Understanding Business Units in PeopleSoft Purchasing

A business unit is an operational subset of an organization that tracks and maintains its own set of requisitions and purchase orders. Each business unit has its own way of storing information and its own processing guidelines. PeopleSoft Purchasing business units share supplier, purchase order, and receiving information with PeopleSoft Payables business units in the same SetID.

After you determine how many business units that you need and how to organize them, define them in the PeopleSoft Purchasing system.

Note: The information in this section, which describes some of the essential traits of business units as applied to PeopleSoft Purchasing, can help you determine the best way to define business units for the PeopleSoft Purchasing implementation. PeopleSoft implementation personnel can also help you define the appropriate business unit structure.

Some purchasing transactions use business units as key identifiers. For example, you cannot create a single purchase order that includes items that have different business unit requests. Each business unit that is requesting items generates a separate purchase order.

Define business units in this order:

  1. Define generic PeopleSoft business units.

  2. Define PeopleSoft General Ledger business units.

  3. Link PeopleSoft business units to PeopleSoft Purchasing.

  4. Specify requisition-processing and purchase order-processing information for PeopleSoft Purchasing business units.

  5. Link PeopleSoft General Ledger business units to PeopleSoft Purchasing for general ledger distribution needs.

Specifying Responsibility

You can establish separate business units to specify areas of responsibility. For example, a department may be responsible for purchasing a particular type of item. You can establish a business unit specifically for this department. Using strategically created business units enables you to group purchases for analysis. The business unit configuration can also help you maintain the required level of accounting control.

Interunit Accounting

PeopleSoft Purchasing interunit accounting enables you to track interunit purchases among PeopleSoft General Ledger business units. If you require this, designate each of the organizational entities as a PeopleSoft General Ledger business unit. If you've centralized the procurement practices, you can define one PeopleSoft Purchasing business unit that can generate charges to each PeopleSoft General Ledger business unit.

PeopleSoft General Ledger Considerations

A PeopleSoft Purchasing business unit must be associated with a PeopleSoft General Ledger business unit, although this does not have to be a one-to-one relationship. You can place multiple PeopleSoft Purchasing business units under one PeopleSoft General Ledger business unit, or you can charge multiple PeopleSoft General Ledger business units from one PeopleSoft Purchasing business unit. Often, the PeopleSoft Purchasing business units will be the same as the PeopleSoft General Ledger business units.

PeopleSoft Payables Considerations

To pass accounting information from PeopleSoft Purchasing to PeopleSoft Payables and through to PeopleSoft General Ledger, you must install PeopleSoft Payables and PeopleSoft Purchasing in the same database. This requirement also applies if you want to use the matching functionality that PeopleSoft software provides.

You do not need a one-to-one relationship between a PeopleSoft Purchasing business unit and a PeopleSoft Payables business unit. One PeopleSoft Payables business unit can process data for many PeopleSoft Purchasing business units, and multiple PeopleSoft Payables business units can create vouchers for one PeopleSoft Purchasing business unit. However, you must configure these business units to share the same set of suppliers.

Suppliers

A business unit can be a subset of the organization, but from purchasing and accounts payable perspectives, a business unit can also represent a group of suppliers.

If you have multiple companies or subsidiaries with unique sets of supplier requirements, consider establishing separate business units for each set of requirements. You can share a set of suppliers across business units, but you cannot share subsets of suppliers. Within a PeopleSoft Purchasing business unit, you can access all of the suppliers in the set that is assigned to that business unit, but you can't exclude subsets of suppliers in that set.