# Track Against Actuals

Reading a variance is mostly about reading two of them at once.

A cost above budget means nothing until you know whether the revenue it supports was above budget too.

![An open budget, FY2026 Capital Expenditure, showing its fiscal year, its period and the accounts it carries figures for.](https://www.sorviai.com/help/budget/budget-detail.png)

*The comparison is only as useful as the phasing behind it.*

## Reading variances

| Account type | Actual above budget | Actual below budget |
| --- | --- | --- |
| Income | Favourable | Adverse |
| Expense | Adverse | Favourable |
| Cost of goods sold | Adverse, unless sales rose too | Favourable, unless sales fell |

That last row is the one worth pausing on. Cost of goods rising alongside higher sales is not a problem; it is the point. Always read a cost variance next to the revenue variance rather than on its own.

## Timing against real

Half of all monthly variances are timing: an invoice dated a day into the next month, an annual bill that arrived early, a campaign that slipped. Look at the year-to-date column beside the month before you go and ask anybody about it.

- **Month adverse, year-to-date on plan** (timing): Something landed early or late. Nothing to act on beyond noting why.
- **Month adverse, year-to-date adverse** (real): The pattern is persistent. This is the one worth a conversation.
- **Month on plan, year-to-date adverse** (historic): Something went wrong earlier and has since been fixed, or has not been.

## Keeping it useful

- Review monthly, shortly after the period closes, while anyone can still remember why.
- Investigate large variances in both directions. An unexpectedly small cost is as informative as a large one.
- Reforecast rather than rewriting history when circumstances change materially.
- Keep the original budget. Comparing against a figure that has been quietly edited all year proves nothing.

> **Tip:**
>
> **Two columns, not one**
>
> A variance report showing the month alone will send you chasing timing differences every month. Showing month and year-to-date side by side answers most questions before they are asked.