Processing Earmarked Funds
Definition
Earmarked funds are business transactions in Funds Management which claim already allocated budget for expected revenues or expenditures.
The following business transactions are grouped together under the term “earmarked funds”:
Funds reservations
Funds precommitments
Funds commitments
Funds blocking
Estimated revenues
Use
Differentiation criteria for using these types can have the following aspects:
Budget-based commitment character
Application of funds by functional specification
External legal commitment
Funds reservations
Using funds reservations you can make an early claim for parts of the budget e.g. for a project, without needing to know the exact application of funds. The funds reservation is considered a preliminary step of funds precommitments and funds commitments in which the user can refer to the funds reservation. So the funds reservation provides a framework for future budget usage, within which all subsequent activities take place.
Funds precommitments
A funds precommitment can refer to a funds reservation. With a funds precommitment the user is more familiar with the application of funds without having already entered into a concrete contractual agreement with external parties.
Funds commitments
For funds commitments the legal commitment plays a role in addition to the application of funds. Such legal commitments can for example be purchase orders with a supplier or other contractual agreements. Using the funds commitment you can go back to funds which were provided by a funds reservation or a funds precommitment.
Funds blocking
Using budget blocks you can completely block access to already allocated budget This budget is no longer available for other business transactions.
Estimated revenues
Using an estimated revenue you can enter expected revenues for which, for example, it is not yet currently known which activity actually causes the revenues and at which exact point in time the funds are available to you.
Structure
Earmarked funds documents are subdivided into the document header and into the area of the individual items. A document header and several document items are possible for each document.
Document header
The information which is valid for the whole document is contained in the document header. This includes for example the document date, the document number and the controlling information.
Document line items
In the document line items there is only the information regarding the respective item. Included in this is the account assignment information, for example the Funds Management account assignment (commitment item, funds center and if desired fund) or a CO account assignment and an amount.
Note
Depending on which account assignment is included, earmarked funds claim budget in Funds Management or Controlling. If both account assignments are included then only the earmarked funds, funds reservation, funds precommitment and funds commitment affect the budget in Controlling. The entry of a CO account assignment for an estimated revenue or a funds block only serves information purposes.
The fields business area, vendor, customer and different payment recipient serve as information only; in other words, no update takes place on these objects. The information can be transferred in follow-on documents if the follow-on document is not an FI document. The business area can also be transferred if the follow-on document is an FI document.
Further specifications for the whole document or for the document line item are possible, or even required, depending on the respective accounting transaction and the Customizing settings.
Integration
Earmarked funds are reduced by the postings in Funds Management, Financial Accounting or Materials Management. A maximum of 99,999 postings reducing earmarked funds may be carried out per document line item.
See also:
Reduction Through Earmarked Funds