Budget vs actuals is a financial comparison that measures the difference between planned results (the budget) and real results (actuals) for revenue, expenses, and other metrics over a specific period. It is used to track performance, explain variances, and adjust forecasts, headcount, or spending based on what is happening in the business.
What Budget and Actuals Mean
- Budget: The approved plan for a time period, often built annually and updated in reforecasts. It can include revenue targets, expense limits, hiring plans, and unit economics assumptions.
- Actuals: The real recorded results, typically pulled from accounting systems and operational sources (billing, payroll, CRM, procurement).
Budget vs actuals can be tracked at multiple levels, such as company-wide, department, cost center, product line, region, or project.
Variances and How They Are Reported
A budget vs actuals view usually includes:
- Variance (absolute):
Actuals − Budget - Variance (percent):
(Actuals − Budget) / Budget
Variance reporting often separates:
- Favorable variance: Better than plan (for example higher revenue or lower expense).
- Unfavorable variance: Worse than plan (for example lower revenue or higher expense).
Organizations also track variance drivers, such as pricing changes, volume changes, timing shifts, and one-time items.
How Budget vs Actuals Is Used
Common use cases include:
- Monthly close reviews: Explain what changed and why.
- Department performance management: Track spend against headcount and program plans.
- Forecast updates: Use trends in actuals to revise the outlook for the quarter or year.
- Cash planning: Compare expected vs actual cash receipts and payments.
- Board reporting: Summarize key variances and actions being taken.
Budget vs Actuals in AI-Assisted FP&A
In modern FP&A workflows, budget vs actuals is often automated and enriched with operational data:
- Automated variance classification: Systems label variances as volume, price, mix, timing, or one-time.
- Narrative generation: AI drafts variance commentary using predefined rules and financial hierarchies.
- Anomaly detection: Alerts flag unusual spend, duplicate invoices, or unexpected revenue drops.
- Driver-based modeling: Forecasts update automatically when leading indicators change, such as pipeline coverage, churn, or usage.
Frequently Asked Questions
Is budget vs actuals the same as forecast vs actuals?
No. Budget is the approved plan. Forecast is the latest expected outcome, updated more frequently.
How often is budget vs actuals reviewed?
Most companies review it monthly, with deeper quarterly reviews and reforecast cycles.
What causes budget vs actuals variance in revenue?
Common drivers include pipeline conversion changes, deal timing shifts, churn, pricing changes, and product mix.
What systems are used to produce actuals?
Actuals usually come from the general ledger and subledgers, plus operational systems like billing and payroll for detail.
What is the difference between accrual and cash actuals?
Accrual actuals follow accounting recognition rules. Cash actuals track money received and paid, which can differ by timing.
