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This document explains how integration between material management and funds management takes place in SAP, also includes SRM integration in a standalone. classic and extended classic scenarios.

1.    Introduction to Funds management.

Fund Management module related to creation and management of budgets. The goal of Fund Management is to budget all revenues and expenditures of cost and revenue elements, and to limit transactions for those elements withing the allocated budget.

The Fund Management module is integrated with other SAP modules. The basic requirement is to integration Funds Management with General Ledger Accounting component. Funds Management can also  be integrated withs Materials Management so that the procurement process of non-productive items can be controlled from creation of purchase requisition to creation of invoice. Integration ensures that the transactional data flows to Fund Management without the need for entering the data again in funds management.

The Organizational unit for Fund Management is the Financial Management Area (FM area). To be able to take advantage of the integration, FM area must be linked to other organizational units.  When a Financial Accounting document is assigned to Fund Management assignment objects such as Commitment item and Fund Center the system has to determine the FM area so that the data is recorded in the Fund Management.  For this reason we need to specify how the FM area is determined.

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2.    Intergration with MM

Transactions carried out in Materials Management are updated in Funds Management.

The following activities are recorderd in Funds Management:

  • Purchasing: Purchase requisition, Purchase Order and Scheduling Agreement
  • Inventory Movement: Goods receipt, Goods Issue, Goods Return
  • Invoice verification: Invoice Receipt, Logistics Invoice Verification

Assignment of FM area to Plant and Purchase Org

FM Areas are not directly assigned to any Plant or Purchase Org, FM areas are assigned to company codes and then the Plant or Purchase Org is assigned to the company code

SAP Customizing Implementation Guide > Enterprise Structure > Assignment > Financial Accounting > Assign company code to financial management area

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SAP Customizing Implementation Guide > Enterprise Structure > Assignment  > Logistics – General > Assign plant to company code

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OR

SAP Customizing Implementation Guide > Enterprise Structure > Assignment > Materials Management

> Assign purchasing organization to company code

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When transactional data is posted in other modules, such as Materials Management and Financial Accounting , the system passes on the data to Funds Management (FM). The actual data is updated in FM and can be displayed in the information system.

In configuration it can be defined whether the goods receipt should be included in Funds Management, the process for display of tax, the currency type to be used for currency integration and whether sales orders are to be updated in FM ro not

GR/IR Updating

If  Goods Receipt is chosen, the actual data is displayed in Invoice column in the information system, per the goods receipt date.

If  Invoice Receipt is chosen, the actual data is displayed in the Invoice column in the information system, per the invoice receipt date.

Price differences while posting the GR or IR are also included.

Tax Display

If you choose Net, the information system on the commitment item shows no value added tax but only the net tax.

Funds are committed based on the delivery date of the item.  For example if the PRn is created in May, but the delivery date of the Goods or Services is in July, the funds will not be committed in the current fiscal year, but will be committed in the next fiscal year (assuming the fiscal year runs from April to March).

3.    Integration with SRM

Like MM SRM system can also be integrated with funds management. Commitment postings are done in real time. All changes that are made to the shopping cart data or the creation of follow-on documents lead to the direct adjustment of the commitment. For other purchasing documents, such as RFxs or auctions or contracts, no funds are committed in the system. Multiple account assignment is supported and leads to the commitments being split according to the percentage or value distribution among the different account assignment objects.

Supported scenarios:

·    SRM standalone scenario

·    SRM classic scenario

·    SRM extended classic scenario (ECS)

All of the shopping cart item types are supported:

  • Standard items
  • Limit items
  • Service items
  • Catolog items

Budget check in three types of setup of SRM –

Standalone scenario:

A commitment is only simulated in the shopping cart at the time of ordering it, with the amount in the PR the budget is checked with the backend using a RFC. No commitment is written to the system. After the purchase order is posted in the SRM system, the commitment is created in the backend system using an IDOC. If you change, delete or edit the PO in ways related to funds management, a new IDOC is sent back to the SRM system. This IDOC however only contains the difference from the old commitment.

Extended Classic scenario

In the extended classic scenario there is only a little difference from the Standalone scenario when you are creating the shopping cart. That is, with theSC amount the budget is checked online using a RFC to ECC system. No commitment is written to the system however. A copy of the local purchase order is first is transferred to the back end when you post a purchase order, this when the commitment posting takes place. This is done by calling the BAPI_PO_CREATE1 or BAPI_PO_CHANGE BAPI. If the invoice is entered in the ECC system,then the reduction of the commitment values is carried out within the ECC system.

Classic scenario

As the case with the Standalone scenario, a commitment is again only simulated in the SRM system, that is, the budget is checked using a RFC, but no commitment is written to the database. After the shopping cart is saved, the commitment is transferred to the back end (ECC system). A commitment is created depending on the setting in the back end, either as a purchase requisition commitment or a purchase order commitment. All further movement of the commitment occurs in the back end with the subsequent GR and IR.

4.    Flow of commitment in a MM cycle

Business transactions posted in Materials Management are updated in Funds Management (FM). The recording of the flow of funds depending on customizing and the following factors.

Irrelevant postings

If no budget-relevant update is wanted, it can be configured that the update only takes place statistically in Funds Management for purchase requisitions and purchase orders without account assignments (these are purchase requisitions and purchase orders in which no account assignment category was specified) and for the goods issue. This can be done in the settings in Customizing and by assigning a statistical commitment item for the warehouse stock account.

Value based or quantity bases commitments

The Value-based commitment indicator can be set in SAP NetWeaver > General Settings > Check Units of Measurement.

Value based commitment.JPG

This indicator decides whether commitments for this unit of measurement are recorded on a quantity basis or a value basis. If this indicator is not set then then the commitments are recorder on a quantity basis but if it is set then they are managed on a value basis. For value-based updates, the transfer of purchase order commitments takes place on the value of goods receipt or invoice. For quantity-based updates, the transfer of purchase order commitments takes place on quanity of the goods receipt or invoice .

For example

  • The PO is created with net value 500 Euros and 10 PC, i.e. each item of 50 Euros
  • A valuated GR is posted with a value 450 Euros and 10 PC, valuing each item at 45 Euros only
  • For value-based transfer, an amount of 450 Euros is tranferred from the commitment to actual.
  • For quantity-based updates, the entire amount of  500  Euros is updated as the quantity delivered is still 10 PC.

(PR’s commitment in Funds Management are always transferred by quantity from PR to PO).

Parked Documents

Parked documents are only updated if they have the status “Complete”. Parked documents having reference to a PO or funds reservation are not updated in the Funds management.

Sample Cycles

Whenever funds management is active budget is normally allocated to a cost center or real internal order for a fiscal year. In the MM cycle it moves through various stages for each material document created. Let us see the flow for a few typical scenarios, taking an example of an internal order IO00000111 with a total budget of 1000 Euros for a fiscal year, the value of the SC or PR is 500 Euros and quantity is 1 PC.

Note: These can be checked in the system with the T Code – S_ALR_87013019

Scenario A: PO, GR and IR created of the entire value, GR Valuated

  1. When a    shopping cart or Purchase Requisition is created

The total value of the SC or PR is added against the commitment when the SC or PR is created and released. 

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

500

500

500

Total

1000

0

500

500

500

  1. When the PO is created

The commitment is transferred from the PR to the PO but it is still shown as commitment, however a new PR can only be of the value of 500 Euros or less as the funds are still committed to this PO

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

500

500

500

Total

1000

0

500

500

500

Note that purchase orders for which the Return item indicator is set are not updated in Funds Management

  1. When the GR is created

Now the GR is created the value is no longer fictional but becomes an actual expense so the value is transferred from Commitment to Actual (note that GR is valuated in this scenario)

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

500

0

500

500

Total

1000

500

0

500

500

  1. When the IR is created

When the IR is done the commitment stays intact as the funds were already updated as part of the GR creation.

Scenario B: PO, GR and IR created for part of the entire value, GR Non-Valuated

  1. When a    shopping cart or Purchase Requisition is created

The total value of the SC or PR is added against the commitment when the SC or PR is created and released.

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

500

500

500

Total

1000

0

500

500

500

  1. When the PO is created

Let us assume the value of the PO is changed to 300 Euros but quantity is 1 PC, so the entire PR is consumed. The commitment is transferred from the PR to the PO but it is still shown as commitment, a new PR can now be of the value of 700 Euros or less as the funds committed to this PO have changed

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

300

300

700

Total

1000

0

300

300

700

Note that purchase orders for which the Return item indicator is set are not updated in Funds Management

  1. When the GR is created

Now the GR is created but the GR is non-valuated so the funds are still committed and not consumed so no transfer takes place from Commitment to Actual

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

300

300

700

Total

1000

0

300

300

700

  1. When the IR is created

When the IR is done the commitment moves from the commitment to the actual funds consumed. This is due the fact that the financial documents are only posted at the time of IR creation

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

300

0

300

700

Total

1000

300

0

300

700

Scenario C: PO, GR and IR created for part of the entire quantity, GR Valuated

  1. When a    shopping cart or Purchase Requisition is created

The total value of the SC or PR is added against the commitment when the SC or PR is created and released.

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

500

500

500

Total

1000

0

500

500

500

  1. When the PO is created

Let us assume the value of the PO is unchanged as 500 Euros but quantity is only 0.5 PC, so the entire PR is not consumed. The commitment is transferred from the PR partially to the PO but it is still shown as commitment, a new PR can only be of the value of 500 Euros or less as the total funds committed to this PO and PR are unchanged

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

0

500

500

500

Total

1000

0

500

500

500

Note that purchase orders for which the Return item indicator is set are not updated in Funds Management

  1. When the GR is created

Now the GR is created of .25 PC and the GR is valuated so part of the funds are still committed and part of it are consumed, so a transfer takes place from Commitment to Actual

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

125

375

500

500

Total

1000

125

375

500

500

  1. Delivery Completed indicator is ticked in the PO

When the final delivery is ticked the system now takes that no more deliveries are expected on the PO and the remaining quantity will not be consumed, so the system releases back that amount to the available funds, the funds released will be for ordered but not delivered quantity .25 PC so the funds released will equal 0.25 X 500 = 125 Euros. Checking the final delivery indicator in the SRM confirmation or delivery completed indicator in the GR at the time of posting has the same effect/wp-content/uploads/2014/05/image009_459757.png

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

125

250

500

500

Total

1000

125

250

500

500

  1. When the PR is closed or deleted

Closing the PR by checking the closed indicator will also release the funds allocated to it, in our example the unordered quantity is 0.5 PC, so funds equal to 0.5 X 500 = 250 Euros will be released back to the available funds. Deleting the PR will also have the same effect in the commitments

/wp-content/uploads/2014/05/image011_459762.png

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

125

0

125

0

Total

1000

125

0

125

0

  1. When the IR is created

When the IR is done the commitment stays intact as the funds were already updated as part of the GR creation.

Orders

Budget

Actual

Commitment

Allotted

Available

IO00000111

1000

125

0

125

0

Total

1000

125

0

125

0

These three scenarios cover most of the possible situations in MM cycle.

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8 Comments

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  1. B V Mittal

    Dear Mr Amit

    The document published by you on “Integration of Funds Management With Materials Management in SAP”  is very informative and useful . Thanks for providing such a useful document .

    In this document , You have mentioned that in configuration it can be defined whether we want to update Fund-Management for Goods Receipt / Goods Return .  We require that Funds-Management not be updated for “Goods Receipt / Goods Return” .  I request you to kindly guide us about the steps to be followed to make setting in spro for this .

    Kindly help us pl .

    With Regards

    B Mittal

    I

    (0) 

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