Commitments Management (CO) (SAP Library

Commitments Management (CO)

Purpose

CO Commitments Management enables you to enter and analyze commitments at an early stage, and thus to account for them in controlling.

Implementation Considerations

Purchase orders or purchase requisitions lead to financial commitments with varying degrees of obligation (See also : Commitments Management Flow) . Commitments reserve funds for costs that will be incurred at a future date. Therefore, commitments must be included in funds monitoring.

For more information on funds commitment, see SAP Library under Financials ® Controlling ® Internal Orders ® Funds Commitment (Cost Centers, Internal Orders, Projects).

Integration

In Commitments Management, data from the following SAP components is processed integrally:

Controlling (CO)
In Controlling you can perform tasks such as planning, checking and controlling costs. Commitments management is a part of the cost monitoring process. Commitments are displayed either on internal orders, cost centers, or projects.

Materials Management (MM)
This covers tasks such as material requirements planning, purchasing, goods receipt, inventory management, and invoice verification. Commitments are created through purchase requisitions and purchase orders. Commitments are reduced by various business transactions such goods receipt. The commitments data is transferred to Controlling.

Features

Creation of Commitments

For example, specific goods are ordered for an internal order, a cost center, or a project. A purchase order commitment is created that is equivalent to the purchase order value.

Commitments Display

Commitments are always displayed with a value and, if required, a quantity for the cost element, the fiscal year, and the period when the costs are expected to be incurred (See also: Commitments Information System).

Commitments Currency

The system executes all commitments in the currency used, in the original business transaction (for example in the ordering transaction). It then translates the amount into the controlling area currency, company code currency and the object currency. The PO currency exchange rate is used for currency translation.

Reducing the Commitment:

The commitment is reduced by business transactions (such as goods receipts) and actual costs are incurred by the corresponding account assignment object. This continues until, for example, the business transaction "Purchase order" is closed and the purchase order commitment is reduced to zero.

Carrying Forward Commitments at Year-End-Closing

At year-end closing, you can carry the open commitment values from purchase requisitions, purchase orders and fund commitments forward to the first period of the next fiscal year. You can select by account assignment object (order, cost center or project). You can also process individual documents if required.

Commitments are carried forward for each controlling area.