Defining Year(s) of Cash Effectivity 
Use
One principle of budget planning is the “principle of cash effectivity” , enabling organizations to define the so-called year(s) of cash effectivity. This enables you to set up a budget that contains:
- expenditures to be paid for within a specific planning year (= fiscal year)
- revenues received in the same fiscal year.
During this fiscal year, entitlements (commitments) can be made to pay invoices in future years, in this way specifying the years that these commitments can be paid, that is, the years that “cash effectivity” is active.
Together with the fiscal year, the year of cash effectivity forms a second “time dimension” which can be used in the following areas:
Budget planning and preparation , for example, when you transfer planning data from CO or BW
Budget entry, for example, using the Budgeting Workbench
Mass transactions for budgeting, such as freezing or copying budget , transferring budget , releasing budget , and carrying over residual budget in which the year of cash effectivity is used.
Reporting: all budget and commitment/actual values can be listed according to the year(s) of cash effectivity that were maintained.
Integration
The year of cash effectivity is fully integrated with Public Sector Funds Management and the Budget Control System (BCS).
Prerequisites
The Budget Control System must be installed and running in order to configure the year of cash effectivity.
Procedure
In order to use the year of cash effectivity in your FM area, go to the IMG activity
BCS Budgeting
Basic Settings
Definition of Budget Data
Choose Budget Category. 
For each FM area and budget category, in the column Time Horizon , enter the number of years that “cash effectivity” is to be active.
Specify whether the following year is to be the starting year, by checkmarking the column Start Next Year .
Save your entries.
Result
You can use the year of cash effectivity for BCS budgeting and reporting.
Example
A financial budget (or “financial plan”) is set up for 2005. It contains the budget planning data for the following three years, that is, the commitments with the years of cash effectivity 2006, 2007 and 2008.