory layer identifies where the activity is happening. This analytic plan allows us to analyze profitability and costs by location or internal function. Each transaction must be assigned to exactly one site or unit. Includes analytic accounts like Bridgemere or Burford, as well as Marketing, Logistics, and Manufacturing
3. Operational Dimension- Projects and Capex: Unlike the first two layers, this dimension is conditional. It is only used when a transaction is linked to a specific, time-bound project or a capital expenditure (Capex). Specialized investments such as a Mould Shop setup, a New Office build-out, or an Interior showroom/range relaunch are the analytic accounts for this analytic plan.

Practical Example: The Bridgemere Retail Budget

To see multi-layer budgeting in action, let’s look at the Physical Retail: Bridgemere Budget. Instead of a flat total, the budget is built by layering specific dimensions to provide a complete picture of expected revenue.

• Layer 1: Primary Dimension (Sales Channel): The top-level view starts with the broad channel. In this case, Physical Retail is assigned a baseline budget of $50,000. This represents general revenue expectations for that channel before drilling down into specific locations.
• Layer 2: Business Unit / Site: To refine the budget, we look at specific locations. The Bridgemere site is allocated $20,000. By separating this, management can track the performance of this specific site independently from the broader retail channel.
• Layer 3: Operational Dimension (Projects and Capex): The most granular layer focuses on specific activities or internal departments. Here, the budget accounts for specific operational units: Mould Shop: $5,000 New Office: $3,000

By structuring the budget in layers, the $78,000 total is easier to understand and analyse.

This structure allows the company to see exactly where the money is coming from and where it is being allocated. If the “Bridgemere” site underperforms, or if the "New Office" project goes over budget, the business can identify the exact "layer" where the deviation occurred and react accordingly.

Let’s imagine that we have a sales order, the popup window in the image below is where the user confirms exactly how much of the Sales Order value hits which budget.

By assigning an Analytic Distribution directly on the Sales Order lines, you create a direct link between your sales team's activity and the company's financial tracking. As soon as the order is confirmed, the $200.00 value is reflected in the corresponding Analytic Budget, in this case in both the Physical Retail and Bridgemere lines, allowing for real-time monitoring of revenue against targets.

Another way we can view the analytic budget is by going to Reporting and selecting Analytic Report.

Financial Budgets

If you do not use analytic accounting for budgeting you can create financial budgets instead. They are structured around specific income and expense accounts and the transactions associated with them. They are primarily used for formal financial reporting, financial analysis, and regulatory or statutory compliance.

To set up a financial budget, follow these steps:

1. Navigate to Accounting ‣ Reporting ‣ Profit and Loss to open the Profit and Loss report.
2. Select the desired reporting period using the calendar date selector.
3. Click the Budget button and enter a name for the budget. A new column with the budget name appears next to the Balance column.
4. Enter the budgeted amounts for each account you want to track.
5. A percentage (%) column automatically appears, showing the variance between the actual figures and the budgeted amounts.

Rather than editing the budget directly in the Profit and Loss report, you can click the pencil icon to open the budget configuration page and make your changes there. The Budget Items section is where individual budget lines are defined. Each line represents a planned financial amount for a specific account and time period. The following columns are available:

• Account: Specifies the general ledger account being budgeted. For example, the account 400000 – Product Sales represents expected revenue.
• Months: Defines the time frame for the budget line. In this example the planned amount is for the month of December.
• Amount: Displays the budgeted value for the selected account and period. In this case, a revenue of 10,000.00 is the budget expected for Product Sales in December. This amount is entered as a negative value so that it appears as a positive in the P&L report.

You can create multiple financial budgets using this process to compare performance across different scenarios or time periods.

Conclusion

While financial budgets provide strong control at the accounting level, they offer limited flexibility when it comes to tracking performance by projects, cost centers, or operational activities. For these use cases, analytic budgets provide more detailed and operational insight.