Overhead commitment control

Requirement

Purchasing of M3 non-stock items can be controlled against financial budgets. An additional budget can be used where an overspend on the original budget amount is approved.

M3 solution

Commitment is monitored from the point a department enters a purchase requisition for a non-inventory item. If the accounting string that is used is included in the control budget, this calculation is automatically performed:

Budgeted value + Manually entered overspend - Actual year-to-date value for the accounting string - Committed value

If the calculated amount is greater the PO line amount, then it is added to the general ledger balance file for the budget that is reserved for committed values. If the PO line is to be deleted afterward or the status is changed from Definitive to Preliminary, then the procedure is reversed. When the goods are received or when the invoice is recorded, the committed amount is deducted automatically.

If the calculated amount is lower than the PO line amount, then the PO is either blocked and updated with the status 14 or a warning is issued, depending on the selection in (CRS750/G). See the configuration guidelines.

Configuration guidelines

Program ID Program name Description or comment
CRS012 Accounting Dimension. Enter Names Connection to general ledger settings.
BUS100 Budget. Open

Connection to general ledger settings.

Create these budgets:

  • An expenditure control budget
  • An empty budget that is reserved for committed expenditures
  • A budget for manual entry of approved overspend
CRS750/G Settings - General Ledger Select the Use commitment check box, specify the used budgets, and set the other fields accordingly.
PPS970 Commitment. Calculate

Run to update the commitment budget manually.

Note: The commitment budget is updated overnight with committed values by M3 Job Scheduler. Old values are thus continuously replaced with new values.
GLS216 Column Template - Balance Inquiry. Open Include the commitment budgets in a column template.

Connection to ‘GL Balance File. Display’ (GLS215).
GLS215 GL Balance File. Display To display actual against commitment information for the affected cost centers or departments, use the column template for commitment budgets. See the hereinabove description for (GLS216).