Budget vs. Actual: Using a Budget That You'll Actually Check

Many clinics create a budget at the start of the year and never look at it again. A budget is most valuable when it is simple enough to compare with actual results every month.

Build it from drivers, not guesses

Start with what drives revenue:

• Provider hours available each month
• Expected utilization
• Average contribution or revenue per booked hour
• Membership count and dues

Revenue then follows from capacity and demand, rather than from adding a percentage to last year.

Budget costs by behavior

• Variable costs, such as product and commission, as a percentage of the related revenue.
• Fixed costs, such as rent, salaries and software, as monthly amounts.
• Planned investments, such as hires, devices and campaigns, in the month they happen.

Spread it across the year

Use last year's seasonality to spread revenue across months. A budget that assumes the same revenue every month will look wrong all year.

Compare monthly

For each line, show budget, actual and the difference. Focus on large or growing differences, not small ones.

Understand variances

For each important variance, ask:

• Is it timing, such as an invoice arriving a month late?
• Is it volume, meaning more or fewer treatments?
• Is it price, such as discounts or a price change?
• Is it cost, such as product cost changes or new staff?

Reforecast quarterly

If results drift far from the budget, update the forecast for the rest of the year. Keep the original budget for comparison, but plan with the latest forecast.

Keep it short

One page of budget versus actual, by major line, reviewed monthly, is worth more than a detailed spreadsheet nobody opens.