Reserves for future expenses. Practical planning

Provisions are created, for example, for upcoming employee leave payments, payment of benefits, repairs of fixed assets, warranty repairs and maintenance, production costs associated with the seasonal nature of production, etc.

The creation of reserves for future expenses allows the company to avoid sharp jumps in costs and fluctuations in financial reporting. Therefore, planning for reserves is of great importance for both shareholders and potential investors. In addition, in some cases, the creation of reserves is the responsibility of the company.

The following example illustrates the automatic calculation of reserves, but in most cases it is recommended to use the normal editing.

Examples. The creation of reserves for the costs associated with the seasonal nature of repair work.

Let, administrative expenses include the cost of utilities and expenses for seasonal repair of the premises and the utility equipment business, under which it is planned to create reserves.

Let, the prices of utilities are rising slightly, for example, in January and June by approximately 5%. See the schedule of utility costs for three years:

Schedule of administrative expenses can be called from table "Profit and Loss statement": "line "Administrative expenses" → right click → Graph". As the graph shows, costs at the beginning of 2015 are 124 153, at the end of 2017 141 455. That is, the graph shows a slight increase (only 17 302 over three years) and a slight increase in prices within the acceptable fluctuations.

Though, the company decided to hold the annual seasonal repairs of facilities and utility equipment in the eighth month (August). The cost of works in each year is 420 000, and under these costs, the company plans to create reserves.

Planning provisions for liabilities and charges:


1. step. Monthly payments accumulation of reserves will be 35 000 (420 000 / 12 = 35 000). As planning begins on 1 month project will take into account accumulated reserves for 4 months last year (September-December 2014): 140 000 (35 000 × 4 = 140 000).


2. step. We come to the table "Financial plan" and call the planning form: left mouse button (single click) – active link "Reserves for future expenses," or – F2.
3. step. Add new product: the menu item add (F2).


4. step. Edit the settings. In the first tab "Settings backup" choose the reserve = Repair of fixed assets. Note, this information does not affect the calculations, in contrast to the next paragraph.
5. step. Edit the settings. In the first tab "Settings backup" choose the expenditure = Administrative expenses. Under this article to create reserves.


6. step. Settings of calculation. In the second tab "Settings for the calculation of reserves", specify the settings as shown in the picture:
   
   
   1. Start, end of the backup period: 1-12 . That is, we plan to create reserves for seasonal work annually.
   2. Reserve amount: 420,000 .
   3. Start, End: 8 .
   4. Check the box next to "Set the annual backup cycle". In this case, the reserves will be calculated for each year (in accordance with the specified calculation parameters).






7. step. Tab "table of provisions". Before performing the calculation, we take into account accumulated reserves (140 000) for 4 months last year, as shown in figure:






8. step. Perform the calculation: "Calculation → the Selected list item → ОК".

"Reserve table" after the implementation of the calculation:








Please note, the amount of accumulated and redeemed reserves are not the same as "written off" the accumulated reserve last year. To accrued and repaid (written off) reserves match, will charge the remaining amount in "future period" as shown in the figure below:







9. step. Save changes. Starting with version 6.00, save has been replaced by auto-save!


10. step. Perform the final calculation: "Calculation → Final table", as shown in figure:

In most cases, you can use the usual editing if the charts of "accumulation" and "repayment" of reserves are pre-determined. In the edited lines, the context menu tools are available, with which you can quickly fill in the rows. After editing, you must perform the final calculation (steps 9-10).

Go to the table "Profit and Loss statement" and perform the final evaluation of the project: "Main menu → Data → Calculate" (also the F9). It is worth recalling, together with financial reports it is recommended to calculate operational plans if they were previously subjected to (even minor) changes.

After calculation, we get the schedule of administrative expenses "line "Administrative expenses" → right click → Graph". As the graph shows, costs at the beginning of 2015, given the planned reserves are 159 153 (before calculation of reserves – 124 153), at the end of 2017 176 455 (up to the reserve calculation, this amount was 141 455). It is easy to calculate, unlike the previous chart, the monthly cost increased by 35 000, "drawing" the graphics have not changed.

Now administrative costs include costs for seasonal repairs, but at the same time avoided sudden fluctuations in the "Profit and loss statement":

For example, when reserving employee vacation costs, in the operational plan, only monthly salary charges should be specified, excluding leave payments. That is, it is necessary to exclude these costs in the operational plan.

Below is a graph of administrative costs calculated in the "Budget-Plan Express", with the same example (with the same initial data), only here the costs were not planned through reserves, and all are attributed to the costs of the reporting period. In this case - the amount of 420 000, annually, is charged in August, as shown in the figure:

The jumps in the cost fluctuations in the eighth month correspond to the amount spent for seasonal repairs (420,000). And, on the contrary, the creation of reserves made it possible to avoid sharp jumps in the financial statements.