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  1. Funds Management for Cost objects


Process Flow


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Organization structure

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FM Area

The financial management area is an organizational unit within accounting which structures the business organization from the perspective of Funds Management.Each company code would be created as a FM area. All the configurations and transactions are based on FM area.


Funds Center

Funds Center is the level at which we create budgets in SAP. It could be at Company Code level, Cost Center Group level or Cost Center level. We can create cost centers as Funds Center but the budget checking (for actual and commitment) will be done at Fund Center group level.

Funds Center Group for budget checking can be a cluster of Cost Center based on the rules as below, viz:-

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Commitment Item

GL accounts are mapped to Commitment Item

Commitment Item is a group of various GL accounts for which budget is created. In SAP budgeting is done at Commitment Item level.

Budgeting is not done for all the GL a/cs. There are certain expenses which are incurred once in a while or for some GL a/cs we do not create any budget (e.g. employee expenses, diesel etc) for this accounts for which there is no commitment item, we set up the tolerance profile for this accounts as ‘without error message’ so that it will not be funds checked.


Budgeting

Budgeting is done Cost Center wise. Budgeting can be done in SAP or outside SAP and subsequently loaded manually. For cost objects economic budget is loaded.


Budget Utilization

Budget can be consumed in three ways:

  • Purchase requisition (PR)
  • Purchase order (PO)
  • Funds reservation


Commitment  – Blocking of Funds

Commitment here is different from Commitment Item which we discussed above. Commitment means the amount/liability which we know will arise in future and whose amount is certain. Example could be a Purchase Order (PO) – we know the amount which we have to pay against a PO and the date when it is due. For PO, commitment is created based on the delivery schedule date.

Commitment is used for blocking funds from the budget so that when the actual liability arises, the budget is not exhausted.

Commitment can also be created by Fund Reservation – T.Code: FMX1

Now, let’s say that we have created a Fund reservation for purchasing something. At the time of invoice receipt, we should utilize the funds which we have reserved and not from the budget. This is because we have already reserved funds out of the budget. There is a cell called Earmarked funds wherein Fund Reservation document number has to be mentioned (this is there in both cases

  • where invoice is entered on the basis of PO – MIRO; or
  • where there is no PO i.e. direct invoice F-43

Actual             Actual is the actual amount taken from FI postings and it is as on posting date.

Availability     Availability = Budget – Commitment – Actual

Whenever we utilize the amount from commitment i.e. when FI entry is passed, Commitment shifts from to Actual.

If there is sufficient balance in Budget then the payment can be made, else we need to increase the Budget. This case could be vice-versa also. In that situation, the Budget would be increased.

Utilized = Actual + Commitment


Reporting

SAP standard report like FMAVCR01 can be used to display the amount allocated to the budget, consumed (commitment + actual) and the balance available.


Integration

Material Management- Funds management document is created when the PR/PO is raised in MM module.

Production Planning and Control – Funds management check is done for the respective cost center on the material issue for production order.

Plant Maintenance – Funds management check is done for the respective cost center for procurement transactions on maintenance orders.

   

  1. Funds Management for Invetsment objects

Process Flow


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Organization structure

org structure.png

FM Area

Each company code is created as a FM area.


Funds Center

For Investment object the Fund center will be represented by WBS and the fund checking will be done at individual project level or level 1 WBS.


Commitment Item

All G/L accounts will be budget checked for investment objects. For investment objects, all Gl accounts the tolerance profile will be set as ‘with error message’


Budgeting

Budgeting is done Project wise. Budgeting can be done in SAP or outside SAP and subsequently loaded manually. For investment objects financial budget is loaded for funds management. For budget check at PS level a separate budget can be loaded.


Budget Utilization

Commitment  – Blocking of Funds

Actual             Actual is the actual amount taken from FI postings and it is as on posting date.

Availability     Availability = Budget – Commitment – Actual


Reporting

SAP standard report like FMAVCR01 can be used to display the amount allocated to the budget, consumed (commitment + actual) and the balance available.


Integration

Material Management- Funds management document is created when the PR/PO is raised in MM module.

Production Planning and Control – Funds management check is done for the respective cost center on the material issue for production order.

Plant Maintenance – Funds management check is done for the respective cost center for procurement transactions on maintenance orders.

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