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Using Top-Down, Bottom-Up, and Middle-Out Budgeting

Top-down, bottom-up, and middle-out budgeting are methods for allocating and reporting budget amounts, depending on the level of detail by which you enter budget amounts.

You can use one of these methods for your entire business, or you can use a combination of these methods by choosing the method that is most appropriate for each part of your organization.

Top-Down Budgeting

With top-down budgeting, you enter budget amounts to key accounts at the top level, then distribute those amounts among lower-level accounts. For example, you can enter a budget for the entire company based on goals established by top management, then 0 assign budget amounts to each division or cost center.

There are two ways to perform top-down budgeting:

Bottom-Up Budgeting

For bottom-up budgeting, you enter detailed budget information at the lowest level, then use the Financial Statement Generator to review summarized budget information at higher levels.

For example, you could define budget organizations for the lowest level within your company, such as by cost center. Then, after each manager enters their cost center budget, you can summarize these budgets at the division and company level using the Financial Statement Generator.

Middle-Out Budgeting

Middle-out budgeting is a combination of the top-down and bottom-up methods.

You enter budget amounts for each division based on goals established by middle management. You then use budget formulas and MassBudgets to calculate budgets for cost centers within each division. You can also summarize your budgets for all divisions using the Financial Statement Generator.

See Also

Creating Master/Detail Budgets

Defining Budget Organizations

Overview of Financial Statement Generator

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