In ERPNext, you can set and manage budgets against a Cost Center. This is useful when, for example, you are doing online sales. You have a budget for search ads, and you want ERPNext to stop or warn you from over spending, based on that budget.
Budgets are also great for planning purposes. When you are making plans for the next financial year, you would typically target a revenue based on which you would set your expenses. Setting a budget will ensure that your expenses do not get out of hand, at any point, as per your plans.
In the Budget form, you can select a Cost Center and for that cost center you can define budgets against any Expense / Income accounts. Budgets can be defined against any Cost Center whether it is a Group / Leaf node in the Chart of Cost Centers.
If you have seasonal business, you can also define a Monthly Distribution record, to distribute the budget between months. If you don't set the monthly distribution, ERPNext will calculate the budget on yearly
While setting budget, you can also define the actions when expenses will exceed the allocated budget for a period. You can set separate action for monthly and annual budgets. There are 3 types of actions: Stop, Warn and Ignore. If Stop, system will not allow to book expenses more than allocated budget. In Case of Warn, it will just warn the user that expenses has been exceeded from the allocated budget. And Ignore will do nothing.
