Understanding PeopleSoft Receivables Business Units
A business unit represents a high-level organization of business information that can be shared across a set of applications. You can use a business unit to define regional or departmental units in an organization.
To understand how PeopleSoft Receivables uses business units, consider how PeopleSoft General Ledger uses them. A business unit in PeopleSoft General Ledger is a subset of your organization that keeps its own set of books or ledgers. A receivables business unit is a subset of your organization that has its own set of customer balances. Each receivables business unit has its own defined group of valid customer balances, its own way of aging and reporting on those customers, and its own item and payment processing guidelines.
The system stores each business unit's financial transactions, such as invoices and payments, in tables that are keyed by business unit ID. This ensures that the data for one business unit remains separate from the data for other business units—even though the data exists in the same physical database table.
This section discusses:
Types of business units.
PeopleSoft Tree Manager.
Business unit setup process flow.
How you define a business unit depends on your industry, statutory requirements, regulatory reporting demands, and operating responsibilities. For example, a bank might treat different branches as separate business units, but a manufacturer might segregate the finances of each plant or division. Multinational organizations might separate their operations into geographic business units because of the necessities of conducting business globally. Highly diversified organizations might define each subsidiary or cost center as a business unit.
You use a tool called Tree Manager to group business units together into a hierarchical structure. Tree Manager and your business unit structure provide a mechanism for defining reporting parameters.
A business unit is the smallest structural unit that can be represented in Tree Manager. This is important because certain reports use the relationships defined in Tree Manager to sort and sum amounts. These amounts can include:
PeopleSoft Receivables subtotals for each business unit at the lowest level.
Further subtotals for each grouping of business units—that is, for each level of the tree.
A grand total of an organization's receivables.
Suppose that an organization consists of 12 different companies, each represented by a business unit. You group these companies into three lines of business. Each business line is a subsidiary of the organization. In addition, you have a separate corporate business unit. All of these units—the 12 in 3 subsidiaries and the corporate business unit—roll up into the organization at the top of the hierarchy. You can report at any level of the hierarchy.
Tree Manager enables you to establish hierarchical structures called trees. Using this tool, you can group business units together and define the relationships between them.
Note: PeopleSoft Receivables uses trees to define corporate customer structures and to summarize information for aging reports. See the product documentation for PeopleTools: Tree Manager.
When you plan your business unit structure, you need to be familiar with TableSets, which are used in all PeopleSoft Financials products.
The accounting structure and processing rules for each PeopleSoft application are defined in a series of control tables. A TableSet is a group of rows across control tables, identified by the same SetID, on which you define the accounting structure for each of your business units, aging rules, entry types and reasons, payment terms, credit and receivables personnel, and so forth. For a business unit to process transactions, it must have an associated TableSet.
You can think of business units and TableSets in the following simplified terms:
A business unit contains all the actual data.
A TableSet contains the rules by which the data is processed.
A SetID identifies each TableSet. You can have as many SetIDs as you want. However, using numerous SetIDs creates complex TableSet sharing. You must create at least one SetID, even if you do not use TableSet sharing.
A business unit is the highest level in the hierarchy and you must set default values for business units. All other entities fall beneath them in the hierarchy. Some of the attributes set at the business unit level may be set at lower levels in the hierarchy, such as the customer or item level, but are not required.
Default hierarchies exist throughout the system. Any time that a default hierarchy exists, you can:
Leave information blank at lower levels, because defaults are inherited from the next higher level.
Override information set at higher levels by entering different information at the lower levels.
To understand default hierarchies, consider the example of payment terms. When you enter a pending item, you can specify payment terms on the Pending Item 1 page. If you do not specify payment terms there, the system checks the customer level to see if payment terms are defined for the customer. If payment terms do not appear at the customer level, the system uses the payment terms that you defined at the business unit level on the Receivables Options - Payment Options page.
Follow these steps to set up business units:
Create the receivables business unit and its associated TableSet on the Receivables Definition - Business Unit Definition page.
Set up a general ledger business unit.
Set up an Accounts Payable business unit if you use refund processing.
Set up the common application tables and core PeopleSoft Receivables tables.
Define the default processing values for each business unit at the SetID level and for individual business units.
Use the Receivables Options component (BUS_UNIT_OPT_AR1) to define defaults at the SetID level. All business units assigned to a SetID use the defaults that you provide there. Use the Receivables Definition component (BUS_UNIT_TBL_AR) to define defaults for specific business units.