How to consider an annual fee on the budget?

Anon
Are you doing an accrual based budget or a cash flow?
If accrual, then I think forecast 1/12th each month.

If it is non refundable, it should be booked in full in the month incurred. Generally it is always better to do that, as it will help you forecast cash flow better and a non material ($300) charge is better booked in the month incurred.

If the product or service is received throughout the year and just happens to be paid monthly, and if the purpose of the budget is for overall strategic planning and less for cash flow purposes, then spread it out.

Generally, all budgets should be prepared under the accrual basis (unless your financial statements are prepared on the cash basis). So in this example you should spread the expense evenly to the 12 months. Ideally, you should have the ability to specify in the budget software how (and when) the payment should be made (think in terms of Vendor Payment Terms).

If your budget software can automatically generate a balance sheet and a statement of cash flows from the budget (and synchronized to the P&L) you will get your cash flow numbers in each budget period and all balance sheet account balances for the duration of the budget.

I highly recommend doing it this way since you will not have to approximate your cash flow, either high level or through a very complex model you build in a spreadsheet.

The example given here is immaterial to budget and cash projection results but is a good example how this type of transaction should be handled.