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Author's profile photo Stefan Mueller

Active Budget Control in SAP Business ByDesign – Financial Planning / Revenue and Expenses

Financial planning –  Overhead Costs and other Gains/Losses, Revenues and Cost of Goods Sold

This is a detailed blog post in the context of SAP Business ByDesign capabilities related to active budget control – see main blog post: Active Budget Control in SAP Business ByDesign

But the information here gives valuable insights to how to enter financial planning data in general.

Overview planning

Why do we need to talk about planning at all?

  1. Financial planning is the prerequisite to release budget. Without plan data no released budget is possible.
  2. Released budget is the prerequisite to execute budget checks on the purchase order (PO) or supplier invoice creation for account assignments to cost centers and cost collector projects
  3. Released budget is related to the default plan version only

In SAP Business ByDesign the data entry of financial plan data is supported by using excel templates that integrate with the SAP Business ByDesign system. It is clear that we are not talking about supporting an entire planning process that orchestrates the phases and stages of planning itself. The capabilities allow financial or management accountants to enter the financial plan data into the SAP Business ByDesign system for operational reporting and monitoring in order to benchmark the actuals against the plan. In addition, with uploading deltas and changes there are capabilities to adjust the plan over time if required.

In this blog post I will focus on the planning of revenue and expenses and stick to the main aspects you need to know and keep in mind.

Access planning and create a new plan version

Access the work center ‘Cost and Revenue’ and work center view ‘Planning’. Plan Versions are created at a granularity of:

  • Company
  • Set of Books
  • Fiscal Year

Creation of new plan versions is only possible by using the excel sheet. After they have been created certain properties can be maintained on the UI.  I personally prefer to create an empty plan and step by enter data for the P&L areas via multiple uploads that add on top of each other. Keep in mind that the plan version captures the entire P&L. That means that a complete plan version has plan data for revenues, discounts, overhead costs and other gains/losses.

The entered plan data is can be mainly reported and be used in two areas:

  • Financial Statement Plan / Actual
  • Cost Center Plan / Actual and Cost Centers – Budget Monitoring

Question:  How to access the excel template for financial planning?

After having switched on active budget control you need to download new planning templates with budget category entry enabled. Simply store it on your computer, file share or shared folder you can access and usually use for your financial planning.

Financial%20Planning%20-%20Access%20to%20Planning%20Templates

Financial Planning – Access to Planning Templates

Download%20the%20Planning%20Template%20for%20Income%20Statement

Download the Planning Template for Income Statement

Now open the excel template connect and logon to the SAP Business ByDesign system with a user authorized to do financial planning and logon.

Connect%20to%20SAP%20Business%20ByDesign%20using%20the%20SAP%20Business%20ByDesign%20Excel%20PlugIn

Connect to SAP Business ByDesign using the SAP Business ByDesign Excel PlugIn

Question: How to create an ‘empty’ plan version?

Simply enter the mandatory header information. Unfortunately, you must enter minimum one record to create a new plan version like illustrated.

Creation%20of%20an%20%28Empty%29%20Plan%20Version

Creation of an (Empty) Plan Version

In the SAP Business ByDesign Plugin for MS Excel use the ‘Save Data’ option. I personally also would recommend to store the excel file itself to a storage location to document the plan data entry activities. As a result, you now will see in the system an instance of the plan version.

New%20Plan%20Version%20Created

New Plan Version Created

The next few screenshots illustrate the properties you can access and maintain on the UI.

Plan%20Version%20-%20General%20Data

Plan Version – General Data

Plan%20Version%20-%20View%20Plan%20Data

Plan Version – View Plan Data (in this case with one record)

Proposal:  How to structure the plan data entry from a business perspective?

Please take this paragraph as input for a thought process how to manage and orchestrate the plan data entry in a way that suite your needs. I will share my preference here. From a conceptional point of view I prefer grouping plan data entry in logical sections like in the P&L structure:

  • Overhead Cost plan data entry
    • Cost Centers
    • Direct Cost Projects
    • Allocation Adjustments
  • Revenue and Cost of Goods Sold plan data entry
  • Other Gains and Losses plan data entry

For sure if you are only interested for entering only plan data for overhead you only can maintain this data. A complete P&L analysis using this plan version would obviously not make sense .I always create a structure like this on a file share to keep organized and track the various excel sheet templates for initial load but also to document later on for delta adjustments in the respective area

Financial%20Planning%20-%20Folder%20Structure%20on%20a%20Fileshare

Financial Planning – Folder Structure on a Fileshare

I personally prefer to zip the folder structure on a regular basis and apply it at planning milestones to the plan version as a pure documentation of the overall planning process in the SAP Business ByDesign System!

Plan%20Version%20Attachments%20-%20Documenting%20the%20Plan%20Data%20Entry%20Process

Plan Version Attachments – Documenting the Plan Data Entry Process

 

Question: How to enter data using the excel template?

In order to understand how to enter the data in the excel template I created a small overview table to illustrate this. Other critical settings or actions for a created plan version are available from the UI in order to assure that they are consciously applied and not by accident. To mention a few of these critical actions:

  • Delete all plan data from plan version
  • Set as default, reset default
  • Delete entire plan version including plan data

Format to enter data

As mentioned, I recommend splitting the upload into multiple planning areas as described before. Since we have one excel template format to input the data, I think it would be helpful to share in which format the data needs to be entered.

Area Amount
Input Format
G/L Account Budget Category* Cost Center Direct Cost Project Profit Center** Functional Area ***
Overhead Cost Centers Positive Input
200,00
yes Optional* Yes n/a derived derived
Overhead Direct Cost Projects Positive Input
200,00
yes Optional* n/a yes derived derived
Other Gains Negative Input
-10,00
yes n/a n/a n/a Manual Input derived
Other Losses / Expenses Positive
Input
10,00
yes n/a n/a n/a Manual
Input
derived
Revenues Negative Input
-1000,00
Yes n/a n/a n/a Manual Input derived
Cost of Goods Sold Positive Input
800,00
Yes n/a n/a n/a Manual
Input
derived

* Budget Category – Only relevant if budget check scope is switched on

** Profit Centers – Only relevant if accounting with profit centers is switched on

*** Functional Area – this is not an input field but will be derived / enriched during data load into SAP Business ByDesign. It is relevant if your P&L is structured by function of expense. See special chapter further below

Example: Plan data entry for cost centers

A tip upfront: I first would create a kind of ‘cheat sheet’ for myself to keep an overview of the relevant subset of G/L accounts I consider relevant for plan data entry. It is also a good practice to map these G/L Accounts to the desired budget categories. Usually this should be similar to the settings that you had applied during the budget category definition. For example, the ‘cheat sheet’ could look like this:

Budget Category G/L Account G/L Account Name
DEPREC 515600 Depr. Other Machinery, Furniture & Office Equipment
EQUIPMENT 450230 Material Consumptions
OTHERS 517900 Other Expense
SALARY 510100 Wages Expense
THIRDPARTY 511000 Insurance Expense
THIRDPARTY 513300 Rent or Lease Expense
TRAVEL 500300 Travel Expense

Thereafter a filled plan data entry sheet for cost center planning could look like this:

Example%3A%20Plan%20Data%20Entry%20for%20Cost%20Centers

Example: Plan Data Entry for Cost Centers

After having saved the data to your SAP Business ByDesign system you can check the plan data entry by looking into the details of the plan version.

You can validate the overall values of the entire plan by:

  1. Using the plan data display in the plan version UI itself
  2. Using a report ‘Financial Plan Details’
  3. Using a report ‘Financial Statements – Plan/Actual – Version Comparison’

Example%20Report%3A%20Financial%20Plan%20Details%20using%20a%20personalized%20view

Example Report: Financial Plan Details using a personalized view

Example: planning revenues, discounts and cost of goods sold

In this example I’m illustrating how the excel template can be used to plan revenues, discounts and cost of goods sold.

G/L Account G/L Account Name
400000 Domestic Sales
401000 International Sales
450000 Cost of Goods Sold
409910 Discounts

 

Please note that revenues are entered as negative amounts whereas discounts and costs of goods sold are entered as positive amounts.

Plan%20Data%20Entry%20-%20Revenue%2C%20Discounts%20and%20Cost%20of%20Goods%20Sold

Plan Data Entry – Revenue, Discounts and Cost of Goods Sold

 

Special topic: functional area derivation

Why is the topic ‘functional area derivation’ important in the context of cost center planning? Please keep in mind that planning overhead cost is also part of your P&L plan & actual reporting. Since many customers report their P&L by function of expense the functional area derivation is of key importance here. How is the functional area derived during upload of the plan data entry to the SAP Business ByDesign system?

Area G/L Account Cost Center Direct Cost Project Functional Area Derivation Strategy
Revenues yes n/a n/a 1. From G/L Account & Sales Document Indicator
2. From G/L Account & Sales Document Indicator = space
3. Fallback = Default Functional Area if provided
Cost of Goods Sold yes n/a n/a 1. From G/L Account & Sales Document Indicator
2. From G/L Account & Sales Document Indicator = space
3. Fallback = Default Functional Area if provided
Overhead Cost Centers yes Yes n/a 1. From G/L Account and sales document indicator = space
2. From Cost Center Type
3. Fallback = Default Functional Area if provided
Overhead Direct Cost Projects yes n/a yes 1. From G/L Account and sales document indicator = space
2. From Cost Center Type
3. Fallback = Default Functional Area if provided
Other Gains yes n/a n/a 1. From G/L Account and sales document indicator = space
2. Fallback = Default Functional Area if provided
Other Losses / Expenses yes n/a n/a 1. From G/L Account and sales document indicator = space
2. Fallback = Default Functional Area if provided

The functional area derivation is part of your fine-tuning activities. So this area is carefully to be reviewed. I recommend checking the P&L impact by using the Financial Statement after initial uploads of the plan data for cost center planning to double check the correct setup of your functional area determination.

Fine%20Tuning%20Activity%20-%20Functional%20Area%20Determination

Fine Tuning Activity – Functional Area Determination

Special topic: dealing with allocations and distributions in planning

This special topic is only of interest if you are looking in parallel on the same plan version from a P&L perspective.   I initially try to illustrate the problem with a very simplified example of a cost center collecting all costs for energy and distributing / allocating these costs at period end to receiving cost centers with distribution rules.

Example%3A%20Allocations%20/%20Distributions

Example: Allocations / Distributions

From a cost center budget planning perspective and cost center plan / actual comparison point of view the data entry could focus on the ‘input side’.  Also, the cost center plan actual reports filter on the input side only. But if the area marked in ‘red’ is not considered, the effect in the P&L and income statement is that the costs are being doubled in this example.

Special topic: multiple uploads to the same plan version

If you are using the plan data entry capabilities for the first time you must know how SAP Business ByDesign handles multiple uploads using the excel sheet template. I would like to illustrate this with a simple example for delta upload mechanism and common mistakes you should avoid. This delta mechanism is handy in :

  • Planning in multiple business ‘areas or purposes’
    e.g., overhead, cost and revenue, others
  • Planning with multiple financial accountants
  • Large organization to be planned
    g. multiple 100 cost centers
  • Having to adjust the plan data over time

Here is the short story to explain the behavior:

Our financial accountant Julia starts planning cost centers. Shortly before lunch she saves the file and uploads it to SAP Business ByDesign.

Plan%20Data%20Entry%20for%20Cost%20Center%20MC20000

Plan Data Entry for Cost Center MC20000

After lunch she continues to plan the cost centers MC22000, MC23300, MC42000. She enters the data in the planning sheet like this and uploads to SAP Business ByDesign. Please note that Julia has NOT entered the cost center MC20000 again.

Plan%20Data%20Entry%20for%20Cost%20Centers%20MC22000%2C%20MC23300%2C%20MC24000

Plan Data Entry for Cost Centers MC22000, MC23300, MC24000

 

After 2 delta uploads Julia has a combined plan of all 4 cost centers. The second upload simply adds to the existing plan.

Avoid common mistake: 

If Julia would have simply extended the planning sheet like this and uploads it again, some unwanted results will occur.

Common%20Mistake%20-%20Extending%20an%20already%20uploaded%20plan

Common Mistake – Extending an already uploaded plan

The planning for MC22000, MC23300, MC42000 looks o.k. But after the 2nd upload the amounts for cost center MC20000 doubled. Why? Please have a look at the first cell marked with the red dot on the screenshot above.

  • EQUIPMENT       450230                  MC20000   PERIOD 1
    during the 1st upload (prior to lunch break) she uploaded 111,11 USD
  • Now with the 2nd upload the exact same record EQUIPMENT     450230                  MC20000   PERIOD 1 another 111,11 USD is added totaling to a period plan of 222,22 = 111,11 + 111,11 USD.

Special topic: plan data adjustments and changes

The need to adjust a plan occurs in real life on a regular basis. We all know that. This happens during the planning process but also while you are running in the middle of a fiscal year. Typical examples are:

  • Shift planned budget from one budget category to another
  • Shift planned budget from one cost center to another cost center or merge/split cost centers
  • Shift planned budget to later periods
  • Increase or decrease budget or sales planning to adjust to a changed business environment

Especially in these change scenarios the ‘delta upload’ behavior described in the previous paragraph becomes extremely handy. Envision you have planned 100 or more cost centers with ~20 G/L Accounts in multiple budget categories. Instead of reuploading the entire P&L plan with multiple thousands of lines only the delta needs to be entered. I would like to illustrate this with a tangible example we all might be familiar with.

“Our accountant Julia has to update the plan locally for one cost center MC2000 because it has been decided to change the working environment with less face-to-face meetings in office to more online meetings. That means the required budget to TRAVEL is reduced and shifted to EQUIPMENT in the first quarter and increases THIRDPARTY expenses across the entire year for the Online Meeting Services contract.”

In this example the change could look like this:

Example%3A%20Plan%20Data%20Change%20-%20Shift%20between%20Budget%20Categories

Example: Plan Data Change – Shift between Budget Categories

 

Julia checks the impact of that delta change in one of the planning reports and confirms the expected results

Example%3A%20Delta%20Adjustment%20in%20Plan%20Data%20after%20Upload%20of%20Changes

Example: Delta Adjustment in Plan Data after Upload of Changes

Please note:

  1. you are planning the delta – not the total budget. After the upload you see the overall result in the planning reports.
  2. With these deltas you also can create ‘negative costs’ temporarily. This is not constrained by the system to give accountants the required flexibility.
  3. The rational is to give the planning accountant more flexibility is to allow complex changes in a way the accountant wants to apply them probably step by step using multiple uploads. This might in a short intermediate phase cause negative budgets that can be adjusted with the next delta upload.
  4. It is a good practice to upload these plan changes in the attachment folder of the plan version to document the deltas.

Major plan changes – delta changes or a new plan version – what is the better approach?

If major structural adjustments or totally radical unforeseen changes happen it is a good practice to create a new plan version that accounts for all these changes and gets approved. If the changes are put into effect the accounting team can switch the new plan version to be the default version for reporting. In case active budget control is switches on and a related budget version exists adjustments are required here too.

Summary:

I hope these tangible examples and recommendations give you guidance how the system handles plan data entry. The upload via excel plugin combined with excel capabilities for the accountant to model customer ‘side-calculations’ for specific needs for his company or type of business. This blog is fundamental also to understand the budget release in context of active budget control because it also uses the excel plug-in and a template to upload the released budget. Moreover, in the budget release scenario a good understanding of the delta mechanism is required.

Back to main blog post: Active Budget Control in SAP Business ByDesign

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      3 Comments
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      Author's profile photo Hannah Burke
      Hannah Burke

      In SAP Business ByDesign the data entry of financial plan data is supported by using excel templates that integrate with the SAP Business ByDesign system. It is clear that we are not talking about supporting an entire planning process that orchestrates the phases and stages of planning itself.

      tellthebell

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

      Hello Hannah, I think it is honest to mention that the planning activities itself have not been in the focus of the invest of active budget control. Therefore it is ok that you quote above sentences. We are not talking about bottom up, top down, breaking down high level targets here or other means of collaborative planning in the context of active budget control.
      For sure there is a relationship between finally agreed and confirmed yearly financial plan and the budget released for spending. Therefore I put some information how plan data can be entered and altered in SAP BusinessByDesign. The understanding how this works will also help to understand how budget release works.

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

      Hello Hannah, It is also common that the planning process is conducted outside the SAP Business ByDesign systems. I've seen examples of partner build solutions that were build on SAC (SAP Analytics Cloud).
      Either you can import these final planning results into SAP Business ByDesign using the excel based templates as interface. In addition interfaces have been published to update plan data programmatically. These will be mentioned in the blog post: Active Budget Control in SAP Business ByDesign – Scenario Extensibility.

      So - thank you again for your comment