Funds management and Budgeting

Certain type of expenses must be spent in a control way to avoid any extra or unwanted spend from the organization point of view, such expenses are mainly pertaining to
1. Marketing Spends
2. Service procurement
3. Stores and Spares
4. Repairs and Maintenance
5. Admin Expenses
6. Travelling and Consultancy
7. Other non-production related spends

How to control and monitor the actual spends is the main ask by any of the business owner and finance head, The answer is to control through the Budgetary Control System of SAP , Here we can set the budget for each type of spends on a monthly/quarterly/annual basis and set the tolerance level as well so if in any case the actual spends exceeds the limit of budget then system will stop that entry. For example: For Marketing Spends we have budget of 10 Crore for a quarter and due to some reason the actual spends on Marketing Spends is exceeding than the 10 Crore then system will stop that entry and will not allow to proceed, in this case we can save ourselves from extra spends on account of marketing,

If Management approves that additional spends then we can enter the supplementary budget of that amount say 1 crore and monitor that spends as well

All these types of monitoring are very important and critical from the point of view of funds managements

Basic Finance and Costing Module is required for the implementation of the SAP Budgetary control System

Control over the high value spend items in terms of allocated budget and actual spends. Normally the high value spends gets approved without any check on the budgets and at the end of the year these transactions gets surfaced and no actions can be taken at that time

Approach:
SAP standard module of Budgetary Control System to be implemented for these type of Expenses heads where management wants to control the budgets and monitor the actual spends w.r.t. the allocated budget
No additional license cost is required for implementation of the SAP Budgetary control system module. Only implementation cost is required to be incurred.

Assumptions:
Budgets would be available for the major expense heads to enter in the SAP system
Revenue (Income) is not part of the budget control process
Production related expenses (Raw material consumptions) is not part of budget control expenses

In the existing processes users are not getting any warning or error message for transactions and spends, however going forward where budget exceeds the error or warning message would be coming.

Additional activities to be performed such as the upload of the budget, release of the budget and monitoring of the budget values.

Process for Budgetary control system would be implemented and Reports for the Budget vs. Actual Spends.
SOP for the entire budgetary control process
Project documents (Solution documents, Manuals and configuration documents etc.)

Step by step processes, master data , configuration related sequences are well documented for this solution to get implemented in SAP

SAP Experts are there to handle the same and implement as per the SAP standard solutions.

Testing and migration to be carried out as per the industry best practices.

Post go live and Hyper care support would be there

2 weeks for understanding the current process, account grouping and format discussion
2 week for preparing the solution documents based on the understanding and sign off
4 weeks for Realization and Testing the solutions in the DEV and Quality system of SAP
2 weeks for moving the TR To Production system and generate financial statement report in Production system

This solution of budgetary control system will bring lot of internal control and discipline in the organizations and respective department in terms of the approval of the big ticket items spends.

The opportunity to control and save is very high however as per the experience 2 to 3 crore of annual savings on this type of spends can be controlled through the implmentation of the Budgetary Control System.

8 weeks of implementations and 2 weeks of post go live support for the SAP project system: 2 Functional resources

M1 – Project start
M2 – Solution Document sign off
M3- UAT Sign off
M4- First month end closing

INR 7,00,000/-

Budgetary Control System will bring more discipline in high value spends.