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Author's profile photo Stefan Mueller

Active Budget Control in SAP Business ByDesign


I’m a product manager for SAP Business ByDesign with focus on financials and would like to share my point of view how these new enhancements introduced in release 2205 complement the existing capabilities of planning and encumbrances.  SAP Business ByDesign has been extended to give customers additional means to actively control spending behavior for cost centers with cost collector projects and direct cost projects. I have been happy about the insights that are captured in our systems – but kept advocating to put means into place to help the CFO to put a tighter spending regime into place, if required. To know after the fact that budget has been exceeded is, in many cases, too late or not acceptable.

I think it would be very beneficial for the community not just to highlight the new capabilities but to put them into an end-to-end context and to understand how they build on top or relate to each other. Therefore, I created a series of related blog posts including the activities to set the scenario up and introduce it into existing running processes. Finally, I would like to stress the areas of openness (addressed especially to partners) and illustrate what they are intended for. It had been crucial for the SAP team in the design phase to keep openness in mind to allow partners with their respective customers to enhance and add on top of the standard capabilities.

Active budget control – main enhancements

The following diagram illustrates the key elements being additionally introduced or enhanced


Active Budget Control – Main Enhancements (updated 2022-06-01)

  • Introduction of a budget category
  • Capability to release portions of the planned yearly budget to be spent
  • Execute budget check at release, approval or change of purchase order against the available budget at the granularity of cost center, budget category, year to period (YTP) of available budget
  • Execute budget against direct cost project available budget compared based on the project cost estimate
  • Budget check available for invoices without purchase order reference
  • Activation of budget check for procurement on cost center level
  • Available budget for cost centers  = YTP released budget – (Actuals complete year + Encumbrances) using default set of books and default released version
  • New reports and enhanced analytics for budget monitoring
    Cost Centers – Budget Monitoring
    Projects – Budget Monitoring
  • Changes to plan data entry and new released budget
  • Journal entry voucher with budget category
  • Recurring Journal entry voucher with budget category
  • Journal entry lines with automatic population of budget category from preceding documents
  • Partner openness for process enhancements

Series of related blog posts

In this blog post you have access to detailed blog posts on specific topics relevant for the overall process. These also cover aspects like scoping, configuration but also required process steps to benefit from active budget control from an end-to-end perspective.

The related blog posts that explain the entire process in more detail can be accessed here:


New Report: Cost Centers – Budget Monitoring

Personas involved

The process of active budget control involves multiple personas and different activities at different points in time. The personas are:

  • Financial or cost accountant / CFO
  • Manager with cost center responsibility and assigned direct cost or cost collector projects for overhead spending
  • Procurement department
  • (Probably employees with transaction having cost impact – using partner extensions)

Process story

The basic concept is simple and can be summarized in a few sentences:

  • The yearly budget (plan) is approved
  • Step-by-step budget is released to be spent
  • At purchase order creation (or manual supplier invoice creation without reference), the available budget is checked and, in case it would be exceeded, creation of the purchase order is not possible and blocked
  • The available budget for cost centers and cost collector projects is determined by the released budget reduced by actuals and reduced (optionally) by encumbrances at the granularity of budget categories
  • For direct cost projects the total project cost estimate on project task level is the basis for budget comparison. *
    (*in public sector edition for direct cost projects a financial planning and release budget at the granularity of budget category are required)
  • Partners can extend the capabilities at multiple points


Budget Check Violation at Release of Purchase Order

The more extended version of the story could be:

As part of fiscal year preparation, the approved yearly budget plan version for cost centers for the default set of books is finally set in December for next year. In addition, the customer now must decide for example on a periodic or quarterly basis which portion and which budget categories of the planned yearly budget should be released for spending by the cost centers. This capability to periodically release only a portion of the budget gives the CFO better control on the budget spending over the duration of a fiscal year and stop “burning nearly all yearly budget in the first 2 quarters”.

We all know, that no plan or released budget is carved into stone. We all encountered these situations. The business environment might change, reorganizations might be required, unexpected situations might occur. So cost accountants do and must have the capability to:

  • Shift released budgets between cost centers or budget categories
  • Adjust released budget by increasing or decreasing it. Checks are implemented that the sum of the released budget does not exceed the year total of the default agreed plan (at a granularity of cost center and budget category).
  • If required, even the yearly plan can be adjusted and changed according to the business needs.
  • Customer can decide that released budget is allowed to exceed planned budget

Now that planning is in place and a portion of budget is released there is a key question: “How does all this relate to ‘active’ budget control?”

Especially for spending caused by procurement on cost centers, direct cost and cost collector projects that are directly subject to influence, a budget check is now available.  It checks at the point in time of purchase order release, approval or change after release the available budget. This enhancement of a budget check is also implemented for the supplier invoice without a reference to a purchase order.  It will check the anticipated to be spent amount on the purchase order against the respective available budgets. If the amount in the purchase order (item) exceeds the available budget, the purchase order cannot be released. There is a VETO! But what is available budget?

  1. On the purchase order (PO) the items with reference to cost centres and budget categories are summarized.
  2. At this point the net amounts (including non-deductible taxes) in the purchase order (converted into company currency) are checked against available budget BEFORE the PO can be released or approved.
  3. The available budget is computed:
    Cost centers und cost collector projects on the combination of cost center and budget category as: Released budget YTP – (Actuals + Encumbrances)
    Direct cost project: Project task cost estimate – (Actuals + Encumbrance)
  4. Currently encumbrances include the prior created purchase order encumbrances from other purchase orders affecting the same cost center and budget category. If these POs are invoiced or a goods receipt is posted the incurred encumbrance is automatically decreased or finally cancelled.
  5. In case the required amount exceeds the available budget, the purchase order cannot be released. Active steps by the procurement department to resolve the conflict must be taken before the PO can be released.

Naturally, the cost accountants and CFO also do have plenty of other means at hand to monitor or to be alerted the ongoing activities. Variances might occur at times of goods and service acknowledgement. Deviation also might occur in the supplier invoice processing or by currency exchange rate effects. In addition, the controls in supplier invoice processing also have strong elements of enforcing tight controls. But also, the flexibility in analytics encourage to build specific dashboards, KPIs, reports and customer defined measures monitoring on critical variances from different sources depending on your industry or requirements. These capabilities will not be portrayed in this blog post series.

Extensibility for partners

I encourage partners to extend the existing planning, release and budget check solutions based on their customer feedback.  Embedding budget check in more transactions could be one option. Another touchpoint could be to build advanced request scenarios for budget adjustment requests building defined constraints into these requests with their customers. For this purpose, we have compiled the following set of blogs focusing on extensibility and openness in the context of active budget control:

  • Budget Check (API)
  • Budget Category Enhancement during Journal Entry Creation (BADI)
  • Budget Released and Change Budget Released (Webservice)
  • Plan Budget and Change Plan Budget (Webservice)

Is procurement the only source that influences the overhead budget? Absolutely not. However, implementing budget check for every kind of transaction seemed also not to be the right approach since it might completely block the processing of the transactions in certain environments. One of these examples is the enhancement of the journal entry voucher with a budget category. SAP has decided by purpose not to implement a budget check on the creation of the journal entry voucher because many customers ask for an empowered cost accountant to post corrections or other required financial adjustments with this means. With an optional 4 eyes principal in place, SAP decided against a standard budget check. Partners though can on request of their respective customers ‘plug-in’ a budget check utilizing the budget check API and surround it by the required set of controls or customizing. Similar enhancements might be specifically requested for expense reports or other transactions.


It has become clear that the additionally introduced capabilities give customers better means to control spending behavior in the overhead cost area. Moreover, it is obvious that a high degree of flexibility and customer enhancements is key to cover many different scenarios and control systems potentially required. In the detailed blogs I touch on the main required or optional elements, the existing and the newly introduced ones, and share my view on the topic to allow customers and partners to make an informed decision whether, when and in which steps to introduce the processes along active budget control.

I hope you got some benefit out of this series of blog posts. Share your thoughts or experiences.

See also available help at for this topic



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      Author's profile photo RAY KANYEPI

      Hi Stefan - thanks for this. How do we activate the new Active Budget Control enhancements in our Production and Test SAP BYD Tenants immediately?


      Author's profile photo Stefan Mueller
      Stefan Mueller
      Blog Post Author

      This is part of the SAP Business ByDesign 2205 release being released to customers very soon. The next couple of days I'll be publishing the mentioned detailed blog posts. I strongly recommend to read these first, setup a dedicated introduction project that suites your particular situation

      Author's profile photo RAY KANYEPI

      Exciting!! Will make a quantum leap in budgeting + planning capabilities of BYD! Will we get demo-videos in UI with this release? Thanks once again

      Author's profile photo Stefan Mueller
      Stefan Mueller
      Blog Post Author

      Hi Ray, I decided to provide a series of detailed blog post including many screenshots. I believe this suites the needs of the community better by being able to address the typical and detailed questions that will arise. So I didn't plan to produce a end to end video.

      Author's profile photo RAY KANYEPI

      Hi Stefan - thank you! Do you mind if I volunteer to do draft demos that you can review, edit and hopefully sign off for release? Will use dummy data and hopefully the training tenants used in the OpenSap app. Let me know your thoughts.  Thanks

      Author's profile photo Eun Seok Bang
      Eun Seok Bang

      Hi Stefan,

      From the picture “Active Budget Control – Overview Enhancements”, the line for Budget category “Salaries” shows Plan is used to calculate Available budget instead of Released budget(in this case, none). 

      So can I conclude the formula for available budget like the following?

      Available budget = YTP released budget* – (Actuals complete year + Encumbrances)

      * Planned budget if there’s no released budget




      Author's profile photo Stefan Mueller
      Stefan Mueller
      Blog Post Author

      Hello EunSeok

      I have to confirm I made a mistake in the PPT Screenshot Active Budget Control – Overview Enhancements”. I apologize probably having created any confusion. In the meantime I corrected the screenshot.

      • Scenario 1: Active Budget Control is scoped - the report will work as depicted in the updated screenshot.
      • Scenario 2: Active Budget Control is NOT scoped - the report will behave differently.
        - there is no budget category available in financial planning
        - there is no budget release available
        - there is also no budget check in the purchase order available
        But still the report can be used to compare plan values that will be shown in the budget column  against spent = actuals + encumbrances

      Thanks you for your understanding

      Author's profile photo Eun Seok Bang
      Eun Seok Bang

      Hi Stefan,


      Thank you very much for clarification!




      Author's profile photo Karthikeyan Chakravarthy
      Karthikeyan Chakravarthy

      Great Share!!. Long time expected functionality and really excited as this will help lot of customers.

      Author's profile photo Wenling Zhang
      Wenling Zhang

      Hi Stefan,

      I tested this new features and below are my findings so far, can you please review and confirm if my findings are correct?


      1. The active budget check need to check budget against a specific cost center or cost collecting project.
      2. The active budget control is currently working on expense and "non stock" items, if there is any inventory stock purchase, we still can't do active budget checking on the procurement process.

      One of our customer's specific ask is to place budget control on inventory stock purchasing, so that they can take pro-active control on their inventory. Could you please let me know if there is a way to get that from the out of box functions?


      Author's profile photo Stefan Mueller
      Stefan Mueller
      Blog Post Author

      Hello Wenling,

      here are the answers to your questions.

      1. Q: The active budget check need to check budget against a specific cost center or cost collecting project?
        A: Yes - there must be a cost center or a project task (type: direct cost or cost collector)  cost assignment in place on purchase order item level
      2. Q: The active budget control is currently working on expense and "non stock" items, if there is any inventory stock purchase, we still can't do active budget checking on the procurement process?
        A: The active budget check is currently only designed for non-stock procurement. Primarily because  only here plan data, project cost estimate or released budgets exists.

      So active budget control is currently not suitable to control inventory levels from a procurement standpoint.


      Author's profile photo Wenling Zhang
      Wenling Zhang

      Thanks for the reply Stefan.

      So currently is there any other better pro-active way to help customers control their inventory levels? If not, any development plans in the roadmap that will meet towards this target?


      Author's profile photo Stefan Resag
      Stefan Resag

      Hello Wenling,

      to control stock levels you can use the safety stock level and target stock level and lot sizing method in the product master data - Planning section.

      Best regards,


      Author's profile photo Elen MAHE
      Elen MAHE

      Hi Stefan,

      Thanks for all these interesting information.
      I run some tests but something is not completely clear for me.

      I read all the blogs related to the active budget but I couldn't find the answer to my question - I probably have missed it.

      Let me take an example to illustrate my doubts :
      I have an active budget on the budget category "Others" - Cost center xxx

      I have allowed 1000€ per month to this budget category/CC

      I have released the budget for the all year in Byd

      We are in 08/2022
      As of today, I have already consumed all my allocated budget - 8000€ (8*1000)

      Today (so in August 2022), I am creating a new purchase order for 500€ with a delivery date in 09/2022

      The system blocks my order because I do not have budget available but in my perspective it shouldn't because my plan is to receive the delivery the next month which means it should check if I have budget available in September and not in August.

      Could you confirm it is the system behaviour?
      Or did I miss something in the setting up?


      Author's profile photo Stefan Mueller
      Stefan Mueller
      Blog Post Author

      Hello Elen,

      in the detailed blog post I tried to list the implemented behavior.

      Active Budget Control in SAP Business ByDesign – Budget Check for Cost Centers and Projects |

      So in your example the YTP = 08 / 2022 is taken into consideration if the PO is to be released today. It does not take the anticipated delivery date into consideration. Having said that you might need to adjust the strategy when to release budget. In your case earlier.

      Hope that answer clarifies your question.

      Best regards


      Author's profile photo Elen MAHE
      Elen MAHE

      Hello Stefan


      Thanks very much for your confirmation.

      It is what I thought but I wanted to be sure that I understood correctly.