What is the budget-to-actual analysis?

Budget-to-actual analysis compares planned financial results to actual results, calculating variances to understand performance. The process identifies where results exceeded or fell short of expectations and investigates underlying causes. It answers: Did we hit our targets, and if not, why?

Finding the story behind the variance

Revenue came in $40,000 under budget. One lost client or many small misses? Expenses ran $15,000 over. One-time event or pattern? The numbers alone mean nothing. Analysis demands asking why. The variance is a symptom. Diagnosis requires investigation.

Turning analysis into action

Each significant variance needs: a root cause identified, an owner assigned, a corrective action determined, and a timeline set. Revenue miss triggers pipeline review. Expense overage requires vendor renegotiation. Close the loop every month or stop doing the analysis.