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Actuals are the numbers that show how much revenue an account generates or how much money it pays out in expenditures at a specific point in time during a financial year.
In other words, actuals are the reported income and expenses at a given moment.
A budget is an estimate of revenues and expenditures for an account during a certain period of time, such as a fiscal year. It represents the financial metrics a company is expected to reach within the budget period. This includes revenue, expenses, cash flow, cash runway, and other key performance indicators.
On the other hand, actuals are the reality of what a company has actually been able to achieve within a given time frame once a business has run its accounts.
In short, a budget represents what it is thought a company can do, while actuals represent what has actually been done.
When it comes to corporate models, there are two ways to approach the financial side of things. Business leaders can either plan out what they want to achieve based on a set of assumptions about their company's market size, growth rates, etc., or they can base their plans on actual data.
One of the main reasons why organizations should track their actuals is because they help understand where a business stands in terms of its ability to meet its goals.
For example, by tracking the actuals for the first time, finance leaders might be able to find unexpected costs or expenses that weren’t included in the budget planning.
Tracking a company's actuals will give business owners an idea of whether their company is on track for hitting its goals or not. If they are off track, senior management can make budget adjustments to their initial financial plan.
Find out how your budget variance analysis can improve your forecasting and modeling processes with the help of our latest article. Read on to learn more.