Activity-Based Budgeting using NetSuite Planning and Budgeting (NSPB)

Do you want to take your budgeting process to the next level? To better understand where costs are made and revenues are gained? Consider using Activity-Based Budgeting (ABB). This budgeting method links budgets to specific business activities. It enables you to understand how your company spends its resources and, as a result, enhances decision-making.

Why is Activity-Based Budgeting such an effective budgeting method?

Activity-Based Budgeting (ABB) is a proven budgeting method that companies across the globe use. With good reason, as it focuses on identifying costs and revenues associated with specific activities. Often, this approach leads to improved results as eliminating unnecessary costs boosts profitability. 

Also, ABB systems give you more control over the budgeting process. Revenue and expense planning occurs at a precise level that provides you with valuable details regarding projections. ABB enables management to have increased control over the budgeting process and to align the budget with overall company goals. It provides more accurate cost data and gives your company valuable insights for making business decisions that are simply unavailable with traditional budgeting methods.

How to start using Activity-Based Budgeting

To start using Activity-Based Budgeting, you roughly apply these 3 steps:

1. Identify relevant activities

These drivers are the items responsible for incurring revenue or expenses for the company.

2. Determine the number of units related to each activity

This number is the baseline for calculations.

3. Calculate the cost/revenue per activity

Delineate the cost/revenue per unit of activity and multiply that result by the activity level.

The benefits and challenges of Activity-Based Budgeting

The benefits of Activity-Based Budgeting are multifold. The method allows you to determine the budget much more precisely because the budget is directly linked to the drivers of the business processes. Also, you get a better insight into the ‘dials’ you can turn to control your costs better. Summing up, you’ll get accurate information based on which you can make sound strategic decisions.

However, most companies encounter some challenges as well. The method is more complex than traditional budgeting methods, requiring you to look at specific activities. Another challenge of this methodology is that more stakeholders (not only Finance) are involved in setting the budget.

How NetSuite Planning and Budgeting helps you use Activity-Based Budgeting

The tool NetSuite Planning and Budgeting (NSPB) helps you tackle these challenges. It can support the driver-based process or combine ABB with traditional budgeting methods including what-if analyses. The tool can guide users through the steps of the budget (or forecast) process. Also, it enables them to create their own sandboxes to see the effects before submitting their figures. NSPB is closely integrated with NetSuite for analyzing your budget (and forecast) data against your actual figures by providing ‘drag and drop’ analyses.

The NetSuite Planning and Budgeting (NSPB) tool

NetSuite Planning and Budgeting (NSPB) is a tool that has been around for years and is used by thousands of customers. That means it has proven itself and is always kept up to date. In combination with our expert team, we’re here to help you with every step – from implementing NSPB to the crucial phase of using and adopting NSPB.

View our webinar

Discover more about NetSuite Planning and Budgeting and how to provide your organization with a smooth and reliable budgeting process. Please note: The webinar is in Dutch only!