Financing from the Organization Component 

Purpose

This process describes how you can finance the employees in your organization by using the budgets of budget structure elements.

The financing process is closely linked to the Budget Allocation process (since both processes supply funds to cover personnel expenditures).

However, in the Financing process, funding is supplied using a position or person as the point of departure, whereas a budget structure element is the point of departure in the Budget Allocation process.

Basically, there are two ways of financing an employee in your organization:

If you finance an employee directly using the budget of a budget structure element, you supply funds (monetary amounts and FTEs) to cover the personnel expenditures incurred by this employee. This type of financing is referred to as direct financing because funds are assigned directly to the employee (and not via a position). This means that you can also finance employees who are not assigned to positions.

You have hired a temporary worker for 6 months. This worker is not assigned to a specific position. By financing the employee directly (in the Employee) component), you can supply funds to cover the personnel costs incurred by this worker.

If you finance employees indirectly, you supply funds (monetary amounts and FTEs) from the budgets of budget structure elements for a position, and in this way cover the personnel expenditures incurred by the employees assigned to the position in question. This type of financing is referred to as indirect financing because funds are assigned via positions (and not directly to employees).

You can also use indirect financing to reserve budget funds for positions that have not yet been staffed.

You can combine both types of financing as you please (in other words, you can finance a portion of the personnel costs incurred by an employee directly, and a portion indirectly).

If financing details have already been defined for a person or position, you can only use budgets of budget structure elements managed in the same budget unit as the budget structure elements of the donor budgets to change or add to this financing information.

When you supply the funds required for an employee (i.e. finance the employee), the employee’s absences are also taken into account. This means, for example, that no funds are required for an employee who has taken unpaid leave. In Customizing, you can define how absences are to be taken into account in HR Funds and Position Management.

Prerequisites

Depending on the circumstances in your organization, you must have defined a budget hierarchy with budget structure elements and budgets, an organizational structure with positions, and relationships between positions and persons. You can only use this process for allocatable budget structure elements (i.e. the budget structure elements in question must not be summarization items).

In Customizing (step: Overall Budget ® Define Financing Types for Object Types), you must also have specified which types of financing (monetary values and FTEs) are allowed for positions and persons. Furthermore, you must have defined how the employee’s absences affect financing (step: Overall Budget ® Define How Absences Are Handled).

Process Flow

  1. Depending on the situation, you can finance an employee directly or indirectly.
  2. To help you determine the financing required, the system provides you with the information you need. On the basis of this information, you create financing, or change existing financing.
  3. When you create or change financing, the system runs an availability check. This ensures that you can only allocate the budget of a budget structure element that still has budget funds available.

See also:

Financing Employees Directly

Financing Employees Indirectly

Deleting Existing Financing Details

Updating the Outgoing Funds of a Position

Displaying the Financing Overview

Display: Financing Details in Organizational Structure