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SAP Central Finance: Central Budgeting for Internal Order

Introduction:

With latest release of SAP S4HANA 2020, SAP has introduced new functionality, Central Budgeting for Internal Orders, in SAP Central Finance scenario. This functionality is allowing a centralized approach to managing budget in a Central Finance system while the budget is typically consumed in a process carried out in the source systems.

With Central Budgeting a remote budget check from a source system to a Central Finance system will be active during the posting process where the budget is consumed. For example – If you use Central Budgeting, then whenever you are performing an FI posting, such as creating a vendor invoice, or a CO posting, such as entering a manual cost allocation or a direct activity allocation, with which you post costs to an internal order in a source system, the system checks the budget in the Central Finance system.

User Guidance on Customizing (Source System):

The remote budget check during a posting in a source system will consider the Customizing settings made in the Central Finance system for the budget profile and tolerance limits for availability control.

Apart from it, in order to use Central Budgeting for Internal Orders functionality a new Customizing activity is now available in Customizing for Central Finance in Source System.

Path:

IMG->Financial Accounting-> Central Finance-> Central Finance: Source System Settings:

(Or, you can directly use the transaction code – CFINIMG)

A) Set up Connection to Central Finance System-> Maintain RFC Assignments and Settings for the Central Finance System

This activity is performed to create an RFC destination in the source system for Central Budgeting for Internal Orders.

B) Settings for Central Budgeting->Settings for Internal Orders:

You need to define the company codes and internal orders for which you want to enable Central Budgeting for Internal Orders with (error enablement)

Benefits:

SAP has moved ahead with its S4HANA innovations and expanded the central finance scope with inclusion of Financial planning and analysis (FP&A) through this new functionality of Central Budgeting with Internal Orders. It will provide below benefits to the business –

  • plan and release budgets centrally for replicated internal orders
  • harmonize and streamline the budgeting process
  • Centralize budget maintenance and better budget control by allowing several processes in the different source systems to consume a common budget
  • enable activity control in the source systems to check (validation with/ without error functionality) against a centrally planned budget

Recommendation:

  • In my opinion, all those clients, who are using CFIN and using IO based budgeting, should be doing all reporting for internal orders which are part of Central Budgeting in the Central Finance system. For all new clients it is highly recommended to enable this functionality.

Reference:

This document is based on SAP S4HANA release 2020. Please refer to What’s New document https://help.sap.com/doc/b870b6ebcd2e4b5890f16f4b06827064/2020.000/en-US/WN_OP2020_EN.pdf for more details.

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