Budget vs actual in Xero: Budget Summary or Budget Variance?

Short answer: for budget vs actual in Xero, run the Budget Variance report. It puts actual results next to the budget and shows the difference for each account. The Budget Summary shows only the budget, with no actuals. You need a budget in Xero first (Budget Manager, or import a spreadsheet), and budgets are not on every Xero plan. Each month, comment only on the few lines that are well away from the budget, for example more than 10% and £1,000, and say which of those are timing rather than real differences.

Comparing actual results with a budget is one of the most useful things a monthly report can do. It turns “we made £8,000 last month” into “we made £8,000 against a plan of £11,000”, which is a much better starting point for a conversation.

Xero has two reports that involve budgets, and they do different jobs. This guide explains both, how to get a budget into Xero in the first place, and how to report budget vs actual each month.

Plan details and menu names change, so check Xero’s pricing page and Xero Central for your region before relying on anything below.

Step 1: check your plan includes budgets

Budgets are not on every Xero plan. According to Xero’s UK and NZ pricing pages in October 2026, the entry Ignite and Grow plans do not include budgets, Comprehensive includes a limited number of budgets and Ultimate includes budgets with smart suggestions. Australian plans are structured differently. If you do not see budgeting in your file, the plan is the first thing to check.

Step 2: create the budget

Xero Central covers creating a budget in Budget Manager, and in September 2026 Xero announced a new Budgets experience in early access that can start from your existing actuals. Either way the main decisions are the same:

• The overall budget or an additional one. Every organisation has an Overall Budget. Additional budgets can be created with their own names and can be tied to a tracking category, for example a budget per location or department. Xero notes that tracking-category budgets do not roll up into the overall budget, so if you budget by location, keep the overall budget in step yourself. The tracking category reports guide covers the location Profit and Loss those budgets are compared with.
• Monthly amounts. Spread annual figures across months in a way that reflects seasonality. A flat one-twelfth split makes every December look like a failure for a retailer and every January look like a triumph.
• Import or type. Xero lets you download a budget template, fill it in a spreadsheet and import it. For anything more than a few accounts, the spreadsheet route is quicker and easier to check.

The two reports

Budget Summary

The Budget Summary shows the budget itself: budgeted amounts for each revenue and expense account, by period. It does not show actual results.

Use it when you want to show the plan, for example when presenting next year’s budget to a board, or when the reader needs to see what was budgeted for the coming months.

In Xero’s accounting API, the Budget Summary accepts a start date, a number of periods (from 1 to 12) and a period size of a month, a quarter or a year.

Budget Variance

The Budget Variance report is the budget vs actual report. It compares actual results with budgeted amounts over a date range and shows the difference. Xero offers preset layouts such as the current and previous three months, and you can choose which budget to compare against (the Overall Budget is the default).

This is the report most people mean when they say “budget vs actual”. Save your preferred layout as a custom report so it is the same every month.

Which to send

Reader wants to know	Send
How did we do against the plan last month?	Budget Variance
How are we doing against the plan year to date?	Budget Variance with a year-to-date range
What is the plan for the next few months?	Budget Summary
Both	Budget Variance first, Budget Summary as an appendix

With no budget in Xero, the same year-to-date question can still be answered against the same months last year; year to date profit and loss statement shows how, and how to project the full year without just multiplying up.

Making budget vs actual useful

Explain big variances, not all variances. Set a threshold, for example any line more than 10% and £1,000 away from budget, and comment only on those. A list of twenty small variances hides the two that matter.

Separate timing from real differences. An annual insurance premium paid in March against a budget that spreads it monthly will look like a large overspend in March and an underspend for the rest of the year. Say so once, or budget it in the month it is paid.

Revisit the budget when the business changes. A budget set before a new contract or a lost customer stops being useful within a few months. Some businesses keep the original budget and add a reforecast as a second budget so both comparisons are available. The profit and loss forecast guide shows how to build the figures from last year’s P&L and the assumptions that drive sales, with a worked year.

Know the sales line you cannot fall below. If sales come in under budget, the first question is whether they still cover overheads. The free break-even calculator works that out from your monthly overheads and gross margin, and how much a point of margin changes it.

Budget the cash as well as the profit. Xero budgets cover profit and loss accounts only, so they leave out VAT or GST, tax payments, loan repayments, equipment and drawings. A cash flow budget turns the profit budget into the month-by-month bank balance and shows which month is lowest.

For wording ideas, see our variance commentary examples. To turn the report into a monthly habit, the P&L management guide gives a 30-minute routine and a worked month where sales beat the budget but profit missed it by a third.

Common questions

How do I work out a budget variance? Actual minus budget, then that difference divided by the budget for the percentage. Sales of £46,000 against a budget of £50,000 is £4,000 under, or 8% under. For costs the sign means the opposite: wages of £21,500 against £20,000 is £1,500 over budget, which is bad news even though the number is positive. Label each variance “better” or “worse” rather than relying on plus and minus signs.

Why does my Budget Variance report show no budget figures? Usually because the report is comparing against a budget with nothing in it for those months, or against the wrong budget. Check which budget the report is set to (the Overall Budget is the default) and that the budget has amounts for the dates you chose. A budget tied to a tracking category only compares with that category’s figures.

Should I compare a month or year to date? Both, for different questions. One month is noisy: a single late invoice or an annual bill can swing it. Year to date evens that out. Say profit was £3,000 under budget in June but £2,000 ahead for the year so far; the year to date figure is the one that says whether the plan is on track, and the June figure is the one to explain.

Which variances should I explain? Only the ones above a threshold you set once, such as more than 10% and more than £1,000 away from budget. With a £50,000 sales budget, a £4,000 shortfall passes both tests and needs a sentence; a £600 overspend on software does not. The variance commentary examples show how to word them.

Do I need a Xero budget to report against a plan? No. Without one, compare with the same months last year, or keep the budget in a spreadsheet and put it next to the Xero Profit and Loss. The year to date profit and loss statement guide shows the comparison against last year.

Sending it every month

Like other Xero reports, budget reports are run and exported by hand at the time of writing; Xero does not email them on a schedule (see Xero report scheduling).

A point worth knowing if you are comparing automation tools: Xero’s accounting API exposes the Budget Summary but, at the time of writing, has no Budget Variance endpoint. Apps that connect to Xero can therefore send the budget itself directly from Xero, while a budget vs actual comparison has to be rebuilt by the app from budget and actual figures, or exported from Xero by hand.

ReportPilot includes the Budget Summary in its report list, pulled from Xero at send time. It does not currently produce a Budget Variance report, so if your readers need budget vs actual, a pack containing the Profit and Loss and the Budget Summary side by side is the closest it gets, and the full Budget Variance report still needs to be exported from Xero. It asks Xero for read-only access, and there is a 14-day free trial with no card, then plans start at US$19 a month.