FP&A
Budget vs Forecast vs Actuals: What's the Difference?
A budget is your plan set at the start of the year. A forecast is your best current estimate of where you will finish, updated as the year progresses. Actuals are what really happened. Running all three together lets you catch problems early, not in a January post-mortem when the damage is already done.
Three different views of the same business, used together. Budget is the annual commitment. Forecast reflects current reality. Actuals are what happened. Side by side, they tell the operating story.
The three views
- Budget: set at the start of the fiscal year. Anchored to the strategic plan. Used for bonus calculations and board commitments. Rarely changed mid-year.
- Forecast: updated monthly or quarterly. Reflects latest known information. Used for operating decisions, cash planning, and reforecast cycles.
- Actuals: what actually happened. Pulled from the GL after monthly close. The source of truth for variance commentary.
BVA reporting format
| Line | Budget | Forecast | Actual | vs Budget | vs Forecast |
|---|---|---|---|---|---|
| Revenue (May) | $1.2M | $1.35M | $1.41M | +17.5% | +4.4% |
| EBITDA (May) | $140K | $180K | $162K | +15.7% | -10.0% |
The most common mistake
Only tracking variance to budget. The forecast variance is often more actionable because it reflects current management's most recent expectations. Variance to a stale budget tells you the plan was wrong; variance to forecast tells you operating execution went sideways.
Frequently Asked Questions
why both budget and forecast?
Budget is the annual commitment. Forecast tracks current reality.
what is BVA reporting?
Budget-vs-Actuals side-by-side with variance commentary.
refresh cadence?
Budget annually. Forecast monthly or quarterly. Actuals on close.
Related Terms
- What is variance analysis?
- What is a rolling forecast?
- What is a reforecast?
- What is 13-week cash flow?
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