Dynamics 365 F&O| Power Platform: Part-3 Budget Planning

With Budget Planning in Dynamics 365 functionality you can achieve the following:

1- Consolidation of the multiple budget plans from a lower level into a single-parent budget plan at a higher level in the organization.
2- Developing a single budget plan at a higher level of the organization and allocating the budget to lower levels of the organization.

The final step of the budget planning is to generate the Budget register entry based on the budget plan.

In today’s post, we will develop a single budget plan, allocate amounts to the multiple budget plans at the lower level, aggregate the multiple budget plans from a lower level into a single-parent budget plan at a higher level in the organization.

Budget planning requires Budget planning configuration. This configuration includes the following:

First off we need to imagine the budget hierarchy that we will be using for the Budget planning.

For budget planning, we will be using the sales organizational structure. In our case we will have 2 organizational levels: Head Marketing & Sales at the first level, Europe Regional Sales department, Asia Regional Sales department, and America Regional Sales department at the second level. Let’s call them as Head Office level and Sales department level.

To use our own organizational hierarchy with the budget planning we will need to assign a newly created hierarchy to the budget planning purpose.

To accomplish all of that, first, we will create our Departments.

Navigate to Organization administration > Organizations > Internal organizations

Click the New internal organization button.

Select Department and click OK.

Create 4 departments described above.

Navigate to Organization administration > Organizations > Organization hierarchies

Create a new organization hierarchy that will be used for budget planning by clicking the New button.

Enter the name

and assign a budgeting purpose by clicking the Assign purpose button.

Select Budget planning purpose from the left-hand side.

And then click Add button.

In the opened form select created earlier Organization hierarchy and click OK.

Open created hierarchy by clicking the View hierarchy button

Go into the edit mode by clicking the Edit button

Click the Insert button and chose Department

Choose Head Marketing & Sales department and click OK.

Underneath the Head Marketing & Sales department, click Insert -> Department and select created earlier departments.

Publish the created hierarchy by clicking Publish button and specifying the effective date.

Once you publish it, you will see an Infolog message

Next one we need to identify what stages will be at Head Office level and at the Sales Department level.

Budget planning stages identify the steps that a budget plan goes through from inception to final approval.

Let’s look at the workflow of our budget planning

Headquarter will create baseline base on the previous year sales, multi-year contracts. Then it will be distributed to each sales department for the estimation. Sales department will adjust budget plan if needed and submit budget amount. Once sales departments submit budget amounts it will be sent back to headquarter. All amounts will be aggregated and will be sent for budget manager’s review. Budget manager adjusts budget plan if needed. This flow ends up reviewing and the final approval by CFO.

Based on the description above we need to create the stages.

Navigate to Budgeting module > Setup > Budget planning > Budget planning configuration.

Switch to the Stages tab.

Click Add

Type in a name in the Budget planning stage and a description in the Description field.

Based on the workflow above we need to create the following stages:

Next one, we need to configure Budget planning scenarios. It is a result of each stage. Let’s create scenarios for our case.

Navigate to Budgeting module > Setup > Budget planning > Budget planning configuration

Switch to the Scenarios tab.

Click Add

Type in a name in the Budget planning scenario and a description in the Description field.

Specify the Unit of measure as Monetary.

The next one is Budget plan workflow creation.

We will create 2 workflows first one is for the High-level department (in our case it’s Head Sales & Marketing), the second one is for the Lower level departments (in our case it’s the Regional Sales Departments).

Let’s create Regional Sales Department’s workflow. In this case sales department will approve budget plan and submit this budget plan to the headquarter, where it will be aggregated (in High-level workflow)

Navigate to Budgeting module > Setup > Budget planning > Budgeting workflows

Create new workflow by clicking New button and selecting Budget plan workflows type.

Budget plan workflow for child budget plans will be the following:

Click Properties button

Highlight Approve budget plan element and click Basic settings

Change Name

Double-click on Departments approval workflow elements

Highlight Step 1 and click Properties

Change Name, Work item subject and Work item instructions

Switch to the Assignment tab and select Participant

Switch to the Role-based and select Security role participants in the type of participants and select System administrator in the Participant.

Note: In our case, it will be difficult to approve everything under different roles/users, so on each stage, I am going to select System administrator so I will be able to approve everything under my own user.

Switch to the Completion policy and chose a Single approver

Close Properties form and go back to the Level up

Highlight Stage transition budget plan task and click Basic settings

Change the Name

Once you’ve done, make sure that there are no errors

Click Save and Close

Type in Version notes and click OK

Select Activate the new version and click OK

Make sure that new workflow has been created and activated.

Now let’s create a second workflow for the headquarters level.

Let’s quickly review what we have built

1 – Activation of budget plan

2 – Distribution amounts from Headquarter to Sales departments (at this step 3 budget plans for sales departments will be created)

3 – Review budget plan and approval

4 – Aggregation estimated amounts by sales departments (at this step 3 budget plans reviewed and adjusted by sales departments aggregated back to Headquarter budget plan)

5 – Stage transition from HBaseline stage to Aggregated

6 – Allocation across periods on the Headquarter budget plan

7 – Stage transition from Aggregated stage to BMReviewed

8 – Stage transition from BMReviewed stage to CFOReviewed stage

9 – Final approval

Note: Each stage transition can be visible on the budget plan itself.

Highlight Review budget plan and click Properties

Switch to the Assignment and chose Participant

Specify the role on the Role based tab

Highlight Approve budget plan task, click Properties and change the Name

Highlight Step1 and click Properties. Change instructions as well as assignments.

Set Single approver on the Completion policy tab

Change the workflow properties

We ended up having two workflows

Configure workflow for headquarter

Configure workflow for sales departments

Create an Allocation schedule for ‘Distribute to departments’

Create Stage allocation for ‘Distribute to departments’

Create an Allocation schedule for ‘Aggregated from departments’

Create Stage allocation for ‘Aggregated from departments’

Create an Allocation schedule for ‘Allocate across periods’

Create Stage allocation for ‘Allocate across periods’

Configure budget planning process

Once you are ready with the Budget planning process, you have to Activate it. Only after Budget planning activation, users can create budget plans and submit them to workflow for updates, reviews, and approvals.

Click on Action button on the top

Click on Activate button

Now we are going to limit the user’s access to the budget plans. We will use the configuration based on the security.

Navigate to the Budget planning configuration > Parameters tab and select Security model = Based on the security organizations

If you are using this option you need to perform the following additional settings:

Assign budget planning organization hierarchy to a purpose of security
Grant access to user

Follow the steps below to complete the setups above

Go to Organization administration > Organizations > Organization hierarchies

Click Assign purpose

Select ‘Security’ purpose and add that purpose to your organization hierarchy as presented below

Now go to System administration > Users > Users

Select the user that need access to budgeting

Click Edit

Select the role to whom you would like to grant the access

Click Assign organizations button

Select Grant access to specific organizations individually

In the Select organization hierarchy drop-down, select the organization hierarchy

Note: Only organization hierarchies that have Security purpose assigned will be displayed in the drop-down list.

Highlight the highest node

Click Grant link

Let’s grant the access to this user to all organization hierarchy nodes

Note: Keep in mind that since we were given an access to the System user role, there might be any other users in the system with Grant access to all organizations. If you do not change it, during budget plan approval the system will be creating additional approval steps for those users. So be careful when granting the access.

Let’s now review how we can create and manage our budget plans based on the information that we already have set up within our budget planning configuration and our budget planning processes.

First, we need to create budget plan for previous year actuals and multi-year contracts and use it as our baseline.

Budget plan is a document that consists of a budget plan header and budget plan lines. In the system you can have more than 1 budget plan depend on your budget planning cycle.

Previous year actuals: we will generate automatically based on the GL, but first we will create the budget plan (only budget plan header)

Navigate to Budgeting > Budget plans

Click New

Select Budget planning process

Note: Only activated budget planning processes will be displayed in the drop-down list

Specify the Budget plan name

We have created the budget plan header and now we need to add budget plan lines. Budget plan lines can be either created manually or automatically (since now budget planning was integrated with the ledger, fixed assets and so on).

In our case Previous year actuals will consist of Expenses and Revenue, so are going to run Generate budget plan from general ledger twice. First time for expenses, second time for revenue.

Navigate to Budgeting > Periodic > Generate budget plan from general ledger

In the Action field select Update the existing budget plan scenario, and append new data (since we have already created the budget plan header)

In the Source section provide the following data:

In the Fiscal year field select the year from which you would like to take the amounts. We are creating budget plan for 2018, so for previous year sales it will be 2017

In the From period field select Period 1

In the To period field select Period 12

In the Account type select Expense

In the Target section provide the following data

Set the Historical flag to Yes

In the Budget planning process, field select your budget planning process

In the Document, number field select the budget plan created earlier

In the Budget class field select Expense

In the Budget plan scenario select the Previous year sales

Once you are done, click on Generate button

Once budged plan generation from general ledger is completed, navigate to budget plan and review the budget plan lines

Navigate to Budgeting > Periodic > Generate budget plan from general ledger

In the Action field select Update the existing budget scenario, and append new data (since we have already created the budget plan header)

In the Source section provide the following data:

In the Fiscal year field select the year from which you would like to take the amounts. We are creating budget plan for 2018, so for previous year sales it will be 2017

In the From period field select Period 1

In the To period field select Period 12

In the Account type select Revenue

In the Target section provide the following data

Set the Historical flag to Yes

In the Budget planning process, field select your budget planning process

In the Budget class field select Revenue

In the Budget plan scenario select the Previous year sales

Click on Generate button

Note: In case if there are no records in GL for selected criteria, the error message will be displayed: The selection criteria that were used did not include any records to generate. Update the selection criteria, and then try again.

Wait for the following Infolog message

Navigate to the Budget plan and review the created records. As you can see the lines have been populated for all of the accounts that we have selected.

For multi-year contracts information, we can use generate budget plan from budget plan feature, if your multi-year contracts were entered in the budget plan for the previous year.

I have shown you how to generate budget plan, but in my example, I am going to create the budget plan manually, since I do not have information for regional sales departments from previous year.

I will work with the following budget plan:

Pay attention to the Budget planning stage. Right now, it’s HBaseline – the first step in our workflow.

In the future, our parent budget plan will go thought the following stages: HBaseline > Aggregated > BMReviewed > CFOReviewed.

Our child budget plans will go thought the following stages: SDEstimated > SDSubmitted

Once you are ready, go ahead and submit the workflow.

Type in the comment and click Submit button

To review to whom the workflow is assigned, click on Workflow -> View history

From the workflow history, we can see that 2 tasks have been already completed.

1 – Budget plan is activated

2 – Budget amounts distributed to departments. At this point, 3 additional budget plans for sales departments have been created. Sales departments can go to their plan, estimate the forecast amounts and approve the budget plan.

If you go to Budget plan list, you will see 3 budget plans created:

Plan for America Sales
Plan for S.Asia Sales
Plan for Europe Sales

We need to adjust those plans and submit them for approval. Pay attention to the Budget planning stage, it’s SDEstimated. After approving it, it will be changed to SDSubmitted.

Go inside each plan and populate Forecast by Sales department field

Next on is for Asia

At last one is for Europe

After that you need to highlight the plan and click on Workflow -> Approve

Type in the comment and then Approve button

Repeat these steps for the rest child budget plans

After approving those, go ahead and accept parent budget plan

Click on Workflow – > Accept

Type in the comment and click Accept

Then click Complete

Type in the comment and click Complete

If you look at the Budget planning stage after the Completion of the Review task, it will be changed from ‘HBaseline’ to ‘Aggregated’, then to ‘BMReviewed’ and then to ‘CFOReviewed’

And if you go to the history, you will notice that the following tasks have been completed:

Budget planning stage allocation
Stage transition budget plan
Budget planning stage allocation
Stage transition budget plan

Approval budget plan task is Pending

All completed tasks mean that sales departments estimated amount have been aggregated from child budget plan and added to the parent budget plan (this you can see from filled column Forecast by Sales Department)