Business Unit Structure
In PeopleSoft Receivables, a business unit is an organization or a subset of an organization that is independent with regard to one or more accounting or operational functions.
Deciding how many business units to use and when to use them depends on how you want to report on and track the transactions within your organization. Before you can define business units and start entering data into the system, you need to decide how you want to retrieve information from the system. The way that you retrieve information determines how you set up the business units.
When you decide on the business unit structure, examine the structure in your current system. What types of organizational categories do you use? Do you use company codes, organization codes, and division codes? How do you categorize customers?
Consider how existing codes and IDs might map to business units. Determine if you can map existing structures to business units or if you need to modify existing structures.
In PeopleSoft Receivables, a business unit typically represents a grouping of customer balances. Suppose that an organization has multiple companies or subsidiaries within it. Each of those companies is run as a separate business with its own set of products and customers and its own set of rules for handling those customers from a receivable point of view. Consequently, you would set up separate PeopleSoft Receivables business units for each company.
Consider reporting requirements and maintenance of balances when you decide how to group receivables in a business unit. Familiarize yourself with what data is defined at the business unit level. For example, if you use one method to age a customer's open items in business A and another method in business B, you must handle customers in business A differently from those in business B. It would make sense to set up separate business units for business A and business B.
As you determine the optimal business unit structure for your organization, remember that in some circumstances you must set up multiple business units. If you do not, you will be restricted from using certain features.
You may decide to set up separate business units even if you do not need them for processing. For example, one department in your organization may handle a particular group of customer balances, and you may want to use a separate receivables business unit for those customer balances. You may want to group certain customers together for analytical reasons even though other customers may be processed the same way. You may want to maintain accounting control and balances at a lower level than that of the total organization.
You must associate each PeopleSoft Receivables business unit with a PeopleSoft General Ledger business unit. The association does not need to be one-to-one. You can consolidate multiple PeopleSoft Receivables business units under one PeopleSoft General Ledger business unit. However, you cannot split a PeopleSoft Receivables business unit to associate it with multiple PeopleSoft General Ledger business units. Consider general ledger distribution when determining how many business units you need.
This diagram illustrates that you can consolidate multiple PeopleSoft Receivables business units under one PeopleSoft General Ledger business unit.
If you use PeopleSoft applications for all financial business processes, typically the PeopleSoft Receivables business units are the same as the PeopleSoft General Ledger business units. You set up PeopleSoft General Ledger first and then set up PeopleSoft Receivables to mirror PeopleSoft General Ledger. If you use a different general ledger system, you may not use the business unit concept. In this case, think carefully about how you will distribute from PeopleSoft Receivables to your general ledger.