How Funds Accounting works

The accounting software allows you to activate Fund Accounting. This will enable you to optimize your budget monitoring by clearly identifying your main revenue and expenditure items.

The cost accounting module does not allow you to create a forecasted budget. Please let us know your needs on this subject via our suggestion box.

This article covers all the points related to the use of budgets in the Accounting application:

• What is allocation management?
• How does allocation management work?
• Activate allocation management

👉 Download our Fund Accounting Guide

What is allocation management?

Allocation management aims to explain the financial results of an organization:

General accounting gives an overall view of the organization's accounts.

Allocation management provides a detailed outlook by budget, project, or expense item.

By creating specific budgets, you can easily identify the distribution of expenditure and revenue. This results in each item's analytical result (loss or profit).

Allocation management aims to analyze expenditures and revenues by budget:

It does not analyze the result according to accounts.

Only the entries for expenditures and revenues can be allocated.

How does cost accounting work?

First, create budget categories and items from the Accounting > Funds & Allocation page, in the Funds Management tab.

Each entry can be broken down into one or more budgets, for example:

• An operating budget (expenses in training, administrative management, etc.)
• A product sales budget (clothing, goodies, etc.)

For example, you can break down an order of T-shirts as follows:

• An amount of $X in the "Clothing" budget item, belongs to the product sales budget.
• An amount of $Y in the "shipping costs" budget item, belongs to the operating budget.

Once the entry has been broken down, it will automatically feed the budgets you will find in your Expenditure-Revenue document or your Profit and Loss Statement.

Activate allocation management

1. Go to the Settings > Accounting > Settings

2. Activate Funds & Allocation

3. You can also activate Direct allocation, which allows you to allocate entries directly after making a new book entry.

A Funds & Allocation section will now be available. From here, you will be able to assign your expense and revenue entries to your different budgets.

The next steps are:

• Create your budget categories and items from the Funds Management tab.
• Start allocating entries to your budgets.