ERPNext will help you set and manage budgets on your Cost Centers. 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.

You can define it in the Cost Center. If you have seasonal sales you can also
define a budget distribution that the budget will follow.

In order to allocate budget, go to Accounts > Setup > Chart of Cost Centers and click on Chart of Cost Center.
Select a Cost Center and click on Open.

#### Step 1: Click on Edit.

![]({{url_prefix}}/assets/old_images/erpnext/budgeting-1.png)  

<img alt="Accounts Receivable" class="screenshot" src="{{url_prefix}}/assets/img/accounts/accounts-receivable.png">

#### Step 2: Enter Monthly Distribution.

![]({{url_prefix}}/assets/old_images/erpnext/budgeting-2-1.png)


If you leave the** **distribution ID blank, ERPNext will calculate on a yearly
basis or in equal proportion for every month.

#### Step 3:Add New Row and select budget account.  



![]({{url_prefix}}/assets/old_images/erpnext/budgeting-3.png)  



### To Create New Distribution ID

ERPNext allows you to take a few budget actions. It signifies whether to stop
, warn or Ignore  if you exceed budgets.  

![]({{url_prefix}}/assets/old_images/erpnext/budgeting-4.png)



These can be defined from the Company record.

![]({{url_prefix}}/assets/old_images/erpnext/budgeting-4-1.png)  



Even if you choose to “ignore” budget overruns, you will get a wealth of
information from the “Budget vs Actual” variance report. This report shows
month wise actual expenses as compared to the budgeted expenses.

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