Automatic Funding of Expense Budgets from Revenue

Welcome to the demo of how to use the automatic funding of expense budgets from revenue feature in Oracle Fusion's Budgetary Control. Automatically increase your expense budget and funds available for spending as revenue is recorded. This prevents overspending during a budget shortfall and allows for increased spending when there is a budget surplus.

Create revenue funding rules when the expense budget is determined by the amount of revenue recorded.

The Create Budget Entry from Revenue process uses the revenue funding rules to automatically increase the budget balance for expense accounts by creating budget entries reducing the need for manual creation. In the demo we will use a fictional city, Vision City. The city owns and manages the public theater. The theater's budget is financed solely through admission fees. You will see how the city can setup revenue funding rules to fund the theater's expense budget.

I've navigated to the Manage Control Budget Page. This is the city's control budget used to control spending of expenses called Annual Expense Budget. It has an annual calendar and a control level of Absolute. The Control budget segments are fund-department and account.

To create revenue funding rules, check the Allow funding from revenue check box which enables the Revenue Funding Rules region to be displayed on the Edit or Create Control Budget page. This option can be enabled when the source budget type is Other, the processing type is Procure to pay, and the control budget currency is the same as the ledger currency.

Once the budget chart of accounts has been added to the control budget by clicking the Assign budget flexfield button, the Revenue Funding Rules can be added.

This is the Edit Revenue Funding Rule window. Give the rule a name and description. You can specify a maximum funding limit. The limit is the maximum amount that can be added to the budget from this rule. The limit type can be unlimited which means there isn't a limit or a fixed amount allowing you to specify the limit or from revenue estimates. When using the revenue estimate type, you also specify the budget scenario. For our example we don't want to limit the amount of admission fees going to the theater budget so we want to select the unlimited value.

In the funding target you enter the theater's budget accounts funded from the admission fees revenue. Budget entries in our example will be created for fund 0001 (general fund), department 7070, the theater dept), and account 5670 (theater supplies). If a rule has multiple funding target budget accounts, the budget entry amount is created using the funding target percentage.

Next define the revenue source ledger and segment values. The ledger can either be the ledger of the control budget or a secondary ledger. For our example, the ledger is the same as the control budget.

You can specify a minimum revenue threshold. This is the amount the revenue balance must be before budget can be added from revenue. The options are no minimum which means as revenue is recorded it's added to the expense budget, a fixed amount allowing you to specify the limit or from revenue estimates. The Revenue estimate type can be used for either the minimum or maximum limit but not for both. For our example, we want all admission fee revenue to go to the theater budget, so we select no minimum as the value.

Next we'll define our revenue source segments, for each segment value in your chart of accounts specify all values or specific values. At a minimum you need to specify the natural account values. For our example our revenue source is the theater's admission fees which are recorded in the general fund to the theater department, so we assigned the general fund (fund = 0001), the theater department (dept = 7070) and theater admission fee revenue account (acct = 4306).

The revenue balances are calculated from all account combinations matching the segment values for the ledger.

The Revenue Funding Rule is complete and I'll click ok to return to the Edit Control budget page.

The rule must be enabled and the control budget in use to be considered by the Create Budget Entry from Revenue process. Click save to save the revenue funding rule.

I'll select action to place the control budget in use.

I've navigated to the General Accounting Dashboard, let's take a look at the revenue amount generated from theater admissions for the period of January 2025 before we submit the Create Budget Entry from Revenue process. The revenue for the theater department 7070, in the admissions revenue account 4306 ( 0001-7070-0000-4036-000000-0000) is $6,795.00.

I've navigated to Scheduled Processes, and have selected the Create Budget Entry from Revenue process. A budget entry is created by this process when these conditions are met: the revenue balance is greater than the minimum revenue threshold, the revenue balance has changed since the last time the Create Budget Entry from Revenue process was run and the maximum funding limit hasn't been met.

Select the ledger and the accounting period used to derive the year to date revenue balance.

In this example, I only want to load the budget to Budgetary Control so I've selected Budgetary Control validation for the Budget Usage parameter.

I want the budget to be loaded as a budget adjustment so I've selected the Budget Revision budget entry classification.

We recommend you schedule the Create Budget Entry from Revenue process to run at regular intervals to continually load revenue amounts to your expense budgets.

I'll click submit to initiate the process.

Two reports, the Expense Budget Entry from Revenue report and the Budget Import Analysis, are submitted automatically when the process is complete.

Let's review the Expense Budget Entry from Revenue Report. I'll republish the report to see it in an interactive viewer.

The Expense Budget Entry from Revenue Report shows the budget entries created from revenue and the details for each revenue rule.

This is the first time we have run the process so we expect the full revenue amount, to be created as the budget entry.

In the Budget Import Summary section of the report, we can see a budget entry was created for our control budget, Annual Expense Budget, for the budget period of FY 25 for $6,795, which was the amount of our Theater revenue source we reviewed earlier.

In the budget entry details section, you can see the entry amount by revenue funding rule.

The Target Budget Account and Revenue Source Details Sections, provide the detail accounts for each rule.

I've navigated to the Review Budgetary Control Balances page. Let's verify the budget amounts are reflected in Review Budgetary Control Balances.

Querying for our control budget, Annual Expense Budget, using a saved search, we can see a budget adjustment balance of $6,795. This is shown as an adjustment because we selected a budget usage classification of budget revision.

Drill down on the total budget amount to see the budget entry.

This is the budget entry created by the Create Budget Entry for Revenue process. The request submission process id is shown in the Justification field. Click on the Budget entry name to drill down to the Budget Entry Details.

You see the budget account and the amount of the budget entry. In addition, in the Comment field, you can see the revenue funding rule name used to create this budget entry, the Theater Rule. Now you have seen how to automatically increase your expense budget as revenue is recorded.

This concludes the demo.