Business Blue Print Document for Funds Management
Scope (Brief description)
The functions in the component Public Sector Management – Funds Management (PSM-FM) supports in creating budgets. The tasks of Funds Management are to budget all revenues and expenditures for individual responsibility areas, monitor future funds movements in light of the budget available, and prevent budget overruns, budgets can be change by entering releases, supplements, returns, and transfers.
Entering an FM account assignment (for example commitment item, funds center) when creating a document in FI, the system will determine an FM area before it can flow the data to Funds Management.
The FM area is derived from Company Code (organizational unit in Financial Accounting) by assigning the company code relevant for Funds Management to an FM area. One or more company codes can be assigned to an FM area.
Funds Management will be activated for all company code at once.
Exclusion: Funds Management will not cover budgets for Capital Expenditure (CAPEX). CAPEX will be covered through Project Systems or Internal Orders.
Expectations / Requirements (General Explanations)
To control actual cost incidence over budgets at various fund centers (combination of cost center / MM Organization element) through operational budgets and also to provide effective and seamless management reporting tool aimed at monitoring and controlling costs.
In order to achieve the above stated requirement, it is proposed to make use of SAP’s Fund Management (PSM-FM) component to organize the business into various Fund centers with a view to Control the actual cost. Further, to report on budgets utilized and available against each commitment item.
Explanations of Functions and Events
To facilitate budgetary control and monitoring the operational efficiency of various organizational elements in terms of funds centre. It is proposed to structure the company codes into various Fund centers for the purpose of budgetary controls.
Commitment items are assigned to GL Account where a budget has to be fixed and cost centers are assigned to funds center. Budgets are maintained for commitment item against the funds centre. When the actual cost is incurred in each of these responsibility areas the costs are captured in commitment item against each fund centers and checked for availability of funds.
The data flow into Funds management can be derived from the transactions originating from Finance and Logistic Modules by way of cost element and Cost Centre on the posting line item itself.
Business processes for Budgetary Control
Budgeting can be done on the basis of Annual Values or Overall Values and both Top-down and Bottom-up approaches can be followed while establishing the budgets. It is proposed that the Annual values basis be followed for budgeting Bottom-up.
In the case of Annual Values budgeting, periodic (monthly) distribution of Budget values within the fiscal year will be made by the system only statistically on the basis of Distribution Key defined in the Budget definition screen. However, the availability check will be performed against a specified % on the Annual Value. For example, during the beginning of every quarter, 25% of the Budget can be released and the balance can be blocked.
Once the budget has been created, it has to be released for each budget object. The Budgeting process in FM Area can be handled with the help of Budget Objects. Budget Object is a combination of Funds Center and Commitment Item. The budget structure represents all the funds centers and commitment items for which budget or postings have been made, in their entirety for each fund in hierarchy format.
Process Flow
1.Create Commitment Item
2.Create Fund Center
3.Derive fund center as per derivation rules,
4.Derive Commitment Item from GL Account
5.Define Budgets against each Commitment Item and fund center ( Budget object)
6.Release Budget
Each Cost center / Cost Center group (representing a department or function in a plant will form a Budget Area (Fund Center). Accordingly, there exists a one-to-one or many to one relationship between cost centers and fund centers.
Commitment Check will be at Fund Center level. Hence, whenever the expense posting exceeds the Commitment budget for the Budget Object, the availability control will be active.
The data in the cost Centers and Fund Centers tallies with respect to the Commitment Items.
Availability Control and Tolerance Definition
Availability Control checks the Budget before the creation of Commitment. For this process, each Cost Center will be attached to a Fund center. Fund Center will be derived from the Cost Center assignment.
Availability check can be made to work along with the Tolerance Limits specified for each Business Transaction. The system can also be notified with the action it should display if the tolerance limit for the business transaction is exceeded.
Note: Commitment check will be available for Expense only. It will not be available for notional postings like Depreciation and assessments, Clearing GL accounts.
Availability Control is available at following Transaction postings:
GL expense postings
Procurement material / service transaction
Availability checks:
Three types of availability control options can be done. For example:
1. 80% utilization = Warning message.
2. 90% utilization = Warning with mail to the responsible person
3. 100% utilization = Error message.
The availability control is set for a FM area generally. The facility to do checks for specific combinations of Fund Center and Commitment is provided.
The following scenarios/documents are identified, where payment budget to be captured and Budget availability check to be performed:
Scenarios Type of Budget Availability checks possible
Direct FI entries Blocking or Warning
MM direct expenses booking Blocking or Warning
MM Procurement transactions Blocking or Warning
Planning Process
Plan Data will be initially keyed in at Cost Center level and stored in version 0. The plan data so captured will be summarized at the Organization level and the normalization process will be initiated (viz., running up / down the plans and submitting to corporate for approval and obtaining their concurrence etc) and approved plan will be transferred to version 01
Once the Budgets are approved the same will be copied to FM component as approved budgets as annual values.
Note: All Budgets will have a time span applicability of one year and unexpired budgets will not be carried forward.
Configuration
If you have similar type of business requirement in your hand and you are looking step by step help document, Please find as below
Budget Control System (FM-BCS) Concept Presentation
Funds Management BCS Configuration
FM Business Process on P2P Cycle with Down Payment
How to Migrate Former Budget to Budget Control System
How to Control Authorization on FM Master Data Level
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I really love this article…. great work and very good collection of document…Raman
I found very helpful this set of documen.I found that it is a complete document for all about BCS. With the help of configuration document I could implement my project…. thanks to all sapebooks team.