# Budgeting

> Budgeting and forecasting: annual budgets, forecasts, scenario planning, expense approval workflows, and vendor evaluation. Use when creating budgets, updating forecasts, or evaluating spending decisions.

- Skill: `saolalab/budgeting` (Agent Skill)
- Install (CLI): `npx skillmds@latest add saolalab/budgeting`
- Raw SKILL.md: https://api.skillmd.com/api/skills/saolalab/budgeting/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: saolalab (https://skillmd.com/u/saolalab)
- Updated: 2026-09-22
- Page: https://skillmd.com/skills/saolalab/budgeting

---


# Budgeting

## Annual Budget Template by Department

```markdown
# Annual Budget {Year}
**Company**: {Company Name}
**Fiscal Year**: {Start Date} to {End Date}
**Prepared**: {Date}
**Status**: {Draft/Final/Approved}

## Total Company Budget
- **Total Revenue**: $X
- **Total Expenses**: $X
- **Net Income**: $X

## Department Budgets

### Engineering
- Salaries & Wages: $X
- Benefits: $X
- Software & Subscriptions: $X
- Infrastructure: $X
- Equipment: $X
- Other: $X
**Total Engineering**: $X

### Product Management
- Salaries & Wages: $X
- Benefits: $X
- Software & Subscriptions: $X
- Research & Tools: $X
- Other: $X
**Total Product Management**: $X

### Marketing
- Salaries & Wages: $X
- Benefits: $X
- Advertising & Campaigns: $X
- Events & Conferences: $X
- Software & Tools: $X
- Other: $X
**Total Marketing**: $X

### Sales
- Salaries & Wages: $X
- Benefits: $X
- Commissions: $X
- Software & CRM: $X
- Travel & Entertainment: $X
- Other: $X
**Total Sales**: $X

### Operations
- Salaries & Wages: $X
- Benefits: $X
- Rent: $X
- Utilities: $X
- Office Supplies: $X
- Insurance: $X
- Other: $X
**Total Operations**: $X

### Legal
- Salaries & Wages: $X (if applicable)
- Legal Fees: $X
- Compliance: $X
- Other: $X
**Total Legal**: $X

### Finance & Accounting
- Salaries & Wages: $X
- Benefits: $X
- Accounting Software: $X
- Professional Services: $X
- Other: $X
**Total Finance & Accounting**: $X

### HR
- Salaries & Wages: $X
- Benefits: $X
- Recruiting: $X
- Training & Development: $X
- Other: $X
**Total HR**: $X

## Company-Wide Expenses
- Depreciation & Amortization: $X
- Interest Expense: $X
- Taxes: $X
- Other: $X
**Total Company-Wide**: $X
```

## Forecasting Methodology

### Bottom-Up Forecasting

1. **Gather Department Inputs**
   - Request detailed forecasts from each department head
   - Include headcount plans, tooling needs, and project costs
   - Review historical spending patterns

2. **Aggregate and Validate**
   - Sum all department forecasts
   - Compare to historical trends
   - Identify outliers and validate assumptions

3. **Adjust for Company-Wide Factors**
   - Add company-wide expenses (rent, insurance, etc.)
   - Apply inflation and market rate adjustments
   - Include one-time expenses (equipment, legal, etc.)

4. **Review and Iterate**
   - Present initial forecast to leadership
   - Incorporate feedback and adjustments
   - Finalize forecast

### Top-Down Forecasting

1. **Set Revenue Targets**
   - Define growth targets based on strategy
   - Apply industry benchmarks
   - Consider market conditions

2. **Allocate by Percentage**
   - Engineering: X% of revenue
   - Marketing: X% of revenue
   - Sales: X% of revenue
   - Operations: X% of revenue

3. **Refine with Bottom-Up Validation**
   - Compare top-down allocations to bottom-up needs
   - Adjust for strategic priorities
   - Balance both approaches

## Scenario Planning

Create three scenarios: Best Case, Base Case, Worst Case

```markdown
# Scenario Planning {Year}

## Best Case Scenario
**Assumptions**: {List key assumptions}
- Revenue: $X
- Expenses: $X
- Net Income: $X
- Runway: X months
- **Key Drivers**: {What drives this scenario}

## Base Case Scenario
**Assumptions**: {List key assumptions}
- Revenue: $X
- Expenses: $X
- Net Income: $X
- Runway: X months
- **Key Drivers**: {What drives this scenario}

## Worst Case Scenario
**Assumptions**: {List key assumptions}
- Revenue: $X
- Expenses: $X
- Net Income: ($X)
- Runway: X months
- **Key Drivers**: {What drives this scenario}

## Scenario Comparison
| Metric | Best Case | Base Case | Worst Case |
|--------|-----------|-----------|------------|
| Revenue | $X | $X | $X |
| Expenses | $X | $X | $X |
| Net Income | $X | $X | ($X) |
| Runway | X months | X months | X months |

## Action Plans
- **Best Case**: {What to do if this happens}
- **Base Case**: {What to do if this happens}
- **Worst Case**: {What to do if this happens}
```

## Expense Approval Workflow

### Approval Thresholds

- **$0 - $X**: Auto-approve (Finance Controller)
- **$X - $Y**: Department Head approval required
- **$Y - $Z**: CEO approval required
- **>$Z**: Board approval required

### Approval Process

1. **Expense Request Submitted**
   - Requester fills out expense form
   - Includes: amount, vendor, purpose, business justification

2. **Finance Review**
   - Verify budget availability
   - Check against approval thresholds
   - Validate business purpose

3. **Approval Routing**
   - Route to appropriate approver based on threshold
   - Track approval status
   - Notify requester of decision

4. **Payment Processing**
   - Once approved, process payment
   - Record in accounting system
   - Update budget tracking

### Expense Request Template

```markdown
# Expense Request

**Requested By**: {Name}
**Date**: {Date}
**Department**: {Department}

**Expense Details**:
- **Vendor**: {Vendor Name}
- **Amount**: $X
- **Category**: {Account Code}
- **Description**: {What is this expense for}
- **Business Justification**: {Why is this expense necessary}

**Approval Status**: {Pending/Approved/Rejected}
**Approved By**: {Name}
**Approval Date**: {Date}
```

## Vendor Evaluation Financial Checklist

When evaluating new vendors or renewing contracts:

- [ ] **Pricing Comparison**
  - Compare to current vendor (if applicable)
  - Compare to market alternatives
  - Consider volume discounts

- [ ] **Payment Terms**
  - Net 30 / Net 15 / Net 60
  - Early payment discounts
  - Late payment penalties

- [ ] **Contract Terms**
  - Contract duration
  - Auto-renewal clauses
  - Cancellation terms
  - Price escalation clauses

- [ ] **Budget Impact**
  - One-time vs recurring costs
  - Impact on department budget
  - Impact on total company budget

- [ ] **Financial Health**
  - Vendor financial stability (if significant contract)
  - References from other customers
  - Risk of vendor failure

- [ ] **Total Cost of Ownership**
  - Initial cost
  - Ongoing costs
  - Integration costs
  - Training costs
  - Support costs

- [ ] **ROI Analysis**
  - Expected benefits
  - Cost savings
  - Efficiency gains
  - Payback period

## Budget Tracking

### Monthly Budget Review

1. **Actual vs Budget Comparison**
   - Compare actual spending to budget
   - Calculate variances
   - Identify trends

2. **Variance Analysis**
   - Investigate significant variances (>10% or >$X)
   - Determine root causes
   - Recommend actions

3. **Forecast Update**
   - Update forecast based on actuals
   - Adjust for known changes
   - Communicate updates to leadership

4. **Budget Adjustments**
   - Request budget revisions if needed
   - Document reasons for changes
   - Get approval before implementing

### Budget Variance Thresholds

- **<5% variance**: Monitor, no action required
- **5-10% variance**: Review and explain
- **>10% variance**: Investigate and take action
- **>20% variance**: Escalate to CEO