Set Up Financial Defaults, Charge Codes, Vendors, and WIP Settings

As a financial manager, create the required default financial data. These defaults enable investment managers and other business users to perform their financial management tasks. Investment managers can plan investments by tracking costs and processing financial transactions against them. They can make financial decisions about their investments that are based on actual financial data.
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As a financial manager, create the required default financial data. These defaults enable investment managers and other business users to perform their financial management tasks. Investment managers can plan investments by tracking costs and processing financial transactions against them. They can make financial decisions about their investments that are based on actual financial data.
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Example: Create Financial Data to Process Financial Transactions and Plan Investment Costs
A financial manager oversees the finances for a new Human Resources (HR) Upgrade project. The initiative includes several investments that are assigned to different investment managers across the organization. The investment managers want to track individual investment costs and process transactions against the overall initiative. The financial manager creates the following financial data:
  • Vendors V1 and V2 to track the hardware and material
  • A financially enabled company profile
  • Financially enabled investments, resources, and roles
  • Input type codes to differentiate the rates of full-time resources from contractors
  • Charge codes to differentiate the cost of regular work from overhead
Verify the Prerequisites
Before you create the required financial data, verify that you understand the following financial management concepts:
  • Cost planning as opposed to actuals, fiscal calendar cycles, fiscal time periods and how they are defined in your organization.
  • The desired outcomes for any type of configuration. After you start using the configured data to create instance data, you cannot change the configuration. You cannot delete fiscal time periods or department and location organizational breakdown structure (OBS) units. You also cannot delete any financial classifications that the application uses.
  • How you want to set up your organizational structure using entity, and the location and department OBS units. Organization is important because when you use the application or you generate reports, information groups by the outcome desired.
  • How your configurations, classifications, and definitions affect the data flow to your third-party integrations and chargebacks processing.
  • How your data affects the cost/rate calculations on the project side of the application as opposed to the financial side. For example, transactions posted to work-in-progress (WIP).
Verify that you have set up the following financial items:
  • Location and department OBS and OBS units
  • Entity
  • Financial Classes
  • Cost and Rate Matrices
  • Currencies
  • Investments (for example, projects, applications, assets)
  • Resource and roles
Add Vendors
You can define your vendors so you can track the purchases to a specific supplier of products or services. For example, you can use a vendor when entering transactions for material, expense, and equipment. The vendor entry helps you track the location of purchases that are made against investments. Some other uses for vendors include:
  • Voucher headers
  • Resource and company properties
  • Third-party integrations for exporting financial data
Follow these steps:
  1. Open Administration, and from Finance, click Setup.
    The financial organizational structure appears.
  2. Click Vendors.
  3. Click New.
  4. Complete the requested information.
  5. Click Save.
Create Company Profiles
You can create company profiles to associate with investments when integrating with third-party billing systems so you can classify the data. Activate and financially enable the company profiles to process financial transactions against them and determine how their costs affect investments.
Define the financial properties of the company before setting up the billing addresses. You can set up multiple billing addresses for a company. A placeholder billing address profile is created by default using the company name and ID. You can edit the profile to provide the billing address information.
Selecting a financial location and a financial department for a company automatically populates the WIP class, investment class, and company class with default values. The default values are populated only if you specified these values for the entity that is associated with the location and department OBS.
Follow these steps:
  1. Open Home, and from Financial Management, click Companies.
  2. Click New.
  3. Complete the requested information.
  4. Click Save.
  5. Open the Properties menu and click Financial.
  6. Complete the requested information. The following fields require explanation:
    • Financial Status
      Indicates the status of the company profile.
      Values
      :
      • Active: You can create financially enabled investments for the company.
      • Inactive: You cannot create financially enabled investments for the company.
      • No New Business: Financially enabled investments currently exist for the company currently but you cannot create more investments.
    • Financial Location
      Defines the financial location of the company that is used for processing financial transactions.
    • Financial Department
      Defines the department that is assigned ownership of the company. The value for this field defaults based on the value of the financial location for the company. If you modify this value, the location value can also change.
    • WIP Class
      Defines the work-in-progress (WIP) class indicating the financial transaction category for the company.
    • Investment Class
      Defines the investment class to which this company is assigned. The value is used to categorize company-related investments.
    • Company Class
      Defines the company class to which this company is assigned. The value is used to describe the company within the organization.
    • Date Opened
      Defines the effective date that the company was financially enabled.
  7. Save the changes.
  8. Click Billing Addresses and provide the billing address information.
  9. (Optional) Open the Properties menu and click Supplemental.
    The supplemental company properties appear.
  10. Complete the requested information. You can enter the company web address, stock ticker symbol, and account manager. The following fields require explanation:
    • External ID
      Defines the external ID for the company. This ID can be an ID related to a system ID at your company.
    • Rating
      Defines the rating to use for the company.
      Values
      : High, Medium, Low
    • SIC Code
      Defines the company Standard Industrial Classification (SIC) code.
    • Division
      Defines the division if the company is a division of a parent or affiliate company.
    • Industry
      Defines the industry that is associated with the company.
      Values
      : Consumer Products, Education, Financial, Government, Health Care, Manufacturing, Other, Other Service, Technology
    • Ownership
      Defines the ownership type for the company.
      Values
      : Corporation, General Partnership, Limited Liability Company, Limited Proprietorship, Sole Proprietorship
    • Ticker Symbol
      Defines the symbol that the company uses on the stock exchange.
    • Referral Source
      Defines the name and contact information of the person that referred the company.
  11. Save your changes.
Create Input Type Codes
To accomplish the following financial goals, create input type codes:
  • Classify the resources that are assigned to investments for reporting purposes.
  • Control whether a transaction is chargeable.
  • Differentiate costs and rates that are based on the type of work that the resources perform. For example, different rates apply for regular work and overtime work in the detailed financial transactions posted to WIP.
Follow these steps:
  1. Open Administration, and from Project Management, click Input Type Codes.
  2. Click New.
  3. Complete the requested information. The following fields require explanation:
    • Chargeable
      Indicates if the input type code can be used in chargeable calculations. The chargeable codes help to process financial transactions and to track posted actuals for financial planning.
  4. Save the changes.
Create Charge Codes
To accomplish the following financial goals, create charge codes:
  • Process financial transactions and timesheets.
  • Support financial planning for investments.
  • Differentiate costs and rates by the type of work that is performed for investments (mostly projects).
You can use charge codes to define the type of work that is associated with investments. For example, use charge codes to calculate the actual cost of sick time or vacation time. The detailed financial transactions are posted to WIP.
Follow these steps:
  1. Open Administration, and from Project Management, click Charge Codes.
  2. Click New.
  3. Complete the requested information. The following field requires explanation:
    • Open for Time Entry
      Specifies if the resource can use timesheets to track time that is spent on task assignments. When cleared, you cannot select the charge code for investments, time entries, or financial transactions.
      Default:
      Selected
  4. Save the changes.
 If the project management setting 
Enable Investment-specific Charge Codes
 is selected, you see an additional 
Investment Name
 field. You can browse and select a project in this field. The new charge code is used only with this project for tracking time entries and financial transactions.
Set System Defaults
You can set system-level defaults for financial classes, cost and rate matrices, and other financial management settings. The system defaults help simplify the financial setup in the following situations:
  • Little variation exists in the type of work.
  • A standard set of costs and rates apply to all investments.
You can override the system defaults at the entity level or investment-level. The investment-level defaults take precedence over entity or system defaults.
The system defaults apply when lower financial hierarchy levels such as investments or resources are missing configurations. For example, you might not configure a project with a matrix. In this case, the software uses the matrix that is defined in the project transaction entry defaults.
: If you already defined a default entity in the entity properties, a value is auto-populated in the financial management defaults. Alternately, you can browse and select a new default entity on the Defaults page. If you overwrite the existing entity with a new value, the newly selected entity becomes the default entity. Conversely, you can undo this default entity and can select a new default entity from the entity properties. The entity field is not required but if you do not set a default entity, it impacts the resource management capability in the
New User Experience
.
Follow these steps:
  1. Open Administration, and from the Finance menu, click Setup.
    The financial organizational structure page appears.
  2. Click the Defaults link.
    The financial management defaults page appears.
  3. In the File Maintenance
     
    section, select the default values to use for the entity, location, department, and financial classes.
  4. In the Project section, click the Project Transaction Entry Defaults link.
    The transaction entry page appears.
  5. In the Labor section, complete the following fields:
    • Rate Source
      Defines the default matrix that is used to determine the chargeable rate for labor.
    • Cost Source
      Defines the default matrix that is used to determine the labor costs.
    • Source Location
      Defines the default source location that is considered when using a matrix for applying rates and costs.
      The source is either the employee (that is, resource) or the investment location that is based on the associated location OBS. If the default source location is set at the entity level, the system uses the entity setting to determine the source location. The location that is defined on the WIP settings is also used to determine the source location.
    • Exchange Rate Type
      Defines the default labor exchange rate type that is based on active currencies for all investments in the system.
      Values
      :
      • Average. The blended derived rate over a period, weekly, monthly, or quarterly.
      • Spot. The variable rate that changes frequently, such as daily.
      • Fixed. The fixed rate that does not change over a defined period.
  6. In the Material, Equipment, and Expense sections, complete the following fields:
    • Rate Source
      Defines the default matrices that are used to determine the chargeable rate for the material, equipment, or expenses incurred.
    • Source Location
      Indicates that the default source location OBS unit that is considered when using a matrix for applying rates and costs is the investment location.
    • Exchange Rate Type
      Defines the default exchange rate type that is based on active currencies for all investments in the system.
  7. Click Save and Return.
  8. In the General section, complete the following fields to set default financial metric rates. These rates help calculate financial metrics of investments, such as NPV, ROI, IRR, MIRR, payback period, and a break-even date. You can overwrite the defined default rates at the investment level.
    • Annual Total Cost of Capital %
      Defines the annual finance rate that is used to calculate the total cost of capital of an investment.
    • Annual Reinvestment Rate %
      Defines the annual interest rate that is used to reinvest positive cash flow of an investment.
    • Ignore Non-Labor Roles/Resources in Cost Plan Population
      Specifies whether team allocation or assignment ETC from non-labor resources and roles is skipped during the autopopulation of a cost plan. For example, Populate from Investment Team. When this option is cleared, all data for an investment is included in the cost plan. The option is unselected by default.
  9. Save the changes.
Specify WIP Settings
WIP transactions let you adjust and review transactions before invoicing them. The WIP transactions also add actuals in the cost plans. The investment managers use the latest data in the cost plans to make business decisions and to prepare for chargebacks.
To classify financial data in chargebacks, transactions posted to WIP, and in cost plans, specify the WIP settings. Verify that you select the same value for entity, location, and department (that is, Project, Client, or Employee) as shown in the following table.
WIP Setting
Configuration Option 1
Configuration Option 2
Configuration Option 3
Entity
Project Entity
Client Entity
Employee Entity
Location
Project Location
Client Location
Employee Location
Department
Project Department
Client Department
Employee Department
If the values do not match for entity, location, and department, you can get unexpected results in the WIP transactions.
Follow these steps:
  1. Open Administration, and from the Finance menu, click WIP Settings.
  2. Complete the following fields:
    • Entity
      Defines the entity that determines how financial data is classified in chargebacks, transactions, and cost plans.
    • Location
      Defines the location that determines how financial data is classified in chargebacks, transactions, and cost plans.
    • Department
      Defines the department that determines how financial data is classified in chargebacks, transactions, and cost plans.
    • WIP Aging Levels in Days
      Defines the number of days for each WIP level. The value is used in reporting to classify chargeable transactions that have not been billed.
  3. Click Save.