2020-09-21 04:11:50ExpensesEnglishBudget software refers to a computer program that helps you as a business and individual develop, maintain, track, and change your budgets.https://quickbooks.intuit.com/global/resources/expenses/budgeting-software/Budgeting Software for Business, Home & Personal | QuickBooks

Budgeting Software: Features, Types, and Benefits of a Budgeting Software

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In this article, you will learn:

As per IBM’s global C-Suite study conducted in 2015, 81% of finance managers considered optimizing their budgeting and forecasting as one of the important goals.

Despite technological advancement, many companies regardless of their size or industry present budgeting and forecasting as one of the major challenges faced by them.

When it comes to creating a business or personal budget, we do not think about investing in budget software. Rather, we rely on creating budgets and spreadsheets manually.

This turns out to be quite burdensome and time-consuming. There are many leading companies that address budgeting and forecasting challenges by adopting new technologies and implementing best practices. This is because such an initiative helps them develop accurate budgets, save time, promote collaboration, and undertake effective decision making.

Given the importance of budgeting, this article highlights how a Budgeting Software can help in dynamic forecasting, features of a Budget Software, and points to consider when purchasing a budgeting software.

What is Budgeting Software?

Budget software refers to a computer program that helps you as a business and individual develop, maintain, track, and change your budgets. This software has been in existence for a very long period of time – one of the first programs on personal computers was the spreadsheet that helped businesses or individuals maintain their data in a simple and organized way.

Since budget software is a computer program it brings accuracy by reducing human error which is a common thing to happen while preparing budgets manually.

In addition to this, automated reminders in budget software ensure that you avoid going over budget or avoid any suspicious transactions. Primarily, there are two types of budgeting software. One is Business Budgeting Software and the other is Personal Budgeting Software. Business Budgeting Software is quite complex, relatively expensive, and demands

Budgeting Software for Business

Small Business Budgeting Software is an online budgeting tool that helps in managing your business budgets in an organized and streamlined way. The small business budgeting software is a bit more complex than the personal budgeting software and comes with different features depending upon the business need.

This software offers a host of forecasting methods in order to help you as a small business to plan your budget. In addition to this, you can even generate different types of reports that give you insights about your business finances, that is, your daily expenditures.

Small business budget software like Quickbooks offers the functionality to create budgets monthly, quarterly, or yearly. It also provides the option to prefill the data automatically from the current or the previous year in the budget so created.

In addition to this, you can even split the budget by class, customer, or location and then specify what class, customer, or location to add to the budget.

Besides creating budgets, you can even view the following two reports:

  • Budget Overview which is nothing but a summary of budgeted amounts for a specific budget
  • Budget Vs Actuals is a report that provides a summary of budgeted amounts against the actual amounts and their variances and variance percentages.

Personal Budgeting Software

Personal Budgeting Software is similar to business budget software. However, it is less complex and much easier to use. Some Personal Budgeting software offers the functionality to manage budgets and track expenses. While other sets of software budgets help in managing investment portfolios.

These budget software bring together your balances as well as bills all in one place so that it’s easy for you to understand and manage your finances.

You simply need to connect your bank accounts with the budgeting software to get a snapshot of your finances within minutes.

Furthermore, personal budgeting software automatically updates and categorizes your information as it gets integrated with your bank accounts, credit cards, as well as retirement accounts.

In addition to this, you can also set goals while creating budgets. Say, for instance, you want to purchase a digital camera from your savings this year. So, you simply need to enter the amount of money that you would be needing to purchase the camera into the budgeting software.

Then, the software will go through your previous year’s data and set an amount that you need to keep aside in the form of savings in order to meet your goal.

It is important to note here that some budgeting software provides you with suggestions as to what expenses you need to cut down in order to meet your goal.

Home Budgeting Software

Home budgeting software is software that you can use to keep a track of your income and expenses by updating details pertaining to your finances into your software.

The kind of home budgeting software that you need would depend upon the goal that you want to accomplish. That is, if you want to track your spending over a period of time, then a simple spreadsheet having the budget template would make the task of the budgeting easier.

However, if you need to create multiple categories along with their spending limits, then you would require a more advanced home budgeting software. In this case, you can either go for computer-based budgeting software or web-based budgeting software.

Computer-based budgeting software stores the information on your own computer and not the server. Moreover, it’s a one-time investment as against the web-based budgeting software that follows the model of monthly or annual subscriptions.

Web-based free budgeting software, on the other hand, is accessed via browsers and stores information in the cloud. Besides, they offer advanced security and can be accessed anytime, anywhere, and through any device.

Benefits of Budgeting Software

The following are the advantages of using budgeting software:

  • Makes Budgeting Simple

One of the major features of budgeting software is that it automatically updates various categories of accounts including incomes, cost of goods sold, and expenses. This saves you a lot of time as you do not have to manually update each and every transaction as well as prepare a budget for the following year.

  • Ensures Reliability

Since various categories of accounts get updated automatically, there are fewer chances of committing errors. Such accurate data makes your budgets and forecasts more reliable and thus helps in better decision making. This is because it gives a realistic view of your business in the long run.

  • Saves Cost

Cloud-based budgeting software helps you save costs as you just need to shell out monthly or yearly subscription fees, unlike the traditional budgeting software that calls for a one-time investment. Besides providing core functionality, the cloud-based budgeting software provides third-party integrations for functions that are not the core to your business. For instance payroll.

  • Gives Control

Preparing budgets in spreadsheets increases the chances of your data being exposed to data alteration both by mistake or malicious intent. Such alteration in data could result in massive errors while reporting and hence lead to poorly informed decisions. Cloud-based budgeting software gives you full control over the data as the information gets saved in the cloud and is accessible to only those individuals who have been given the permissions to work on the data.

  • Snapshot of Day to Day Operations

Since your bank accounts are integrated with the budgeting software, your income and expense postings as well as expenditure on day to day operations get updated automatically. Thus, by obtaining an up-to-date snapshot of your businesses’ everyday operations, you have great control over business planning and strategy.

  • Enables Data Entry and Collaboration

Cloud-based bookkeeping, accounting, and budgeting software allow you to import existing budget spreadsheets in excel into one intuitive system. Besides this, you can even create your own budgets based on the previous year’s data updated in the budgeting software. Thus, there is no need for manual data entry and you can effectively track and control data inputs. In addition to this, the budgeting software also allows collaboration so that various members of the team can undertake analysis easily.

  • Data Security

Since cloud-based budgeting software offers the functionality of user permissions to access the data, this ensures that the security of your data is managed tightly. Apart from this, the budgeting software follows data security standards implemented by the top financial institutions and banks. So, this gives you control as well as reassurance in terms of data security that you expect out of your budgeting software. In addition to this, the budgeting software also gives control over audits as you get a complete audit trail for all the changes made to data whenever you need them.

Typical Features of Budgeting Software

A good budgeting software has the following set of features:

  • Data Import

Cloud-based budgeting software allows you to integrate your bank accounts, investment accounts, retirement accounts, etc. This enables you to import data seamlessly as the data gets updated automatically as and when the transactions occur.

  • Custom Reports

Online business budgeting software like Quickbooks helps you to create a customized budget and budget vs actual reports. These reports give you an overview of the actual and budgeted amounts in various categories of accounts. Such a comparison helps you to understand whether you are within the budget or exceeding the same.

  • Track Expenses

With cloud-based budgeting software, you can keep track of expenses in real-time apart from getting customized reports that give a break-down of all the details. This is possible via the integration of bank accounts with software.

Thus, your business gets an overall snapshot all in one place and also helps you in showcasing any unauthorized activities without waiting for the monthly statement to get completed.

  • Budget Plans

Budgeting software is used by businessmen as well as individuals primarily to create and maintain business as well as personal budgets. The budgeting software besides giving an overview of your business finances all at one place also generates a budget automatically based on your businesses’ income and expenses, investments, and contributions to retirement accounts. Thus, such an overview helps you as a business to manage your finances effectively.

  • Anytime, Anywhere Access

Cloud-based budgeting software offers you the flexibility to access your financial data anytime, anywhere, and through any device. This is because everything saves in the cloud and you just need an internet connection to access the data either via an online browser or through an application.

  • Simple and Easy to Use

A good budgeting software has a user-friendly interface and is quite simple to understand. Thus, various functionalities like exporting data, categorizing charts of accounts, and integrating bank accounts with the software are a breeze with good budgeting software.

  • Alerts

With the coming of the cloud-based budgeting software, gone are the days when you had to manually check whether you are overspending or not making payments on time. Budgeting software sends alerts in order to ensure that you are not overspending and missing any of the payments. This means that whenever you surpass any set goals or benchmarks, the cloud-based budgeting software would notify you.

Considerations When Buying Budgeting Software

A good business budgeting software should offer functionalities that help in reducing errors as well as saves time during the entire budget process. Therefore, before investing in a business budgeting software, the following are the factors you need to keep in mind:

  • Mobility

One of the major considerations while selecting a budgeting software is that it offers the functionality to access the financial data anytime, anywhere, and through any device. Such a solution should not bound you to the desktop and provide secure access to your financial data on the go.

  • Seamless Collaboration

A good business budgeting software never restricts access to the financial data just to a single user. It allows multiple users to work on the budget so created in order to make financial analysis and avoid any duplicate procedures.

  • Integration with Multiple Data Sources

Financial data is the very foundation of creating a budget. The major challenge with budgeting software is its lack of ability to obtain data from a variety of data sources. Therefore, you need to ensure that a budgeting software that you intend to purchase integrates with various types of data sources.

  • Easy to Use

It is important to note that the budgeting software must have a user-friendly interface. It should be intuitive and must have proper resources like support and help desk so that the user can reach the same when facing a challenge.

  • Import/ Export of Data

A good business budgeting software must offer the functionality of importing data externally or through external systems. Further, it should also have the functionality of exporting data from budgeting software to excel sheets for the seamless functioning of the business.

  • Customizations

A good budgeting software should also offer the functionality to customize a budget in terms of display of chart of accounts, number format, reporting period, display of items in header and footer, negative numbers, rows, and columns, etc.

  • Cloud-based budgeting software would be preferred by businesses. Software as a Service (SaaS) offers flexibility and modest cost that attracts businesses and individuals to go for cloud-based budgeting solutions. Besides this, the cloud-based budgeting software offers access to real-time data, makes collaboration easy, and offers immense data storage.
  • Since there is an advancement to predictive analytics, there seems a possibility that the budgeting software solution might incorporate artificial intelligence, machine learning, data mining, and simulation. This would help in generating predictive analytics and help in giving your business stakeholders actual foresight.
  • There is a shift from using spreadsheets for budgeting and forecasting to budgeting software solutions. Budgeting software offers collaborative solutions that not only generate accurate budgets and forecasts but also generate reports that help you as a business owner make better decisions.
  •  Since the gig economy has set in, there is an utter need for collaboration as the teams are working remotely. Thus, modern-day budgeting software offers the feature of team collaboration to make it easier for the team to work on a given budget spreadsheet.
  • The cloud-based budgeting software also has the capability to generate customized financial reports. Such real-time reports help finance managers to make decisions effectively as such reports are accurate and can be generated within no time.
  • The modern-day budgeting software is not restricted to offering the sole functionality of budgeting and forecasting. Since businesses demand a unified platform that has the capacity to manage financial reporting, budgeting, and consolidation, the modern-day budgeting software offers a host of functionalities as such an approach is cost-efficient and minimizes disruption in business.

How to Manage & Create Budget in Quickbooks?

As a business, you need to create budgets in order to track sales and expenses. Quickbooks Online offers the functionality to create budgets using your business’ accounting data. When you create a budget in Quickbooks Online, you can review as well as edit the budget so created as per your need. In addition to this, you can also generate financial reports that help you compare your sales and expenses with your budget.

Now, in order to create a budget in Quickbooks Online, you need to have permission to access, create, or delete budgets. Once you have the access, you simply need to sign in to your Quickbooks account and follow the steps below:

Create a Budget in Quickbooks

  • First, go to ‘Settings’ and choose ‘Budgeting’
  • Next, find your budget on the list displayed on the screen
  • Now, select the ‘Action’ dropdown and simply run ‘Budget Overview Report’ or run Budgets Vs Actuals Report’

The Budget Overview Report gives a summary of the budgets by account. Whereas the Budget Vs Actuals Report showcases actual amounts as well as the budgeted amounts of the various charts of accounts. Therefore, this comparison indicated whether you are under budget or over budget.

Once you have created a budget for a selected period, you can also edit the same in case there is a need. So, to make changes in the budget created in Quickbooks Online, you need to follow the steps below:

Edit the Budget in Quickbooks

  • First, go to ‘Settings’ and select ‘Budgeting’
  • Next, find your budget on the list displayed on the screen
  • Select the ‘Action’ dropdown and then choose ‘Edit’
  • Edit each account – one month at a time
  • In case you desire to change the time period from month-to-month to quarterly or yearly, choose the ‘Gear’ icon provided at the top of the budget. Then select ‘Quarter’ or ‘Year’.
  • Once done, select ‘Save’.

Using QuickBooks Budgets and Forecast Reports

The Quickbooks budgets and forecast reports help you to understand your business performance as well as compare your business’ actual revenue and expenses to the budgeted amounts.

Furthermore, these reports also help you to check if there are any cost-saving opportunities, errors, as well as avenues for business expansion. For instance, the Budget Overview Report in Quickbooks gives a summary of your business’ budgeted revenues and expenses monthly or quarterly.

On the other hand, the budget Vs actual report compares your business’ actual revenues and expenses to the budgeted amounts in order to determine the variance. Such a variance helps you to understand whether you are over or under budget.

How Do Budgets and Forecasts Differ?

Budgets and forecasts are both financial planning tools that help you in analyzing various aspects of your business, strategize, plan, and hence make decisions.

A budget is a financial tool that helps in estimating the revenues and expenses of your business for a specific period in the future. It allows you to control your day-to-day operations, business activity as well as spending.

Forecast, on the other hand, is also a financial tool that helps in estimating revenues and expenses based on the market as well as your current budgets. Industry trends and market outlook influence forecasting to a greater extent.

Furthermore, forecasting is also dependent upon your business’ anticipated growth, customer spending factors, as well as external factors like political and social environment over which you have no control. Historical trends, industry data also influence forecasting to a greater extent.

Once you develop forecasts, you can analyze them in order to make adjustments.

Comparing Budgets and Forecasts

Both budget and forecasts are financial tools. However, both differ in the sense of estimation. Where the budget is dependent on previous years’ financial data, forecasts also incorporate historical figures. However, it uses such data to form expectations with regard to the future performance of your business.

The forecasts help you to adapt to new market conditions and variables. Thus, the forecast is always forward-looking.

Budgets are static in nature. However, it may be updated once a year depending upon the decision of the management of a business entity.

Whereas, forecasts are updated at regular intervals. In addition to this, budgets include comparing actual amounts with the budgeted amounts to determine variances from the expected performance. Whereas, the forecasts do not include any variance analysis.

Thus, we can say that the major difference between budget and forecast is that budget is a plan that gives direction to your business. Whereas, the forecast indicates where your business is actually going.

Laying Out Your Master Budget

A Master Budget refers to a comprehensive single financial plan that combines a host of smaller budgets for your fiscal year.

The Master Budget of your business comprises operating budgets detailing revenues and expenses and financial budgets that showcase the expected inflow and outflow of cash. Once you prepare such a Master Budget, you also prepare a budgeted balance sheet and income statement dividing the amount of income and assets your business should possess relative to the debts and expenses in the upcoming fiscal year.

Therefore, while preparing a master budget for your business, you need to make sure that your small business is able to survive and grow throughout the upcoming year.

Therefore, your operating budget consists of the income statement of your business showcasing areas that generate income for your business and includes both revenues and expenses. The Financial Budget, on the other hand, comprises a cash budget and a budget for assets. Therefore, you need to first develop an operating budget and then using this data along with assumptions you need to prepare a financial budget.

Thus, your operating budget would include the budgeted amounts of the following components:

  • Forecasted sales
  • Inventory
  • Direct Material
  • Direct Labor
  • Overhead costs including fixed and variable costs
  • Ending finished goods inventory
  • Selling and administrative expense

The Financial Budget, on the other hand, would include:

  • Cash budget
  • Budgeted balance sheet
  • Capital expenditures budget

Potential Budgeting Issues

There a lot of problems attached to creating budgets for your business:

  • Since the budgets are created on the basis of certain assumptions, there is a higher chance of a budget being inaccurate especially when the business environment changes drastically.
  • Creating budgets is a time-consuming process. However, cloud-based budgeting software reduces the time required to create budgets.
  • Since the budgets are numeric in nature, they focus only on the quantitative aspects of your business such as profitability. It does not take into consideration the qualitative aspects such as customer needs.
  • A small adjustment to a budget may lead to complex back and forth redoing of numbers and, hence, falling short of deadlines.


  • What software would you use to create a business budget?

You need to use business accounting and budgeting software like Quickbooks in order to get an overview of your company’s budgets, forecasts, and have access to features like tracking expenses and invoicing.

  • How do I create a budget spreadsheet for my business?

You can create budget spreadsheets using Microsoft Excel or Google Sheets by recording various charts of accounts along with their actual amounts. Additionally, set your goals and make necessary adjustments in spending in order to meet your goal.

  • How does budgeting help a business?

Budgeting helps a business in both planning and controlling its finances, ensuring that a business meets its current commitments and objectives and ensures that your business has funds for future projects.

  • What should you include in a business budget?

Your business budget must include your fixed costs, variable costs, one time costs, cash flow, and profit.

  • What are the 3 types of budgets?

There are three different types of budgets. These include the Master Budget, Operating Budget, and Financial Budget.

  • Why are budgets prepared?

It is important to prepare a budget as it helps you to prepare expenditures, reduce costs, and prepare for uncertain times. It is a financial tool that measures whether a business has enough funds to operate and grow.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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