Integration of Funds Management with Materials Management in SAP

http://scn.sap.com/docs/DOC-55331
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.

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

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

OR

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

> Assign purchasing organization to company code

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

For other purchasing documents, such as RFxs

creation of follow-on documents lead to the direct adjustment of the commitment.

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 the SC 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.
 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

2. 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

3. 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

4. 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

2. 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

3. 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

4. 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

2. 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

3. 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

4. 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

Orders Budget Actual Commitment Allotted Available

IO00000111 1000 125 250 500 500

Total 1000 125 250 500 500

5. 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

Orders Budget Actual Commitment Allotted Available

IO00000111 1000 125 0 125 0

Total 1000 125 0 125 0

6. 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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