Every business has a budget. Maybe it’s in your business plan, or maybe it’s just in your head. But having a budget is only half of the battle. To be effective, budgets need to be analyzed and readjusted on an ongoing basis. Writing a budget report is the first step toward finding out if your budget is realistic and just how closely it is being followed. Follow these steps to learn how to write a budget report.

List the budget items and budgeted dollar amounts.

Record the amount that was actually spent for each budget item. Subtract the actual amount spent from the budgeted amount. This is your over/under amount. Divide the actual amount spent by the budgeted amount. This is your budget-to-actual ratio. Multiply that ratio by 100 to arrive at a percentage.

Write a description for each budget item that you spent money on. If the item is a self-explanatory fixed amount, you don’t need to write a description. For example, if your budget is $50 for website hosting, and the fee didn’t change, you don’t need a description. If however, the cost increased or decreased, you should report the new amount explain why it changed. For other items, your description should include basic details on what you spent the money on and how it benefited your cause. Pay special attention to items that are significantly over or under budget. Include details as to the cause of the difference, and how you plan to bring those items back in line with the budget in the future.

Write your summary. Even though this section should appear on the top of your report, you should do it last. Briefly highlight the steps you have taken to optimize your budget, steps you plan to take to bring overages back within budget, and any items that cannot be fulfilled within the current budget. Also include a short paragraph on how the expenditures have benefited the company.