Budget Allocation Process
Allocations processing in General Ledger enables you to spread either fixed amounts or a pool of complex pro rata amounts from multiple ChartFields. You can use statistical and monetary accounts from any ledger (or combination of ledgers) as the basis. Allocations provide complete flexibility in mapping ledger amounts across the chart of accounts. You can use allocations to generate large volumes of budget entries quickly and easily. Allocations processing supports top-down budgeting and the dynamic generation of budgets based on any segment of the organization at any given time.
Allocations enable you to spread amounts from any ledger to the budget ledger so that you can devise budgets and forecasts based on the strategic information already stored in your database. Here is an example:
Suppose that your sales manager is preparing next year's monthly sales targets for the eastern sales division, as well as a budget for travel expenses. The sales manager bases the forecast on a number of factors:
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2004 revenue should be 128 percent higher than 2003 amounts.
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Because of unusual market fluctuations in 2003, the manager wants the 2004 forecast to reflect the 2002 monthly sales trends.
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The travel expense budget will be 10 percent higher than last year, allocated using the new sales projections as a basis.
First, the sales manager uses the Budget Copy Definition pages to copy 2002 eastern sales region revenue figures from the actuals ledger into the budget ledger for 2004.
The manager uses the Factor (%) field to increase by 128 percent the 1998 actuals amounts. Then the sales manager does the same for the travel expense accounts, increasing them by 10 percent.
Next, the sales manager uses the Budget Allocation process to reallocate revenue amounts according to 2002 sales trends, using the 2002 amounts in the sales revenue account for all departments as the basis. In this way, sales figures for the eastern division are spread according to the general sales trends for 2002.
As the final step, the sales manager uses the new 2003 sales revenue forecast amounts as the basis for allocating the travel expenses.