Before You Start

This guide assumes you have Advisor or Standard user role in Xero with access to the Report Center. Basic knowledge of financial statements is helpful.

Overview

20 min
Setup Time
Intermediate
Difficulty
Monthly
Maintenance

What You’ll Learn

  • How to create a budget in Xero’s Budget Manager
  • Steps for importing your budget via CSV
  • Running and customizing the Budget Variance report
  • Interpreting budget vs. actuals for financial insights

1. Preparation Steps

Before creating your budget, consider these best practices:

Key Considerations

  • Define your budget period (e.g., fiscal year, quarter)
  • Align budget with your Chart of Accounts
  • Review historical data for realistic forecasts

Required Data Points

  • Account Code (or Name)
  • Budgeted Amount for each period
  • Tracking Categories (optional, but recommended)

2. Choosing Your Budget Method

You have two main options, each with serious pros and cons.

Method A: Direct Entry in Xero

This method is suitable for smaller, simpler budgets.

Pros:
  • Simple for small budgets.
  • No file formatting needed.
  • Immediate feedback on entry.
Cons:
  • Time-consuming for large budgets.
  • No version control outside Xero.
  • Limited bulk edits.

Method B: Import via CSV

This method is ideal for complex budgets with many accounts or tracking categories.

Expert Tip: For budgets with more than 10-15 accounts or multiple tracking categories, importing via CSV is significantly faster and less prone to manual errors.

3. Step-by-Step: Creating Your Budget

Here’s a simplified view of the budgeting workflow in Xero.

Here is a sample code block to show how a CSV for budget import might look.

Account,Month 1,Month 2,Month 3,Tracking Category 1,Tracking Category 2
Sales,10000,10500,11000,Region A,Product X
Cost of Goods Sold,4000,4200,4400,Region A,Product X
Rent,1500,1500,1500,,

Example CSV structure for importing a budget into Xero.

4. Setting Up Your Budget

  1. 1

    Access Budget Manager

    Navigate to Accounting > Reports, then find ‘Budget Manager’ in the list of available reports.

  2. 2

    Create New Budget

    Select ‘New Budget’, define your fiscal year, periods (monthly/quarterly), and choose to include tracking categories if needed.

  3. 3

    Enter or Import Data

    Manually enter figures directly into the grid, or click ‘Import’ to upload your prepared CSV file. Ensure the CSV format matches Xero’s template.

Common Error: CSV Formatting Issues

Ensure your CSV file perfectly matches Xero’s template for columns and date formats. Incorrect headers or missing columns will cause import failures.

5. Tracking & Analysis

Running the Budget Variance Report

  • Go to Accounting > Reports
  • Select ‘Budget Variance Report’
  • Customize parameters (period, tracking categories, comparison)
  • Export or save your report for analysis

Need Help?

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