Improving Budget-to-Actual comparisons with HPC JETS

Budgets are generally entered into SAP at the cost center level. Actuals, however, can be charged to either a cost center, an order, or a WBS element.  So, to compare budget to actual, charges to orders or WBS elements must be settled to the responsible cost center holding the budget and to the same cost element where the dollars were budgeted. Settlement provides a way to summarize actual costs to compare against the budget provided to the cost center.

When a charge is made to the wrong order or WBS element, the charges must be reversed. It is therefore imperative to reverse the charge in the exact amount that was charged erroneously. In order to maintain valuable detail, HPC recommends reversing the individual line items, not the total (or lump-sum) of two or more line items. Reversing and re-posting at the line item level ensures that the cost center receiving the settlement will get full credit (reversal). That said, we recognize that correcting errors at the line item level is time-consuming—and prone to error itself because the process is often manual.

That's where the HPC Journal Entry Transfer Solution (JETS) adds tremendous value. JETS enables authorized SAP users to move dollars from one cost object to another, line item by line item, far more efficiently than is possible manually. Only charges already posted may be adjusted.

Without JETS, users will likely avoid this tedious process, and post a lump-sum adjustment that may not credit the full amount of the erroneous charge(s) settled originally to the responsible cost center. In that scenario, costs may be left in the (mischarged) cost center because line-item charges weren't reversed exactly the way they were charged originally.

In other words, because SAP provides for settlement rules based upon specific cost elements charged, lumping together two or more cost elements into one adjustment can alter the settlement results, leaving dollars in the responsible cost center that would have been reversed had the adjustment been made to the original cost object and cost element. In contrast, using HPC JETS enables you to move all of the dollars to the correct cost object, such that budget-to-actual comparisons will retain their full integrity. Learn more about HPC JETS.

SAP budgeting solution Allevo from Kern AG

While at the Controlling 2013 conference, we enjoyed speaking with our neighboring exhibitor Kern AG. Adrian Rochofski and Alexandra Stegmann showed us how their Allevo budgeting solution for SAP integrates Excel and SAP to optimize the budgeting process in SAP. Allevo reduces the complexity of planning, especially for users new to SAP, while taking full advantage of SAP's sophistication. Allevo can shorten the time required to budget, reduce staff workload, and increase data quality, enabling controllers and business owners to invest more time in analysis instead of data management (a common theme with our own JETS cost adjustment solution). We'd encourage all SAP users interested in improving their planning processes to take a look at Allevo.