FM

1. FUNDS
MANAGEMENT

2. OVERVIEW OF FUNDS MANAGEMENT

3. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

4. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

5. INTRODUCTION TO FUNDS MANAGEMENT
 FM Component is used for creating and executing budgets for an organization.
 Budgets all Revenues and Expenditures for individual responsibility areas.
 Monitors Funds Movements in the light of budget available.
 Prevents Budget Over-runs.
 Integrates with all other SAP Modules.

6. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

7. ORGANISATION STRUCTURE
Funds Management Area
Client
FM Area
1100
Company
Code 1110
Company
Code 1200
Company
Code 1100
FM Area
1200
Company
Code 1210

8. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

9. MASTER DATA
 Commitment item represents Revenue & Expenditure in FM.
 Commitment items in Funds Management are arranged in hierarchies. You can
create more than one hierarchy for an FM area.
 Example: one hierarchy for revenues and another for expenditures.
COMMITMENT ITEM

10. COMMITMENT ITEM HIERARCHY
Expense
Personnel
Expenses
Project
Expenses
Operating
Expenses
Revenue
Research
Revenue
Other
Revenue
Operating
Revenue
CI 11 CI 12
CI 21 CI 22
CI 31 CI 32 CI 41
CI 51
CI 42
CI 52
CI 62
CI 61

11. FUND CENTER
 Organization unit within an FM area which represents the structure of an
organization in the form of a hierarchy.
 You can assign budget to funds centers. Budget is used up as postings are made
to funds centers, giving rise to commitment and actual values.
 Funds centers in Funds Management are arranged in hierarchies. You can define
one funds center hierarchy per FM area. There is only one top funds center in a
funds center hierarchy. Every other funds center has one superior funds center.

12. FUND CENTER HIERARCHY
Executive board
Fund Center A
Department II
Fund Center C
Department II
Fund Center B

13. FUND
 Fund can be defined as a further sub division of the commitment item or fund
center and can be very useful for reporting. An example of fund could be lets
say if you have travel as a commitment item a fund could be foreign travel
and local travel.
 Funds are used to Track Sources & Application of Funding.

14. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

15. BUDGET
There are mainly two types of budgets:
 Overall Budget is budget which is available for more than one fiscal year but is not
distributed to individual fiscal years.
 Annual Budget is budget which is available for an individual fiscal year.
 Though you can distribute your annual budget period wise i.e. monthly but the
availability control would be on the annual budget only.
BUDGETING IN FUNDS MANAGEMENT

16.  Budget Structure is created to specify the budget objects (fund center,
commitment item) which can be budgeted & posted.
BUDGET STRUCTURE

17. BUDGET EXECUTION
 Once the master data and the budget structure is set up the budget execution
process has to be implemented. This exercise basically helps to control the budget
which has been set. This feature is one of the most powerful features in Funds
Management.
 There are three types of messages which can be structured for every budget profile
based on the budget utilized. They can be combined with the transactions.
 The messages are :-
1.Warning Message
2.Warning + A Mail to the Fund Center Manager.
3.Error Message.

18. PROCESS- FM BUDGETING
 Original Budget entry for the combination of Fund Center & Commitment Item.
 Budget Updates in terms of
1. Supplements – Additions to the original budget
2. Returns – Reduction in the original budget
3. Transfers – Transfer from one budget object to another budget object.
 The current budget in system is equal to:
Original budget
+ Supplements
- Returns
+/- Transfers
+ Year-end closing budget transfer
---------------------------------------------------------------
= Current budget
 Availability Control is carried out on the Current Budget.

19. PROCESS- FM BUDGET RELEASE
 Budget Release is used to release the budget bit by bit as per the business
requirement.
 Budget Release functionality can also be used for releasing the annual budget
period wise if an organization requires the availability control on the amount
released (for the period) – which itself would be a separate transaction/activity
on the user part….

20. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

21. AVAILABILITY CONTROL
 Organization uses Active Availability to Control the generation of system
reactions to Budget & Actual Entry.
 An Important function in the Funds Management system is the monitoring of
available Fund.
 Active Availability Control determines which Budget structure elements have
Budget and what actual and Commitment values have been posted to them.

22. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

23. CLOSING OPERATION
 Fiscal Year End leads to some major decision regarding the carry forward of Commitment, Fund balances &
Budgets.
 For Year-end activities in Funds Management Following Activities require to be defined:
1. Carry forward rules must be defined.
2. Transactions may be reversed for open items that are not going to be settled in the current year and are also
not going to be carried over to the next year (such as deleting purchase requisitions, cancelling reservations,
resetting purchase orders and notifying the vendors).
 If the Year End process is not correctly carried out then:-
1. Any budget not used remains in the old year and cannot be used in the new year.
2. Open items are reduced in the old year as soon as they are processed in the new year
YEAR END ACTIVITIES

24. CARRY FORWARD RESIDUAL BALANCE
 If at the end of a Financial Year there are unused Budget still remaining for some individual
Budget items it can be carried forward to the next year .To do this you need to define rules as to
how to carry forward the residual balance.
 You use carry-forward rules to help in the processing of genuine residual budgets. They help in
carrying out the following requirements:
1. Changing the FM account assignment -For each combination of funds center, commitment
item and fund, you can define the combination to which budgeted values are to be carried
forward in the new year.
2. Converting surplus revenues into expenditure budget -By changing the FM account assignment
in the way described, it is possible to make surplus revenues which were realized over and
above the budgeted revenues available as expenditure budget in the new fiscal year.
3. Handling negative residual budgets (budget overruns) -If expenditures exceed the budget in
the fiscal year which has just come to an end (for example, if you have set the tolerances for
availability control to over 100%), then the resulting negative residual budget can be carried
forward and therefore be deducted from the subsequent year's budget

25. FUNDS MANAGEMENT-OBJECTIVES
 Introduction to Funds Management
 Organisation Structure
 Master Data
 Budgeting in Funds Management
 Availability Control
 Closing Operation
 Report

26. REPORT
 The standard Reports in Funds Management relate to:
1. Master Data-Fund Center, Commitment Items, Assignments
2. Budget Values
3. Actual Values
4. Comparison of Commitment and Actual values
And many more…..

27. OVERVIEW FUNDS MANAGEMENT
 Control revenues and expenditures and thus control the funding of business
transactions of an organization.
 Closely control your budget with respect to funds assigned to the areas of
responsibility.
 Funds availability control at the transaction level.
 Control the finances of your organization by comparing commitment and actual
values with current budget values.
BENEFITS

28. THANK YOU