Learn what makes budgeting a powerful and effective way of planning and tracking your cash outflow

Updated over a week ago

What is Budgeting in Loc8

Budgeting is an effective tool to plan and track your outgoing cashflow such as costs in labour, tasks, unplanned expenses, and materials used from inventory, for works performed over a given financial year (i.e. from 1st July of the current year to 30th June 30th of the next). 

Having a budget in place enables you to manage your business with thorough knowledge on where your money is going, and when and in what way you can best utilise an allocated sum of money reserved for the current financial year or the next. In this way you are sure to not have spent more than what's necessary.

Budgeting conveniently lets you keep an eye on the costs and expenses based on regions and job types, and when that's combined with the ability to create more than one budgets for a particular region and financial year, and further refine the data to capture budgets for targeted assets, you are able to reach different levels of granularity that clearly tracks your money on a large scale spanning suburbs to small sectors representing clusters of sites.

In a nutshell, Budgeting serves as a blueprint of your estimated costs for a financial year as well as reports factual data on the cash outflow for planned and ad hoc jobs within a given region.

Important elements in Budgeting

The real-time costs in your business is derived from the following interrelated elements:

  • Regions — Since regions define the geographical boundaries enclosing the sites and therefore the jobs being executed there, regions and budgets are directly related to each other. So, if you want to create a budget, you need to create a region first. Once you have the region ready, you can navigate to the associated budget area and create one or more budgets under that region. For example, under a region covering the inner suburbs of Victoria, you may have a budget 'XYZ Business Properties' to capture costs on maintaining properties of XYZ customer located in the city and another budget called 'Melbourne CBD Residences' for costs involved in inspections and audit for customers owning apartments in the city.

  • Sites — By sites, we refer to any customer location with a valid address. The valid address is the key to geographically link the site to an appropriate region that is already listed in Loc8. Once the link has been established between the site and the region, all costs incurred on the assets within that site will be captured in the Budgets area of that region on every job completion.

  • Jobs — As your team completes jobs, the costs for tasks (as defined in the Task Template Library), hourly labour rates ( as defined in Default Rates), items used from inventory (as defined in the Inventory Library ) and additional expenses, get captured in the Budget area under the relevant regions. Please note the difference between costs and charges in jobs — while costs are expenses incurred in executing a job, charges are the amount a customer is due to pay for the completed jobs.

  • Assets — Since every asset has its own state and condition, and may require maintenance schedules to be run at different frequencies, budgets can help you identify how much expense goes towards the maintenance of a particular asset type over a selected period. In this way, you are able to gain more flexibility in adjusting the allowed budgets towards those asset types. The important parameter that lets you identify expenses per asset type is the Budget Category, which you can create per asset type. So when your team completes tasks on assets, the related cost (as specified in the Task Template Library) appears in the Budget Category for that asset type. Please note that you will configure Budget Categories only at the parent asset type level, as the child asset types will automatically get associated with their parent's Budget Category.

Types of Cost Estimates in Budgeting

There are two types of cost estimates available in the Budget area:

  1. Total Budget — The total estimated cost that is allocated in a given year is called Total Budget. This is where you will enter the total amount planned towards various costs for that financial year. On a good scenario, your actual costs will always be less than the Total Budget, and you can keep an eye on your increasing costs using the budget indicator. If the budget indicator turns red, you can adjust your Total Budget or examine the cause for excessive expenditure and action accordingly to decrease overheads in future.

  2. Cost Estimates for Incomplete Jobs — The costs involved in jobs that are either Overdue, In Draft, Open, In Progress or On Hold can also be capture in Budget. Jobs directly created from quotes or jobs generated from the active preventative maintenance plans also come under this cost estimates, till the time a technician accepts and completes the job. The budget indicator helps you track such dormant costs using a grey colour code.

Budgeting Smarter through Refinements

Refinements is a clever option to record budgets for a specific set of jobs and assets. This is done by selecting and applying asset attributes such as Customer, Condition, Status, Maintenance Start etc to be considered for refining the list of available data. The ability to capture budget for a narrower group precisely helps you to address acute scenarios in your business. For example, when you need to reserve the remaining amount of your Total Budget for assets that are active but in critical condition only for a particular customer, you can configure refinements for that customer and for assets in 'Very Poor' condition.
Please note the applied refinements will be applicable for the current financial year only, after which they will roll back to the default in the next financial year.

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