Budget Variance
Definition
The difference between a budgeted figure and the actual result. Favourable variances improve profit versus plan; adverse variances reduce it. Analysing them keeps spending and performance on track.
Related Terms in Financial Analysis
Rolling Forecast
A forecast that is continually updated by adding a new period as each one ends, always looking the same distance ahead. It keeps planning current instead of fixed to a single annual budget.
Zero-Based Budgeting
A budgeting method where every expense must be justified from a zero base each period, rather than carried over and adjusted from last year's budget. It forces scrutiny of all spending but takes more effort.
Net Revenue Retention (NRR)
The percentage of recurring revenue retained from existing customers over a period, including expansion and after churn and contraction. An NRR above 100% means the existing base grows even without new customers.
Gross Revenue Retention (GRR)
The percentage of recurring revenue retained from existing customers before counting any expansion, so it cannot exceed 100%. It isolates how much revenue is lost to churn and downgrades.
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