You use financial budgeting to scrutinize medium- to long-term term movements in liquidity. You structure the cash inflows and outflows expected per period, according to what caused them or the note to payee. This structuring takes account of the data origins on the one hand and, on the other, enables you to assess risk. Identical structuring of the actual and commitment figures supports your analysis of plan/actual variances.

Financial budgeting in the SAP system has its own organizational unit, called the "financial management area" (FM area). In the FM area master data, you stipulate the currency and periods used for financial budgeting. You assign the FM are to one or more company codes, to connect it with actual data. The actual figures are then also displayed by period, in the currency stipulated.

Commitment items, which describe where payments have come from or what they are used for, are created in the FM area. We recommend that you do not create too detailed a structure. You can use hierarchies for reporting, but planning and actual data processing take place at the lowest level.

As the functions in SAP financial budgeting are still limited, actual planning is often carried out in a PC program, taking account of the commitment item structure. In such cases, the SAP system supplies actual data only. If you want to use the SAP planning functions, you must create a plan profile containing the basic settings needed for planning, then enter the profile in the FM area.

You enter the planned payments per commitment item and period. You classify the items as expenditure or revenue items; the system uses this classification to determine automatically whether each item is an incoming payment or an outgoing payment. You have the option of entering annual values and having the system break them down into period values; this is one of a number of tools for creating and changing the plan.

You can also have a number of different plans in parallel in the system. You use the plan version to distinguish between them.

The financial budget you have produced can be displayed in the information system and compared with actual values.