The short answer
A budget versus actual variance analysis compares each line with the approved budget, states the variance in euros and percent, and records why it happened. The last step matters most: a number without a cause does not help management with the next decision.
Excel template: Download the budget versus actual variance template as Excel. All figures in it are invented example values.
What the template contains
- Budget and actual per line, for the month and for year to date.
- A type selection per line (revenue or cost) so the sign is right.
- Variance in euros and percent, where a positive number is always favourable.
- An adjustable threshold: unfavourable variances above it are flagged "Review".
- A comment field for the cause.
How to read the variance correctly
For revenue a higher actual is favourable, for costs a lower one. The template therefore converts both types to the same logic: plus is good, minus needs an explanation. That lets you compare revenue and cost lines in one table without thinking about the sign on every row.
Always look at month and year to date together. A variance in the month can be pure timing and even out over the year. If it grows over the course of the year, it is more likely structural.
Record the cause
A small, fixed catalogue that the whole team uses works well:
- Volume: more or fewer customers, orders or hours than planned.
- Price: different prices or terms than assumed.
- Timing: an item slipped into another month.
- One-off: an expense or income that does not recur.
- Structural: the assumption was wrong and the forecast must be adjusted.
Only structural variances change the forecast. Everything else is explained and closed.
Example from the template
Invented example: Revenue is 3,000 euros under budget in the month because two contract signings slipped into October. That is timing, not structure. Marketing costs are 30 percent over budget because of a one-off trade fair. That is also noted as one-off. Management does need to look when personnel costs are above plan every month: then the assumption is wrong and the forecast should be adjusted.
How to use the template
After the month-end close, enter budget and actual, set your threshold and comment on every flagged row. A threshold of five percent is a starting value; it should fit the size of the line. For small amounts it is worth adding a minimum euro amount in your head. How the close runs over time is shown in the month-end close calendar.
Frequently asked questions
What is the difference between budget and forecast?
The budget is the approved plan and stays unchanged as the benchmark. The forecast shows the current expectation and is adjusted continuously. If the budget is overwritten with every change, no variance can be explained any more.
From when is a variance relevant?
That depends on the size of the line and your risk. A percentage threshold, supplemented by a minimum amount in euros, is a common starting point. The template has an input field for it.
Who should comment on the variances?
Ideally the owners of each line, for example sales for revenue or marketing for advertising costs. Controlling collects the comments and checks whether they change the forecast.
Read next
For the cash side of variances, see the 13-week cash flow forecast. How long your money lasts is shown in How to calculate your runway. To plan personnel costs role by role, see the headcount and personnel cost plan. All templates in one place: free Excel templates for finance and controlling. Our controlling and planning support is described on the interim accounting and FP&A page.
