Business Functions
A business unit can perform many business functions in Oracle Fusion Applications.
Business Functions
A business function represents a business process, or an activity that can be performed by people working within a business unit and describes how a business unit is used. The following business functions exist in Oracle Fusion applications:
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Billing and revenue management
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Collections management
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Customer contract management
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Customer payments
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Expense management
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Incentive compensation
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Materials management
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Payables invoicing
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Payables payments
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Procurement
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Procurement contract management
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Project accounting
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Receiving
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Requisitioning
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Sales
Although there is no relationship implemented in Oracle Fusion Applications, a business function logically indicates a presence of a department in the business unit with people performing tasks associated with these business functions. A business unit can have many departments performing various business functions. Optionally, you can define a hierarchy of divisions, business units, and departments as a tree over HCM organization units to represent your enterprise structure.
Your enterprise procedures can require a manager of a business unit to have responsibility for their profit and loss statement. In such cases, any segment that allows the identification of associated revenue and costs can be used as a profit center identification. The segment can be qualified as the Cost Center Segment.
However, there are cases where a business unit is performing only general and administrative functions, in which case your manager's financial goals are limited to cost containment or recovering of service costs. For example, if a shared service center at the corporate office provides services for more commercially-oriented business units, it doesn't show a profit and therefore, only tracks its costs.
In other cases, where your managers have a responsibility for the assets of the business unit, a balance sheet can be produced. The recommended best practice to produce a balance sheet is to setup the business unit as a balancing segment in the chart of accounts. The business unit balancing segment can roll up to divisions or other entities to represent your enterprise structure.
When a business function produces financial transactions, a business unit must be assigned to a primary ledger, and a default legal entity. Each business unit can post transactions to a single primary ledger, but it can process transactions for many legal entities.
The following business functions generate financial transactions and will require a primary ledger and a default legal entity:
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Billing and revenue management
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Collections management
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Customer payments
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Expense management
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Materials management
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Payables invoicing
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Project accounting
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Receiving
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Requisitioning
Business Unit Hierarchy: Example
For example, your InFusion America Company provides:
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Air quality monitoring systems through your division InFusion Air Systems
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Customer financing through your division InFusion Financial Services
The InFusion Air Systems division further segments your business into the System Components and Installation Services subdivisions. Your subdivisions are divided by business units:
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System Components by products: Air Compressors and Air Transmission
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Installation Services by services: Electrical and Mechanical
The following figure shows an example of a business unit hierarchy.
Oracle Fusion applications facilitates independent balance sheet rollups for legal and management reporting by offering up to three balancing segments. Hierarchies created using a second or third balancing segment can provide the divisional results. For example, it's possible to define second or third balancing segment values to correspond to business units, and arrange them in a hierarchy where the higher nodes correspond to divisions and subdivisions, as in the InFusion US Division example.