In the business world, maintaining cash flow is crucial for organizations. It is mandatory for them to monitor their cash inflows and outflows, as various expenses contribute to significant outflows, particularly those related to human resources. Categorizing such costs can be advantageous in creating the organization’s budget.
To assist in this task, Microsoft Dynamics 365 Finance has introduced a forecasting tool for position expenses. This tool enables organizations to plan expenses related to workers and integrate them into their budget planning. By forecasting expenses beforehand, organizations can effectively manage their finances and make informed decisions.
Understand the processes of position forecasting
The position forecasting process typically involves configuring the budget cost elements and compensation groups as the initial components. Forecast positions are then created based on existing positions, with users easily modifying them as needed. To streamline budgeting assessments across various scenarios, multiple versions of the same forecast position can be generated. When the budget planning is updated, a new version of the forecast position can be created to facilitate the necessary changes.
Establish the Position Forecasting in Microsoft Dynamics 365 F&O
1. Budget Cost Elements
The cost details for a projected position are defined using budget cost elements, which specify the type of cost, calculation method, and whether the cost is allocated across multiple dates in a budget plan. The behavior of each budget cost element is determined by specific fields such as budget cost type, forecast position override value, and allocation method. Budget cost types -Earning, Benefit, Taxes, or Other are predominantly used for calculating totals. The allocation method field allows for the splitting of cost amounts onto separate budget plan lines with varying dates.
The cost amount for a budget cost element is calculated using effective dates to facilitate its usage in different periods. An individual account with either percentage or an annual amount is assigned for each distinct period to regulate the cost amount. Budget cost elements can only employ a percentage of other cost elements or an annual amount at a single time. Both cannot be used together. Additionally, an annual limit can be specified. When a cost element is expressed as a percentage, it’s important to indicate the budget cost components that will be employed in the computation.
2. Compensation Groups
Compensation groups can be employed to categorize forecast positions that possess comparable compensation attributes. Users also can establish a forecast position’s earnings and annual increases, in addition to allocating a specific set of collective budget cost elements.
The primary purpose of compensation groups is to assign specific budget cost elements to a forecast position. As a result, a manager can effortlessly add basic costs like benefit plans and taxes, without the requirement to know the individual cost elements. The Budget cost elements tab recognizes the cost elements to be added to the compensation group setup.
Compensation groups can also define the earning rates for a forecast position. Users can configure a compensation group to use an hourly or annual salary basis for calculating the earnings of a forecast position.
Within the Compensation rate tables tab, there exists a compensation grid consisting of pay rates that determine the earnings associated with a forecast position, depending on the designated level and step. These grids can be based on existing compensation grids in Human resources, or new ones can be formed for budget planning purposes. Select the required option in Create a new compensation grid from an existing grid field.
Pay rate changes on any date that is useful for bargaining unit negotiations are in the compensation rate table as Effective and Expiration dates. It can result in rate increases for a mid-budget cycle. The Mass Change option on the newly created rate table enables users to apply a percentage or flat amount increase or decrease to all rates in the grid.
The Increase schedule and the Date of increase fields on the compensation group come into play when pay increases are mandatory due to positions advancing to the next step, often annually. The increase schedule determines whether the step increase for a position should be based on the individual’s anniversary date or a single, common date. This relates to all forecast positions in the compensation group.
When computing the anticipated earnings for forecasted positions within a group, the selected cost component for compensation is applied, including base pay and step increases. The Compensation fixed plan field is used to associate the compensation group with a fixed compensation plan in HR, allowing for a worker’s fixed compensation information to be assigned to a forecast position. This linkage helps to improve the accuracy of budget planning. However, it’s essential to ensure that the compensation grid structure for the compensation group matches the fixed compensation plan structure, or the system will not be able to link them correctly.
End Note
Microsoft Dynamics 365 is an incredibly powerful software that offers a customizable and flexible platform for position forecasting, allowing organizations to tailor their approach to their specific prerequisites and goals. With proper data and analysis, position forecasting can accurately predict the skills and positions required in the future.
In general, the position forecasting module in Microsoft Dynamics 365 can help enterprises achieve superior workforce planning, reduce recruitment and retention costs, increase productivity, and ensure compliance with labor laws and regulations. By leveraging position forecasting in Microsoft Dynamics 365, organizations can gain a competitive edge by ensuring they have the right people with the right skills in the right roles to meet their business objectives. Get more insights into position forecasting by integrating other tools like SAP, Salesforce Solutions, etc.
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