How to Select the Most Suitable Active Budget Availability Control Solution for Your Organization

  • by David Golan, Senior SAP CO/FM Professional Consultant, C-Value, LTD
  • February 25, 2016
Learn about the different tools available in an SAP system to implement active budget availability control and how to select the most appropriate tool for your organization based on its financial, cash flow, and budget control objectives.
Learning Objectives

After reading this article, you’ll learn:

  • About the different tools available in an SAP system to perform active availability control (AVC)
  • About the scope of  budgeting and availability control possible in each tool
  • About the similarities and differences between the different tools
  • How to tailor a budgetary business scenario to the most suitable tool
Key Concept
Organizations of nearly all types and sizes hold a budget. The budget is a monetary depiction of organizational targets, priorities, plans, and cash-flow constraints for the fiscal year or years to come. Some organizations may only need passive budget control through reporting; for others, active budget enforcement is needed for part of or for the entire organizational budget in different levels of detail.

SAP standard solutions provide you with tools to realize active budget availability control (AVC) for various business scenarios, scope, and level of detail. Through reading this article, you will learn about basic options of budget AVC in the Controlling (CO) module for specific expense types through internal orders. In Project System, I describe more advanced options than available in internal orders for active AVC and budgeting, especially with regard to complex multi-level projects and detailed budget management options.

I also explain numerous options that SAP Public Sector Management Funds Management (PSM-FM) allows for active AVC for all types of organizational costs (profit and loss [P&L] expenses, fixed assets and inventory acquisition), for every needed dimension within objects and across objects and for various budget targets, such as P&L expenses targets, cash flow targets, or both.

I list the most common business scenarios relevant for budget AVC, and then in each tool description, I list its matching scenarios, allowing you to tailor the tool that most closely matches your budget AVC organizational needs. Table 1 in the final section summarizes linkages between budget AVC business scenarios and AVC tools while indicating which tool best matches each business scenario when more than one tool is possible.

I review the diverse budget controlling needs organizations may have and the possible solutions SAP standard tools can offer. To be as business process oriented as possible, I define budget AVC, describe common budgetary business scenarios requiring budget AVC, describe each tool and its associated objects, and describe tools and features that best fulfil the business scenarios requirement.

What Is AVC?

AVC means real-time monitoring and checks of costs against budget. The checks are carried out throughout the monitored business process or part of it. For example, it can be triggered right from purchase requisition entry and continue through a complete sequence: purchase order > goods receipt > invoice verification > payment (FM only). Or it could start at a later point and terminate earlier. The AVC message to the user can be an error message, a warning message, or a warning and an email to responsible persons.

David Golan

David Golan is a senior SAP CO/FM consultant at C-Value, LTD. He has more than 10 years of experience as a consultant and team leader and more than 13 years’ experience in ERP and IT. David holds a BA degree in economics and an MA degree in public administration. He has acquired experience and expert SAP consulting skills in various settings, including eight full-cycle projects in many industries, such as manufacturing, finance, public utilities (municipal), government, and defense. He has expert knowledge in the Funds Management functionality, Product Costing functionality - Standard and Actual Costing, including material ledger and alternative valuation/cumulative costing and Mill Products CO industry solution, FI Accounts determination (standard and extended), Profitability Analysis (CO-PA), Cost Centers and Internal Order Accounting (Overhead Management), Activity-Based Costing (ABC), and Profit Center Accounting (EC-PCA).

In addition to his SAP consulting experience, he has held positions as a QA team leader, a programmer in a large high-tech company, a financial software instructor, and assistant researcher in the Bank of Israel Research department.

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