S4C30e

Implementing SAP S/4HANA Cloud

- Finance

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PARTICIPANT HANDBOOK
INSTRUCTOR-LED TRAINING
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Course Version: 20
Course Duration:
Material Number: 50143593
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Contents

vii Course Overview

1 Unit 1: SAP S/4HANA Cloud - Finance Overview

3 Lesson: Analyzing SAP S/4HANA Cloud

17 Lesson: Financials with SAP S/4HANA Cloud

43 Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

45 Lesson: Utilizing Hybrid Deployment

63 Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

65 Lesson: Understanding SAP Central Business Configuration in SAP

S/4HANA Cloud

91 Unit 4: SAP S/4HANA Cloud Human Resources Integration with SAP

SuccessFactors Employee Central

93 Lesson: Introduction to Workforce Data in SAP S/4HANA Cloud

105 Lesson: Human Resources Connectivity

117 Unit 5: Accounting and Financial Close

119 Lesson: Accounting and Financial Close

185 Lesson: Understanding G/L Configuration Options

217 Unit 6: Accounts Payable

219 Lesson: Scope of Accounts Payable

233 Lesson: Exploring Configuration and Data Migration

245 Unit 7: Accounts Receivable

247 Lesson: Scope of Accounts Receivable

271 Lesson: Configuration and Migration Activities

281 Unit 8: Credit Management

283 Lesson: What is New in Credit Management

289 Lesson: Scope Credit Management

349 Unit 9: Collections and Dispute Management

351 Lesson: Collections and Dispute Management

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371 Unit 10: Subscription Billing and Revenue Management

373 Lesson: Overview of Subscription Billing and Revenue Management

385 Lesson: Managing Convergent Invoicing
435 Lesson: Managing Contract Accounting

567 Unit 11: Asset Accounting

569 Lesson: Scope of Asset Accounting

589 Lesson: Assets Under Construction
593 Lesson: Configuration and Migration for Asset Accounting

605 Unit 12: Intercompany Processes

607 Lesson: Explaining Intercompany Processes

613 Unit 13: Advanced Accounting and Financial Close

615 Lesson: Advanced Financial Close

643 Lesson: SAP S/4HANA Finance for Group Reporting

663 Unit 14: Overhead Cost Accounting

665 Lesson: Scope of Overhead Cost Accounting

713 Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

715 Lesson: Margin Analysis

731 Unit 16: Event-Based Revenue Recognition

733 Lesson: Revenue Recognition

761 Unit 17: Product Costing

763 Lesson: Product Costing

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Course Overview

TARGET AUDIENCE
This course is intended for the following audiences:
● Application Consultant

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viii © Copyright. All rights reserved.
 UNIT 1 SAP S/4HANA Cloud - Finance
Overview

Lesson 1
Analyzing SAP S/4HANA Cloud 3

Lesson 2
Financials with SAP S/4HANA Cloud 17

UNIT OBJECTIVES

● Get an overview of SAP S/4HANA Cloud

● Understand the Scope of Finance with SAP S/4HANA Cloud

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Unit 1: SAP S/4HANA Cloud - Finance Overview

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 Unit 1
Lesson 1
Analyzing SAP S/4HANA Cloud

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Get an overview of SAP S/4HANA Cloud

SAP S/4HANA Cloud

Digital Transformation
Today's world is changing quickly. Digital technology is everywhere, and technology is the
backbone of the digital economy. For example, we are part of the digital economy when we do
any of the following:
● Deposit a check using our smartphone
● Go for a run wearing an activity tracker
● Take the bus and use our smartpass
● Use our loyalty card to buy groceries in the store

The digital economy is the world most people live in today, whether you think we are a part of
it or not. This world is changing faster than ever before, thanks to the technology available at a
massive scale today. You interact with these technologies every day in your personal life and
your work life. Technology is so tightly embedded in everything around you, it's easy to forget
it’s there.

Figure 1: Major Technology Trends

Some major technology trends happening now are:

● Hyperconnectivity - for example, the smartphone. We check it at all hours of the day and in
any place imaginable. You can manage e-mail, restaurant reservations, video
conferencing, read a newspaper, and stay connected to the world through hundreds of
thousands of apps. For some, smartphones are hardly used as phones to make calls
anymore. It's no longer just a phone - it's now a watch, a stereo, and a bank - and
scrapbooks are also used. This dramatically impacts our expectations of speed of service,
response time, and productivity. Every time we use these devices we use data and leave a
trail of data. There are no signs of mobile devices decreasing in relevance.
● Big Data - Big Data is what enables Amazon to tell you that they are having a sale on your
favorite brand of sneakers in your favorite color, or how Netflix can recommend a new TV
show that is similar to the one you just finished watching last night. There's a good chance
that the Google Search function knows, (through your recent search history), more about
what you're doing than your closest family members. Big Data is growing.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● Cloud Computing - The Cloud has existed for as long as the internet has, but it wasn't
called the Cloud originally. If you ever had a Hotmail, Yahoo mail, or Gmail account, you've
been operating in the Cloud. The big difference now is that software is being sold and used
in the Cloud. With the Cloud, you don't need to own or build a big IT infrastructure or giant
data center anymore. You can buy these computing capabilities from someone else and
have it deployed in the Cloud. This gives anyone access to large scale computing
capabilities at a low cost.
● Intelligent World - Science fiction authors have told stories about artificial intelligence (AI)
in the science fiction genre. But today, a lot of the hypotheses in these classic books could
be headlines from the news. AI is real and is a part of our daily lives. You can play games on
smartphones or laptops with AI players designed to help improve your skill level. Doctors
use 3D printers to create ears, valves, and knees, and the medical community is just
getting started. Sensors, robotics, 3D printing, and AI are becoming normal and these
intelligent technologies will increasingly impact our lives and the way we do business.
● Cybersecurity - People increasingly use and rely on technology. It gives wrongdoers a new
set of weapons to attack, undermine, and disrupt businesses and financial markets. Trust
and privacy are of great importance and more companies know more about their
customers and store both private and professional data, pictures, likes, tweets, and other
information. The more digital the world becomes, the more security becomes a major
issue. Businesses who are proactively focusing on security are getting a competitive
advantage in the market and enhancing their reputations in the process.

Αll these technologies impact our work and personal lives, but they also have a tremendous
impact on business and the global economy. Digital technologies have changed the rules of
business and some industries have been more impacted than others. Consider the changes in
areas such as travel and hotels, taxis, newspapers, retailers, and banks. By now, all industries
are directly or indirectly impacted and there are no signs that the disruptions will stop.
Businesses have no choice but to re-invent themselves: if they don't, someone else will.
The introduction of the Intelligent ERP is made possible thanks to the following technologies
coming to maturity:
● Machine learning, to reduce mundane tasks and increase business agility
● Intelligent assistants, to empower users to focus on what matters
● Predictive analytics, to focus more on outcomes than in the past

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 Lesson: Analyzing SAP S/4HANA Cloud

The Intelligent Enterprise

Figure 2: The Intelligent Enterprise

Intelligent Enterprises accelerate value creation through visibility, focus, and agility. They
deliver best-in-class experiences to customers. They empower their employees to do
meaningful work. And they do more with less, while driving top line growth through new
business models. To do this, these organizations have had to make sense of a growing volume
of data, allocate scarce capital strategically, and innovate with relentless speed.

Video: Intelligent Enterprise

For more information on Intelligent Enterprise, please view the simulation in the
lesson Analyzing SAP S/4HANA Cloud online in the SAP Learning Hub.

SAP provides three essential components to help your business transform into an intelligent
enterprise: an intelligent suite, a digital platform, and intelligent technologies.
We offer an Intelligent Suite of applications for every line of business: Customer Experience,
Supply Chain and Manufacturing, Digital Core, People Engagement, and Network and Spend
Management:
● We provide a unified user experience and seamless integration across the portfolio.
● We enable you to consume individual modules at your own pace.

The data generated from these applications will then be managed and orchestrated by our
Digital Platform:
● With data management, you can tap into new sources of data within your business and
across value chains to derive deep and holistic insights in real-time.
● With the business technology platform, you have the glue to securely connect solutions,
extend them, and reuse common services.

Most importantly, the intelligent suite and digital platform will be embedded with Intelligent
Technologies such as artificial intelligence, Internet of Things, and advanced analytics:

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● These technologies can automatically detect patterns in the data, recommend the best
course of action, and optimize workflows.
● For customers who want to innovate even further, we offer industry accelerators and open
innovation services, which apply design thinking methodologies to identify new business
models.

This is unique, because only SAP can offer the following:

● End-to-end integration across the processes that matter most to your business, built on
common master data, domain models, and platforms.
● The Industry Expertise to help make sense of your data in the specific context of your
business.

Figure 4: Intelligent Suite

Automate day-to-day business processes and improve interaction with customers, suppliers,
and employees through applications with embedded intelligence. The SAP Intelligent Suite
has the following features:
● Standard integration to take advantage of SAP Business Technology Platform (SAP BTP),
the SAP Analytics Cloud solution, and a common data foundation with SAP HANA software
and the SAP Data Hub solution.
● Best-in-class user experience (UX) with a consistent experience across the entire portfolio.
● Modular - for easier consumption and cost-effective operation.
● Easier extension to allow customers and partners to customize solutions quickly.
● Intelligence embedded in the applications to make workflows smarter.

Overview of SAP S/4HANA Cloud

Video: Why SAP S/4HANA Cloud?

For more information on Why SAP S/4HANA Cloud?, please view the simulation
in the lesson Analyzing SAP S/4HANA Cloud online in the SAP Learning Hub.

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Figure 6: SAP S/4HANA Cloud - The Digital Core for Live Business

SAP S/4HANA Cloud offers unique native integration and side-by-side extensibility with
SAP’s full portfolio. You've probably heard a lot about the Total Cost of Ownership (TCO)
benefits of the Cloud. While the Cloud certainly offers a cost advantage, the real benefits of
the Cloud for business are in innovation and agility. This is why companies are turning to the
Cloud. With rapid innovation cycles, the Cloud delivers new functionality several times per
year, enabling you to request and get new enhancements to advance your business. Releases
are immediately available to every customer, with no lengthy upgrade cycles, no consultants,
and no long training or change management projects required.
With agile Cloud Platforms, you can quickly develop industry-specific, process-specific, or
company-specific extensions to any SAP applications to achieve new, innovative business
processes that advance your business. By extending your on-premise assets with the Cloud,
you can enable new business processes, gain new insights, and unlock new value for your
business.
If your customer is merely moving to the Cloud to enable the same process through a new
delivery or pricing model, it's probably not worth doing. You move to the cloud to enable new
capabilities, new innovations, and new agility. With SAP's digital framework strategy, you can
tap the best solutions for procurement, travel and expense management, customer
experience, CRM, workforce management, and get all the benefits they deliver. You can
position yourself to see new levels of accurate data flow, connected processes, speed, and
flexibility with SAP S/4HANA Cloud and additional best solutions.
SAP S/4HANA Cloud offers unique native integration and side-by-side extensibility with
SAP’s full portfolio. You can extend capabilities by utilizing or building applications on SAP
Business Technology Platform (SAP BTP) for truly unique and differentiating capabilities that
customers leverage for full digital transformation and disruption. In addition, SAP S/4HANA
Cloud is designed to be open, so capability and data can be accessed via published APIs for
reuse with third-party solutions or custom apps.
While you don't have to opt for all solutions to see the benefit, if you choose for example, SAP
Concur for travel and expense management, you take full advantage of the connection
between Concur and the other SAP LOB solutions and SAP S/4HANA.
So, if you are ready to embrace the SAP Digital framework as you evolve and refresh the
different systems that run your business, you can move them to the SAP framework. This
way, you get the most complete Cloud ERP solution and the best line-of-business solutions.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

Figure 7: Why SAP S/4HANA Cloud?

Not all Clouds are created equal. SAP believes that the successful Cloud partner offers the
following:
● Accelerated innovation cycles that require a partner who is on the cutting edge.
● Industry best practices for processes, leveraged out of the box.
● Truly global best practices helping you transform your business. You need both global and
local reach to operate anywhere in the world.
● A data center strategy that will provide 100% uptime.
● A modern platform for growth, so you can focus on your core business.

Figure 8: SAP S/4HANA Cloud Release Cycle

A quarterly update and release cycle ensures that your business stays ahead of all new
technology trends as well as all shifts in local legal requirements. You can keep up-to-date
with features that are coming with future releases by going to [Link]/roadmaps and finding
the SAP S/4HANA Cloud roadmap.

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 Lesson: Analyzing SAP S/4HANA Cloud

Situation Handling
Overview

Figure 9: Situation Handling

As business users go about their daily tasks, there may be certain recurring issues that go
unnoticed if they do not recall or manually search information across transactions and
applications. Having recurring undiscovered issues such as upcoming deadlines, expiring
contracts, pending confirmations or approvals, and approaching thresholds can affect your
business. Acting on these situations too late can lead to penalties, whether that means
additional costs, frustrated staff, or even loss of customers.
How can we bring these issues to the attention of the correct users and avoid negative
consequences? Situation Handling helps you to effectively handle all kinds of issues in your
business. You can select from a wide range of standard use cases in SAP S/4HANA and SAP
S/4HANA Cloud with no additional license required.
Situation Handling is a framework within SAP S/4HANA that increases the quality and
efficiency of your business processes by detecting exceptional circumstances automatically
and informing specific groups of users depending on the defined teams and responsibilities.
By bringing these issues to the attention of the right users, we allow them to immediately take
follow-up actions, speeding up the resolution of critical business events.
A “situation” captures a current business event, its circumstances, and results. Situation
Handling supports the following two kinds of situations:
● Object-based situations: Situations for a specific business object, such as a contract, a
service order, an invoice, or a material. You can create the conditions that specify when a
situation is created: for example, when the status of an object changes or when a threshold
is surpassed.
● Message-based situations: Situations that refer to warning and error messages occurring
in system runs or reports. Instead of defining conditions, you select system messages that
create situations.

Usage

Figure 10: Situation Handling

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Unit 1: SAP S/4HANA Cloud - Finance Overview

Situation Handling focuses on automatically identifying exceptions, providing related context

information, and suggesting follow up actions. If the answer to one or more of the following
questions is YES, then Situation Handling could be the right choice:
● Do you have specific issues with a significant frequency?
● Do you want to proactively notify responsible users about urgent issues?
● Do you want to actively confirm when a task is completed successfully?
● Do you want to get insights into how issues are handled?
● Are there certain scenarios that are not part of a workflow?
● Do you need structured business data for automation and machine learning purposes?

Note:
Situation Handling Versus Workflows
Workflows are well-defined, end-to-end business processes. They involve user
actions such as approvals, which trigger the next process step. Workflows are
especially important for compliance matters, progress overviews, and ensuring
processes are executed as intended.
Situation Handling focuses on business process snippets, mainly exceptional
circumstances like process delays and deviations.

Note:
Situation Handling Versus Business Event HandlingBusiness Event Handling is a
basic technology that signals status transitions of business objects through
events. For instance, a new object instance created, an object instance updated,
or a PO created from PR. Based on the publish-subscribe pattern, the central
event handling component can receive events from multiple senders that can be
consumed by receivers who have subscribed to them.
Situation Handling uses business events as one trigger type to evaluate if a new
situation occurred. The Situation Handling framework evaluates the data against a
condition and notifies the responsible users that situation instances are created.
The situation is indicated in corresponding apps in combination with related
information and actions. In the background, the lifecycle and data context of
situation instances is tracked which can be used for further analysis.

Basic Terms
With Situation Handling, we deliver a wide range of standard situation templates across lines
of business. A situation template predefines a business situation that you want to bring to the
attention of specific members in your organization by using the Situation Handling
framework. Standard situation templates are preconfigured by SAP and are intended for
specific use cases. See a list of all available use cases for SAP S/4HANA Cloud.
Situation templates serve as a blueprint to create situation types. A situation type defines how
a situation instance is triggered, who is informed about it, and what actions can be performed
to solve it. When creating a situation type based on a template, you can change and redefine
many of the preconfigured settings, including the texts that are shown to the end users when
a situation occurs. However, the underlying data structure on which a standard template is

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 Lesson: Analyzing SAP S/4HANA Cloud

based cannot be changed. The integration with Responsibility Management allows you to
define the recipients for situation types based on teams or responsibility rules, depending on
the use case.
Situation instances of an enabled situation type are generated according to the situation type
settings:
● For object-based situations: Whenever the conditions defined for the situation type are
fulfilled.
● For message-based situations: Depends on the run type settings for scheduled application
jobs.

When a situation instance occurs, the specified end users can be informed by texts that are
displayed through the following various channels:
● A list entry in the My Situations and My Situations - Message-Based apps.
● A situation message in the corresponding business apps.
● An automatic notification in the SAP Fiori launchpad.
● Optional email notifications that the end user can opt to receive in the SAP Fiori
launchpad's settings.

The last three features are only available for object-based situations.
Over time, situations can be monitored, including the occurrence and the lifecycle of situation
instances with respect to their status and related business objects. Situation Handling allows
you to track and collect comprehensive analytical data on business situations and how they
are handled, which helps you monitor and continuously improve your business processes.

Message-Based Situations

Figure 11: Message-Based Situations

Key users can define message-based situations in the Manage Situation Types - Message-
Based app as a blueprint for business use cases. In this case, you can create a new situation
type or situation template. When creating a new situation template, you must select the
predefined situation scenario that you want to base it on. When creating a new situation type,
you have to select either the SAP situation template or the custom situation template that you
want to base it on. The responsible users for message-based situations are also defined by
using integrated Responsibility Management in the same manner as object-based situations.
Additionally, key users can monitor the occurrence of warning and error messages in the
system through the Collect Statistics option, which is available in the list view of the Manage
Situation Types - Message-Based app.
End users can display all message-based situations in their area of responsibility in the My
Situations - Message-Based app. From the overview table, you can navigate to the situation
detail pages where related actions help you solve those situations.

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Object-Based Situations

Figure 12: Object-Based Situations

Key users can define object-based situations in the Manage Situation Types app based on
standard situation templates.
How does this work?
● Create a situation type as a copy of a situation template,:for example, Procurement use
case Contract is Ready as Source of Supply.

Figure 13: Create Situation Type

● Maintain admin information such as ID, Name, and Display Sequence. If there are several
situation types enabled for the same business object, you can define the sequence in
which you want to display the situation instances in the situation message.

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Figure 14: Maintain Admin Information

● Define the conditions for which situation instances are created, and the conditions for
which notifications are sent. These settings can be configured by adding filter values and
further conditions, or by deleting predefined conditions. By checking Send Notification, you
enable notifications to be displayed in the SAP Fiori launchpad (and optionally as an email
notification) when a condition is met.

Figure 15: Define Conditions

● Personalize the in-app text that is displayed in the consuming app.

Figure 16: Personalize In-App Text

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● Adjust the notification texts for situations that are displayed in the SAP Fiori launchpad
when a situation occurs. Additionally, you can decide if you want to send notifications for
each individual situation instance or just one aggregated notification. You can also choose
to resend notifications when open situation instances are updated.

Figure 17: Adjust Notification Text

● Define who is responsible for situations, who can see them in the My Situations app, and
who receives notifications. Under Responsibility by Teams, you can view which teams are
enabled for the situation type. Create Team directly opens the object page for creating a
new team in the Manage Teams and Responsibilities app. Under Responsibility Rules, the
rule name is directly displayed if there is a rule defined for the template, or you can choose
ADD rule. Responsibility rules are preconfigured by SAP but can be enhanced through
custom business logic.

Figure 18: Create Team

● Define whether you want to monitor the occurrence and status updates of situation
instances by selecting Monitor Instances.

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Figure 19: Monitor Instances

When the situation type is enabled, Situation Handling uses notifications in the SAP Fiori
launchpad to automatically inform specific end users about object-based situations that they
need to be aware of and handle as soon as possible. Depending on the use case, the end user
can navigate directly from the notification to the app where the business situation is displayed
together with related information and related actions to resolve it.
End users can choose to get additional email notifications if needed.

LESSON SUMMARY
You should now be able to:
● Get an overview of SAP S/4HANA Cloud

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Unit 1: SAP S/4HANA Cloud - Finance Overview

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 Unit 1
Lesson 2
Financials with SAP S/4HANA Cloud

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand the Scope of Finance with SAP S/4HANA Cloud

Finance Scope
Finance with SAP S/4HANA Cloud

Figure 20: SAP S/4HANA Cloud High-Level Scope

All teams within the finance organization are impacted by the transformation towards digital
and must rethink how they perform their functions. In SAP S/4HANA, working from a single
source of the truth allows for greater integration and collaboration among teams.
The following key areas are affected:
● Accounting and Financial Close
Reduce cost and effort with fast, accurate, and compliant financial close. Represent a
complete set of accounting processes with multiple views, valuation approaches, and
allocation methods.
● Financial Operations
Simplify the way to record and manage accounts payable and receivables data from
vendors and all customers. Increase automation and reduce manual effort and cost.
● Cost Management and Profitability Analysis
A powerful toolset of planning and cost allocation tools for transparency and efficiency.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● Treasury Management
Gain real-time insight into global cash and liquidity management with SAP S/4HANA
Cloud. Rely on a single version of the truth for forecasting and managing cash by
integrating data from multiple sources.
● Subscription Billing and Revenue Management
Used to monetize digital transformation through high-volume, subscription billing, and
revenue management.
● Real Estate Management
Manage all Leasing Operations.
● Enterprise Risk and Compliance
Provide integration points to global risk and compliance tools.

Figure 21: SAP S/4HANA Finance Cloud - Product Map

For Finance, key features allow you to:

● Centralize all accounting-relevant transactions
The Universal Journal brings together Financial Accounting (FI) and Controlling (CO) into
one pool of relevant business data. This single source of truth collects all accounting-
relevant transactions and makes them available to all relevant application components.
● Comply with the latest financial reporting standards
With SAP S/4HANA Cloud for contract and lease management you can ensure compliance
to the latest financial reporting standards, like the new lease accounting standards IFRS16
and FASB ASC 842.
● Monitor fluctuations in foreign currency rates
With the treasury management capabilities in SAP S/4HANA Cloud, you are always fully
informed about your exposure to fluctuations in foreign currency rates with real-time
position analysis, which is based on automatic cash flow forecasts and an integrated
market data feed.
● Assess and manage financial risk

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 Lesson: Financials with SAP S/4HANA Cloud

Protect your assets and cash flow with real-time treasury and financial risk management
from SAP S/4HANA Cloud. Assess financial risks and manage market conditions in real
time using robust analytics. Gain immediate insight into risk positions using what-if
analyses to make proactive decisions.
● Analyze the financial status of projects
Analyze the financial status of projects from multiple perspectives, from high-level
overview down to each detailed line item so that you can find the root-cause and
proactively take corrective measures.
● Reduce errors and effort with intelligent services
Upload documents, detect and classify regions of interest, extract and classify text, and
return structured information, using Machine Learning capabilities to reduce manual
errors and effort.

Figure 22: SAP S/4HANA Cloud Value Proposition: Streamlining the Entire Financial Value Chain

The customer value proposition of SAP S/4HANA Cloud can be summarized to the following
areas:
● Instant insight-to-action
- In-memory-enabled, single financial data source across transactional and analytical
data
- Enables real-time processes for instant insight across finance and controlling to make
timely and relevant decisions
● Accelerated close
- Enable a soft close by solving issues throughout the month
- Integrated financial and managerial reporting
- Reduces duplications and errors, minimizing the need for reconciliations
● Real-time cash management

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Unit 1: SAP S/4HANA Cloud - Finance Overview

- Automated payment processes

- Provide rich analysis dimensions and drilldown feature for better insight into cash daily
operations
- Bank Account Management
● Higher Productivity
- Intuitive and role-based user experience for higher employee productivity
- Real-time receivables and payables reconciliation avoid the manual work
● Pre-delivered HR Integration
- Employee and cost center data integrated immediately across SAP SuccessFactors
and SAP S/4HANA Cloud
- More integration scenarios leveraging Intelligent Services and Machine Learning are on
the way

Key Architecture Features

Video: Universal Journal

For more information on Universal Journal, please view the simulation in the
lesson Financials with SAP S/4HANA Cloud online in the SAP Learning Hub.

Figure 24: Single Source of Truth - Universal Journal

With the Universal Journal, all finance line items are stored in a single table. All reporting
figures are drawn from this single source of financial data. The same logic of a single source
applies for actual, plan, and consolidation data. The business benefits of the Universal Journal
are:

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 Lesson: Financials with SAP S/4HANA Cloud

● Insight from a single source of truth for external disclosures and for management
reporting
● Personalized reports for finance, controlling, and operations
● Ability to drill down to line-item level for root-cause analysis
● Aggregation and segmentation on the fly across multiple dimensions
● Reduced manual reconciliation

Figure 25: Business Process View - Soft Financial Close Anytime

Traditional systems are not fast and flexible enough:

● Close activities that don't begin until period end
● Multiple batch-run dependencies
● Batch bottlenecks that delay downstream activities
● High error-correction efforts
● Complex issues that are postponed until after close
● Time-pressured resolutions
● Delayed visibility into reporting

The SAP S/4HANA Finance Cloud has the following features:

● Real-time system with key performance indicators (KPIs) instantly refreshed
● Elimination of end-of-period batch bottlenecks
● Continuous intercompany reconciliation
● Continuous financial reporting visibility

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● Profitability analysis and line-item detail reconciliation

● Automation for routine tasks
● Full management visibility of close tasks

SAP S/4HANA is not just faster and smarter. It is the key driver in simplifying business
processes. The complexity found in decision making, process execution, and IT architecture
has a high cost. The figure, Business Process View - Soft Financial Close Anytime, shows
specific examples of complexity in finance and the results as follows:
● In decision making: Finance has to wait for experts (usually in IT) to gather and prepare
data to analyze. By the time this is done, the problems Finance is trying to discover and
diagnose have often become unmanageable.
● In process execution: Today's batch-oriented processes, like period-end close, suffer from
the inherent latency of a batch operation, and also rely on manual reconciliation between
finance and controlling systems. This means that there is no time left in a period to check
for errors or even simulate what would happen under different conditions, such as an
acquisition, divestiture, or reorganization.
● In IT architecture: Because there has been little structural change in finance systems, IT
must spend time creating interfaces and reporting layers to help bend the business into
the predefined structure demanded by the system. As a result, businesses cannot really
optimize the way they work. If they do reorganize, this creates even more of a burden on
one-off interfaces or reporting structures to handle the differences.

Global Hierarchies
Global Hierarchy

Figure 26: New Global Hierarchy Maintenance

Today, each separate master data record type basically has its own logic and app for group or
hierarchy maintenance. SAP plans to gradually unify all the group and hierarchy maintenance
functions into a single easy-to-use app.

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 Lesson: Financials with SAP S/4HANA Cloud

Figure 27: Manage Global Hierarchies – Usage in Finance

The Manage Global Hierarchies app has the following key features:
● Modern, consistent UI and persistency in One Hierarchy – SET group, FSV, custom
hierarchy, and others
● Fulfil critical functional gap – time dependency, status control (draft versus active)
● Support custom extensibility – custom hierarchy, custom field, and custom logic
● Compatible with existing hierarchies

Starting with SAP S/4HANA Cloud 2008, the Manage Global Hierarchies app provides the
following new features:
● Aging/reclassification attribute can be set for hierarchy nodes and G/L accounts in
financial statement version (FSV) hierarchies
● Business Transaction Type is supported as a new hierarchy type. Users with the relevant
authorizations as provided in the General Ledger Accountant
(SAP_BR_GL_ACCOUNTANT) business role template can create and maintain business
transaction type hierarchies
● Hierarchy node texts can be maintained in all languages that SAP S/4HANA Cloud
supports

Manage Global Hierarchies

Video: Global Hierarchies

For more information on Global Hierarchies, please view the simulation in the
lesson Financials with SAP S/4HANA Cloud online in the SAP Learning Hub.

© Copyright. All rights reserved. 23

Unit 1: SAP S/4HANA Cloud - Finance Overview

Video: Manage Global Hierarchies Demo

For more information on Manage Global Hierarchies Demo, please view the
simulation in the lesson Financials with SAP S/4HANA Cloud online in the SAP
Learning Hub.

Parallel Accounting

Video: Introduction to Universal Parallel Accounting

For more information on Introduction to Universal Parallel Accounting, please
view the simulation in the lesson Financials with SAP S/4HANA Cloud online in
the SAP Learning Hub.

Figure 31: Universal Parallel Accounting

Universal parallel accounting allows you to prepare and present financial statements for
different sets of accounting standards across end-to-end processes using ledgers. For each
ledger, you can perform valuations and reporting based on one accounting standard and thus
benefit from consistent value flows and full audit trails that fulfill local and group-
wide reporting requirements.
Value Proposition
● Full audit trails through consistent, parallel information across all ledgers
● High degree of automation and accuracy for parallel legal valuations
● Benefit from the flexibility of the parallel ledgers in general ledger accounting and in
various subledgers
● Simplified configuration settings and less manual effort
● Basis for future innovations in the area of parallel valuations

Capabilities

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 Lesson: Financials with SAP S/4HANA Cloud

● Define material prices by ledger

● Capitalization of self-manufactured assets by ledger
● Actual cost rate, overheads, settlement, and universal allocation are calculated and posted
by ledger
● Parallel valuation postings and analysis in production, accounting for event-based
production orders
● Perform valuation runs and other closing tasks by ledger, resulting in individually
calculated values for financial and management accounting
● Display accurate data on the basis of the selected ledger in many Finance apps

Asset Accounting for Parallel Accounting

Video: Demo for Asset Accounting

For more information on Demo for Asset Accounting, please view the simulation
in the lesson Financials with SAP S/4HANA Cloud online in the SAP Learning
Hub.

Video: Asset Accounting for Parallel Accounting

For more information on Asset Accounting for Parallel Accounting, please view
the simulation in the lesson Financials with SAP S/4HANA Cloud online in the
SAP Learning Hub.

Figure 34: Asset Accounting for Parallel Accounting

Universal parallel accounting provides consistent and universal support of parallel accounting
standards to manage and monitor fixed assets. It allows you to manage assets with multiple
accounting principles across their entire lifecycle: that is from the acquisition of an asset up to
its retirement. Asset Accounting supports parallel value management with different
accounting principles and also with parallel currencies.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

Value Proposition
● Use the asset valuation view in the Manage Fixed Assets app as a central point of entry
during the complete lifetime of an asset (holistic view on values, value comparison in
different depreciation areas, and embedded navigation to other apps)
● Use analytical Fiori apps to gain immediate insights into asset values per accounting
standard on ledger level for all currencies defined in General Ledger Accounting, including
the functional currency also for future years.

Capabilities
● Configuration is simplified and is based on a clear relationship between accounting
principles, ledgers, and depreciation areas.
● Asset values are processed automatically for all currencies, including the functional
currency.
● Asset transactions including manual depreciation postings, quantity postings, statistical
postings, and the settlement of assets under construction are posted real-time with
separate journal entries per accounting standard on ledger level.
● Legacy data transfer of asset postings is performed per accounting standard on ledger
level.

Overhead Accounting for Parallel Accounting

Video: Overhead Cost Accounting Demo

For more information on Overhead Cost Accounting Demo, please view the
simulation in the lesson Financials with SAP S/4HANA Cloud online in the SAP
Learning Hub.

Figure 36: Overhead Accounting for Parallel Accounting

Universal parallel accounting offers consistent and universal support of parallel accounting
standards for end-to-end processes like make to stock/order and manufacturing of assets. It
allows the parallel representation of different accounting principles across the whole value

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 Lesson: Financials with SAP S/4HANA Cloud

flow of overhead costs. For example, in the assignment of overhead costs from projects to
cost centers or assets, as well as the allocation of costs between cost centers.
Value Proposition
● Consistent parallel value flows of overhead costs, with no reconciliation effort
● Higher degree of automation and accuracy
● Full audit trail of overhead costs
● Easy to use and simple to configure

Capabilities
● Actual cost rates, overheads, settlement, and universal allocation are calculated and
posted by ledger
● Overhead accounting reports allow reporting/analyzing data by ledger
● Activity allocations and settlements create separate journal entries by ledger
● Actual cost rates can be calculated and maintained as ledger-dependent

Video: Overhead Accounting

For more information on Overhead Accounting, please view the simulation in the
lesson Financials with SAP S/4HANA Cloud online in the SAP Learning Hub.

Inventory Prices, Product Cost Planning, Actual Costing for Parallel Accounting

Figure 38: Inventory Prices, Product Cost Planning, Actual Costing for Parallel Accounting

Universal parallel accounting offers consistent and universal support of parallel accounting
standards for the value creation process, including make to stock and make to order. It allows
the parallel representation of different accounting principles for standard costs
and the valuation of work in process, finished goods inventories and cost of goods sold
at actual costs.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

Value Proposition
● Consistent parallel value flows for inventory valuation
● Full audit trail for process of setting standard and actual costs
● Higher level of transparency and accuracy in inventory accounting with less work than
before
● No time-consuming adjustment postings with automated posting and processing of
different accounting rules
● Consistent currency handling in all financial applications with no additional effort

Capabilities
● Material prices are maintained per ledger
● Calculation of the cost of goods manufactured can be done per ledger
● Actual costing runs are done per ledger
● Actual costing runs can cover multiple periods (year-to-date valuation)
● Inventory balance sheet values can be calculated and posted per ledger
● Lowest value by range of coverage and by movement rate can be calculated per ledger by
using ledger-specific valuation alternatives

Production Accounting for Parallel Accounting

Video: Production Accounting Demo

For more information on Production Accounting Demo, please view the
simulation in the lesson Financials with SAP S/4HANA Cloud online in the SAP
Learning Hub.

Video: Production Accounting

For more information on Production Accounting, please view the simulation in
the lesson Financials with SAP S/4HANA Cloud online in the SAP Learning Hub.

28 © Copyright. All rights reserved.

 Lesson: Financials with SAP S/4HANA Cloud

Figure 41: Production Accounting for Parallel Accounting

Universal parallel accounting offers consistent and universal support of parallel accounting
standards for the value creation process, including make to stock and make to order. It allows
the parallel representation of different accounting principles for the usage of input materials,
provision of manufacturing activities and assignment of overhead, together with the valuation
of work in process and finished goods inventories.
Value Proposition
● Consistent parallel value flows for cost of goods manufactured
● Immediate reflection of work in process and production variances
● Full audit trail for value created in manufacturing
● Easy to use and simple to configure

Capabilities
● Input material usage is determined and posted by ledger
● Overhead is determined and posted by ledger
● Work in process is calculated immediately to reflect the value of material usage by ledger,
activity usage by ledger, and overhead by ledger
● Delivery of finished goods to stock is valued and posted by ledger
● Variances are calculated immediately and by ledger

Reporting and Summary

Video: Sales and Profitability Reporting

For more information on Sales and Profitability Reporting, please view the
simulation in the lesson Financials with SAP S/4HANA Cloud online in the SAP
Learning Hub.

© Copyright. All rights reserved. 29

Unit 1: SAP S/4HANA Cloud - Finance Overview

Video: Reporting with Parallel Accounting

For more information on Reporting with Parallel Accounting, please view the
simulation in the lesson Financials with SAP S/4HANA Cloud online in the SAP
Learning Hub.

Currencies

Figure 44: Currencies

In Accounting, currencies play a decisive role because they not only reflect the financial ratio
in the respective national currency but they are also configured according to their use in your
company. With the currency settings that you specified for the respective ledgers, currencies
control, for example, how financial statements and consolidated financial statements are
represented differently on the basis of the same data or how balances are created for
different purposes with different currency translation (for example, for tax purposes).
There is the need to make a basic distinction between the business-transaction-specific,
externally-specified currency (for example, amounts on an invoice), and currencies that,
according to their use in a company, can be translated on the basis of particular settings
(such as an exchange rate and a set of books) and hence can be managed in parallel to the
original currencies. The externally-specified currency is the transaction currency. The other
currencies can be defined and translated according to the role they have in Accounting.
Currencies and their related information, that is, the currency code and the conversion
settings, are stored in your SAP system as currency types. The actual currency code (such as
USD or EUR) and the translation method (for example, using the current Reuters exchange
rate or the central bank rate) are assigned to the currency type. Translation when posting
ensures the zero balance setting for each document, clearing, and reversals. SAP delivers two
currency types that you can use for your company code: the company code currency and
your group currency. Per company code, you can configure one currency in addition to the
two pre-delivered SAP currency types (company code currency and group currency).
The new currencies are converted in real time for each journal entry according to the
specified currency conversion settings.
By default, the following currency types are available in the system:
● 00 (Transaction Currency). The currency in which a document is posted.
● 10 (Company Code Currency). The company code currency is the currency a company
code reports financial data to local authorities with. This is defined when you create a new
company code.

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 Lesson: Financials with SAP S/4HANA Cloud

● 30 (Group Currency). The group currency is used to compare amounts using a single
currency. You specify your group currency when you set up your SAP S/4HANA Cloud
system and before you proceed with your other configuration settings in the Realize phase.
The group currency is valid for all company codes and ledgers.

Note:
For a meaningful comparison of amounts from different company codes, not
only do the amounts have to be in the same currency, but the respective
company codes must also use the same accounting principle.

● Freely-Defined Currency. If your business needs require an additional currency, you can
configure your own currency type. This is recommended for functional currency reporting,
if functional currency deviates from Company Code Currency or Group Currency. You
create your additional currency and make the necessary configuration settings in the
Manage Your Solution app under Configure Your Solution. Start the Define Currency
Settings for Ledgers and Company Codes configuration step under Finance General
Settings Currencies.

Note:
You can only add new currency types for a company code that has not been used
yet. This means that you can only add an additional currency for a company code
if the following conditions are true in both your quality (Q) and production (P)
systems:
● No journal entries have been posted for the company code.
● No accounting attributes of materials have been edited for the company code.
● No plants have been assigned to the company code – both the Q- and P-
system

It is possible to adjust the values of the freely defined currency via the app Post
Currency Adjustment, but it is not possible to specify the revaluation of an asset
for the freely defined currency.
It is available in many, but not all, reports. In many reports where the currency
isn’t available as default it can be added via Data Source Extension.

Functional Currency
The functional currency specifies the currency of your primary economic environment. It is
the same for all ledgers in a company code and is defined on leading-ledger level. By default,
the company code currency (10) is defined as the functional currency. If most of your
business transactions are in a currency different from the local currency, you can enter a
different currency as your functional currency. As functional currency, you can use the
company code currency (10), the group currency (30) (the predefined SAP currency types),
or your own freely defined currency type.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

Figure 45: Input Functional Currency for Journal Entry

The accounting journal entry made to the corresponding company code and ledger will
includes functional currency as additional valuation. For example, in the app Manage Journal
Entries, the functional currency can be selected in the Entry view.

Note:
As soon as you make postings to a company code, you can no longer change the
functional currency.

Note:
The functional currency is available in many reports and valuation related process,
but not all of them yet!

Substitutions and Validations

Figure 46: Substitution and Validation Rules for Journal Entries

Video: Validation and Substitution Introduction

For more information on Validation and Substitution Introduction, please view
the simulation in the lesson Financials with SAP S/4HANA Cloud online in the
SAP Learning Hub.

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 Lesson: Financials with SAP S/4HANA Cloud

Before a journal entry in FI is posted, for example when a sales order is created, the system
performs checks to make sure that the data is complete and correct. Substitution and
validation can be used to automatically fill fields or to substitute or validate field values,
depending on defined preconditions and rules. You can use the Manage Substitution/
Validation Rules app to define such substitution and/or validation rules for FI postings. Two
business contexts (Coding Block and Market Segment) are supported in this release. You can
access the app Manage Substitution/Validation Rules - Journal Entries to display, change, or
create rules for these two contexts.
To access the Manage Substitution/Validation Rules - Journal Entries app, the business role
assigned to you must include the business catalog SAP_CA_BC_ACC_CONFIG_PC
(Accounting - Configuration).

Figure 48: Define Substitutions

Substitution allows you to replace an element of a posting according to your own user-defined
logic. Follow the procedure below to create a substitution rule:

1. Choose Create Rule.

2. In the dialog box that appears, choose a context and an event, then select Substitution
Rule as the rule type. (The available contexts and events are defined by SAP. Context
determines which fields can be included in the rule definition. Event specifies the exact

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Unit 1: SAP S/4HANA Cloud - Finance Overview

time and location for the validation to occur, for example, when users execute a particular
step in a business process.)

3. The detail input page is divided into three sections: General Information, Precondition, and
Substitution. In the General Information section, specify a rule name and a meaningful
description.

4. In the Precondition section, set one or more conditions for the substitution to take place.

● If the conditions are met, values for the relevant fields are substituted based on
substitution lines defined in the Substitution section.

● If the conditions are not met, values are not substituted.

● If you leave this section empty, values for the relevant fields are always substituted.

Note:
The relationships between conditions are as follows:
● Filters for different fields have an AND logic between each other.
● Filters for the same field have an OR logic between each other. There is an
exception: Filters using a negative operator, such as Not equal to, have an
AND logic with the filters that use positive operators.
● Source: Depending on your selected substitution type, either enter a
constant value or select a source field whose value is to substitute the
target field.
● Overwrite: Select the checkbox if you want to overwrite any existing value of
the target field with the value you specified in Source. If you want to keep
any existing value of the target field, leave the checkbox deselected.

5. In the Substitution section, define one or more substitution lines with the following
settings:

● Target Field: Select a field whose values are to be substituted.

● Substitution Type: Select how the values for the target field are to be substituted. You
can choose from the following types:

- Clear value: Clears any existing value for the target field.

- Substitute with constant: Fills in the target field or replaces its existing value with a
constant value.

- Substitute with field value: Fills in the target field or replaces its existing value with
the value from the source field.

6. Save the rule. The rule now has the status New. You must activate the rule before applying
it at runtime.

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 Lesson: Financials with SAP S/4HANA Cloud

Video: Create and Activate a Substitution

For more information on Create and Activate a Substitution, please view the
simulation in the lesson Financials with SAP S/4HANA Cloud online in the SAP
Learning Hub.

Figure 50: Define Validations

Validation rules are used to check values as they are being entered in runtime applications.
Follow the procedure below to create a validation rule:

1. Choose Create Rule.

2. In the dialog box that appears, choose a context and an event, then select Validation
Rule as the rule type. (The available contexts and events are defined by SAP. The context
determines which fields can be included in the rule definition. The event specifies the
exact time and location for the validation to occur, for example, when users execute a
particular step in a business process.)
The detail input page is divided into three sections: General Information, Precondition, and
Validation. In the General Information section, do the following:

3. Specify a rule name and a meaningful description.

4. Choose a control level, Error or Warning. It controls how strict the validation rule is. When
data fails the validation at runtime, the system responds differently as follows:

● Error: An error occurs and prevents you from completing the posting until you correct
the erroneous entries.

● Warning: A warning occurs but doesn't prevent you from completing the posting.

5. In the Precondition section, set one or more conditions for the validation to take place.

● If the conditions are met, the values entered for the relevant fields are to be checked
based on the check statements defined in the Validation section.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● If the conditions are not met, the values entered are not subject to the validation.

● If you leave this section empty, the values entered are always to be checked.

6. In the Validation section, define one or more check statements using Field, Operator, and
Value. Note that the relationships between conditions (or statements) are as follows:

● Filters for different fields have an AND logic between each other.

● Filters for the same field have an OR logic between each other. There is an exception:
Filters using a negative operator, such as Not equal to, have an AND logic with the
filters that use positive operators.

7. Save the rule. The rule now has the status New. You must activate the rule before applying
it at runtime.

Figure 51: Manage Validation and Substitution Rules

Edit Rules
For an existing validation or substitution rule, you can edit, activate, disable, or delete it.
Generally, when editing a rule, a draft of the rule is generated. Any changes are first saved to
the draft and can only be saved to the active version of the rule after you activate the draft.
The possible actions to a rule or its draft are as follows:

1. Edit new rule: After creation, a rule has New status. You can continue editing the rule, the
New status is kept.

2. Activate new rule: You can activate a new rule so that it has Active status. Only active rules
can be used in validation or substitution at runtime.

3. Edit draft or active rule: After activation, when you choose Edit for the rule for the first
time, a draft is generated. Any changes you made thereafter are first saved to the draft.
The rule displays as Active status with a Draft changed by: <user name> link underneath.
For this kind of rule, you can take either of the following actions:

● Edit the draft again by choosing the draft link and making changes. Draft rules have
Modified status.

● Activate the draft by choosing Activate. The draft rule changes to Active status and
overwrites the original active version.

● Edit the active rule by choosing the row or the arrow icon, it will discard the existing
draft and generate a new draft. Any changes are saved to the new draft.

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 Lesson: Financials with SAP S/4HANA Cloud

4. Disable rule: You can disable an active rule so that it cannot be used in validation or
substitution until you activate it again. The rule status changes to Disabled. This is useful if
you want to invalidate a rule temporarily.

5. Delete rule: You can delete a draft or an active rule. Note that when deleting an active rule,
its draft version is also deleted.

To ensure auditability, the system keeps track of all changes to the substitution and validation
rules on a database table level. The user names and the timestamps of the changes are also
persisted.
Display Rules
When displaying rules you can:
● Search for rules
● Personalize lists layouts
● Show the rule execution sequence
● Check the rule for errors
● Show the rule script

Transport Rules

1. Substitution and validation rules are configured by configuration users in the quality
system (also known as the "Q system"). An administrator, who has been assigned with the
transport management-related business catalogs SAP_CORE_BC_SL_IMP and
SAP_CORE_BC_SL_EXP, needs to take the following steps to transport these rules to the
production system ("P system"):

2. Access the Export Software Collection app in your Q system.

3. Create a software collection and choose Add Items.

4. Select the Financial Substitution and Validation type and the rules you want to transport.

5. Choose Export. If the export is successful, you can proceed with the next step. Otherwise,
repeat steps 2-4.

6. Access the Import Collection app in your P system.

7. Open the right version of the software collection you created earlier. It should have the
Ready for Import status.

8. Choose Import. If the import is successful, the rules are transported to the P system and
can be applied in the relevant runtime apps.

All changes to rules can be transported in this way, including rule creation, change, deletion,
and activation. However, a rule with a draft version cannot be exported. You need either to
delete or activate the draft.

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Unit 1: SAP S/4HANA Cloud - Finance Overview

Figure 52: Effects on Posting

At runtime, business users make postings or record data using various apps, such as Post
General Journal Entries. Based on the respective context and event, your defined rules apply
automatically as follows:
● Substitution: Derives, replaces, or clears values for the relevant fields defined in the
substitution rules. The substitutions take place at the time of data entry with no system
messages.
● Validation: Validates the values entered for the relevant fields defined in the validation
rules. Depending on the control level of each validation rule, when an entered value doesn't
comply with the rule, a warning or an error message is raised. Business users can follow
the link provided in the message to check the rule details so that they can correct their
entered values as necessary.

Substitution and Validation Rule Execution Logging

The Substitution/Validation Logs app is introduced for configuration users to view
substitution and validation rule execution logs based on event. You can also choose to enable
or disable the logging for a certain user or a time period and set logging level by using the Set
Substitution/Validation Logs.
To access both Substitution/Validation Logs and Set Substitution/Validation Logs apps, the
business role assigned to you must include the business catalog
SAP_CA_BC_ACC_CONFIG_PC (Accounting - Configuration). Take reference to the business
role template SAP_BR_BPC_EXPERT (Configuration Expert - Business Process
Configuration).

SAP Innovations for Finance

Intelligent ERP

Video: Re-think ERP

For more information on Re-think ERP, please view the simulation in the lesson
Financials with SAP S/4HANA Cloud online in the SAP Learning Hub.

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 Lesson: Financials with SAP S/4HANA Cloud

SAP’s leading enterprise applications — for example, SAP S/4HANA, SAP SuccessFactors,
and Concur — are the authoritative data sources in their respective domains. For example,
SAP S/4HANA are the authoritative data sources in finance, SAP SuccessFactors in HR,
Concur in T&E. SAP complements these applications by infusing capabilities that bring
transactional data together with machine data and social data. These enable customers to
gain new insights, and go from insight to action. This becomes a loop that enables an
organization to continually improve over time. Rather than traditional implementation
services, SAP leverages Design Thinking Services that support the creation of a system of
innovation.
SAP Innovations are changing the world of finance by adding intelligence to applications:
● Automating the end-to-end processes: Increase efficiency and reduce costs with SAP’s
Finance Portfolio
● Detect and prevent: Detect and rank information out of Big Data
● Predict: Derive knowledge from historical information to increase the accuracy of
predictive scenarios
● Proactive context sensitive support: The digital assistant boosts the productivity of your
financial experts

Figure 54: Product Areas of Future Investment

In the figure, Product Areas of Future Investment, you can see the main areas SAP is focusing
on for future product enhancements and development.

Robotic Process Automation (RPA)

Robotic Process Automation (RPA) accelerates digital transformation of business processes
by automatically replicating tedious actions to free up human workers for more high-value
tasks. There are two flavors:

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Unit 1: SAP S/4HANA Cloud - Finance Overview

● Unattended: Fully automated process, where robots are working autonomously with
human supervision only.
● Attended: Partially automated process, where robots are co-working with humans, also
called Robotic Desktop Automation (RDA).

Examples of bot-assisted processes include:

● Upload of general ledger entries
● Mass lock / unlock cost centers
● Fixed asset depreciation run
● Smart accruals collector
● Supplier down payment request
● Upload customer down payments for sales orders
● Upload advice and trigger cash application for payment advice
● Send email to customers for disputes
● Supplier invoice status checks
● Mass asset acquisition

For demos and news, please sign up to the

SAP Intelligent RPA YouTube channel

LESSON SUMMARY
You should now be able to:
● Understand the Scope of Finance with SAP S/4HANA Cloud

40 © Copyright. All rights reserved.

 Unit 1

Learning Assessment

1. Which of the following are hallmarks of successful cloud offerings?

Choose the correct answers.

X A Accelerated Innovation Cycles

X B Best Practices for Industries and Countries

X C Fully Customizable Solutions

X D Reliable Data Centers

X E A Modern Growth Platform

2. All Customer Personalization done via Self-Service Configuration UIs (SSCUIs) and Expert
Configuration is stored separately from SAP Best Practice content.
Determine whether this statement is true or false.

X True

X False

3. Your customer wants to know what kind of management can be performed for SAP Fiori
business catalogs. Which of the following is true for these?
Choose the correct answer.

X A They can be changed as per the customer needs.

X B They are delivered pre-configured and can’t be changed.

X C They are assigned to users via the PFCG transaction.

4. Situation Handling supports object-based and event-based situations.

Determine whether this statement is true or false.

X True

X False

© Copyright. All rights reserved. 41

Unit 1: Learning Assessment

5. Object-based situations refer to warning and error messages occurring in system runs or
reports.
Determine whether this statement is true or false.

X True

X False

6. What are core areas of the financial portfolio?

Choose the correct answers.

X A Financial planning and analysis

X B Treasury management

X C Operational Purchasing

X D Governance, risk and compliance

X E Inventory Management

X F Accounting and financial close

X G Finance operations

7. Match the process tasks to the solutions.

Match the item in the first column to the corresponding item in the second column.

Perform Hedge Accounting Treasury Management

Compare Cost Center Plan val- Financial Planning and Analy-
ues to Actuals sis
Post Fixed Asset Depreciation Accounting and Financial
Close
Manage Dispute Cases
Finance Operations

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 UNIT 2 SAP S/4HANA Cloud for Hybrid
Deployment

Lesson 1
Utilizing Hybrid Deployment 45

UNIT OBJECTIVES

● Hybrid Deployment

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

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 Unit 2
Lesson 1
Utilizing Hybrid Deployment

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Hybrid Deployment

SAP S/4HANA Cloud for Hybrid Deployment

Enterprise Subsidiary Network Strategy

Figure 55: Managing the Enterprise Subsidiary Network

Managing the subsidiary network can be a big challenge because of:

● High IT complexity and cost due to diverse applications across subsidiaries
● High Corporate risk due to limited governance and compliance across subsidiaries
● Higher cost of finance and increased cash needs due to limited visibility to timely
subsidiary analytics
● Reduced operational efficiencies due to minimal leverage by subsidiaries of Corporate
capabilities and services
● High subsidiary operational costs due to inconsistent business processes
● High costs to incorporate new acquisitions into the Corporate infrastructure
● Low collaboration from Corporate to subsidiaries, and subsidiaries to subsidiaries, leads to
reduced monetization of the digital economy

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

Figure 56: New Subsidiary Strategy

Companies need to expand globally faster:

● New and existing subsidiaries are key components of a growth strategy and these need a
solution that helps them scale quickly at low cost.
● Solution standardization is key and the most effective solutions provide built-in
governance, control, visibility, and best business practices.
● The Cloud value proposition is the perfect fit to enable efficient subsidiary adoption and
flexible growth.

Success in the digital economy will drive companies to implement new business models
across all subsidiaries, including:
● Better collaboration between Corporate and subsidiaries to quickly roll out company-wide
products and services
● Digital economy business models to allow speedy response to both local and global
business needs
● Faster integration with corporate infrastructure for faster and more effective ROI from new
subsidiaries

Building competitive advantage and out-performing the competition requires a tighter

alignment between Corporate and its subsidiaries:
● Real-time visibility across the entire subsidiary ecosystem to drive insight to action and
serve customers better
● One face to the customer with tighter subsidiary ecosystem interrelationships
● Increased leverage of Corporate services and capabilities out to subsidiaries to build
competitive advantage

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 Lesson: Utilizing Hybrid Deployment

Figure 57: Two-Tier Approach to ERP Strategy

Many enterprises adopted a two-tier ERP strategy that supported a standard enterprise
system in headquarters from one vendor and a multiple choice ERP strategy for subsidiaries,
which effectively created a multi-vendor two-tier environment.
Generally, the reasons for this strategy can be grouped in the following categories:
● Reducing ERP costs (existing systems are too expensive and upgrading is too expensive)
● Improving functional coverage in the subsidiaries (including industry-related, geography-
related, and compliance-related needs, where local requirements can be realized more
quickly in a second tier ERP)
● Enabling more innovation (both organically and by acquisitions, which continue to
increase)

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

SAP S/4HANA Cloud for Hybrid Deployment

Figure 58: The SAP S/4HANA Cloud ERP Advantage

SAP S/4HANA Cloud is an ideal match for the two-tier ERP mode, because it comes with out
of the box integration and best practices. It offers:
● Common data model
● Common user experience
● Common data entities
● Common analytical structures
● Global support and localization
● Central finance at headquarters fed by subsidiaries
● Toolset for data migration

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 Lesson: Utilizing Hybrid Deployment

Figure 59: Extend the Digital Core with the Next Generation Two-Tier Enterprise

SAP S/4HANA Cloud offers the right balance between cost, efficiency, and innovation:
● Rapid time to value and lower cost to maintain:
SAP S/4HANA offers complete choice for deployment. SAP S/4HANA can be deployed on
premise or in several Cloud options. SAP S/4HANA provides a complete choice of
deployment with the same product line. Unlike our competition, there is no need to switch
to an entirely different ERP solution to go from on premise to Cloud (or vice versa).
Integration scenarios operate on compatible data models. All benefits provided by SAP S/
4HANA to the line of business (LOB) and IT begin with a simpler data model based on SAP
HANA. All SAP S/4HANA solutions share this data model, whether on premise or in the
Cloud. This simplifies everything for business and IT alike. For some of our competitors
who bought their way into Cloud ERP, the data model will vary, adding complexity and
preventing consistent benefits across the organization. For other competitors who started
in the Cloud, their solutions are often limited to one, or a few LOBs, lacking scale and
depth, particularly when it comes to industry-specific coverage. While they run on a
decades-old database technology in the cloud, SAP S/4HANA covers all LOBs and twenty-
four industries in the Cloud or on premise, with a solution built from the ground up to fully
exploit in-memory technology.
SAP S/4HANA offers a simplified and faster rollout and lower maintenance costs.
● Taking real-time insights to action:
The modern SAP HANA database is the foundation to enable real-time insights connected
to the appropriate action.
Unprecedented real-time functionality delivers real-time insights across the entire
enterprise.
● Process consistency where needed and freedom of operations where beneficial:
Process integration with ERP for cross and consolidated processes such as accounting,
material movements, and so on, or simplified vendor management.
● Easy to change and simple to extend:
Leveraging common data and process models, SAP S/4HANA Cloud is easier to change.

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

It offers a common Platform-as-a-Service: Customers who want to integrate or extend

their SAP S/4HANA ERP have a clearly defined platform to do so with SAP ERP HCP. This
is the same platform whether the customer is deployed on premise or in the Cloud.
Customers who choose to implement different ERPs at each tier, even if those ERPs are
from the same vendor, have no common platform for extension and integration. This adds
complexity and cost. With SAP Business Technology Platform, you can add functionality or
connect to other SAP Cloud solutions.
● Easily adapted innovations:
Often, the users at a subsidiary will find new and innovative ways to run processes more
effectively. When the different tiers of an ERP solution are using the same data model, UX,
entities, and reporting structure, those innovations will be much easier to take large-scale
throughout an organization. Those using different ERPs at each level, even if they come
from the same vendor, will stifle innovation when ERP tiers cannot easily duplicate the
innovation.

Two-Tier ERP Best Practices

Figure 60: Change, Adapt, or Implement New Business Processes Following Best Practices

The availability of the SAP Platform as a Service solution, SAP Business Technology Platform,
further extends a two-tier model by providing a platform for additional functionality not found
in SAP S/4HANA, including direct connectivity to other SAP Cloud assets, such as SAP Ariba,
SAP SuccessFactors, SAP Hybris, and SAP Concur, as well as providing a platform for
building net-new functionality.
A subsidiary can run a separate version of these SAP Cloud assets or connect to an
enterprise-wide instance, whichever is most relevant for the business model. Both
headquarters and subsidiaries can add new SAP cloud functionality as needed, providing a
single-vendor option for bringing on board key business processes in domains such as
finance, human resources, talent management, contingent labor, time and expense billing,
customer interaction, and procurement.
The strategic choice that really matters at this juncture in the evolution of business and
technology is about changing, adapting, or implementing new business processes that are
enabled in software, whether they are enterprise-wide processes or those specific to a local or
micro-vertical need, without extensive customization.

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 Lesson: Utilizing Hybrid Deployment

Figure 61: Two-Tier Scope Items

You can find the relevant scope items for the two-tier ERP solution with SAP S/4HANA Cloud
on the SAP Best Practices Explorer, [Link]

Hybrid ERP - Financial Scope

Figure 62: Financial Planning and Upload of Plan Data

Business Benefits
● Standardization of Financial planning across HQ and subsidiaries.
● Headquarters can trigger the group level planning and import the planning data to the
subsidiary.
● Subsidiary can report Plan versus Actual report based on the imported plan data.

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

Figure 63: Enabling Group Financial Consolidation & Profitability

Business Benefits
● Headquarters can trigger the group level consolidation by reading the financial data from
the subsidiary.
● Reading the financial data from the subsidiaries will provide an overview of the corporate
groups profitability.
● Budget Planning done at Annual Cycle can be done based on the Group profitability report.

Figure 64: Legal Consolidation with Cloud Consolidation

Business Benefits
● Headquarters and Subsidiaries can leverage SAP S/4HANA Cloud for Statutory financial
consolidation capabilities across the group
● Configuration for legal consolidation purpose
● Data quality at source meaning no more late adjustments
● Tight Integration: direct access to universal journal data for consolidation functions
● Ability to bring in data from third-party systems
● No need for a costly On- Premise consolidation solution

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 Lesson: Utilizing Hybrid Deployment

Figure 65: Connectivity to OnPrem SAP BPC for Financial Consolidation

Business Benefits
● Subsidiaries running SAP S/4HANA Cloud can connect to SAP BPC for financial
consolidation and group closure.
● Tight Integration: Direct access to financial data for consolidation functions.
● SAP BPC Planning, budgeting, financial forecasting, and consolidation capabilities can
leveraged by the subsidiaries.

Figure 66: Cash Visibility of Subsidiary at Headquarters

Business Benefits
● Headquarters can get a real-time short term cash visibility and liquidity status from the
subsidiary.
● An overview of the current cash position, liquidity forecast, and bank statements with the
opening and closing balance of the subsidiary, is available to the headquarters for a better
Financial planning for subsidiary.
● Headquarters can allocate cash based on the cash visibility from the subsidiary.
● Productivity improvement for the treasury department of HQ and Subsidiary.

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

Figure 67: Consolidation of Autonomous Subsidiaries via Central Finance

Business Benefits
● All financial documents from SAP and non-SAP systems are replicated to the Central
Finance (deployed @HQ) which serves as a starting point for the centralized financial
consolidation.
● Non-disruptive and Company-wide single source of truth.
● Leverage embedded planning and real time consolidation in Central Finance.
● Process centralization (shared services team).
● Pre-delivered scenario with in-built mapping and error handling capabilities.
● Same scenario for replication from other source systems.

Figure 68: SAP Global Trade Services Integration

Business Benefits

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 Lesson: Utilizing Hybrid Deployment

● Customers can integrate SAP Global Trade Services 11.0 on-premise with SAP S/4HANA
Cloud for ERP, to utilize existing rules in SAP Global Trade Services for trade that is
managed in the cloud.
● Leverage an existing investment in SAP Global Trade Services 11.0 for businesses
managed in SAP S/4HANA in the public cloud.
● Use the existing global trade services infrastructure for a best-of-breed deployment of an
international trade solution with minimal new configuration.

Figure 69: Finance Master Data Replication

Business Benefits
● Drastically reduce the implementation timeline
● Master-data harmonization across the entire enterprise
● Automated, real-time, and seamless process
● Easy implementation using SAP Business Technology Platform Integration
● Use of standard whitelisted APIs

Figure 70: Advanced Financial Closing in SAP S/4HANA Cloud

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

With SAP S/4HANA Cloud for Advanced Financial Closing, you can support the planning,
automating, processing, monitoring, and analysis of tasks in the financial close for the entities
of the group. As a cloud-based solution, this application is offered as an optional, non-
standard scope item (best practice scenario ID 2V8) in SAP S/4HANA Cloud. Advanced
Financial Closing serves as a cloud closing hub, currently supporting integration to SAP S/
4HANA on-premise financial systems (to conduct the closing process in the remote systems).
Closing Hub to support financial closing processes of on premise systems (starting from SAP
S/4HANA OP 1809 FPS1 in 1902).
Business Benefits
● Headquarters and subsidiaries can leverage SAP S/4HANA Cloud for advance financial
closing capabilities across the group.
● Full availability of the latest solution for automation, process orchestration, and monitoring
of the close.
● Best practice, workflow-supported processes to support the planning, automating,
processing, and monitoring of the group entities.

Figure 71: Finance-Centralized Hybrid Cash Shared Services

Business Benefits
● Centralized cash management to have central cash flow and centralized bank account
management for the entire enterprise.
● Fast adoption Cash Management for smaller business entities in the Cloud.
● Start small and extend later to full SAP S/4HANA Cloud scope.

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 Lesson: Utilizing Hybrid Deployment

Figure 72: Finance- Centralized Hybrid Treasury Shared Services

Business Benefits
● Centralized treasury system to have central treasury station for the entire enterprise.
● Integrating central treasury station with central FI system.
● Replicate all postings in the central system.
● Provide more options for Treasury and Risk Management deployment in SAP S/4HANA
Cloud.
● Usage of ALE/IDoc also makes it possible to connect the SAP S/4HANA Cloud systems
with Central Legacy systems.

Figure 73: Finance- Centralized Treasury Workstation Shared Services

Business Benefits
● Centralized treasury system to have central treasury station for the entire enterprise.
● Payments triggered in SAP S/4HANA Cloud system while the payment requests are
created in the central FI system.

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

● Creation of payment request in central FI system so that once the payment is created, it is
triggered in the cloud system.
● Reversal of payment request (this is optional and can be used in case a customer wishes to
reverse the transaction).
● Usage of ALE/IDoc also makes it possible to connect the SAP S/4HANA Cloud systems
with Central Legacy systems.

Figure 74: Finance- Centralized Customer Payments Shared Services

Business Benefits
● Centralized payment processes across the enterprises and customers.
● Customer payments can be used as a centralized solution.
● Self-service offerings for customers to deploy electronic bill presentment and payment
processes managed centrally.

Figure 75: Supplier Financing

Vcard Example:
● Buyer maintains supplier master data for participation in VCard program

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 Lesson: Utilizing Hybrid Deployment

● Buyer sends invoices of participating suppliers to the bank (that is, the issuer of VCard)
● Bank sends information about card usage (Billing Account Statement)
● After reconciliation of card usage, buyer pays VCard account balance via normal payment
run

Business Benefits
● Improve cash flow and operations of companies
● Lower financing costs
● Improve business efficiency
● Links the various parties in a transaction - buyer, supplier, and factor (bank)
● Strengthen relationship with important suppliers and secure the supply chain
● Optimize working capital
● Extend days payables outstanding for the buyer (Purchase-2-Pay)
● Decrease days sales outstanding for the supplier (Order-2-Cash)
● Give buyers and suppliers access to financing conditions that they may not be able to
receive directly

LESSON SUMMARY
You should now be able to:
● Hybrid Deployment

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Unit 2: SAP S/4HANA Cloud for Hybrid Deployment

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 Unit 2

Learning Assessment

1. To use hybrid ERP scenarios you must configure a central finance system.
Determine whether this statement is true or false.

X True

X False

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Unit 2: Learning Assessment

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 UNIT 3 SAP Central Business
Configuration in SAP S/4HANA
Cloud

Lesson 1
Understanding SAP Central Business Configuration in SAP S/4HANA Cloud 65

UNIT OBJECTIVES

● Introduce SAP Central Business Configuration

● Understand the Implementation Systems
● Explore the Implementation Project Experience
● Complete the Scoping Tasks
● Complete the Explore Phase Tasks
● Complete the Realize Phase Tasks
● Complete the Deploy Phase Tasks

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

64 © Copyright. All rights reserved.

 Unit 3
Lesson 1
Understanding SAP Central Business
Configuration in SAP S/4HANA Cloud

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Introduce SAP Central Business Configuration
● Understand the Implementation Systems
● Explore the Implementation Project Experience
● Complete the Scoping Tasks
● Complete the Explore Phase Tasks
● Complete the Realize Phase Tasks
● Complete the Deploy Phase Tasks

Introduction to SAP Central Business Configuration

Introduction to SAP Central Business Configuration

Figure 76: Introduction to SAP Central Business Configuration

SAP Central Business Configuration is a new tool that will make it possible to configure
business processes spanning multiple SAP cloud solutions from one central place. SAP
Central Business Configuration currently supports the system provisioning and configuration
of RISE with SAP S/4HANA Cloud (formerly SAP S/4HANA Cloud, essentials edition).

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

The long-term goal is to support implementation of all solutions in SAP's Intelligent Enterprise
to enable seamless end-to-end business process configuration from one single SAP Central
Business Configuration system, meaning solutions such as SAP SuccessFactors Employee
Central, SAP Ariba, SAP Concur, and others would be provisioned and configured from SAP
Central Business Configuration, just as RISE with SAP S/4HANA Cloud currently is currently
provisioned and configured.
SAP Central Business Configuration is one central system to access the following capabilities:
● Project Experience
- Manage your SAP Cloud solutions (currently only RISE with SAP S/4HANA Cloud).
● Scoping
- View and select business scenarios to activate from SAP Best Practices.
- Select the countries/regions in which to activate each SAP Best Practices scenario.
● Central Configuration
- Define core finance settings.
- Build the organizational structure.
- Enter data in the Self-Service Configuration UIs (SSCUIs) to configure business
scenarios selected during scoping. Configuration of SSCUIs is often referred to as fine-
tuning.

You can easily find support and resources with the embedded user assistance and
Conversational AI chatbot.

Note:
Find additional information in the SAP S/4HANA Cloud SAP Central Business
Configuration Learning Journey

Characteristics of SAP Central Business Configuration

Figure 77: Characteristics of SAP Central Business Configuration

Characteristics of SAP Central Business Configuration:

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

● Built on the foundation of SAP Best Practices business scenarios.

● Provides quick access to provision a preconfigured Starter System with the Enterprise
Management scope and pre-populated data to use for business scenario demonstrations
during Fit-to-Standard workshops.
● Provides quick access to provision and transport configurations to the Quality and
Production systems.
● Enables you to select the SAP Best Practices business scenarios to activate in your
systems and choose the relevant countries/regions in which to activate them.
● Enables you to define the core finance settings, organizational structure, and enter data to
configure the business scenarios with self-service configuration UIs (SSCUIs).
● Enables you to activate and configure additional business scenarios and countries/regions
as needed (for example, after a release upgrade).
● Enables you to define extended configuration values for areas not equipped with existing
SSCUIs.
● It is open to partner content.

Using SAP Central Business Configuration will result in:

● Faster implementations.
● Reduced TCO for customers and SAP.
● Enablement of agile go-lives in smaller, iterative steps.
● Increased business process flexibility.

Configuring RISE with SAP S/4HANA Cloud

Figure 78: Configuring RISE with SAP S/4HANA Cloud

In RISE with SAP S/4HANA Cloud, SAP Central Business Configuration is the successor to
the Manage Your Solution and Configure Your Solution applications in the SAP Fiori
launchpad, which were previously used to provision systems and configure the solution. New
customers implementing RISE with SAP S/4HANA Cloud will not have the Manage Your
Solution or Configure Your Solution apps in their launchpad.

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

Existing customers whose systems were configured using the Manage Your Solution and
Configure Your Solution apps in the launchpad will be converted over time to SAP Central
Business Configuration. This conversion will only be done by SAP (not by partners). After a
customer is converted to SAP Central Business Configuration, the Manage Your Solution and
Configure Your Solution apps will be removed from their launchpad.
It is important for customers to have access to SAP Central Business Configuration after go-
live, because it is essential to maintaining their Quality and Production Systems. For example,
if a customer wants to activate new scope items (now referred to as Business Scenarios) that
were released in an upgrade, they will use their SAP Central Business Configuration tenant to
activate the new scenarios, select the relevant countries/regions, enter relevant configuration
data, and finally transport the new scenarios to their Quality and Production Systems.

SAP Central Business Configuration Embedded User Assistance

Figure 79: SAP Central Business Configuration Embedded User Assistance

User assistance is accessed through the question mark icon in the upper right corner of the
SAP Central Business Configuration system.
You will find:
● In-app help: on screen information describing UI elements with links to more detailed
information, and step-by-step tutorial videos.
● SAP Help Portal links: Application help with interactive graphics, concepts, task
descriptions and set-by-step instruction videos.
- Access SAP Central Business Configuration in the SAP Help Portal

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

System Landscape Access & Setup

System Landscape High-Level Architecture

Figure 80: System Landscape High-Level Architecture

The figure displays the high-level system architecture. SAP S/4HANA Cloud is the tenant
where your enterprise business data lives. Central Business Configuration is a separate
tenant that lives in SAP Business Technology Platform where you provision your systems,
activate the business scope, and complete configuration-related activities. Both systems are
integrated with the customer's SAP Cloud Identity tenants.

Note:
SAP Cloud Identity Services includes two tenants: Identity Authentication System
(IAS) and Identity Provisioning System (IPS).

All three RISE with SAP S/4HANA Cloud, systems used for implementation activities (Starter,
Quality, Production) are provisioned through SAP Central Business Configuration. Within SAP
Central Business Configuration, there are two separate projects that separate the systems.
The first project, which is already created when you access SAP Central Business
Configuration the first time, is the Starter Project. You request the Starter System from within
the Starter Project.
To provision the Quality and Starter systems, you must create a second project manually,
called the Implementation Project. In the Implementation Project, you complete the rest of
the implementation of RISE with SAP S/4HANA Cloud in the Quality and Production systems.

Project Types in SAP Central Business Configuration

There are two types of projects in SAP Central Business Configuration.
Starter Project
Where you activate the SAP Best Practices scope and content in the Starter System. The
starter project and starter systems are already available when you log into SAP Central
Business Configuration the first time. However, the SAP S/4HANA Cloud starter system is
empty, because no business content has been activated.

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

In SAP Central Business Configuration, you follow the guided workflow tasks to complete
scoping and activate the SAP Best Practices standard data. Refer to the Digital Discovery
Assessment report to find which scope items to activate. After scoping, the standard SAP
Best Practices organizational structure, finance settings, master data, and configurations are
populated in the starter system.
The standard data aligns with the data used in the scope item test scripts from SAP Best
Practices Explorer. The test scripts enable consultants to easily demonstrate business
processes during the Fit to Standard workshops with the preconfigured starter system. If the
business content does not activate in a timely manner for your starter system, submit an IT
ticket.

Note:

● The starter project includes only project activities for the Explore and Realize
phases. The Deploy phase is not available because the starter system is never
deployed; it is decommissioned approximately 30 days after the production
system is provisioned.
● Please refer to the User Onboarding for SAP S/4HANA Cloud guide for step-
by-step activities to complete after the customer IT contact or administrator
receives the starter system.

Implementation Project
Where the quality and production systems are requested and managed. The Explore, Realize,
and Deploy phases are available, and consist of milestones that guide you through the
different phases by unlocking relevant project activities that must be completed. Transports
to release configurations to the quality and production systems are initiated in SAP Central
Business Configuration.
● Explore phase: define scope, request license-dependent scenarios via ticket, request
quality system, define primary finance settings, and setup organizational structure.
● Realize phase: request user creation in RISE with SAP S/4HANA Cloud, request
production system, perform configuration activities (fine-tuning), and release
configuration to production system.
● Deploy phase: maintain current settings in production system (perform required
configuration activities that must be done directly in the production system).

Note:
You can only create and work on one starter project (where the starter system
lives) and one implementation project (where the quality and production systems
live). It is not possible to create multiple projects of the same project type.

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

System Access Welcome Emails

Figure 81: System Access Welcome Emails

When a customer purchases RISE with SAP S/4HANA Cloud the sales order triggers the
tenant setup request. The person that signed the contract to purchase the solution (often the
CIO) is typically assigned the IT Contact role by SAP.
The IT Contact receives system access emails and is automatically assigned to be the super
admin in the Support Portal. The IT Contact assignment will likely need to be changed to the
person who should be the super admin/primary contact for the implementation on the
customer side.

Note:
Find information on changing the IT Contact in SAP Activate Roadmap Viewer

Welcome Emails
The IT Contact receives four welcome emails:

1. SAP Cloud Identity email.

● Provides URL to access the Identity Authentication tenant (IAS).

● Use your S user ID to log into IAS. You will be prompted to reset your password.

Note:
Regardless of the order in which you receive these emails, the IAS system
must be activated first.

2. SAP Central Business Configuration email.

● Provides URLs to the Identity Provisioning system (IPS), Identity Authentication

system (IAS), and Central Business Configuration (CBC) system.

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

● Use your S user ID to log into IPS. You will be prompted to reset your password.

Note:
You first run a job in IPS to replicate CBC roles to IAS. You then create
users and provide access rights to CBC in IAS. Another job is run in IPS to
push the new users with assigned permissions to CBC.

3. S/4HANA Cloud Starter system URL and Initial User ID email.

● Provides the S/4 starter system URL and initial user ID (technical user).

Note:

- The technical user is only to log into S/4 the first time and create an
administrator user. After the administrator user has been created, the
technical user should not be used.
- The starter system will be empty until scoping and business process
content is activated through SAP Central Business Configuration.

4. S/4HANA Cloud Starter system Initial User Password email.

● Provides the S/4 starter system technical user password, which you will be prompted
to reset.

● The password is sent separately from the initial user ID email for security.

SAP Central Business Configuration Starter Kit Email

Figure 82: SAP Central Business Configuration Starter Kit Email

In addition to the welcome emails, the customer IT Contact will receive the SAP Central
Business Configuration Starter Kit email with many resources to learn about using the tool.

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

Figure 83: System Setup Activities

System Setup
The IT Contact is responsible for setting up the project team members, from both the partner
and customer side, in SAP Central Business Configuration.

1. Activate the Identity Authentication System (IAS).

● The identity authentication service provides customers with controlled cloud-based

access to their cloud tenants, such as SAP Central Business Configuration, the RISE
with SAP S/4HANA Cloud Starter, Quality, and Production systems, and additional
SAP Cloud solutions for which a license has been purchased (for example, SAP
SuccessFactors Employee Central (HR system of record)).

2. Provision groups and users in the Identity Provisioning System (IPS).

● User provisioning setup enables customers to automate user and role-specific lifecycle
processes, such as provisioning users and groups across different business
applications that can be added as source and target systems. The source system is
where users and groups are created, and the target system is where users and
configured roles are received. This allows you to create users/groups once and
maintain them in a single system, rather than creating and maintaining in multiple
different systems.

3. Set up job management parameters.

● Jobs can be scheduled, or run manually. The jobs that can be controlled are for
replicating roles from SAP Central Business Configuration to the IAS tenant, and
replicating users from the IAS tenant to SAP Central Business Configuration.

4. Create users in Central Business Configuration.

a. First, IPS is used to run a job that pushes the roles (called user groups in SAP Central
Business Configuration) from the SAP Central Business Configuration system to IAS.
Without this step, there would be not roles available to grant users access to SAP
Central Business Configuration.

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

b. Next, users are created in IAS and assigned to user groups.

c. After this, IPS is used to run another job that replicates the users and their assigned
user groups from IAS to SAP Central Business Configuration.

d. Last, within a project in SAP Central Business Configuration, there is a Teams tab,
where users must be manually added to the team.

Note:
On the initial login to SAP Central Business Configuration, each user will be
presented with a one-time popup window, requesting users to click
proceed in order to acknowledge that the user has read and understood the
provided information and hyperlinked privacy statement. Without clicking
proceed, access to SAP Central Business Configuration will not be possible.
Please refer to the popup message and the hyperlinked privacy statement
for details. For clarification purposes: In order to click proceed, no
certification is required by the user.

5. Create users in the SAP S/4HANA Cloud Starter System (high-level summary).

a. First, the IT Contact logs into the starter system with the technical user credentials
provided in 2 of the 4 welcome emails and manually creates a new administrator user
and assigns the administrator business role to grant full permissions.

b. Next, the IT Contact logs into the starter system with the administrator user
credentials and creates additional users for the implementation project team
members.

c. Last, project team members log into the starter system with their own credentials and
create test users that correspond to the test scripts they will be demonstrating to
customer experts in their respective Fit to Standard workshops.

Note:
In the Quality and Production systems, you will set up an integration with
the customer's HR system of record. When the integration is active, you
will no longer create users manually, as a user created through the file-
upload method in SAP S/4HANA Cloud would simply be overwritten at the
next replication job from the HR system.

Recommendations for Using the Starter System

Do not set up all customer-required configuration settings in the starter system, because your
target system will be set up later in the implementation project. You can customize and edit
some business content in the starter system, but you cannot delete any entities in the
organizational structure or change the core finance settings.
When completing scoping in the starter system for the first time, select only one country/
region and use the default settings provided by SAP to get the base system set up. If you want
to add additional countries/regions, scope, organizational elements, or configuration settings
afterwards, you can initiate a change and perform the required enhancements or changes.

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Changes to Project Activities

Project activities and milestones are executed in a specific sequence in every phase of
project. Any change that belongs to a preceding phase can be done by using the Initiate
Change functionality, which will set back the project to the respective phase.
For example, you can initiate changes to Scope and Country and Org Management which
belong to the Explore phase while you are already in a later phase (such as Realize phase).
The project activities of the previous phase are unlocked and are then sequentially executed
moving forward to ensure you complete all required configurations based on the new scope/
country/region activation. You must complete the same sequence of phases and tasks per
phase because some business scenarios require organizational structure changes and/or will
have corresponding SSCUI(s) that must be configured.

SAP Central Business Configuration Release Upgrades

SAP Central Business Configuration is its own individual product with a feature roadmap
separate from RISE with SAP S/4HANA Cloud and other SAP Cloud solutions. The current
focus is on each SAP Central Business Configuration release providing enhancements to the
configuration capabilities for RISE with SAP S/4HANA Cloud. In the future, additional SAP
Cloud solutions will be included.
Because SAP Central Business Configuration is an independent product, release features will
not be published with the RISE with SAP S/4HANA Cloud content. Instead, refer to the What's
New information in the dedicated SAP Central Business Configuration Help Portal webpage.

Project Experience
Project Experience in SAP Central Business Configuration

Figure 84: Project Experience in SAP Central Business Configuration

The Project Experience allows you to manage all your SAP cloud implementations centrally.
Key features of the Project Experience are:
● Project team management
● Project activity management

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● Access to scoping and configuration experience

● Central access to your SAP Cloud system implementations (currently only RISE with SAP
S/4HANA Cloud)
● System status overview

Central Business Configuration is designed to provide guidance for your implementation

project to avoid errors and control the sequence of the respective activities of the required
steps. Project phases are based on the SAP Activate Methodology. Project activities occur
within each implementation phase (Prepare, Explore, Realize, Deploy, Run), and end with
milestones.
Milestones serve the following functions:
● Trigger the change of project phases
● Lock project activities of project phases that are currently not active
● Trigger and control processes in the background to simplify the user experience

Note:
On the initial login to SAP Central Business Configuration, each user will be
presented with a one-time popup window, requesting users to click ‘proceed’ in
order to acknowledge that the user has read and understood the provided
information and hyperlinked privacy statement. Without clicking ‘proceed’, access
to SAP Central Business Configuration will not be possible. Please refer to the
popup message and the hyperlinked privacy statement for details. For clarification
purposes: In order to click ‘proceed’, no certification is required by the user.

Home / Project Progress

Figure 85: Home / Project Progress

The Home tab displays the overall progress of the project by displaying the number of
activities per status:
● Open

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

● In Progress
● Completed

Project Team

Figure 86: Project Team

The Teams tab provides an overview of project team members and their specific project roles.

Systems and Operations

Figure 87: Systems and Operations

The Systems tab provides an overview of your systems and their provisioning statuses. It
allows you to request system provisioning, and you have the capability to release
configuration settings to the productive environment.

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Change History

Figure 88: Change History

The History tab displays a record of the change history for the following:
● Project activities
● Milestone

You can also export the history in CSV format.

Scoping Tasks
SAP Central Business Configuration - Scoping Tasks

Figure 89: SAP Central Business Configuration - Scoping Tasks

Scoping is the process of selecting solution capabilities that are stored in a central business
adaptation catalog. The available scenarios are based on the SAP Best Practices business
processes.
In SAP Central Business Configuration, you start scoping in the Project Experience area with
the Define Scope project activity. You begin scoping by providing basic information about
your company, such as the countries/regions and the industry you operate in. This causes the
system to propose relevant bundles and scenarios with predefined content.
Because each company has unique business requirements, the system then enables you to
make a series of business decisions to adjust the content and determine which of the
available features and functions you want to incorporate into your solution. Built-in rules

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

ensure that your selected content is logical and consistent from a technical and business
point of view.

Select Countries/Regions

Figure 90: Select Countries/Regions

With SAP Central Business Configuration, customers are able to scope:

● Countries in which the chosen business processes are run
● Predefined scenario bundles
● Additional non-standard scenarios

Note:

● Terminology change: scope items are now referred to as scenarios.

● IFRS and USGAAP are handled as separate non-standard scenarios. The
Accounting and Financial Close IFRS or Accounting and Financial Close
USGAAP scenarios need to be added to get the respective group ledger.
● Constraints ensure that all dependent scenarios are consistently added.
● License-dependent scenarios can currently only be activated by the SAP
Service Center via a ticket.
● Public Sector can only be scoped via ticket by the SAP Service Center.

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Select Bundles/Scenarios

Figure 91: Select Bundles/Scenarios

You can use the text field to search, or filter the bundles and scenarios by:
● Country
● Role
● Line of business

The documentation of each scenario provides a link to SAP Best Practices Explorer for
additional information.

Review Scoping Selection

Figure 92: Review Scoping Selection

My Selected Scope provides an overview of all scenarios chosen thus-far, and the
corresponding features and functions.

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Complete Milestone

Figure 93: Complete Milestone

Based on the scoping selection, relevant customizing and fine tuning activities are identified.

Explore Phase Tasks

SAP Central Business Configuration - Explore Phase Tasks

Figure 94: SAP Central Business Configuration - Explore Phase Tasks

After defining the scope, you request the Quality system and complete the system setup
tasks of defining primary finance settings and setting up the organizational structure.

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Request Quality System

Figure 95: Request Quality System

To request the Quality system, you first create the Implementation Project in CBC, then
complete the relevant milestones in the To-Do area. For the Request Quality System task, you
navigate to the Systems tab and select the Request System button. This should only be
performed by the Project Lead on the customer project team to ensure that only one person
requests the system.

Specify Primary Finance Settings

Figure 96: Specify Primary Finance Settings

In the Explore phase, you can define:

● Fiscal year variant - defines the number of posting periods in a fiscal year and how many
special periods are needed.
● Group currency - used as global currency; allows amounts to be compared in a single
currency.

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

Note:
Defining the fiscal year variant and group currency is a prerequisite for the
organizational structure creation. In addition, the fiscal year variant and group
currency will be applied to the entire system and cannot be changed after
confirmation.

Set Up Organizational Structure

Figure 97: Set Up Organizational Structure

The Organizational Structure app allows you to easily create and adapt your company's
organizational structure (org structure). The selected scope defines which organizational
entities are required to run the underlying processes. The system also runs consistency
checks to ensure all organizational hierarchies contain the relevant entities (for example,
every plant requires at least one storage location if logistics is in-scope), and that all required
relationships are defined (for example, every distribution chain requires at least one plant to
be assigned).
The following types of relationships exist between the units of an organizational structure:
● Tree relation
- Country-specific parent-child relationship (1:n). For example, Plant to legal entity.
● Additional relation
- Relation of an organizational unit from a country-specific tree to another organizational
unit of the same tree or to a global organizational unit. Additional relationships have an
n:n cardinality, meaning each of the organizational units for which an additional
relationship is possible may have an additional relationship with one or several
organizational units.

The following entities existing within an organizational structure:

● Local Entity
- Local entities are assigned to defined countries, and are the highest level of the
organizational structure.

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Unit 3: SAP Central Business Configuration in SAP S/4HANA Cloud

● Legal Entity
- Company is the root node and may have one legal entity as child.
- Under legal entities, you can add these organizational units:
■ Sales Organization for Sales & Distribution.
■ Plant for site logistics.
● Global Entity
- Global entities can be assigned to enterprise structures in one or more countries. For
example, a Shipping Point can be assigned to several Plants which are in more than one
country.
- You can create the following types of global entities:
■ Distribution Channel
■ Division
■ Purchasing Organization
■ Sales Office
■ Shipping Point
■ Shipping Point for Raw Materials
■ Standard Shipping Point

Organizational Structure App Display Views

Figure 98: Organizational Structure App Display Views

The Organizational Structure app allows you to easily create and adapt your company's
organizational structure (org structure) with several different views:
● Graphic view - graphical, scope-dependent, and guided creation of organizational units.
● Table view - all org units are listed in a table.

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 Lesson: Understanding SAP Central Business Configuration in SAP S/4HANA Cloud

● Simplified mode - the buttons that guide you through the creation of new org units are
hidden in this mode to gain a better overview of your org structure.

Note:
Non-confirmed entities are in the staging area, where they can be easily changed
or deleted. Make sure you confirm only the units you want to deploy to the back-
end system. Once confirmed, the entity cannot be deleted!

Confirm Organizational Entities & Complete Explore Phase Milestone

Figure 99: Confirm Organizational Entities & Complete Explore Phase Milestone

When you are finished maintaining the organizational structure, select the Confirm button to
confirm the entities, then Complete Activity. Finally, complete the Explore Phase milestone.

Realize Phase Tasks

SAP Central Business Configuration - Realize Phase Tasks

Figure 100: SAP Central Business Configuration - Realize Phase Tasks

After completing the Explore Phase Milestone, the Production System can be requested. In
weekly sprints, configuration should take place in SAP Central Business Configuration (fine-
tuning), and at the end of each sprint, the configuration is released to the production system
through a transport (also initiated in CBC).

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Configuration activities in the Realize phase cover detailed settings of the solution processes,
or fine-tuning. Fine-tuning is done with Self-Service Configuration UIs (SSCUIs). The SSCUI
concept has not changed since moving from the Configure Your Solution app in SAP S/
4HANA Cloud to SAP Central Business Configuration; we still need configuration items to
adapt the standard business scenarios.

Fine-Tuning Business Processes with SSCUIs

Figure 101: Fine-Tuning Business Processes with SSCUIs

The fine-tuning Self-Service Configuration UIs (SSCUIs) in SAP Central Business

Configuration are designed to support customers in adapting the preconfigured SAP Best
Practices content to their requirements. The SSCUIs available to configure are based on the
solution scope, and display in an organized structure, grouped by their respective line of
business or functional area.
Some fine-tuning UIs are native to CBC, and some are remote. Remote SSCUIs live in another
system - in this case, SAP S/4HANA Cloud - and simply call the web page that displays the
SSCUI from S/4HANA Cloud.
Configuration activities also vary by country, in that not all business processes/scenarios are
available for all countries, meaning some countries may have a larger or smaller number of
SSCUIs to configure. In addition, some configurations are global, meaning a setting made for
one country applies to all countries, and others are country-specific or localized, which allows
you to define country-specific data.
Several implementation activities in the Realize phase are not completed directly in CBC (for
example, Integration Setup, Data Migration), so these activities will link you to the most
relevant area or information to complete the task.
For example, the Integration Setup activity in SAP Central Business Configuration links to the
corresponding deliverable and accelerators in the SAP Roadmap Viewer. The Business
Process Test activity in SAP Central Business Configuration links directly to the Test Your
Processes app in the SAP S/4HANA Cloud quality system.

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Release Transports from Quality to Production

Figure 102: Release Transports from Quality to Production

At the end of each weekly configuration sprint, a transport should be initiated to release
configurations from Quality to Production. This is done from the Systems tab, where you can
find the Release Transport button to the right of the Quality system.

View Transport History

Figure 103: View Transport History

You can view the log of all past transports; the text input in the Transport Description field
displays in the Transport History log. The user that released the transport and the date & time
also display.

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Deploy Phase Tasks

SAP Central Business Configuration - Deploy Phase

Figure 104: SAP Central Business Configuration - Deploy Phase

Some configuration activities must be done directly in the production system. In the Deploy
phase, maintenance of the current settings are completed in the production system. After the
to-do activities have been all moved to the completed area in SAP Central Business
Configuration, the last milestone, Confirm Go-Live, can be completed.
As quarterly upgrades occur, new features and business scenarios will continue to be
released. Customers will always have their SAP Central Business Configuration system to
activate new business scenarios, make additional configurations, initiate transports of
extensions, and complete other tasks to maintain their SAP S/4HANA Cloud system.

LESSON SUMMARY
You should now be able to:
● Introduce SAP Central Business Configuration
● Understand the Implementation Systems
● Explore the Implementation Project Experience
● Complete the Scoping Tasks
● Complete the Explore Phase Tasks
● Complete the Realize Phase Tasks
● Complete the Deploy Phase Tasks

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 Unit 3

Learning Assessment

1. Which applications in RISE with SAP S/4HANA Cloud are replaced by SAP Central
Business Configuration?
Choose the correct answers.

X A Migrate Your Data

X B Manage Your Solution

X C Test Your Processes

X D Configure Your Solution

2. In which SAP Activate phases does the configuration of current settings occur?
Choose the correct answers.

X A Prepare

X B Explore

X C Realize

X D Deploy

X E Run

3. What are some activities that must be completed in the SAP Activate Explore phase?
Choose the correct answers.

X A Release transports from the Quality system to the Production system

X B Define the organizational structure

X C Set a milestone to Scoping Finished

X D Perform scope item / scenario configuration activities in the Quality system

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Unit 3: Learning Assessment

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 UNIT 4 SAP S/4HANA Cloud Human
Resources Integration with SAP
SuccessFactors Employee
Central

Lesson 1
Introduction to Workforce Data in SAP S/4HANA Cloud 93

Lesson 2
Human Resources Connectivity 105

UNIT OBJECTIVES

● Explore workforce data in the Intelligent Enterprise

● Understand how to use the SAP Fiori Import Employees app
● Set up an SAP Best Practices integration with SAP SuccessFactors Employee Central

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 Unit 4
Lesson 1
Introduction to Workforce Data in SAP S/
4HANA Cloud

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Explore workforce data in the Intelligent Enterprise

Recruit to Retire Business Process

Challenges managing the modern workforce

Figure 105: Challenges managing the modern workforce

In the modern workforce, companies can run into challenges such as siloed systems,
inconsistencies across different departments, and the lack of a single access point to manage
employees. Siloed systems lead to a lack of visibility, which creates higher labor costs and
potential compliance risks. Disconnected processes across departments can create data
inconsistencies and gaps between goals and strategies. And without a single access point to
manage all job tasks, employees can easily miss opportunities to improve their knowledge
and skills, and get frustrated jumping between different systems.

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Business Processes in the Intelligent Enterprise Suite

Figure 106: Business Processes in the Intelligent Enterprise Suite

SAP developed the concept of the Intelligent Enterprise to support businesses in tackling
these types of challenges across the entire organization. The four end-to-end business
processes that drive SAP's vision of an Intelligent Enterprise are: Lead to Cash, Recruit to
Retire, Source to Pay, and Design to Operate.
The Recruit to Retire process addresses the challenges of workforce management by
providing easily integrated systems that deliver a clear line of sight into the organization's
business objectives, employee and contingent worker activities and engagement, and the
financial impact. Within the SAP portfolio, this includes integration of SAP SuccessFactors,
SAP Concur, SAP Fieldglass, and SAP Ariba to SAP S/4HANA Cloud.

Recruit to Retire Business Process & Sub Processes

Figure 107: Recruit to Retire Business Process & Sub Processes

An Intelligent Recruit to Retire process enables the end-to-end business processes of

planning, sourcing, and managing all aspects of the workforce (employees and external

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 Lesson: Introduction to Workforce Data in SAP S/4HANA Cloud

workers), with a clear line of sight into the financial impact to support the enterprise in
achieving their business objectives.
Sub-processes within the Recruit to Retire process include:
● Hire to Retire focuses on the employee's lifecycle in the company, beginning with
workforce planning, moving to hiring and onboarding, workforce management (i.e.
employee and employment data), time recording and payroll, and ending with employee
offboarding.
● Travel to Reimburse simplifies the travel process from trip planning to reimbursement,
while ensuring compliance for employers and employees. You can make intelligent spend
decisions by managing travel, expense, and budgets in near-real time in your cloud
environment.
● External Workforce focuses on the external/contingent employee's lifecycle in the
company, from planning, to sourcing, and managing all kinds of talent in the organization.

Note:
Learn more about the comprehensive Recruit to Retire process in the SAP Help
Portal and the SAP API Business Hub

To realize the complete Recruit to Retire business process, the following SAP solutions are
integrated:
● RISE with SAP S/4HANA Cloud
- SAP S/4HANA Cloud is the core ERP solution and financial system of record that
supports activities across the relevant Line of Business and Industry business
processes.
- Finance supports activities such as updating financial statements, making corrections,
processing, maintaining journal entries, and closing the quarter end.
- Professional Services supports activities such as creating customer/internal projects,
assigning work packages that define staffing needs to project activities, and
maintaining project financials.
● SAP Analytics Cloud
- Embedded in the SAP S/4HANA Cloud analytic applications such as those supporting
modeling the demand for talent.
● SAP SuccessFactors
- Employee Central is the HR system of record, which supports activities such as
changing employee/employment information, employees requesting time off, and
termination/offboarding.
- Employee Central Payroll supports payroll processing for internal and contingent
workers.
- Recruiting Management and Recruiting Marketing support staffing activities such as
recruiting new hires, opening requisitions, finding candidates, and making offers.

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- Onboarding supports new hire activities such as employees completing required

paperwork, receiving necessary equipment, training, and meeting new team members.
Onboarding also supports offboarding activities for internal and external resources,
such as initiating offboarding and employees signing required paperwork.
- Learning supports ongoing training and development for employees.
- Performance & Goals support activities such as creating goals and targets for the
upcoming year, and facilitating performance-related discussions.
- Succession and Development supports the organization in preparing for staffing
changes and aligning learning activities for employees with current gaps in the
workforce.
- Compensation and Variable Pay support activities such as defining and adjusting fixed
salary, and short-term bonus or merit-based incentives.
- People Analytics (formerly Workforce Analytics and Workforce Planning) supports
organizations in creating planning models based on HR metrics to determine the talent
demand, and visualizing and modeling HR data using a variety of interactive analytical
dimensions and reporting tools.
- SAP Jam enables employees to collaborate, communicate, and share content in
dedicated groups targeted toward different activities or business initiatives.
● SAP Concur
- Supports travel and expense-related activities, such as planning and booking travel,
processing expense reports, and reimbursement of business expenses.
● SAP Fieldglass
- Supports resource managers in staffing activities, such as opening requisitions,
creating purchase orders, and working with suppliers
- Contingent workers submit their time sheets through Fieldglass, which are then
approved by the supervisor in SAP S/4HANA Cloud.
● SAP Ariba
- Supports sourcing and procurement activities, such as an employee purchasing a new
laptop, or a project manager procuring services from a third-party for a customer-
facing or internal project.

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SAP One Domain Model

SAP One Domain Model

Figure 108: SAP One Domain Model

The SAP One Domain Model is a single, coherent domain model for business objects in SAP's
Intelligent Suite and cloud applications. The purpose of mapping objects to a central domain
is to simplify the exchange and ensure consistency of data, regardless of which application it's
viewed or accessed in.
The term, domain, has many definitions. In the classic sense, a domain refers to a territory
over which rule or control is exercised. It has roots in the Latin words dominium, meaning
property, and dominus, meaning lord. A domain could also refer to a field of knowledge (e.g.
mathematics), or a group of people that share a common characteristic (e.g. university
professors are in the domain of academia). A webpage has an address, or domain name, that
is purchased and owned by someone. In software engineering, a domain typically refers to a
subject area for an application, and the domain model describes the relationships between
domains. There are several types of domain models, including entities, aspects, codes, types,
and enums. The highest level is an entity, with aspects, codes, types, and enums providing
specific information about attributes within the entity domain model. Domain models are then
connected to each other through different types of relationships.
For example, workforce is a domain. Within the workforce domain, a workforce person
(employee) is an entity with a set of attributes that describe it, such as personal details, email,
phone, and work assignments. This chunk of information is collectively the workforce person
domain model, and is visually grouped together in a container when viewed in the SAP API
Business Hub. If we focus on the work assignments attribute of workforce person, we see
there is a separate domain model dedicated to information about work assignments grouped
into its own container. The work assignment domain model includes attributes such as start
date, end date, job details, payment details, work order details, and if the worker is
contingent. If we now focus on the payment details attribute of work assignment, we see a
relationship to a separate container dedicated to characteristics of the payment details. The
payment details domain model includes attributes such as payment type and bank account
type, and defines a maximum of eleven characters for the business identifier code.
Collectively, these different types of domain models with their attributes and relationships to
each other create the SAP One Domain Model. Workforce person and cost center were the

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first two domain models aligned, with business partner and supplier following in a later
release. As domain models continue to be aligned across SAP's applications, it becomes
easier to extend and integrate between solutions. For extensibility, a developer building an
app that consumes employee data can easily see the type of information and requirements
(e.g. length restrictions or type of field - date, Boolean, numeric, etc.) defined in the workforce
person domain model. For integration, workforce person data can easily be synchronized
between different applications because they follow the same structure. With the alignment of
the workforce person and cost center entities, SAP developed a new type of integration
package between SAP S/4HANA Cloud and SAP SuccessFactors Employee Central using the
Master Data Integration Service on SAP Business Technology Platform.
To ensure existing SAP S/4HANA Cloud customers could gain the benefits of the SAP One
Domain Model for employee data, all customers with the old business partner model were
converted to the new model as of Q3 2021. The new BP model solved these issues from the
old model:
● Limited flexibility in handling vendor capabilities of an employee
● Missing ability to properly reflect concurrent and global employment of an employee
● Limited flexibility in adapting employee BP data which results in reduced data accuracy
● Missing functionality to specify a main personnel number of an employee
● Concurrent employment for contingent workers wasn't possible

Note:
Explore the SAP One Domain Model in the SAP API Business Hub.

Technologies for Integrating Systems and Applications

Figure 109: Technologies for Integrating Systems and Applications

● Point-to-point integration

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 Lesson: Introduction to Workforce Data in SAP S/4HANA Cloud

- Every system or application is integrated directly with another system or application to

share data. This type of integration can be set up quickly and easily, but it is not
scalable. Each point-to-point integration must be individually secured, monitored, and
maintained during its lifecycle. This creates a "spaghetti" architecture that becomes
increasingly more time consuming and costly as additional applications are deployed
and integrated into the landscape.
● Hub and spoke integration
- All applications share data through one central hub system. The hub routes traffic to
the respective system/application, and acts as a MOM (Message Oriented Middleware)
that can perform any type of translation, transformation, and routing decision. Unlike
point-to-point integration, each system that wants to share data doesn't need to be
directly connected to any other sharing system. All applications have a single
connection point to the hub, to which they can send or retrieve data. With far fewer
integrations to maintain, hub and spoke integration massively simplifies the landscape.
● Middleware
- Acts as a bridge between two or more applications that need to share data with each
other. As it's name suggests, middleware sits in the middle of an end-to-end
transaction, and therefore initiates outgoing messages from one application in
response to incoming messages from another application. Middleware takes data from
an application and translates, reformats, and restructures the information so it can be
received by another application. It has the ability to process, route, enrich, and
manipulate the flow of data between multiple source and target systems.

Note:
Regardless of the integration technology, Application Programming Interfaces
(APIs) are the messengers that bring data from one application to another. An
integration package is just a set of several different APIs, with each being
responsible for a granular piece of information.

SAP Business Technology Platform Master Data Integration Service

Figure 110: SAP Business Technology Platform Master Data Integration Service

Master data represents the single source of business data used commonly across
applications in business processes. It is important to ensure the data used by different

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applications is correct and consistent, however this becomes increasingly difficult as the
integration landscape grows to be more complex. The Master Data Integration (MDI) service
running on SAP Business Technology Platform enables SAP customers to share and
synchronize master data in the integrated intelligent suite through a central repository. MDI
uses the SAP One Domain Model as the exchange format to achieve a consistent view of
master data across end-to-end business processes.
In the Hire to Retire scenario, MDI acts as the master data broker between the HR system of
record (SuccessFactors Employee Central) for workforce data and the financial system of
record (SAP S/4HANA) for cost center data. While connecting an individual application MDI
constitutes a point-to-point integration, the final result is a hub-and-spoke scenario with all
applications connected to the central repository, or hub to which they send or retrieve data
only once.

Note:
The hub is sometimes referred to as a mini-master.

In other words, MDI is a central repository of data, much like a library is a central repository of
books. Instead of applications being directly connected to each other, they all have a single
connection to the MDI service. A request for data is received and authenticated through SAP
Cloud Identity Services, and MDI delivers the response. Just as a person looking for a book
goes to the library (central repository) with their request for a specific title, then retrieves the
book. The request/retrieval is carried by the API messenger to and from MDI.

Master Data Integration in the Hire to Retire Integration Scenario

Figure 111: Master Data Integration in the Hire to Retire Integration Scenario

Master Data Owner & Consumer

Cost center data is maintained in SAP S/4HANA Cloud and is replicated to Master Data
Integration. From Master Data Integration, cost center data is replicated to SAP
SuccessFactors Employee Central. Workforce data is maintained in SAP SuccessFactors
Employee Central and is replicated to Master Data Integration. From Master Data Integration,
workforce data is replicated to other consumer applications, such as SAP S/4HANA Cloud.
Process Flow

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 Lesson: Introduction to Workforce Data in SAP S/4HANA Cloud

SAP SuccessFactors Employee Central provides employee (worker in MDI terminology) data
to the Master Data Integration Service, which is then consumed by SAP S/4HANA Cloud and
the SAP Cloud Identity applications (from Business Technology Platform). SAP S/4HANA
Cloud provides roles to the Cloud Identity applications and provides cost centers to MDI for
Employee Central to consume. The Cloud Identity applications ensure authentication,
authorization and SSO management in both Employee Central and SAP S/4HANA Cloud. It
also manages the event-based identity lifecycle of employees from Hire to Retire.
SAP Best Practice Processes
The new integration based on the SAP One Domain Model requires SAP S/4HANA Cloud, SAP
SuccessFactors Employee Central, and the Master Data Integration service on SAP Business
Technology Platform. The integration is easy to set up, and with the aligned data model,
replication errors are minimized. The relevant SAP Best Practice business processes to set up
the integration between SAP S/4HANA Cloud and SAP SuccessFactors Employee Central are
Workforce Management with SAP Master Data Integration (4AF) and Financial Master Data
for SAP SuccessFactors Employee Central (4AJ).

Methods of Populating and Monitoring Employee Data

Three Primary Methods of Populating Employee Data in SAP S/4HANA Cloud

Figure 112: Three Primary Methods of Populating Employee Data in SAP S/4HANA Cloud

SAP S/4HANA Cloud covers core ERP processes, such as those in the Finance, Sales,
Procurement, and Manufacturing Lines of Business (LoBs). While you can upload and
maintain a user data file directly in SAP S/4HANA Cloud, and employees can record their time
using the respective Fiori apps, the solution is intended to have a true HR system of record
integrated.
There are three primary methods of populating employee data:
● CSV file upload via Import Employees Fiori app
- Always used to create the initial users for project team members to access the system
for implementation activities and to create test users for Fit-to-Standard workshop
demonstrations of the business processes.
● Integration with SAP SuccessFactors Employee Central via SAP Best Practices packages

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- Original integration: Core HR with SAP SuccessFactors Employee Central (JB1). This
integration package supports transfer of basic employee data, such as employee name,
ID, and contact information, in addition to employment and financial data, such as cost
center and currency exchange rate. Both internal employee and contingent worker data
transfer is supported.
- New integration based on SAP One Domain Model: Workforce Management with SAP
Master Data Integration (4AF) and Financial Master Data for SAP SuccessFactors
Employee Central (4AJ). In the new integration, the data model is aligned across all SAP
applications to minimize potential replication errors, and the structure of the
integration was redesigned with the introduction of the Master Data Integration Service
running on the SAP Business Technology Platform to simplify the integration
landscape.
● Integration with non-SAP HR system of record via SOAP APIs
- Inbound service enabling you to replicate basic master data of the workforce from
external HR systems to the SAP S/4HANA Cloud system. This method corresponds
with the SAP Best Practices scope item: Employee Integration: SAP S/4HANA
Enablement (1FD), although it does not set up the integration, but instead provides
enablement information about consuming the package from the SAP API Business
Hub.

Application Job for Workforce Person Integration Processing

Figure 113: Application Job for Workforce Person Integration Processing

Application jobs are used to monitor application-related tasks, such as monitoring the
success of replication of employee data from an HR system of record. The monitor employee
integration synchronization, use the Workforce Person Integration Processing application job
template. This application job template enables you to:
● Set up activities for workforce deployment replication.
● Clear notifications for the business users who have the AIF recipient
WFD_WORKER_INTEGRATION assigned to them. This applies if the Employee/Workforce
data is already based on the SAP One Domain model.
● The job also helps you run the replication based on different processing models.

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Message Monitoring for Worker Integration Processing

Figure 114: Message Monitoring for Worker Integration Processing

The HR Administrator monitors the success or failure of the creation people data and work
assignment of newly hired employees in the SAP S/4HANA Cloud system. The Message
Monitoring apps are used to check the replication status for each workforce person to see if
there are any failed replications in the namespace: /WFD. These apps use an interface based
on Application Interface Framework (AIF). If you do not see the Message Monitoring apps
available, check your permissions to ensure the business catalog granting access to AIF apps
are assigned.

Employee Fact Sheet

Figure 115: Employee Fact Sheet

After employees have been created in SAP S/4HANA Cloud, their Employee Factsheet can be
found through the Enterprise Search. The Employee Factsheet provides basic employee data,
employments, projects, skills, payment information (if maintained), and contingent worker

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information (if applicable). The app uses restricted role-based access to control visibility of
different sections to users viewing the factsheet.
When using the enterprise search, you can filter by different categories; the categories
relevant to searching for employee information based on the SAP One Domain Model are:
● Employee-Workforce
- The Employment-Workforce search model enables you to search for employees along
with their employment details.
● Employment-Workforce
- The Employee-Workforce search model enables you to search for all employees
matching your search criteria. In the search results for this model, you get basic details
about the employee, such as first name, last name, full name, and skills.

Features of the Employee Factsheet app:

● The Primary Employment tab displays basic employee data, accounting data, and
communication details.
● The Employments tab displays employment details, such as company, start date, end
date, supervisor, and job code.
● The Projects tab displays all previous, current, and upcoming project assignments, and
roles.
● The Tags tab displays the skill sets of the employee.
● The Controlling Information tab displays information about all service cost levels per active
employment. The app displays multiple service cost levels for all active personnel
numbers.
● The Payment Information tab displays payment information such as multiple bank account
details (if applicable), start date, and end date.
● The Contingent Worker Information tab displays the associated supplier per employment.

LESSON SUMMARY
You should now be able to:
● Explore workforce data in the Intelligent Enterprise

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 Unit 4
Lesson 2
Human Resources Connectivity

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand how to use the SAP Fiori Import Employees app
● Set up an SAP Best Practices integration with SAP SuccessFactors Employee Central

Import Employees App

Import Employees Application

Figure 116: Import Employees Application

The Import Employees app enables you to create and update personal details, employments,
service cost level data, and skill tags for employees with CSV file templates. This app is used
to set up the initial users in the SAP S/4HANA Cloud systems for project team members
working on the implementation. In addition, implementation consultants use this app to
create test users for demonstrating SAP Best Practice processes during Fit-to-Standard
workshops in the Starter System.
The Import Employees app enables you to create and maintain employee information directly
in SAP S/4HANA Cloud, without an external HR tool. When an HR system of record is
integrated with SAP S/4HANA Cloud, new users should always be created in the HR tool.
Existing employee information should also be maintained in the integrated HR system of
record, however there may be a need to maintain certain data, like service cost level for
employees (relevant for Professional Services), using Import Employees in SAP S/4HANA
Cloud.
You can use this app to:

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● Download the templates based on the selected Delimiter and Import Type.
● Fill the templates offline using a spreadsheet of your choice.
● Import CSV files. This triggers an asynchronous import and indicates the approximate
processing time.
● Upload new employee data using Employee and Employment Import.
● Assign service cost levels to existing employees using Service Cost Level import.
● Upload the basic employee information using Basic Employee Import.
● Upload the skill tags of an existing employee using Employee Skill Tag Import.

Note:
Constraints of the Import Employees app:
● You can't delete data related to an employee or employment.
● Currently, only single employment is supported, however, data is time-
dependent, and multiple splits can be created for data, such as cost center,
employment status, etc.

The following templates are available:

● Employee and Employment Import
- You use this option to simultaneously upload the data of multiple employees. You can
also update an existing employee or their employment data.
● Service Cost Level
- You use this option to assign service cost levels to existing employees. Service cost
level is an employee's billable rate for internal or external projects in the Professional
Services line of business.
● Basic Employee Import
- You use this option for most cases where time-dependent employment data isn't
required and if you just want to create a basic user. It has only 1 template with all the
employee and mandatory employment fields. You can't use it for terminating and
rehiring employees. Multiple records with different values for data using time
dependency aren't allowed in this template.
● Employee Skill Tag Import
- This option supports append and overwrite . It enables you to either append the given
tags to the available tags or to discard the old tags and overwrite them with the new
tags.

Note:
Please refer to the SAP Help Portal for additional details regarding filling in
downloaded templates.

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 Lesson: Human Resources Connectivity

Monitor Employee Imports

Figure 117: Monitor Employee Imports

After importing a CSV template in the Import Employees app, you are automatically
redirected to the Monitor Employee Imports app to view the progress. You can also navigate
directly to the Monitor Employee Imports app at any time to view the application logs relevant
for the SHCM-Employee Integration category.

Prerequisite Activities
Integration Setup Guides in SAP Best Practices Explorer

Figure 118: Integration Setup Guides in SAP Best Practices Explorer

Prior to beginning any SAP Best Practices integration, you must read the provided integration
setup guide in its entirety, with special attention to the preparation section. Setup guides
describe the comprehensive list of steps to build an SAP Best Practices integration from
prerequisite steps, to core integration setup, to apps that can be used to monitor and

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troubleshoot potential integration issues. After completing the integration setup guide, you
can work through the test script to verify the integration is successful.
Setup guides can be found for the relevant scope item in SAP Best Practices Explorer:
● Original integration: Core HR with SAP SuccessFactors Employee Central (JB1)
● New integration based on SAP One Domain Model: Workforce Management with SAP
Master Data Integration (4AF) and Financial Master Data for SAP SuccessFactors
Employee Central (4AJ)

SAP SuccessFactors Employee Central Prerequisite Configurations

Figure 119: SAP SuccessFactors Employee Central Prerequisite Configurations

There are several mandatory prerequisite steps to complete for the SAP Best Practices
integration for be successful. A summary list of steps is provided for 4AJ; refer to the setup
guide for detailed instructions.

1. Enable Integration in SuccessFactors Provisioning Settings

● The implementation partner must enable some integration-specific features in

Company Settings. Customers never have access to the SuccessFactors Provisioning
instance, so a consultant must complete this task.

2. Enable Intelligent Services in the Upgrade Center

● You must activate the Intelligent Services upgrade for the integration to be successful.

3. Enable Push Replication - Optional

● The SAP S/4HANA Cloud system triggers data replication in the time intervals you
have scheduled. However, for certain job events, it is useful for replication to happen
immediately and independently of when the next regular replication is scheduled. You
can enable this immediate replication for the job events: hire, rehire, and termination.

4. Set up Metadata Framework (MDF) Object Properties

● The MDF Version History property needs to be defined so that historical records are
replicated correctly.

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 Lesson: Human Resources Connectivity

● Edit the MDF properties for the legal entity and cost center objects based on the
information provided in the setup guide. This includes setting maximum lengths for
several fields because object fields that need to be written to, or read from SAP S/
4HANA Cloud are subject to length restrictions.

5. Enable Cost Center Object to Company Reference

● The SAP S/4HANA Cloud system links cost centers to their respective company code,
and requires both employees and contingent workers are assigned a cost center. In
SAP SuccessFactors Employee Central, cost center is called legal entity. To ensure
Employee Central is set up for usage of cost centers related to legal entities, the cost
center object definition file must include a custom field for company code. Therefore,
you must add a custom field for company code to the cost center object definition file
so that company codes can be written to the cost center object and subsequently
validated against existing legal entities in Employee Central.

Note:
Legal entities in Employee Central must match the company codes in S/
4HANA Cloud to enable cost center replication. In addition, a legal entity
must not have an earlier effective start date than a cost center which is
assigned to it.

6. Set up SAP SuccessFactors API (SFAPI) User

● The SFAPI user is created through a file upload and assigned administrator
permissions to integration-related functionality. The SFAPI user facilitates the
communication of APIs in the integration.

7. Switch off Bank Master Data Validation (optional)

● This task is a prerequisite configuration for the business scenario for bank data
replication from SAP S/4HANA Cloud to SAP SuccessFactors Employee Central. Only
apply this configuration if you want to store payment information in SAP
SuccessFactors Employee Central.

8. Enable Photos in People Profile

● If you use People Profile and want to replicate photos from Employee Central to SAP
S/4HANA Cloud, you need to make Photo visible as a People Profile Header field.

9. Application-Specific Setup - Optional

● Some optional types of data replication require additional application setup in order to
enable the data replication, such as:

- Time Off must be enabled and configured in Employee Central is you want to
replicate availability data. This data is relevant for viewing employee availability
when staffing projects in the Professional Services line of business. Learn more
about implementation of Time Off in the SAP Help Portal

- The Contingent Workforce application must be set up to replicate contingent

worker data from Employee Central to SAP S/4HANA Cloud. Work order
information within the Compound Employee API must also be enabled. Learn more
about implementation of the Contingent Workforce app in the SAP Help Portal

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Master Data Integration Service Setup

Figure 120: Master Data Integration Service Setup

For the new integration based on SAP One Domain Model, the Master Data Integration
service, also referred to as SAP Master Data Orchestration, must be set up and connected to
a customer's existing SAP Cloud Identity account. Through the process of subscribing and
creating the MDI instance, you generate a service key in JSON code that will be used in later
steps in the Communication Management apps in SAP S/4HANA Cloud.
Please refer to the detailed steps in the SAP Help Portal covering the following:

1. Subscribing to SAP Master Data Orchestration

2. Creating a Service Instance

3. Maintaining the Distribution Model in SAP Master Data Orchestration

Communication Arrangement Apps in SAP S/4HANA Cloud

Integration Setup via SAP S/4HANA Cloud Communication Arrangement Apps

Figure 121: Communication Users, Systems, and Arrangements Apps

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 Lesson: Human Resources Connectivity

The Communication Management apps in SAP S/4HANA Cloud enable you to connect your
system to another system to facilitate data exchange. SAP has predelivered many different
SAP Best Practices integrations that can be activated using the Communication Management
apps, which include:
● Maintain Communication Users
- Create and manage communication users for different integration scenarios with other
solutions.
- Other solutions integrated with SAP S/4HANA Cloud need to authenticate themselves
to be able to post data - this is done with the information (user name/password,
security certificate) in the communication user.
- Communication users are assigned to communication systems.
● Maintain Communication Systems
- Create and maintain communication systems used to establish communication
arrangements.
- A communication system represents the communication partner within an integration
scenario.
- A communication user must be assigned to the inbound and/or outbound user sections
(varies based on the integration scenario) to authenticate the partner system.
- Inbound communication refers to a third-party system calling services provided by SAP
S/4HANA Cloud (messages are coming into SAP S/4HANA).
- Outbound communication refers to SAP S/4HANA Cloud calling services provided by
the third-party system (messages are sent from SAP S/4HANA).
● Communication Arrangements
- Create and maintain communication arrangements that your company has set up with
a communication partner system.
- The communication arrangement determines the authorizations, inbound and
outbound services, and the supported authentication methods required for the
successful setup of the integration.
● Display Communication Scenarios
- Display predelivered SAP Best Practices communication scenarios available in your
system, the supported authentication methods, scenario details and properties, and
the status.

Cloud Integration Automation Service

Cloud Integration Automation Service (CIAS)
The Cloud Integration Automation Service (CIAS) is a framework that provides task-based
procedures with automation. It eases the technical configuration of SAP Best Practices
integrations by reducing the manual work, and offers integrated parameter management so
data can be entered once and reused throughout the workflow. You can assign integration
tasks to different roles to ensure that the right person can execute the right task, and allows
traceability of activity by collecting information on who did what steps during the integration
workflow.
Types of tasks in the Cloud Integration Automation Service:

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● Automated tasks: The respective applications provide APIs, which allows the CIAS to
automate the corresponding configuration step.
● Semi-automated tasks: These may include customer-specific data (for example, customer
tenant URLs defined in the integration setup in SAP Maintenance Planner) to partially
automate certain tasks.
● Manual tasks: These will show the respective excerpt of the implementation guide for the
responsible person to apply the necessary setting manually before confirming the task.

Note:
Not all integration scenarios are supported with the CIAS tool. Refer to SAP Best
Practices Explorer to determine which scenarios are supported.

Cloud Integration Automation Service (CIAS) in SAP Maintenance Planner

Figure 122: Cloud Integration Automation Service (CIAS) in SAP Maintenance Planner

In SAP Maintenance Planner, you can access the Cloud Integration Automation Service
(CIAS) via the Plan for Cloud Integration Scenario app. In this app, you can find and activate
supported SAP Best Practices integration scenarios by completing the guided workflow
steps.

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 Lesson: Human Resources Connectivity

Note:
To use the Plan for Cloud Integration Scenario app, customers must request CIAS
Entitlement following the instructions provided in SAP Note 2608492 . Customers
can use this service at no additional cost if they meet the following prerequisites:
● An S-User assigned to the customer ID for access to Maintenance Planner.
● An SAP Cloud Platform Neo subaccount in EU1 region or an SAP Cloud
Platform Integration account to subscribe to it.
● System instances of licensed SAP products that are in scope of this service.

What are the other apps for in Maintenance Planner?

SAP Maintenance Planner is a tool within the Landscape Management component of SAP
Solution Manager. SAP Solution Manager is the Application Lifecycle Management tool used
to implement the SAP S/4HANA on premise and private cloud solutions. Therefore, most
apps in Maintenance Planner are designed to support customers in maintaining and
upgrading their private cloud or on premise systems.

Note:
The CIAS tool only automates the core system connection part of the integration.
You must still complete all preparation steps prior to the core system connection
setup, and complete any relevant business scenario or application-specific follow-
up steps defined in the relevant setup guide.

Automate the Integration Setup of the 4AF & 4AJ Business Processes (1/2)

Figure 123: Automate the Integration Setup of the 4AF & 4AJ Business Processes (1/2)

Complete the following steps in the SAP Maintenance Planner Plan for Cloud Integration
Scenario app to set up the automated part of the integration (part 1 of 2):

1. Select SAP S/4HANA Cloud Integration.

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2. Select one of the two scenarios to set up.

3. Choose the Select Systems button.

Automate the Integration Setup of the 4AF & 4AJ Business Processes (2/2)

Figure 124: Automate the Integration Setup of the 4AF & 4AJ Business Processes (2/2)

(Continued) Complete the remaining steps in the SAP Maintenance Planner Plan for Cloud
Integration Scenario app to set up the automated part of the integration (part 2 of 2):

1. Choose the system tenant(s) as indicated in the guided workflow.

2. After selecting all systems required, select the Invoke Workflow button in the upper right
corner.

3. Review the integration scenario details and confirm.

Repeat the previous steps for the second integration scenario.

LESSON SUMMARY
You should now be able to:
● Understand how to use the SAP Fiori Import Employees app
● Set up an SAP Best Practices integration with SAP SuccessFactors Employee Central

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 Unit 4

Learning Assessment

1. What are some SAP solutions that are integrated with SAP S/4HANA Cloud to support the
Recruit to Retire Intelligent Enterprise process?
Choose the correct answers.

X A SAP SuccessFactors

X B SAP C/4HANA

X C SAP Concur

X D SAP Asset Intelligence Network

X E SAP Fieldglass

2. What are some characteristics of the SAP Master Data Integration service?
Choose the correct answers.

X A It is structured as a point-to-point integration

X B It is structured as a hub-and-spoke integration

X C It acts as a MOM (Message Oriented Middleware)

X D It creates a "spaghetti" architecture

3. What are some methods of populating employee data in SAP S/4HANA Cloud?
Choose the correct answers.

X A CSV file upload via Import Employees Fiori app

X B Migration via Workforce Persons migration object

X C Integration with SuccessFactors Employee Central

X D XML file import via Role Maintenance app

X E Replication via SOAP APIs

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Unit 4: Learning Assessment

4. Which of the following SAP Best Practice business processes are required to complete the
new integration based on the SAP ONE Domain Model between SAP S/4HANA Cloud and
SAP SuccessFactors Employee Central?
Choose the correct answers.

X A Workforce Management with SAP Master Data Integration (4AF)

X B Core HR with SAP SuccessFactors Employee Central (JB1)

X C Employee Integration - SAP S/4HANA Enablement (1FD)

X D Financial Master Data for SAP SuccessFactors Employee Central (4AJ)

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 UNIT 5 Accounting and Financial Close

Lesson 1
Accounting and Financial Close 119

Lesson 2
Understanding G/L Configuration Options 185

UNIT OBJECTIVES

● Maintain General Ledger Master Records

● Daily Operations in G/L Accounting
● Use the Cash Journal
● Perform closing operations
● Use Purchase Order accruals
● Perform Goods and Invoice Receipt reconciliation
● Assess your knowledge
● Understand configuration for the General Ledger
● Migrate G/L balances and open items
● Assess your knowledge

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Unit 5: Accounting and Financial Close

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 Unit 5
Lesson 1
Accounting and Financial Close

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Maintain General Ledger Master Records
● Daily Operations in G/L Accounting
● Use the Cash Journal
● Perform closing operations
● Use Purchase Order accruals
● Perform Goods and Invoice Receipt reconciliation
● Assess your knowledge

Chart of Accounts and G/L Accounts

General Ledger Chart of Accounts

Figure 125: General Ledger Accounting

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Unit 5: Accounting and Financial Close

The central task of G/L accounting is to provide a comprehensive picture of external

accounting and accounts. Recording all business transactions (primary postings as well as
settlements from internal accounting) in a software system that is fully integrated with all the
other operational areas of a company ensures that the accounting data is always complete
and accurate. G/L accounting is used to create the legally required balance sheets and profit-
and-loss statements for the company code.
G/L accounting serves as a complete record of all business transactions, providing a
centralized, up-to-date reference for the rendering of accounts. Actual individual transactions
can be checked at any time in real-time processing by displaying the original documents, line
items, and transaction figures at various levels, such as account information, journals, totals,
transaction figures, and balance sheet.
The Accounting and Financial Close process covers all required period end-closing steps,
related to-do local period-end closing and steps that are identical for local and parallel ledger.

Figure 126: Chart of Accounts

Each general ledger is set up according to a chart of accounts. The chart of accounts contains
the definitions of all G/L accounts in an ordered form. The definitions consist most
importantly of the account number, account name, and the type of G/L account, that is,
whether the account is a P&L-type account or a balance-sheet-type account.
Each company code is assigned to the operating chart of accounts. In addition, the company
codes, depending on the country, are assigned to a local chart of accounts and the G/L
accounts of the operating chart of accounts are assigned to an alternative account.
In the SAP S/4HANA Cloud system, you use the SAP-delivered chart of accounts as it is, or
you can modify the account numbers delivered by SAP to your own account numbers before
activation of the Q-system. The customer has to provide a 1:1 mapping between SAP's
provided account numbers and the customer account number. You need to make sure that
the filled-in Microsoft Excel template with the customer-specific CoA mapping has no
duplicate account numbers before you forward it to the service center.

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 Lesson: Accounting and Financial Close

After activation, if you need additional accounts that are not in SAP's chart of accounts, you
can add them in the Explore phase.
In the delivered CoA, you have the following G/L account numbers available for bank
accounts 11XXXX00, where XXXX is any number except for the following numbers: 11009100,
11009200, 11009500, 11009600, 11009900 (these are reserved for Bills of Exchange).
You should use the following structure when defining additional G/L accounts for your bank
accounts:
● 11001000 - Bank XX - Bank (Main) Account
● 11001100 - Bank XX - Bank (Main) Account Foreign Currency
● 11001010 - Bank XX - Cash Payment
● 11001020 - Bank XX - Bank Transfer (Domestic/SEPA/Foreign)
● 11001030 - Bank XX - Other Interim Transfers
● 11001040 - Bank XX - Direct Debit
● 11001050 - Bank XX - Checks Out
● 11001060 - Bank XX - Checks In
● 11001070 - Bank XX - Check Clearing Account
● 11001080 - Bank XX - Cash Receipt
● 11001099 - Bank XX - Correction Account

General Ledger Accounts

Figure 127: G/L Account Types

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Unit 5: Accounting and Financial Close

G/L accounts are classified into the following G/L account types:
● Balance Sheet (X)
Balance-sheet accounts sort and store values for transactions involving assets, liabilities,
and equity. The balance of a balance-sheet account is carried forward at the fiscal year-
end.
● Primary Costs or Revenue (P)
Primary costs accounts are income-statement accounts that function as a cost element
for primary costs or revenue. Primary costs reflect operating expenses such as payroll,
selling expenses, or administration costs.
● Secondary Costs (S)
Secondary-costs accounts are income-statement accounts that function as a cost
element for secondary costs. Secondary costs result from value flows within the
organization, such as internal activity cost allocations, overhead allocations, and
settlement transactions.
● Non-Operating Expense or Income (N)
Non-operating expense or income accounts are income-statement accounts that record
expenses or gains from activities that are not the main purpose of the company, such as
gains realized from financial investments by a manufacturing company.
● Cash Account (C)
Cash accounts are balance sheet accounts that are needed to connect cash journals and
bank accounts to the General Ledger. When the G/L account type is the cash account, a
G/L subtype must be specified for further categorization. The following subtypes for the
cash account are available:
- Bank Reconciliation Account (B)
- Petty Cash (P)
- Bank Sub Account (S)

Figure 128: G/L Account Groups

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 Lesson: Accounting and Financial Close

Accounts with the same account group normally have similar business functions. The
accounts in the standard chart of accounts are all mapped to one of the following account
groups:
● ABST - [Link] AP/AR
● ANL - Fixed assets accounts
● ERG - Income statement accounts
● FIN - Liquid funds accounts
● MAT - Materials management accounts
● SAKO - G/L accounts (general)
● SASL - G/L accounts (ledger-spec. OI)
● SECC - Secondary costs / revenues

The account groups are assigned number ranges. These control which account numbers are
permissible for accounts created within an account group. For different account groups,
different fields are available for entry in the company code segment of G/L accounts.

Figure 129: Reconciliation Accounts

Reconciliation accounts connect subsidiary ledgers with the general ledger in real time. This
means that a posting to a subsidiary ledger posts to the corresponding reconciliation account
in the general ledger at the same time.
The subsidiary ledgers, which are connected to the general ledger through reconciliation
accounts, are the following:
● Accounts payable
● Accounts receivable
● Asset accounting
● Contract accounts receivable

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Unit 5: Accounting and Financial Close

Figure 130: Account Balances

The total of all line items posted on an account in debit or credit make up the debit and credit
balance of the account. The financial statements for the company code are calculated using
these transaction figures. You can drill down from a report displaying balances of the account
to the line items and further down to the posted documents.

Financial Statement Mapping

Figure 131: Financial Statement Version

A general ledger provides the information needed to create a balance sheet and a profit-and-
loss statement. These reports have to meet country-specific requirements.

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 Lesson: Accounting and Financial Close

In the financial statement versions, you define exactly which accounts are to appear in which
line items of the financial statement. Default financial statement versions are included in the
SAP S/4HANA cloud system.
In the SAP S/4HANA cloud, by default, all line items are filled with the segment characteristic
through the function of document splitting, allowing financial statements to be output per
segment.
With the Manage Chart of Accounts app, you can display G/L accounts according to where
they are assigned in a selected financial statement version (FSV) or by the ID of a chart of
accounts. In the FSV view, you can also choose to display accounts in the hierarchy view or
the list view. To create a new account, you can copy an existing account, assign the new
account to corresponding company codes, and select FSV assignments that are associated
with the account.
For some analytical apps, financial key performance indicators (KPIs) need to be calculated
that are based on nodes in a financial statement version. These KPIs are calculated based on
semantic tags that are assigned to these nodes. For every app, a subset of semantic tags is
required. You use the SSCUIs Define Semantic Tag Groups and Define Semantic Tags for
Balance Sheet-/Profit and Loss Structures for this purpose. Semantic tags are short text
identifiers that you use to represent key figures. When you assign these tags to FSV items,
they become stable across your reports. You can also use them to create KPIs to enhance
your oversight of your finances. Rather than recreating your reports and analytical queries
every time you create a new FSV, for example, the semantic tags remain stable across these
reports, thus easing your workload. You just select the respective FSV during runtime to
change the selection. And semantic tags automatically reflect in reports and KPIs whenever
your FSV structure changes, which means less coding for you. You can also perform multi-
dimension drill-downs using semantic tags, for example, by G/L account, cost center, profit
center, and fixed asset transaction type.
As an example, imagine a hierarchy with two elements: costs and revenues. Some postings
post in G/L accounts for costs, and others go onto the revenues accounts. To identify
whether a posting is for costs or revenues, you have to go down to the respective G/L
account, which can be time-intensive and cumbersome. Moreover, adding a new G/L account
means you have to adapt all of your structures and queries. This is not only time-consuming
and cumbersome, but is also an error-prone process. Now, however, you have semantics that
can be assigned to parts of the hierarchy. You no longer have to recreate your queries for
each report; the tags do that for you, and your predelivered and created queries will return the
correct data.

Note:
The semantic tags are not used in isolation; they work in combination with the
underlying FSV. So if you have different charts of accounts for different countries,
you can map these accounts to the semantic tags and then select posting
documents based on the FSV used in a particular report.

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Other Organizational Units

Figure 132: Profit Centers and Segments

A profit center evaluates the success of independent areas that are responsible for costs and
revenues within a company. By default in the SAP S/4HANA system, you can create only a
profit and loss statement at the profit center level (it is not a splitting characteristic). Some of
the fields on profit center master data records are time dependent (for example, Person
Responsible, User Responsible, Department). Time-based fields enable you to modify your
profit center data without having to create a new profit center.
A segment is a division of a company for which you can create financial statements for
external reporting. Certain accounting principles, for example U.S. GAAP (SFAS 131) and IFRS
(IFRS 8), require companies to perform segment reporting. You can define segments in your
SAP S/4HANA Cloud system using the Configure Your Solution app, and provide information
on the financial results of these business segments.

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Figure 133: Additional Organizational Units

There are more FI entities you can configure with the app, as follows:
● Company
FI records are consolidated at the level of the company. A company can be assigned one or
more company codes, which are then taken into account for consolidation. A consolidation
parent can allocate company IDs to its subsidiaries. For example, one subsidiary may be
allocated 1010 as a company ID, while another may be allocated 1710. Specifying the
company ID helps in business processing, mapping, and showing the relationship within a
group.
● Functional area
In cost-of-sales accounting, overhead costs are reported according to the functional areas
in which they are incurred.

House Bank Accounts in the General Ledger

Overview House Bank Accounts and General Ledger
If your company runs payment processes involving house bank accounts, you need to set up
corresponding G/L accounts so that your company’s payment transactions are also recorded
in General Ledger Accounting.
To be able to run your payment processes, you need to assign each of your house bank
accounts to a G/L account. In addition, for each payment method supported for a house bank
account, you need a separate G/L account. This means that for each of your house bank
accounts, you first need to assign a “main” G/L account which in turn is connected to one
open-item managed clearing account per payment method.
You can specify either balance sheet accounts or bank reconciliation accounts for this
purpose. The two types of G/L account correspond to two different approaches for
maintaining G/L accounts for bank account payments:

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● One set of G/L accounts for one house bank account (using Balance Sheet Accounts)
● One set of G/L accounts for multiple house bank accounts (using Bank Reconciliation
Accounts)

One Set of G/L Accounts for One House Bank Account (Using Balance Sheet Accounts)

Figure 134: Balance Sheet Accounts

For this approach, you assign a unique balance sheet account to each house bank account.
You also need to set multiple clearing G/L accounts for this balance sheet account. As a
result, you need to define a set of G/L accounts, including the balance sheet account and its
clearing accounts, for each house bank account.
Each time you create a new house bank account, you also have to create new G/L accounts to
enable payment processes for the new house bank account. Over time, this could lead to a
high number of G/L accounts.

Note:
The Balance Sheet Accounts scenario is the currently known and used
deployment for all customers.

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One Set of G/L Accounts for Multiple House Bank Accounts (Using Bank Reconciliation
Accounts)

Figure 135: Bank Reconciliation Accounts

For this approach, you assign a bank reconciliation account to several house bank accounts.
You also need to set multiple clearing G/L accounts for this bank reconciliation account.
However, the set of G/L accounts, including the bank reconciliation account and its clearing
accounts, can be shared by multiple house bank accounts.
In this way, you can cut down on the number of G/L accounts needed by creating just one
bank reconciliation account and assigning it to several house bank accounts.

Note:
The Bank Account Reconciliation approach is designed to be a further option for
customers to run their business.

There is no need to migrate or move from the known Balance Sheet Approach to the Bank
Reconciliation Ledger. Since you control the method through master data settings in the
house bank account, an individual approach for each house bank account is possible. Thereby
a side-by-side approach is feasible. This also implies that no big-bang solution must be
implemented, as customers have the option to gradually move to the Bank Account
Reconciliation scenario, if desired.

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Setting up the Bank Reconciliation Account Approach

Figure 136: Bank Reconciliation Accounts - Set up

When setting up the Bank Reconciliation Account approach, there are two main areas to work
on:
● Financial Accounting and the setup of the respective G/L accounts
● Bank Account Management where you define the house bank accounts and the link to the
General Ledger

In this lesson, we focus on the setup of the respective G/L accounts in Financial Accounting.
How to define the house bank accounts and the link to the General Ledger can be found in the
Bank Account Management section of this course.

Financial Accounting and the Setup of the Respective G/L Accounts

Using the Manage G/L Account Master app, the G/L Accounts have to be defined according
to the Bank Reconciliation Account approach and the house bank account data has to be set
in the G/L Accounts.
Define the G/L account for the main bank account and make sure that the G/L account type
is Cash Account and the G/L account subtype is Bank Reconciliation Account.

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Figure 137: Financial Accounting G/L Account Setup - Main Bank Account Master Data

For each payment method you require, create a G/L account as clearing account (bank sub
account). Make sure that the G/L account type is Cash Account and the G/L account subtype
is Bank Sub Account. This setting will activate the additional field Reconciliation Account. Set
the main bank account (often referred to Zero Account) to link the sub account per payment
method to the leading account.

Figure 138: Financial Accounting G/L Account Setup - Bank Subaccount Master Data

The second important setting in the Financial Accounting setup is the maintenance of the
House Bank and the House Bank Account ID in the master data of the G/L Account.

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Figure 139: Financial Accounting G/L Account Setup - House Bank Account ID

Journal Entries
Journal Entry Basics

Figure 140: Journal Entry Types

Journal entry types are used to group journal entries. Each journal entry is assigned to a
journal entry type, entered in the document header. Journal entry numbers depend on the
document number ranges assigned to the document type. The journal entry type also
controls which types of accounts can be posted to in the document.

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Posting Keys

Figure 141: Posting Keys

Each line item contains exactly one posting key. This is used for internal control and defines
the following information:
● Which account type is being posted
● Whether the line item is a debit or credit posting
● The field status of the additional data

In most SAP Fiori apps, you don’t directly input the posting key. Instead, for G/L account
postings, the following applies:
● Debit (d) represents posting key 40.
● Credit (c) represents posting key 50.

Posting keys do appear in line item reports and their control functions are still relevant.

Note:
You can’t define your own posting keys in SAP S/4HANA Cloud.

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Journal Entry Structure

Figure 142: Header

Accountants create G/L journal entries as part of their daily work. In SAP S/4HANA Cloud,
general journal entries are immediately reflected in the income statement reports (as long as
the accounts are included in the financial statement version) and all other document and
balance analysis reporting.
You create and post journal entries using the SAP Fiori app Post General Journal Entries. The
entry screen of this app is divided into multiple areas. In the figure, Header, you see the
document header.
Header data applies to the whole document, such as posting date and journal entry type.

Important Fields — Document Header

The following are the important fields for the header:
● Journal Entry Date (Document Date): This date is usually the date written on any type of
document which prompted the entry (for example, you would enter the invoice date for
posting an invoice). If there is no specific document, you usually enter the same date as
the posting date.
● Posting Date: The posting date is the date the system uses to update the database. It will
often be the same as the actual entry date, but there is no requirement that it must be.
Based on this date, the system defines the posting period and the fiscal year to make the
entry.
● Journal Entry Type: Journal entry types are discussed in the Journal Entry Types section.
● Company Code: The company code entered in the header is defaulted for all lines.
● Transaction Currency: The transaction currency is the currency you will use for the
posting.

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● Exchange Rate: This is defaulted to the rate valid on the translation date, you can also
update the rate manually.
● Translation Date: The system uses the posting date by default to define the currency
translation rate. You can change the date for the rate derivation manually.
● Reference: You enter the reference number/identification of the document you are
posting.
● Header Text: You usually enter the business reason for posting the document.
● Ledger Group: When you leave the field blank, all ledgers are posted to. If you fill it in, you
can post to one of the two ledger groups.

Figure 143: G/L Posting Line Items

The primary entries you maintain are the debit/credit and G/L account. Depending on the
G/L account you are posting, you are proposed different line item fields and information.
Before posting a document, you can simulate it. You can also simulate the general ledger
view, to verify that document splitting is working as expected.

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Manage Journal Entry Template

Figure 144: Manage Journal Entry Template

With the functionality for journal entry templates, you can simplify, speedup, and safeguard
the data entry process for accountants.
The current functionality of the Manage Journal Entry Templates app supports:
● Creating a new journal entry template
● Editing a journal entry template
● Displaying a journal entry template

You can apply a journal entry template in the Post General Journal Entry app.

Manage Journal Entries

Journal Entry Management

Figure 145: Changing Documents

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 Lesson: Accounting and Financial Close

After posting a document, the possible changes are only minimal and if you made a mistake
during entry, you will probably have to reverse the document and repost it.
On the document header, the reference and document header text fields can be changed
after a document is posted.
For the line items, the specification of what can be changed is set according to the account
type and the transaction type used. Fields such as the line item text, assignment, payment
terms, and payment method are changeable.

Figure 146: Reversing Documents

Document reversal in SAP S/4HANA Cloud is performed with the Manage Journal Entries
SAP Fiori app. You enter search criteria for the document or documents you want to reverse,
select the ones to reverse from the list, and reverse them individually or in groups.
The reversal reason defines the reversal settings for the document and indicates why the
reversal is performed.

Figure 147: Maintain Reasons for Reversal

You can maintain additional reversal reasons with the SSCUI Define Reasons for Reversal.
The following settings are maintained for each reversal reason:
● Negative Posting

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A normal reversal would debit the credit line items and debit the credit line items of the
original document. A negative posting reduces the transaction figures of the posted
account by posting negative amounts on the same debit/credit side as the original
posting. This allows you to give the account debit/credit figures the status they would have
had without performing the original posting.
● Alternative Posting Date
You can post the reversal with a journal entry date different than the original journal. This is
useful, for example, when reversing documents of closed periods.

Sometimes when you post a general journal entry, you may want to reverse it later, for
example, at the end of the month or the beginning of next month. Rather than manually
reverse the journal entry, you can use the auto reversal feature in posting related apps. For
example, you can use Post General Journal Entries and choose the default STANDARD_5
template from the list or create a new template for posting journal entries with auto reverse.
You can also schedule a general ledger job for auto reversal on a regular basis.
According to standard configuration, by default the reversal journal entry type will be the
same as the original journal entry type unless a dedicated one is explicitly specified in
configuration. This means that, during reversal, the system will pick the journal entry type of
the original document as the reverse journal entry type. As such reversals will be posted by
default with original journal entry types and within the same number ranges of the original
documents.
As of SAP S/4HANA Cloud 2008, the Manage Journal Entries app provides the following new
features:
● View reversal logs
● Edit the planned reversal date for journal entries scheduled to be automatically reversed
● View your local time on the entry view page

G/L Account Clearing

Figure 148: Clear G/L Accounts

When you post a transaction to an account that is open item managed, the transaction is
incomplete until the item is cleared. To clear an open item, you post a clearing document that
balances the open item or groups of the open items to zero. You can use the Clear G/L

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Accounts - Manual Clearing app to manually clear G/L account open items. When you post
with clearing, you select open items from a list of items posted to the open item account you
specify. When you complete your selection the items must balance to zero amongst
themselves. A clearing document doesn’t change the debit or credit balance of the account, it
only matches up open items. The system creates a clearing document and the clearing
document number is updated on the original documents from which the open items originate.
You can also choose to clear G/L accounts with ledger group-specific open items. Note that
items that are posted to specific ledger groups can only be cleared within the same ledger
group. Using this function, you can have the open items grouped according to their
corresponding ledger groups.
If you matched the wrong items, you can reset clearing documents for items that were
cleared incorrectly. Another reason why you might want to reset clearing is if you need to
reverse one of the original documents; this is only possible after resetting the clearing.

Figure 149: Display Document Flow

With the Display Document Flow app, SAP provides a 360-degree view of the complete
business transaction from a single starting point. The app displays the operational documents
together with their accounting document mirrors in two flows. It is a powerful analytical app
that is assigned to an own catalog so that it can be used by any interested role simply by
adding the catalog in configuration.

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Figure 150: Display Journal Entries - In T Account View

With the Display Journal Entries - In T Account View app, SAP provides accountants with an
option to investigate journal entry impact on accounts displayed in the familiar T-view layout.
You can customize the complexity of the displayed views and it allows you to mark journals of
interest or highlight contra items. The app is available for various financial roles.

Journal Entry Verification

Journal Entry Verification Process

Figure 151: Process for Verification of General Journal Entries

Let's say that you must enter a new journal entry but you want to verify it for posting.

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The workflow for verifying general journal entries is illustrated in the figure, Process for
Verification of General Journal Entries. When a requester creates a journal entry, the journal
entry receives the Initial status. If the requester submits the journal entry for approval, the
journal entry has the Submitted status.
When the processor sees the submitted journal entry in the inbox, the journal entry status can
vary depending on the processor's actions:
● If the processor rejects the journal entry, its status is Rejected. The requester must edit it
and submit it again.
● If the processor suspends the journal entry, its status is Waiting, until a certain time
scheduled by the processor. At the scheduled time, the journal entry status is again set to
Submitted for approval.
● If the processor verifies and approves the journal entry, its status is Posted. The posting
action can fail when some errors occur. In that case, the journal entry's status is Failed.
The requester must edit and submit it again.

Figure 152: Using the General Journal Verification

As a requester, when you create or edit a journal entry, you can submit it for verification.
When you create a new journal entry through Verify GL (Requestor) or submit a journal entry
through the Post GL app that meets the workflow start condition, you trigger an approval
process. You can also track the entry status in the worklist and decide whether to edit a
rejected journal entry and resubmit it for verification. You can choose to copy a journal entry,
edit it, and submit it for verification.
As of SAP S/4HANA Cloud 2105 it's possible to withdraw a request before the processor
approves or rejects it. You can choose Withdraw to take back your request in the Verify
General Journal Entries - For Requester app and the Verify Currency Adjustments - For
Requester app. You can also forward a journal entry or a currency adjustment for which
you’re the processor, when you use the Verify Journal Entries in General Ledger - For
Processor (Inbox) app. An authorization check is done by the system immediately you
forward a task to others. Only a user who is authorized can receive your forwarded task and
verify the journal entry or currency adjustment.
The approval process requires a user from the groups specified in Customizing to verify and
post the journal entry using the Verify GL (Inbox) app. As a processor authorized to verify
general journal entries, you can view journal entries assigned to you that await approval. You

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can choose to approve, reject, or suspend a journal entry. Then, the system changes the
status accordingly in the requester's worklist.
The four-eyes principle is guaranteed by excluding the original requester from the verification
process, even if they are in the approval group pool. All exception handling for the rejected
document can be performed with the Verify GL (Requestor) app.
You can retrieve your own past approvals using the Verify GL (Outbox) app.

Activate and Customize the Journal Entry Verification

Figure 153: Verification Apps

The following SAP Fiori business apps are relevant to configuration and operation:
● SAP Fiori app F2547 - Verify General Journal Entries For Requestor as part of Business
Role GL_ACCOUNTANT
● SAP Fiori app F2728 - Verify General Journal Entries For Processor (Inbox) as part of
Business Role GL_ACCOUNTANT
● SAP Fiori app F2729 - Verify General Journal Entries For Processor (Outbox) as part of
Business Role GL_ACCOUNTANT
● SAP Fiori app F2797 - My Inbox as part of Business Role MANAGER
● SAP Fiori app F2720 - Manage Workflow as part of Business Role GL_ACCOUNTANT

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Figure 154: Manage Workflow Definition

Before you can use the functionality, you must enable the workflows for journal entry
verification.
Here are the minimum steps for configuring workflows:

1. In the Manage Workflows for General Journal Entry Verification tile, choose General Journal
Entry Verification (the default workflow without preconditions defined), and choose Copy.

2. In the Header section, enter a workflow name and in the Properties section, enter the
workflow description and time period of validity.

3. In the Preconditions section, enter the Source Company Code. You can enter only one
company code for each workflow. If you have more than one company code to follow the
workflow, copy existing workflow definitions.

4. In the Step Sequence section, to go to the Edit page, choose Verify. In the Preconditions
section, choose Threshold Amount in Company Code Currency. Enter the currency
amount that triggers the verification step. To enable the workflow, choose apply, save, and
activate to enable the workflow.

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Figure 155: Define Responsibilities

To determine which users in your company can approve postings in a specific company code
over a certain amount, you must manage the workflow for journal entry verification and define
the responsibilities of journal entry approvers.
You can restrict the authorizations for the journal entry verification apps to a specific range of
company codes and company amounts. Follow the steps to define responsibilities of journal
entry processors:

1. Open the Define Responsibilities app. Enter 02800011 (the default rule number) and then
choose Change.

2. If necessary, add verifiers to verifier groups or delete verifiers from the groups. Choose a
verifier group and choose Display Object.

3. In the Responsibility Specs section, define the following conditions:

● AmountInCoCdCurrency: Enter the currency amount range of journal entries that are to
be verified by the group.

● SourceCompanyCode: Enter one company code or a company code range of journal

entries that are to be verified by the group.

Note:
Optionally, you can specify a priority for the verifying group.

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Cash Journal Operations

Cash Journal Overview

Figure 156: Cash Journal Overview

The cash journal is a kind of subledger of Financial Accounting. It is used to manage a

company's cash transactions. The system automatically calculates and displays the opening
and closing balances and the receipts and payments totals. You can run several cash journals
for each company code, and you can run a separate cash journal for each currency. You can
also carry out postings to G/L accounts, supplier accounts, and customer accounts.
Having multiple cash journals for each company code or separate cash journals for each
currency are some business benefits of the cash journal.
Furthermore, the integration of cash journal documents into the FI system and to print
journals repeatedly are clear advantages of the cash journal.
It also helps you to prevent redundant data entry with automatic journal entry generation.

Cash Journal Entry

Figure 157: Cash Journal Initial Data

You can use the Post Cash Journal Entries app to enter cash-related journal entries in the SAP
system. The cash journal is used for recording bank transfers, customer receipts, supplier
payments, and expenses like office supplies.
When opening the tile, enter the company code you want to record the transactions for and
the corresponding cash journal.
We recommend running a separate cash journal for each currency.

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Figure 158: Cash Journal Overview Screen

The cash journal is a single-screen transaction. This means that you can enter, display, and
change cash journal documents on one screen.
You can save cash journal entries locally in the cash journal. The system also calculates the
balances. The cash journal entries saved are then posted to the general ledger.
Each cash journal must be assigned to one G/L account, which represents the petty cash
journal account in the general ledger. Cash transactions are saved separately in the cash
journal and are transferred periodically (for example, daily) to the general ledger.
For a cash journal document, you can carry out CO account assignments, and have taxes
calculated by the system with reference to business transactions, for example, taking account
of tax jurisdiction codes.

Cash Journal Business Transactions

Figure 159: Check Business Transaction

In order to record a transaction in the cash journal, a business transaction must be selected.

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Figure 160: Business Transaction List

Postings in the cash journal are all performed by concrete accounting transactions with
specified bank clearing accounts, revenue accounts, and expense accounts, all with a
descriptive text. One example for a business transaction of the type Expense posting is cash
purchase of office supplies. Here, the expense account Office material is used.
Although customer and vendor payments can be made using the cash journal, the payment
does not clear the open item. This clearing is not done until a second step, as part of the
accounts payable or the accounts receivable.
For business transactions type B and type C in the Post Cash Journal Entries app, if the
configured G/L account used for these business transactions is a type of cash account, you
must fill in both the House Bank and Account ID fields. If these two fields are not entered, you
cannot save cash journal items.

Figure 161: Cash Payment item

When you have inserted the business transaction with all the details, save the entry. This
updates the Balance display with the corresponding values.
Saving the transaction stores the information in the cash journal itself. No posting is triggered
from the Save button, meaning also that no G/L update is performed.
Transactions in that stage are highlighted with the orange triangle.
Using the Post button passes on all the information to the G/L for the creation of Accounting
and Controlling documents. All of the posted transactions are marked green.

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Cash Journal Documents

Figure 162: Follow-on Documents

If the transaction is posted to the G/L, follow-on documents are created. Depending on the
type of transaction (Payments or Receipts) your cash journal account will be debited or
credited.
This basic cash journal account is nevertheless always the same for each cash journal and set
in the configuration of your SAP S/4HANA Cloud system.

Figure 163: Display Cash Journal Entries - Selection Screen

Use the Display Cash Journal app to check the cash journal entries by company code, cash
journal, and date interval.

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Figure 164: Display Cash Journal Single Entries

The report shows you all of the transactions for a certain period. Starting with an opening
balance, the single transactions are shown and categorized in the columns Expense or
Receipt. These two blocks make up the closing balance of the cash journal.
The report also provides the possibility to create subtotals or to change the layout, for
example.

Figure 165: Download Cash Journal to Local File

For further analysis, the cash journal report can be exported to a local file.

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Cash Journal Configuration

Self-Service Configuration UI (SSCUI)

Figure 166: Cash Journal Configuration

Choose the Manage Your Solution app in order to get to the Configuration screen.
The task Configure Your Solution allows you to maintain certain processes.

Self-Service Configuration UI Tasks

Figure 167: Define Amount Limits

The check on the amount is always performed in the first local currency of the company code.
Although you do not have to enter a company code, the entry is then valid for all company
codes within a client that use the currency specified as the first local currency.
Each amount must be specified by the classification of the currency. If you specify a company
code, the currency of the company code is entered in the currency field and you cannot
change this.
The amount limits are defined with time restrictions (Valid from).

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Figure 168: Maintain Business Transactions

The business transactions are entered per company code. The Business Transaction Number
is a number that uniquely identifies the business transaction (these numbers are assigned by
the system automatically).
All business transactions need to be assigned to a Business Transaction Category. These
include the following:
● E (Expense)
● R (Revenue)
● B (Cash transfer cash journal to bank)
● C (Cash transfer bank to cash journal)
● D (Customer incoming/outgoing payment)
● K (Vendor outgoing/incoming payment)
● G/L Account

Furthermore, you make settings for the expense or revenue account for the offsetting
postings, for example, 400000 or 800000.

Caution:
You must not make entries in this field for business transaction categories D and
K.

For tax codes, you may only make entries in this field for business transaction categories E
and R.
The Business Transaction Block is an indicator that a business transaction is blocked for
additional postings.

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Figure 169: Setup Cash Journal

This configuration task is split by company code and cash journal as the two key fields of this
view.
Assign a G/L Account per combination of Company Code and Cash Journal. This is the G/L
account to which you want to post the cash journal business transactions, usually the petty
cash account. The G/L account type of the G/L Account has to be specified upfront as cash
account (c) with G/L subtype Petty Cash (P).
Enter the currency in which you want to run the cash journal. You can choose any cash journal
currency. If you want to run a cash journal whose currency does not correspond to that of the
company code, you need to consider the following details in the corresponding cash journal
G/L account master data:
● The checkbox Balances in local currency only should not be selected
● The account currency must correspond to the company code currency

You can run several cash journals with different currencies in one cash journal G/L account,
but running several cash journals with the same currency in one G/L account is not possible.
If you want to run several cash journals in the same currency in one company code, you have
to select different cash journal G/L accounts.
Use the Cash Journal Closed checkbox if you want to close a specific journal.
Also assign the document types for the G/L postings with regard to outgoing payments to
vendors, incoming payments from vendors, incoming payments from customers, and
outgoing payments to customers.

Note:
If you use extended withholding tax in your company code, you have to make the
corresponding settings for posting payments.

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Period and Year-End Closing in the G/L

Figure 170: Year-End Closing

At the start of the new fiscal year, or shortly before the new fiscal year, the balance
carryforward is run for all ledgers. This ensures that the balances of the G/L accounts are
carried forward to the new fiscal year.
Up to SAP S/4HANA Cloud 2008, you execute the balance carryforward by using the Balance
Carryforward app. From SAP S/4HANA Cloud 2008, there is no Balance Carryforward app.
Instead, the system performs a balance carryforward automatically two weeks before the
start of a new fiscal year. Therefore, you need not usually perform any manual activities for
the balance carryforward. If there are difficulties, you can manually trigger the balance
carryforward. To do this, you must schedule the corresponding job. Then, use the Schedule
General Ledger Jobs app with the Balance Carryforward job template.
To display the status of the balance carryforward, you can use the Balance Carryforward
Status app. With this feature, you can view details about a balance carryforward, such as the
status or when it was run.
The posting periods of the old fiscal year are then blocked and special periods for closing
entries are opened. Technical reconciliation between transaction figures and documents
guarantees that documents are posted without any technical errors.
Foreign currency documents are then evaluated and the expected losses/profits are
recorded.
Accrual and deferral documents are posted.
The GR/IR clearing accounts are cleared. You can use the Monitor GR/IR Account
Reconciliation app to get an overview over the status of open items on your GR/IR accounts
that need clarification. You can also navigate from this app to the Reconcile GR/IR Accounts
app where you can investigate the details or even start to further clarify purchasing document

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items where amounts or quantities in goods receipts and invoice receipts do not match. The
app GR/IR Process Insights provides insights into the GR/IR account reconciliation process
managed by the Reconcile GR/IR Accounts app. You can visualize the activities of the
reconciliation process and thereby identify opportunities for process improvements, for
example by finding bottlenecks, areas of duplicate work or root causes for delays.
If it is an end of year closing, then the special periods can be closed.
For documentation purposes, the balance audit trail is produced and the financial statements
are created. Additional reports are prepared for legal reporting purposes.

Figure 171: Schedule General Ledger Jobs

Figure 172: Periodic General Ledger Jobs

With the Schedule General Ledger Jobs app, you can plan the execution of most G/L closing
activities. The figure shows the list of supported G/L periodic activities with SAP S/4HANA
Cloud 2011. Many of the programs are also available as separate tiles on the launchpad.

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Period-End Activities

Figure 173: Manage Posting Periods

Managing posting periods involves defining the fiscal periods within which you can post
journal entries.
With this application, maintenance is performed on the level of the posting period variant,
updating the open periods for all company code or ledger combinations assigned to the
variant. You can define the following open or close settings for each account type:
● A: assets
● C: customers
● K: suppliers
● M: materials
● S: G/L accounts
● V: contract accounts
● +: all accounts

The specific account type takes precedence over the generic one (S is stronger than +). In
each account type, you can also specify account ranges to further detail the period
assignments.
You can maintain up to three separate intervals:
● Interval 1, normal periods: Controls the normal operative periods. These are the posting
periods that are open for daily posting during the year.

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● Interval 2, adjustment periods: Controls the valuating (also known as special) periods.
Here, you enter the special periods you can still post to for the previous year. The posting
deadline, and what kind of posting to the previous year is allowed, are controlled by local
regulations and corporate policy.
● Interval 3, CO-related periods: Controls the CO-related postings, meaning those
documents posted through CO applications and updating the general ledger (in SAP S/
4HANA, that is almost all CO applications). There is a separate interval for this because CO
allocations are sometimes allowed, even after most FI postings have stopped.

From SAP S/4HANA Cloud 2008, the CO (Cost Accounting) period status is no longer
displayed in the Open Period row for account type + (valid for all accounts). You can now
access the CO period status by selecting CO Period Status in the footer bar. This opens the
new Manage Posting Periods - Cost Accounting app. Business Transaction Type related
periods are no longer displayed. Previously, you selected the posting period variant for
account type + (valid for all accounts), chose Set Posting Periods → Open Periods in the
footer bar and selected the CO-Related Periods tab. Instead, this part of the app is now
available in the new Manage Posting Periods - Cost Accounting app.
As of SAP S/4HANA Cloud 2105 the Manage Posting Periods - Cost Accounting app allows
you to schedule jobs to open and close posting periods using the Schedule Job button within
the app.

Figure 174: Manage Posting Period Variants

The posting period variant is assigned to the company code per ledger. That enables you to
have separate variants for each company code/ledger combination or to group period
maintenance activities as you want.
For each variant, account type, and account range combination, you can maintain an
authorization group. The authorization group is assigned to users. Users with the
authorization group maintain the lines set specifically for them. Usually, this is set for users
that can post to a period later than the rest of the accounting department.

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Expenses and revenue posted in one period can often originate in another period. For this
reason, expenses and revenue must be accrued or deferred. They are distributed to the
periods from which they result. To ensure that expenses are posted to the correct period for
reporting purposes, you enter accrual and deferral documents, and then reverse them in a
later step (as the values are not realized). The reversal date of the original document is then
regarded as the posting date of the reversal document.
Accruals are handled manually by using manual journal entries and also, if required,
automatically through the Purchase Order Accruals functionality (see the relevant section for
more information).
For manual accruals, you can post manual entries or upload entries with the Upload Journal
Entries app. You can use the recurring entry application if you often need to enter accruals
and deferrals with the same values.

Closing Reporting

Figure 175: Financial Statements

Financial statements are official reports that you are required legally to output. The basic
ones that you define in the system are the balance sheet and the profit and loss statement. In
SAP S/4HANA, you maintain the Financial Statement Version (FSV) to produce the financial
statements. In addition, as the FSV is basically a structured way of grouping accounts, you
can create FSVs for other internal and external reporting purposes and for planning.
In SAP S/4HANA Cloud, you can create financial statements using the Define Financial
Statement Versions app. With this app, you can display balance sheets and profit and loss
statements by using both the operational and, where valid, the local charts of accounts. These
reports are generated by analyzing and summarizing all the relevant line items. From these
reports, you can also access the line items of a specific G/L account, as well as customer,
supplier, or fixed asset line items.

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Note:
The system also offers provisions for maintaining and exporting electronic
financial statements for sharing with authorities.

You can also output a cash flow statement. The statement shows how changes in balance
sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to
operating, investing, and financing activities.
Offering clear auditing reports and helpful tools is vital for any system that handles financial
data. SAP S/4HANA stores everything on the line item level. As such, it is easy to understand
the origin of every value on the corporate books. Executing auditing reports is essential before
performing any archiving activities in FI. This is because you must be able to provide lists of
documents and line items for previous years (the amount of years is defined by local
legislation).
Audit Journal in SAP S/4HANA is an app that outputs an overview of all your documents per
company code, ledger, and fiscal year. The output is grouped by period (compact journal) or
by day (journal). There are additional control functions available to quickly pin-point potential
problems in the documents entered:
● Display Journal Entry Changes lists the line items of any changed document and shows per
changed field the old value and the new value.
● Check Multi-referenced Invoices looks for documents posted with the same reference to
help: for example, identify if the same invoice was posted twice.
● Check Gaps in Journal Entry Numbering displays for each number range interval from
which number to which number there are gaps in the posted documents.
● Display Update Terminations displays system terminations that happened for a given date
range.

Overview of Purchase Order Accruals

Figure 176: Business Context

As soon as there are liabilities to a third party, for example to a supplier, but the related costs
have not yet been posted, accruals need to be posted. By posting accruals in the system, the
relevant costs are allocated to the fiscal period in which they occurred.
Deferred expenses or deferrals mean that a payment is made in advance, but the expenses of
services or consumable products are reported in a future fiscal period or in multiple future

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 Lesson: Accounting and Financial Close

periods. You can also choose to activate the deferrals solution in Purchase Order Accruals to
let accruals and deferrals for a purchase order seamlessly work together with automation.
The posting of accruals and deferrals is typically a period-end closing activity because it is
often not known until period end to what extent accruals are required.

Figure 177: Overview of Features

With the new application Purchase Order Accruals, it is possible to automatically calculate
and post purchase order accruals.
This application is offered as non-standard scope item 2VB in Cloud.
This new application is based on the (new) SAP S/4HANA Accrual Engine which offers flexible
configuration options for calculation and posting of the accruals.
Optional: A review process for the monthly accrual amounts can be activated in the
Configuration.
Various screens are available for monitoring, review, and approval of accruals.

Figure 178: Basic Principle

At the end of each fiscal period, the application Purchase Order Accruals calculates the
accrual amounts for the purchase order items by evaluating the plan data in the purchase

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order item. For example, the delivery schedule with its planned delivery dates determines the
cumulated planned costs that are planned to have occurred from the purchase order creation
date up to the end of this period. It is also possible to use other data like non-valuated goods
receipts as plan data.
At end of each period, the system assumes that these cumulated planned costs reflect reality.
If at the end of the period the cumulated actual costs are less than the cumulated planned
costs, the system proposes the difference as accrual amount.
Since the proposed accrual amount at the end of each period is based on an assumption, by
default a review process for those accrual amounts (or for the planned costs) is activated in
Configuration.

Figure 179: For which Purchase Order Items are Accruals Needed?

Accruals need to be posted for costs that were already incurred but were not yet posted in
Accounting.
As a consequence, accruals are only relevant for purchases where costs occur:
● Purchasing products that are directly used, that is, consumed; for example office
materials.
● Purchasing of services that are received during a period of time; for example IT consulting.

The corresponding purchase order items usually have an additional account assignment like a
cost center.
Accruals are usually not relevant for the purchasing of:
● Products that are put on stock, for example raw material that will later be used for
producing other products.
● Products that represent a fixed asset, for example a laptop. Their value is posted to a
balance sheet account. The costs will occur later during depreciation postings.

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Figure 180: Use-Cases for Accruals: PO Item Without Valuated GR

1. Purchasing of consumable material or service - without goods receipts. There is no

recording of the goods receipts in the system. In this case the accruals are proposed:

● Either based on the delivery schedule given in the purchase order item: All planned
deliveries with a delivery date in the past are assumed as received.

● Or using a straight-line approach, that is, a linearization of the total value of the PO item
between start and end date.

Note: The two fields start- and end date are visible in the PO screens if the PO item has item
category Enhanced Limit. In this case, no delivery schedule can be entered in the PO item.

1. Purchasing of consumable material or service - with non-valuated goods receipts:

● The quantity of the received material or service was recorded in the system using non-
valuated goods receipts: Non-valuated means that no costs were posted by the goods
receipt entry.

● In this case the accruals are proposed based on quantity recorded by the non-valuated
goods receipts multiplied by the net price given in the purchase order item.

Note:
Use accrual method PLN_DSNVGR to achieve this behavior.

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Figure 181: Use-Cases for Accruals: PO Item With Valuated GR

1. Purchasing of consumable material - with valuated goods receipt postings:

● The valuated goods receipt (GR) entry posts the costs as entered quantity multiplied
by net price of PO item.

● In this case accruals are only needed if the GR has not been posted despite the material
was already received. That's why the system proposes the accruals based on the
delivery schedule given in the purchase order item: All planned deliveries with a
delivery date in the past are assumed as received. The costs posted by the GRs are
considered of course in the proposed accruals.

2. Purchasing of service - with service entry sheet postings:

● A service entry sheet posts the costs like a valuated goods receipt.

● Usually there is no delivery schedule available in the PO item. In this case the accruals
are proposed based on a straight-line approach: The total value of the PO item is
distributed linearly between start- and end date of the PO item.

Note:
The two fields start- and end date are visible in the PO screens if the PO item
uses the Lean Services approach: Product Type Group is 2 "Service".

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Main Process Steps in Automatic Accruals Posting

Figure 182: Transfer Purchase Order Into Accrual Engine

Following the creation of a purchase order, for example using the SAP Fiori app Manage
Purchase Orders, the transfer occurs as follows:
● Each purchase order is automatically transferred into the Accrual Engine. This happens
according to the Configuration settings controlling whether and how accruals will be
posted. In the Accrual Engine, an accrual object is created for each purchase order.
● Special case - initial data load: When implementing the application Purchase Order
Accruals, you need to transfer your existing purchase orders once into the Accrual Engine
of your production system. You can do this using the job template Accrual Engine for POs -
Transfer Purchase Orders to Accrual Engine in the SAP Fiori app Schedule General Ledger
Jobs.

Review Accrual Amounts for the Fiscal Period

During or at the end of each fiscal period, a reviewer can adjust the accrual amounts (or
planned costs or percentage of completion of the PO item) that the system proposes for the
given fiscal period.
As a prerequisite, the proposal amounts must be generated for the given fiscal period using
the job template Accrual Engine for POs - Propose Period Amounts in the SAP Fiori app
Schedule General Ledger Jobs.
The review can be performed either by the purchase order owner (for example, the goods
recipient) or by a cost accountant.
The review by the purchase order owner is done for each single purchase order item.
Corresponding workflow items are generated and can be processed by the purchase order
owner in the My Inbox app. These work items are generated by the job template Accrual
Engine for POs - Propose Period Amounts. The purchase order owner (that is, the recipient of
the work item) is determined by the system according to the following rule:

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● If there is a goods recipient given in the PO item, this user will receive the work item.
● If no goods recipient is given in the PO item, the requestor of the PO item is used.
● If no requestor is given in the PO item, the system uses the creator of the PO.

If the purchase order owner does not perform the review, a cost accountant can perform the
review as a fallback. The review by the cost accountant is done using a worklist-based app
Review Purchase Order Accruals - For Cost Accountant. This SAP Fiori app is a worklist
because an accountant usually is responsible for many purchase order items. This worklist-
based review app can also be used to monitor the progress of the review. For example, you an
choose it to check whether the PO owners processed their work items.

Post Accrual Amounts at the End of the Fiscal Period

The accrual amounts are posted using the job template Accrual Engine for POs – Periodic
Posting Run, in the SAP Fiori app, Schedule General Ledger jobs.
The accrual posting run first reverses the accruals that were posted in previous periods, then
posts the new accrual amounts. This default behavior is referred to as Full Postings. The
purpose is to post the full accrual amount using the current exchange rates. It is possible to
switch the posting logic from Full Postings to Delta Postings in Configuration.

Figure 183: How the Periodic Accrual Amounts are Calculated

According to IFRS, accruals may be posted if there is a potential debt to some "external" legal
entity (such as a supplier). The logic/algorithm behind the determination of this debt and the
related accrual amount is specific to each use case. For purchase order accruals, the Accrual
Engine uses the following procedure:
● The system calculates two amounts – Planned costs and actual costs – in the following
sense:
- The amount that has been "received" already from the supplier. For example, the
amount of service that was received or goods delivered by a supplier for a purchase
order item up to a certain key date (namely, the cumulated amount). The application
Purchase Order Accruals uses by default the delivery schedule of the purchase order
item to calculate this amount. In other words, the system assumes that the deliveries
were indeed received on the dates as planned in the delivery schedule. These amounts
are stored in the Accrual Engine in an accrual item type that is referred to as Planned
Costs.
- Independently of the planned costs, the system calculates the actual costs that have
already been posted. For example, for non-valuated goods receipts, the actual costs are
posted by the supplier invoice. So the system selects all invoices that have a posting
date before the key date. These amounts are stored in the Accrual Engine in an accrual
item type that is referred to as Actual Costs.

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 Lesson: Accounting and Financial Close

● The system calculates the accrual amount as plan minus actual. The difference between
planned and actual costs represents the debt to the supplier – of course, only if this
difference (planned minus actual) is greater than zero. The system calculates this
difference and stores it in an accrual item type that is referred to as Accruals (SACCRL).

Accruals as Plan Minus Actual

To ensure that the Accrual Engine calculates the accrual amounts for each period using the
correct algorithm, SAP delivers the following accrual item types as default configuration:
● Accrual item type SCSTPLN, calculating the planned costs of the purchase order item
(based on account assignment) for each period. The planned costs are calculated based
on the delivery schedule, for example. When dealing with services, you can also apply an
even distribution of the PO item's net amount over a specific period of time (straight line
approach).
● Accrual item type SCSTACT, calculating the actual costs of the purchase order item
(based on account assignment) for each period. Actual costs are one of the following:
- The goods receipt postings - if valuated goods receipts are used for this PO item
- The supplier invoice postings - if there are no or non-valuated goods receipts
● Accrual item type SACCRL for the accruals. This accrual item type has to be configured to
be the result of planned minus actual costs (but always remaining a positive amount). This
means that if the actual amount is greater than the planned amount, the system will set
difference amount to zero.

Figure 184: Data Structure in the Accrual Engine - Accrual Objects for Purchase Orders

In the application Purchase Order Accruals, an accrual object represents a purchase order.
An accrual sub-object represents a purchase order item that is subdivided based on the
account assignments given in the purchase order.
For each combination of accrual item type and ledger, the following information is stored for
the accrual item:
● The (total) amount to be accrued
● The accrual method, that is, the calculation algorithm for the periodic accrual amounts

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Figure 185: Mapping between PO and Accrual Object

If the PO item is split, a separate accrual sub-object has to be created for each CO object. The
reviewer is often a controller who has to review the accruals for the cost centers they are
responsible for. Since the review process is done on the level of accrual sub-objects (and their
accrual items) separate accrual sub-objects are required. A purchase order item can be split
to several CO objects.

Figure 186: Apps and Features of Purchase Order Accruals

After you activated Purchase Order Accruals, the following apps and features are available:
● Configuration app Purchase Order Accruals - In the app Schedule General Ledger Jobs, the
following additional job templates are available:
- Accrual Engine For POs - Transfer Purchase Orders to Accrual Engine
- Accrual Engine For POs - Propose Period Amounts
- Accrual Engine For POs - Periodic Posting Run
● In the app My Inbox, work items can appear that request the recipient to review the accrual
amounts that the system proposes for the given period.
● Review Purchase Order Accruals - For Cost Accountant - This app shows a worklist and
can be used by a controller to perform the following tasks:
- Monitor the progress of the review of the accrual amounts at period end.

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 Lesson: Accounting and Financial Close

- Review accrual amounts, for example if the purchase order owners did not process
their review work items in the app My Inbox.

Purchase Orders Transfer to Accrual Engine

Figure 187: Transfer of Purchase Order Items into Accrual Engine - Overview

When a purchase order (item) is created, for example using the SAP Fiori Manage Purchase
Orders app, the system determines whether accruals are potentially relevant for it. This is
done by evaluating the settings of the purchase order transfer variant in the configuration.
If they are relevant, the system creates an accrual (sub)object for the purchase order (item)
in the Accrual Engine. This creation of accrual objects for a purchase order can be done
either:
● Offline, after the purchase order was created. Existing purchase orders are transferred
into the Accrual Engine using the job template Accrual Engine for POs - Transfer Purchase
Orders to Accrual Engine in the app Schedule General Ledger Jobs.
● Online, when the purchase order is being created.

Note:
Accrual objects for purchase orders can be displayed using transaction
POACTREE03.

Once an accrual (sub)object was created for a purchase order (item), the Accrual Engine will
calculate and post accruals at the end of each period.
Optionally during period end closing, a manual review of the calculated accrual amounts can
be performed before they are posted.
Finally, during period end closing, you post the accruals by starting the periodic accrual
posting run which is the job template Accrual Engine for POs - Periodic Posting Run in the
Schedule General Ledger Jobs app.

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Figure 188: Offline Integration of Accrual Engine with Purchase Order

When you prepare the go-live with Purchase Order Accruals, there can be already existing
purchase orders that have been created beforehand. Such purchase orders can be
transferred into the Accrual Engine using job template Accrual Engine for POs - Transfer
Purchase Orders to Accrual Engine in the app Schedule General Ledger Jobs.
● You can use this program also for updating existing accrual objects, for example, in case
you changed the Configuration despite the fact that an accrual object was already created
for the purchase order.

Figure 189: Online Integration of Accrual Engine with Purchase Order

By default, the Online integration of the MM purchase order with the Accrual Engine is active
in Cloud. With online integration active, the creation of a new purchase order will also directly
create an accrual object - in case this purchase order is relevant for accruals. There is no need
to use the job template mentioned previously to transfer the purchase order into the Accrual
Engine. Also changing the purchase order will update the data of the accrual object
accordingly. The activation and deactivation of the online integration is done in the
Configuration Step Define Accrual Item Types and Methods for MM Purchase Order Items
(see the figure, Configuration Purchase Order Integration with Accrual Engine: Main IMG
Activity).

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 Lesson: Accounting and Financial Close

Figure 190: Configuration Purchase Order Integration with Accrual Engine: Main IMG Activity

In order to decide whether an accrual (sub)object has to be created for a purchase order
(item), the system evaluates Configuration settings. They can be maintained using the
Configuration Step Define Accrual Item Types and Methods for MM Purchase Order Items.
Since each company code can be assigned to a different variant, means that the online
integration can be activated on company code level:
● - By default, there exists only one PO transfer variant and the checkbox Dflt Var PO
Transfer is checked. This means that this variant will be used for all company codes.
- You can deselect this checkbox and assign it to those company codes for which
purchase order accruals shall be active.

Figure 191: Transfer PO from MM into the Accrual Engine: Big Picture Architecture

During the transfer of purchase orders into the Accrual Engine, offline and online, the system
performs the following steps:

1. The system selects the purchase order items which are relevant to be accrued, that is, for
which an entry exists for the PO Document Type and the PO Item Category in the
Configuration Step Define Accrual Item Types and Methods for MM Purchase Order Items
-> Define accrual item type and method based on PO item.

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2. The system decides according to which algorithm the accruals shall be calculated: In order
to determine the right algorithm, the system first classifies the purchase order item with
respect to accruals.

3. After the classification is done, the system determines the Start of Life and End of Life
dates, that is, the date interval in which accruals will be posted.

4. The system determines the accrual item types and accrual methods (=algorithm) for this
accrual subobject.

5. The system creates (or updates) the accrual subobject in the Accrual Engine.

Note:
The above steps can be influenced not only by Configuration but also by Cloud
BAdIs.

Step 1: Transfer of Purchase Orders into the Accrual Engine: Excluded Purchase Order Items -
Selection
For some purchase order items no accrual objects are created:
● Purchase orders that represent a purchasing to stock do not need to be accrued, since no
costs are associated to such purchase order items.
● Purchasing of fixed assets: No accruals are needed for such purchase order items.
● Purchase orders that represent an inter-company stock transfer. They are not related to
an external supplier, so no accruals are needed.

Note that a purchase order item can be changed by a user. So it can occur that an accrual
subobject already exists for example for a purchase order item that currently has account
assignment category = A: For example, a user had created the purchase order item with
account assignment category = K (cost center). Then the user transferred the PO item into
the Accrual Engine - and later he/she changed the account assignment category from K to A.
As a consequence, this PO item is selected despite it having account assignment category A
in order to be able to update the existing accrual subobject. The accrual items must be set to
obsolete by the system.

Figure 192: Step 1: Transfer of Purchase Orders into the Accrual Engine. Thresholds for Purchase Order Item
Values

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 Lesson: Accounting and Financial Close

In the Configuration activity Define Accrual Item Types and Methods for MM Purchase Order
Items, you define a threshold amount to exclude from "small" purchase orders items from
being accrued:
● In the Define accrual item type and method based on PO item section you can enter a
threshold amount for the PO item net value.
● There is a comprehensive F1 help, position your cursor in this field and click right mouse
F1.

Figure 193: Step 4: Determine Accrual Item Types and Accrual Methods: Configuration: List Screen

After the PO item was classified, the accrual item types and accrual methods are derived
based on the table entries in Configuration Step Define Accrual Item Types and Methods for
MM Purchase Order Items -> Define accrual item type and method based on PO item.

Posting and Reversal of Accrual Amounts

Figure 194: Posting of Periodic Accrual Amounts

For posting of the accrual amounts at period end, the job template Accrual Engine for POs -
Periodic Posting Run can be used. If you have activated the review and/or approval process
for periodic accruals, you can use this transactions after the review and approval process was

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finished. If you want to perform the posting only for selected purchase orders, you can enter
the purchase order numbers in field Accrual Object.
In the Accrual Subobject field you can enter the combination of purchase order item ID and
account assignment number. You use the value help to enter a value in this field. The value
help shows you in the Identifer AccrObj column, whether an accrual object exists for this
purchase order (item).
Note that in field component you can enter value POAC (Purchase Order Accruals) to filter.

Figure 195: Reversal of Accrual Postings

The Accrual Engine can be customized to perform full or delta postings. Full posting means
that in the current period the Accrual Engine first creates an inverse posting that "reverses"
the accruals that have been posted in the former periods.
Then it posts the accrual amount that was calculated for the current period. As a
consequence, it is not required to manually perform a reversal of accrual postings:
● - If full postings are customized then the automatically performed inverse posting
achieves this.
- If delta postings are customized then the reversal is obviously not desired.

Full or delta postings can be customized in the Configuration Step Define Accrual Item Types.
The need to perform a manual reversal of accrual postings should be an exceptional case.
Postings that were done by the SAP S/4HANA Accrual Engine can be reversed in several
ways:

1. If the accrual item type is customized to perform full postings (not delta postings), then
the last periodic postings are automatically reversed if the periodic accrual posting run is
executed for the next period.

2. All postings that were done by the SAP S/4HANA Accrual Engine can be reversed using
the Manage Journal Entries app. The postings can be identified by Reference Procedure =
ACES4.

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 Lesson: Accounting and Financial Close

Review of Periodic Accrual Amounts

Figure 196: Review of Periodic Accrual Amounts: Motivation

The following steps can be performed for review and/or approval of periodic accruals:

1. Generate proposals. Before the review or approval can be performed at end of the fiscal
period, the proposal accrual amounts have to be generated. This is done using the job
template Accrual Engine for POs - Propose Period Amounts. This job does the following:

● It calculates and saves the planned costs, actual costs (by summarzing posted supplier
invoices, and so on), and accruals (as planned costs minus actual costs).

● It generates work items in the SAP Fiori app My Inbox of the purchase order owner.
This job is typically executed after the last invoice and goods receipt was posted for the
fiscal period, but can also be executed in the middle of the period. In the latter case, the
actual costs and accruals might be not yet final, but the planned costs can be correctly
calculated by the accrual method – and the review of the planned costs / PoC can start
afterwards.

2. Perform review of the proposed accrual amounts. The following role-specific UIs are
available for reviewing:

● For the purchase order owner: Work item in the SAP Fiori app My Inbox
It is important to remember that work items are only generated if the accrual amount
exceeds the upper threshold defined in Configuration.

● For the controller: the SAP Fiori app Review Purchase Order Accruals – for Cost
Accountant

Note:
The review of accrual amounts is optional. If the review is not performed
by the purchase order owner or cost accountant, the system will post the
proposed amount. The review process can also be switched off in
Configuration. Another option is to skip the proposal job and just execute
the accrual posting job at the end of the period.

3. Following the review, the accruals can be posted. This is done using the job template
Accrual Engine for POs – Periodic Posting Run.

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By default, the periodic accruals amounts are calculated by the Accrual Engine as planned
costs minus actual costs. This means that the system assumes that the planned costs reflect
reality.
Example: At 31.05.2018, the system proposes the amount of 2,000 EUR as accrual amount
for item 10 of purchase order 4711. The planned costs were calculated as 5,000 EUR, but the
posted invoices for this purchase order item are only 3,000 EUR. The planned costs of 5,000
EUR were calculated by a linearization of the PO item net value of 12,000 EUR over the
lifetime of the purchase order – which is the date interval between the PO creation in 01/2012
and the delivery date of the planned final delivery in 12/2018. The accrual amount of 2,000
EUR means that the system assumes that the company has received the goods or services
with a value of 5,000 EUR, and that the invoice was not yet posted for some reason, perhaps
because the supplier did not send the invoice yet.
So the accrual amounts that are calculated this way by the Accrual Engine are just a proposal,
based on an assumption.
As a consequence, it makes sense that the proposed accruals are reviewed by a person who
can judge whether the assumption is correct or not.
If the accruals are calculated by the Accrual Engine as planned costs minus actual costs
(which is the default and highly recommended), then you should activate the review (and/or
approval) not for the accrual amounts, but for the planned costs.
Performing the review/approval for the planned costs might sound surprising at first glance,
but turns out to be more suitable for several reasons:
● Reviewers are sometimes not accountants but project leads. They don't necessarily know
what accruals are.
● Late invoices/goods receipts may be received after the review/approval was finished. The
accruals shall be reduced automatically by the amount of the invoice/goods receipt.
● Sometimes the percentage of completion is reviewed. The percentage of completion
represents a measure of progress. It is the planned costs that represent this progress, not
the accruals which represent the missing costs.

Figure 197: Review Screen in My Inbox (for Purchase Order Owner) Example

The following steps can be performed for review and/or approval of periodic accruals:

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1. Generate proposals: Before the review or approval can be performed at end of the fiscal
period, the proposal accrual amounts have to be generated. This is done using the job
template Accrual Engine for POs - Propose Period Amounts. This job does the following:

● Calculate and save the planned costs, actual costs (by summarizing posted supplier
invoices and so on) and accruals (as planned costs minus actual costs).

● Generate work items in the SAP Fiori app My Inbox of the purchase order owner. This
job is typically executed after the last invoice and goods receipt was posted for the
fiscal period, but can also be executed in the middle of the period. In the latter case, the
actual costs and accruals might be not yet final, but the planned costs can be correctly
calculated by the accrual method – and the review of the planned costs / PoC can start
afterwards.

2. Perform review of the proposed accrual amounts. For reviewing, the following role-specific
UIs are available:

● For the purchase order owner: Work item in the SAP Fiori My Inbox app. Please note
workitems are only generated if the accrual amount exceeds the upper threshold that
is defined in configuration.

● For the controller: the SAP Fiori Review Purchase Order Accruals for Cost Accountant
app. The review of the accrual amounts is optional. If the review is not performed by
the purchase order owner or cost accountant, the system will post the proposed
amount. The review process can also be switched off in Configuration. Another option
is to skip the proposal job and just execute the accrual posting job at the end of the
period.

3. Post Accruals. This is done using job template Accrual Engine for POs - Periodic Posting
Run.

Note:
E-Mail Notifications
● The workflow can be configured to generate e-mails each time a work item is
created or forwarded to another user. The procedure to perform this
configuration is described in this blog: [Link]
email-notifications-for-pending-workflow-approvals-in-s4hana/
● The workflow scenario ID is WS78500077. The ID of the e-mail template will
be YY1_78500077_CRT_ALL.

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Receiver Determination

Figure 198: Receiver Determination for the Review Work item

The work items that ask the PO owner to perform the review of the accruals (or percentage of
completion) for a PO item in a given period are generated by the job template Accruals for
POs - Propose Period Amounts. These work items will appear in the My Inbox app. By default,
the system determines the receiver of the work items according to the following logic:
● If a User ID is entered as the goods recipient of the PO item, then this user will be the
receiver of the work item. The work item will appear in the My Inbox app of this user.
● If no user or no valid User ID is entered as goods recipient of the PO item, then the system
uses the requisitioner of the PO item.
● If no user or no valid User ID is entered as requisitioner in the PO item, the system uses the
creator of the purchase order item.

If this logic does not fit your requirements, you can use the SAP Fiori app Manage Workflows
for PO Accruals Review to configure the logic of how the receiver of the work items is
determined.

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Figure 199: Receiver Determination for the Review Work item

The work items that ask the PO owner to perform the review of the accruals (or percentage of
completion) for a PO item in a given period are generated by the job template Accruals for
POs - Propose Period Amounts. These work items will appear in the My Inbox app.
The receiver of the work item is determined by the following logic:
● If a User ID is entered as the goods recipient of the PO item, then this user will be the
receiver of the work item. The work item appears in the My Inbox app of this user.
● If no user or no valid User ID is entered as goods recipient of the PO item, then the system
uses the requisitioner of the PO item.
● If no user or no valid User ID is entered as requisitioner of the PO item, the system uses the
creator of the purchase order item.

In SAP S/4HANA Cloud 1811, this logic cannot be changed. Note that a User ID, not a User
Name, needs to be entered in the mentioned fields of the PO item.

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Figure 200: Receiver Determination: Configure Workflow

In the figure, Receiver Determination: Configure Workflow, you can see the options for
configuring the workflow with the relevant app, Manage Workflows for Purchase Order
Accruals Review.

Figure 201: Review Purchase Order Accruals - For Cost Accountant

A controller can use the SAP Fiori app Review Purchase Order Accruals - For Cost Accountant
to monitor the review process. In the worklist, you can see whether the review was performed
by the PO owners, that is, whether they have processed their review work items.

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Figure 202: Review Purchase Order Accruals - For Cost Accountant

The review can also be performed in this app directly by the controller.

Reporting Accruals

Figure 203: Analyze Accrual Postings

The SAP Fiori app Analyze Accrual Postings offers a line item reporting for postings that were
performed by the Accrual Engine (by the job template Accrual Engine for POs - Periodic
Posting Run).
The Line Item Type field in the filter bar of this report is particularly important. Accrual
postings usually consist of two line items that balance each other out to make a zero amount.
If the report displayed all line items, all the totals would be zero, and most of the charts would
also show zero amounts. That's why the report shows only half-documents. By default, the
report shows the offsetting entries. That is, it does not show the line item that posts to the
accrual amount. Instead, it shows the line items that post to the offsetting account, which is
usually a P&L account.
The filter can be changed to show either the line items that post to the accrual account, or all
line items.

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Figure 204: SAP Fiori App Analyze Accrual Postings: Features

All amounts are shown in a selected Display Currency. Graphical charts can be displayed for
filtering data and for visualization of result.

Figure 205: SAP Fiori App Display Line Items in General Ledger

In the SAP Fiori app Display Line Items in General Ledger, the accrual object fields are
available as additional filter. The fields can also be shown in the result list. They are available
as additional columns in the Settings dialog.

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Intelligent Accrual Management

Video: Intelligent Accrual Management Intro and Demo

For more information on Intelligent Accrual Management Intro and Demo, please
view the simulation in the lesson Accounting and Financial Close online in the
SAP Learning Hub.

GR/IR Reconciliation Process

Video: Goods and Invoice Receipt Reconciliation

For more information on Goods and Invoice Receipt Reconciliation, please view
the simulation in the lesson Accounting and Financial Close online in the SAP
Learning Hub.

All goods and invoice receipts are collected on GR/IR accounts. If amounts and prices match,
they are automatically cleared by the system. However, not all items can be cleared
automatically, for various reasons:
● Invoice or goods receipt is missing
● Amounts do not match
● Purchase order item was created with an outdated price list
● Delivery costs were posted on the wrong GR/IR account

The GR/IR account reconciliation process is an exception-handling process for all purchase
order items with differences between goods receipts and invoice receipts. This is a highly
manual process that delays the period-end closing. SAP S/4HANA Cloud for goods and
invoice receipt reconciliation improves the process by displaying all necessary data on one
screen so that the processing steps and statuses can easily be documented in the app. The
proposal service with machine learning automatically proposes next steps for items that
could not be matched, based on the status and situation of a purchase order item.
Furthermore, it recommends a priority value for the action, and indicates an estimated root
cause of the difference.

Solution Overview

Video: Solution Overview

For more information on Solution Overview, please view the simulation in the
lesson Accounting and Financial Close online in the SAP Learning Hub.

SAP S/4HANA Cloud for goods and invoice receipt reconciliation is a cloud service that uses
machine learning technology to enable a thorough and dynamic observation of the
reconciliation of goods and invoice receipt (GR/IR) accounts providing recommendations for
further processing.
It improves the process by displaying all necessary data on one screen so that the processing
steps and statuses can easily be documented in the app. The proposal service with machine
learning automatically proposes next steps for items that could not be matched, based on the

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status and situation of a purchase order item. Furthermore, it recommends a priority value for
the action, and indicates an estimated root cause of the difference.
Business Benefits
● Increase the GR/IR matching rate
● Lower manual efforts
● Increase efficiency of end users
● Accelerate the period-end closing

Machine Learning Integration

Video: Machine Learning Concepts

For more information on Machine Learning Concepts, please view the simulation
in the lesson Accounting and Financial Close online in the SAP Learning Hub.

For the SAP S/4HANA Cloud for goods and invoice receipt reconciliation service, the training
model works by identifying the most common status, priority, and root cause for an
assignment of a purchase order item.
Training works by analyzing historical records of reconciled GR/IR accounts. It specifically
analyzes manual assignments of purchase order items.
Based on the results of the machine learning training model, the following statuses are
proposed:
● Status proposal: a suggested process status as a next step for a purchase order item,
tagged with the addition Recommended.
● Priority proposal: a suggested priority for the action on a purchase order item, tagged with
the addition Recommended.
● Root Cause proposal: a suggested root cause for the difference between goods receipt and
invoice receipt, tagged with the addition Recommended.

Architecture and Administration

Video: Architecture Overview and Administration

For more information on Architecture Overview and Administration, please view
the simulation in the lesson Accounting and Financial Close online in the SAP
Learning Hub.

The solution consists of two delivery components. The first component is the SAP S/4HANA
part, where new tables are created for tracking and logging. In addition, two SAP Fiori
applications are delivered. The second component is a machine-learning service that must be
activated and connected with the SAP S/4HANA system.
The machine learning process is triggered by two batch jobs. The first job is for training
machine learning and the second job is for entering the GR/IR data and processing it through
machine learning.

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Open Item Management for GR/IR Accounts

Extended Open Item Management for GR/IR Accounts
When you activate extended open-item management for goods receipt or invoice receipt
(GR/IR) accounts, you enable the posting of journal entries with more than 999 line items on
those accounts. You can post your invoice receipts and goods receipts as you receive them
from your suppliers.
The only way to activate the extended open-item management for GR/IR accounts is to
schedule a job by using the Activate Extended Open Item Management for GR/IR Accounts
job template. The template is in the Schedule Accounting Data Corrections app. After
activation, the new Extended Open Item Management field is visible in the details of relevant
GR/IR accounts in the Manage G/L Account Master Data app.

Figure 211: Extended Open Item Management GL Account

You must activate extended open-item management for all your GR/IR accounts in a
company code. If you switch to extended open-item management, you cannot go back.
If you create additional GR/IR accounts subsequently, to activate extended open-item
management for them, you must also run the job for the relevant company code to which the
newly created GR/IR accounts belong.

Note:
GR/IR accounts managed on an extended open-item basis can only be cleared by
scheduling a job using the GR/IR Automatic Clearing job template. The existing
template "Automatic Clearing" cannot be used with extended open item
management.

GR/IR Automatic Clearing

Up to release S/4HANA Cloud 2011, you could clear open items from GR/IR clearing accounts
using the more generic job automatic clearing template.
With the new job template specific to GR/IR accounts, you can run or prepare for the
automatic clearing in three modes: You can only display grouped open items for a GR/IR

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Unit 5: Accounting and Financial Close

clearing account, you can simulate the clearing run, or you can start the clearing as a real
update run.
Schedule the automatic clearing runs using the GR/IR Automatic Clearing job template in the
Schedule General Ledger Jobs app.

Summary

Video: Summary
For more information on Summary, please view the simulation in the lesson
Accounting and Financial Close online in the SAP Learning Hub.

The machine learning service of SAP S/4HANA Cloud for goods and invoice receipt
reconciliation is currently available in English and German for SAP S/4HANA Cloud 1805 and
is planned to be launched for SAP S/4HANA 1809 as well.

Note:
The machine learning service is optionally available with the SAP Fiori app
Reconcile GR/IR Accounts and requires a separate license. It is not available as a
standalone functionality or product.

LESSON SUMMARY
You should now be able to:
● Maintain General Ledger Master Records
● Daily Operations in G/L Accounting
● Use the Cash Journal
● Perform closing operations
● Use Purchase Order accruals
● Perform Goods and Invoice Receipt reconciliation
● Assess your knowledge

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 Unit 5
Lesson 2
Understanding G/L Configuration Options

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand configuration for the General Ledger
● Migrate G/L balances and open items
● Assess your knowledge

Local Accounting and Group Accounting

Ledgers for Local and Group Accounting
In SAP S/4HANA Cloud, the ledger 0L is defined as the leading ledger. The values posted to
the leading ledger are relevant for CO processes for follow-on activities such as allocations. In
addition, you can select to assign up to two additional ledgers: 2L and 3L. Each company code
is assigned to exactly one country and therefore assigned to a country-dependent accounting
principle. In the figure below you can see the default setting for the assignment of accounting
principles to the standard ledgers. You can change this default assignment, as detailed below.

Note:
With Universal Parallel Accounting you can also benefit from the flexibility of the
parallel ledgers not only in general ledger accounting but also in various
subledgers (covering solutions like Asset Accounting, Overhead Accounting,
Inventory Accounting, Production Accounting).

Figure 213: Corporate Accounting Principle US GAAP/Ledger

You can only assign accounting principles that are in scope:

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Unit 5: Accounting and Financial Close

● All local accounting principles of the countries in scope (“xxAP”)

● IFRS, if IFRS close is in scope
● USGP, if US-GAAP close is in scope

Rules for the Accounting Principle Assignment:

● Unique assignment: one accounting principle cannot be assigned to two standard ledgers
for example, 0L and 2L.
● The assignment is automatically propagated to extension ledgers and to the ledger for
alternative fiscal year variants.

Figure 214: Wrong Assignment

In the figure you can see an example where using the German local principles as the corporate
principles leads to an error if the assignment for the leading ledger isn't changed.

Note:
SAP recommendation: If you have scoped two standard ledgers, for example 0L
and 2L, then use one ledger as corporate ledger and one ledger for the local close.
You should use the leading ledger 0L with the corporate accounting principle.

Prerequisites
● Changing of accounting principle assignments is only possible for new installations.
● Configuration is done only in the Central Business Configuration framework
● There must be no postings in the quality (Q) and production (P) systems (in any company
code).

How to Customize the Accounting Principles

Video: How to Customize the Accounting Principles

For more information on How to Customize the Accounting Principles, please
view the simulation in the lesson Understanding G/L Configuration Options
online in the SAP Learning Hub.

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 Lesson: Understanding G/L Configuration Options

Automatic Account Determination

Financial Statement Versions

Figure 216: Q2P Process for FSV in the Global Accounting Hierarchy App

For the FSV (Financial Statement Version) in global accounting hierarchy, the transport from
quality to production (Q2P) is supported in the following ways:
● Once the Q2P indicator is on, you can maintain Financial Statement Versions in global
accounting hierarchy in the quality system with the BCP_expert role. After you save, the
changes are included into a transport request, and synchronize to the production system
after release.
● The behavior is consistent with G/L account maintenance.
● For new go-live customers, the indicator is on by default. For existing customers, the
indicator is off so you continue the double manual maintenance in Q and P.

Manage Journal Entries

Figure 217: Country Specific Fields in Manage Journal Entries App

Country specific header fields are currently supported for Russia, Italy, Mexico, and South
Korea. More countries shall be supported in future releases. The additional country specific
fields are shown in the header, as in the figure Country Specific Fields in Manage Journal
Entries App. The user can display and edit the fields with the Manage Journal Entries app.

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Automatic Account Determination

Figure 218: Automatic Account Determination - General Ledger Accounting

With the Automatic Account Determination app, you configure most G/L account
assignments for updating the general ledger for the SAP S/4HANA Cloud system. You can
find the full scope of configurations available for the app here: 2736830 - Release Information
Note: Automatic Account Determination for S/4HANA Cloud Edition 1905
New Account Assignments have been added to following areas in 1905:
● General Ledger Accounting
● Sales

In the new release the following task has been added for General Ledger Accounting (as seen
in the screenshot): Define Zero-Balance Clearing Account - For account assignment objects
for which you want to have a zero balance setting, the system checks whether the balance of
account assignment object is zero after document splitting. If this is not the case, the system
generates additional clearing items. In this activity, you have to create a clearing account for
these additional clearing items.

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 Lesson: Understanding G/L Configuration Options

Figure 219: Automatic Account Determination - Sales

In the new release, the following task has been added for Sales (as seen in the previous
figure):
● Support condition table C006 in application VD
● Support customer-created condition tables, in application V

Account Determination on the Help Portal

Fiscal Year Variant (FYV)

Usage and Configuration of Fiscal Year Variants (FYVs)
A Fiscal Year Variant (FYV) is used to define the number of posting periods in a fiscal year,
how many special periods you need, and how the system determines posting periods during
posting.
By default, SAP S/4HANA Cloud has the following provisions:
● One single controlling area
● A Leading ledger with Local GAAP and optionally a parallel ledger with IFRS or USGAAP
● One unique FYV K4. Fiscal year is the same as the calendar year and has up to 4 special
periods. This applies to all Company Codes

FYV Scenarios
Regarding FYVs, the following scenarios can be set up in SAP S/4HANA Cloud:
● Keep the default FYV K4
● Set FYV to another predefined FYV than K4 using the “Fiscal Year Variant” configuration
step
● Configure customer-specific FYV through configuring FYV SZ using the “Maintain Fiscal
Year Variants” configuration step

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● Enable alternative FYVs (multiple) - Lean Solution implemented using “Create Ledger for
alternative Fiscal Year Variant”
If you need an alternative FYV, a ledger group (for example, ZL) must be defined. This
ledger group included ledger 0L and a non-representative ledger (for example, Z1). You
can set the alternative FYV on the company code or ledger (Z1) level.

Note:
As of SAP S/4HANA Cloud 2011, the process of creating a parallel ledger for an
alternative FYV is simplified. You can now directly assign the newly created
ledger to a reference ledger. You no longer need to create a dedicated common
ledger group.

Figure 220: Alternative FYV

Implementation Tasks
When defining FYVs, you must be aware of the process and steps. The figure, FYV Overview
Implementation, is a good overview of the scenarios showing what and when to do in which
system.

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 Lesson: Understanding G/L Configuration Options

Figure 221: FYV Overview Implementation

Deviating Fiscal Year Variant

Deviating Fiscal Year Variant

Video: Fiscal Year Variant

For more information on Fiscal Year Variant, please view the simulation in the
lesson Understanding G/L Configuration Options online in the SAP Learning Hub.

Figure 223: Deviating Fiscal Year Variant Scenarios

Fiscal year variants (FYVs) define periods in a fiscal year, as well as its beginning and end.
Globally acting companies need a fiscal year for group close (for example, ending 31.12). The
local close in countries such as Australia, Japan, or India must be performed at a legally
binding predetermined date (such as 31.3). This date usually deviates from the group closing
date.
The respective company codes need a second deviating fiscal year next to the group fiscal
year.
The following status is for the solution available in SAP S/4HANA Cloud today:

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Unit 5: Accounting and Financial Close

● If deviating shifted FYV are required in parallel, customers can request a lean solution with
limited scope as additional expert configuration. (Refer to SAP Notes 2568382 and
2220152.)
● The lean solution can be applied to new customers only.
● Future subsequent implementation, of countries requiring deviating shifted FYV at a later
time, is only possible if the lean solution is requested before the initial handover of Q-
system. This is because some preparational configuration must take place up front. It is
not necessary to specify all countries, company codes, and FYVs beforehand.

The following items are currently open:

● The lean solution can come with limitations and business constraints (refer to SAP Notes
844029 and 1951069). These constraints must be explicitly accepted by the customer, for
example, depreciation inaccuracies for deviating FYV requiring corrective postings.
● No automated migration path to redesigned accounting solution is planned. A consulting
project can be required to leverage the new solution.
● Implementing further countries with additional deviating FYV is only possible if the lean
solution has been requested before the initial handover of the system (such as after a new
M&A).

SAP plans a solution to enable customers to setup and maintain their own fiscal year variants
(covering G/L, Assets, Controlling) through SSCUI (release 1811).

Note:
The restrictions mentioned previously (multiple FYVs) will still exist, implying that
such customer-specific fiscal year variants must be used in all ledgers/company
codes as standard.
For example, parallel use of a calendar year-based FYV in one ledger and an
additional deviating shifted customer-specific FYV (such as 4-4-5) in another
ledger will not be supported as standard.

However, the application of the lean solution for multiple FYVs described previously will also
be applicable to add a customer-defined deviating FYV in parallel to the standard. In this case,
the described constraints and business limitations of the lean solution will apply.

General Ledger Account Transformation

SAP Delivered Chart of Account
SAP S/4HANA Cloud content provides one Chart of Account (CoA). YCOA is the delivered
CoA and is assigned as the global standard operating CoA to all Company Codes.
One Chart of Account is delivered, because:
● SAP S/4HANA Cloud includes preconfigured content for core business processes in
finance, procurement, manufacturing, sales, and supply chain
● The account determination is preconfigured for all SAP S/4HANA Cloud processes
● Account determinations are defined with G/L accounts from YCOA

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 Lesson: Understanding G/L Configuration Options

G/L Account Transformation

Video: Convert General Ledger

For more information on Convert General Ledger, please view the simulation in
the lesson Understanding G/L Configuration Options online in the SAP Learning
Hub.

Figure 225: G/L Account Transformation Overview

Figure 226: G/L Account Transformation Scope

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Unit 5: Accounting and Financial Close

Figure 227: SAP Activate for G/L Account Transformation

You can practice the process in the recorded demos here.

Time-Dependent Tax Rates

Figure 228: Time-Dependent Tax Calculation (TDT)

Solution Overview:
In countries where time-dependent tax calculation (TDT) is active, tax rates can be set to be
effective for user-specified timeframes to allow you to adapt to current or planned changes to
tax rates.
Value Proposition:
● Easier response to tax rate changes
● Reduced maintenance effort
● Reduced need for support, because Cloud users can maintain their tax rates
● Better integration between Finance and Sales, and across tax-relevant postings and apps
generally

Capabilities:

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 Lesson: Understanding G/L Configuration Options

● Add validity periods to existing tax rates to account for changes

● Maintain tax codes, tax rates, and tax code properties
● Maintain tax box mappings, tax groups, and tax box structures

Support for various stakeholders:

● Business Experts, who do not have to create tax codes so often. Accountants and
Business Experts, who no longer have to perform such extensive maintenance when tax
rates change – previously, nearly 170 customizing tables had to be maintained when new
tax codes were created.
● Finance and Sales departments, because the risk of inconsistencies in tax rate information
between the two has been greatly reduced.
● Support and service centers, because SAP S/4HANA Cloud customers can now easily
maintain their own tax rates in case of changes.

As of SAP S/4HANA Cloud edition 1908, time-dependent tax calculation is available for
Germany (other countries to be added to the country scope in forthcoming releases).

Figure 229: No Need for New Tax Codes

With the new time-dependent tax solution, you can maintain different tax rates for the same
tax code for different time-periods. This is done through a new SSCUI app available without
needing expert configuration.

Video:
For more information on , please view the simulation in the lesson Understanding
G/L Configuration Options online in the SAP Learning Hub.

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Unit 5: Accounting and Financial Close

Figure 230: More than 500 Usages of Tax Calculation Affected

The solution enables you to maintain and determine the VAT rate dependent on a tax
calculation date. All apps using tax calculation and tax reporting have been adopted. It will
solve the problem of running out of tax codes and reduce the customizing effort to implement
changed rates. It enables the integration of tax engines like the SAP Tax Service.

Figure 231: Simplified Follow-up Process when Tax Rates Change

The new tax rate implementation complexity is greatly reduced. Before, more than 160 tables
where affected by a change to a tax rate – with the new solution, only a few tables are
changed.
The new time-dependent tax rates works with the SAP Localization Hub, tax service that can
help you determine and compute indirect tax for tax compliance in 120 countries.

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 Lesson: Understanding G/L Configuration Options

Configuration for Purchase Order Accruals

Figure 232: Activation of Purchase Order Accruals

The Purchase Order Accruals app with the related apps and job templates are only available if
you activate the scope item Accruals Management in your country configuration using the
app Manage Your Solution -> Define Your Scope.
The technical IDs of this scope item are <country>_2VB, for example DE_2VB for Germany.
Once activated, you can use Purchase Order Accruals without the need to perform further
configuration. Only if you want to adopt the standard behavior of Purchase Order Accruals to
your needs, you can use the Configuration Item Purchase Order Accruals using the app
Manage Your Solution -> Configure Your Solution.

Figure 233: Configuration for Purchase Order Accruals

The Configuration Item Purchase Order Accruals contains several optional steps. The settings
of the following steps should at least be checked:
● - Define Accrual Item Types and Methods for MM Purchase Order Items. In this step, you
define for which purchase order (items) accruals will potentially posted. For each
combination of purchasing document type and item category that you enter in this
step, accruals will be calculated by the system.
- Create and Edit Basic Account Determination. In this step, the accrual account is
defined to which the accrual postings shall be done by the system.
- Define Threshold Variants. In this step, you can define a lower threshold and an upper
threshold for accrual amounts: Accrual amounts below the lower threshold will not be
posted - and accrual amounts above the upper threshold are relevant to be reviewed
before they are posted.

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- Define Reasons Why Adjusting Periodic Accrual Amounts. In this step, you can define
the reasons that a reviewer can enter during the review of accruals: If the reviewer
changes the proposed accrual amount, he/she has to enter a reason in the review
screen.

The step Define Accrual Item Types is an expert step that usually does not need to be
changed. You can use this step to deactivate the review process or assign threshold variants
to company codes.

Figure 234: Standard Configuration: Define Accrual Item Types and Methods for MM Purchase Order Items

For the Configuration Step Define Accrual Item Types and Methods for MM Purchase Order
Items, the following default settings are used in the Cloud. They can be changed by the
customer in the corresponding configuration UI.
By default, accrual objects are created for standard purchase orders with standard purchase
order items only, that is:
● - Order Type = Standard PO. The technical value for this field is NB.
- Item Category = <space>

You an activate the accrual calculation for other types of POs by creating additional entries in
this table.
For purchase order items that represent a purchasing of services or an enhanced limit item,
the accrual method SPLN_LIN_P is used which means that the planned costs are calculated
according to a straight-line approach, that is, a linearization is done between start and end
date that are entered in the purchase order item.
For all other types of purchase order items, the accrual method SPLN_DELSL is used, that is,
the planned costs are calculated using the dates and quantities that are given in the delivery
schedule.
Technically, this distinction is achieved by performing a classification of the PO items: During
the PO creation (more accurate: during the accrual object creation), the system derives a
classification code: SPERP for service PO items (and enhanced limits) and SDELS for all other
PO items.

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 Lesson: Understanding G/L Configuration Options

Figure 235: Standard Configuration: Sample PO Item: Lean Services

The previous screenshot is from the SAP Fiori Change Purchase Order - Enhanced app. An
example for a purchase order that represents the purchasing of services, that is, the planned
costs (and accruals) are calculated using a straight-line algorithm.

Figure 236: Standard Configuration: Sample PO Item: Limit Items

The previous screenshot is from the SAP Fiori Change Purchase Order - Enhanced app. In the
example for a purchase order that has an item of category Enhanced Limit, since there is no
delivery schedule possible, the planned costs (and accruals) are calculated using a straight-
line algorithm.

Figure 237: App Manage Purchase Orders: Performance Period

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In the SAP Fiori app Manage Purchase Orders, the start- and end date that are used for the
linear distribution of the PO item value are displayed with different labels compared to the app
Change Purchase Order - Enhanced: The fields are called Start of Performance Period and
End of Performance Period.
This applies for both cases: Lean service items and enhanced limit items.

Figure 238: Standard Configuration: Important Aspects: Thresholds for Accrual Amounts

For the review of periodic accrual amounts, you can define two thresholds:
● Upper Threshold: If the proposed accrual amount is above this threshold, a review/
approval of this amount is required. Note: Only in this case is a workitem for the My Inbox
app generated by the job template Accruals for POs - Propose Period Amounts.
● Lower Threshold: If the proposed accrual amount is below this threshold, this amount will
not be posted.
● If the proposed accrual amount is between lower and upper threshold, no review or
approval is required: The approval is granted automatically.

In the Configuration Step Define Accrual Item Types -> Settings for Single Ledgers and
Currency Types, you can enter a threshold variant for the accrual item type SACCRL.
The usage of threshold variants is optional. The threshold variant is defined in the
Configuration Step Define Threshold Variants.

Figure 239: Standard Configuration: Define Threshold Variants

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 Lesson: Understanding G/L Configuration Options

In the Configuration Step Define Threshold Variants, the following default settings are used in
the Cloud. They can be changed by the customer in the corresponding configuration UI.
No accruals are posted if they are below 10 currency units - in the given fiscal period for the
affected purchase order item. A manual review process is only required if the accrual amount
is above 1000 currency units - in the given fiscal period for the affected purchase order item.
For the company code of different countries, separate threshold variants are available,
because the currencies are different.
You can assign the a threshold variant to single company codes - or mark one threshold
variant as default variant. If the PO item has a different currency, the system performs a
currency conversion using exchange rate type M to compare the accrual amount with the
threshold amounts.

Figure 240: Activation of Review Process

The review process for periodic accrual amounts is active by default in the Cloud: It is
activated on the level of company code, accrual item type, and ledgergroup.
In release 1811, the review can be activated only for currency type 00 which means that the
reviewer and approver can adjust the proposed accrual amounts in transaction currency. All
other currencies are read-only during the review.
The corresponding Configuration Step is Define Accrual Item Types -> Settings for Single
Ledgers and Crcy Types. The checkbox Review Active activates the review process. You can
activate review process only for the planned costs accrual item type SCSTPLN. For the other
two accrual item types for actual costs and accruals you do not activate it.

Tolerance Groups for G/L Accounts

Tolerance groups for G/L accounts are used during the clearing process of G/L accounts to
determine which limit (based on an amount or a percentage) of a clearing difference is
accepted. The accepted difference will be automatically posted to the G/L accounts that are
defined in the configuration of automatic postings (Automatic Account Determination app). A
tolerance group is assigned to the master record of the G/L account(s) that need(s) to be
cleared.

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Configuration

Figure 241: Configure Tolerance Groups for G/L Accounts

You can set the limits on a company code level and specify amounts and/or percentages for
the difference limits. The following settings need to be configured:
● Add a new entry (or use Copy As to copy from an existing one) to define a new tolerance
group and define the configuration at company code level
● Define Debit Posting (Amount in Local Currency) and/or Percentage as limit for revenues
● Define Credit Posting (Amount in Local Currency) and/or Percentage as limit for expenses

Note:
In addition to the debit or credit posting amount, enter a percentage value in the
percentage field. The lowest limit applies. If you want to use absolute amounts
only or you want to specify a percentage only, you also need to enter the
maximum value in the other field.

Besides this configuration you need to assign the tolerance group to the master record of the
G/L account(s) that you want to clear.

Define Field Status Variants

When you enter accounting documents you notice several fields on a line item. Some fields
are mandatory to be entered and other ones may be optional. The status of the fields depend
on the posting key of the line item and the field status group assigned to the account that you
are using. For example, when you post expenses, you have to specify the cost center and tax
data. In contrast, you do not need to specify this information when you post cash.

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 Lesson: Understanding G/L Configuration Options

Figure 242: Line Item Field Status

Configuration
A field status variant is assigned to a company code. Within a field status variant, field status
groups are defined. You can configure field status groups within existing variants.

Figure 243: Field Status Groups

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Various field status groups are available in SAP S/4HANA. It is recommended that you copy
the standard field status groups and modify the copies as necessary. As the field status also
depends on the field status of the posting key used on a line item, field status settings have
priority. In the case of conflicts, the field status with the higher priority is used. Within a field
status group you can define the following settings for each individual field:
● Suppress (hide: highest priority)
● Req. Entry (required)
● Opt. Entry (optional: lowest priority)

Figure 244: Maintain Field Status Groups

To use the field status group you have to assign the field status group to individual G/L
accounts in the G/L account master record.

Note:
You cannot enter any field status groups in the business partner, so when a line
item is posted to a subledger account, the field status group of the reconciliation
account is used.

Define Document Types

You can create additional document types for customer, supplier, asset and general ledger
business transactions in Accounting. Document types differentiate business transactions and
control settings during document posting, for example the account types that are allowed to
be posted with the document and the number that will be assigned to the generated posting
document. You specify a number range for each document type and you can use one number
range for several document types. You create the desired number range intervals for each
number range key based on the company code.

Note:
Document types are also referred to as journal entry types.

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 Lesson: Understanding G/L Configuration Options

Figure 245: Document Types

Configuration

Figure 246: Define Document Types

Because document types are defined at the client level, they are valid for all company codes.
Standard document types are delivered that can be changed or copied. Document type
settings can be defined in the following areas:

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Properties
● Number range:
Each document type must have a number range assigned to it.
● Reverse Document Type:
The document type specified in this field is used when a reversal transaction is performed.
If you do not specify a reversal document type, the system uses the posted document type
for reversal.

Account types allowed

In this section, specify the account types which are allowed to be posted with this document
type. You can allow Assets, Customer, Vendor, Material, G/L account, and Secondary Costs.
Control data
You can select the Net document type checkbox, which is only valid for document types used
for supplier invoices. Selecting this checkbox reduces the total amount due by the cash
discount amount specified by the payment terms on the invoice.
The following checkboxes are also available:
● Cust/vend check
● Negative Postings Permitted
● Inter-company postings
● Enter trading partner

Required during document entry

The following checkboxes are available:
● Reference number
● Document header text

Define Document Number Ranges

In the settings of a document type a number range is assigned, which is the number interval
from which the document numbers are to be chosen. The type of number assignment can be
internal or external. Number ranges for documents are company-code-dependent. You must
therefore create your number ranges for each company code in which the document type is
used, namely with the same number range key. You also define if you use year-dependent or
year-independent number ranges.

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 Lesson: Understanding G/L Configuration Options

Figure 247: Document Number Ranges

Configuration

Figure 248: Define Document Number Ranges

Number ranges for documents are company-code-dependent. You must therefore create
your number ranges for each company code in which the document type is used, namely with
the same number range key. The number intervals must not overlap. If you use year-
dependent number ranges, you can specify the same interval with the same key several times
for different to-fiscal years (the limit up to which a number range is still valid). If you want to
define number ranges that are independent of the to-fiscal year, enter 9999 in the Year field.

Manage Default Account Assignments

You can define automatic additional account assignments for postings to G/L accounts with
the types Primary Cost or Revenue. Automatic account assignment determination occurs
during postings in external accounting (for example, in the FI, MM, or SD components) if you
have not entered a CO account assignment object (for example, cost center or project) for a
cost-accounting-relevant line item. This is always the case if the system automatically created
the line item in question.
Examples of automatically created line items are discounts, exchange rate differences, and
banking fees in FI or price differences and minor differences in MM. Possible automatic

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additional account assignments include cost center, profitability segment, or profit center (for
revenue postings).

Configuration

Figure 249: Default Account Assignments

You can differentiate the additional account assignment according to various organizational
units (such as company code, profit center, valuation area or business area).

1. Enter the cost elements, including the company codes.

2. If you want account determination to run on the company code level, also enter the
corresponding cost accounting object (cost center, profitability segment, profit center) to
complete the line items.

3. If you want to differentiate the account assignment determination by valuation areas or

business areas, in the column Acct assignmt detail enter 1 (= valuation area is
mandatory). Choose Detail per business area/valuation area and for each valuation area
or business area enter the corresponding cost accounting object (cost center, profitability
segment, profit center) to complete the line items.

4. If you want to differentiate the account assignment determination by profit centers, in the
column Acct assignmt detail enter 3 (= profit center is mandatory). Choose
Detail per profit center and for each profit center enter the corresponding cost accounting
object (cost center, profitability segment, profit center) to complete the line items.

Assign Default Profit Center to Accounts

You can define a default profit center for each company code and account interval. The
default profit center is derived when no profit center is specified in the posting or when the
G/L account is a bank account. Derivation occurs when the posting is made.

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 Lesson: Understanding G/L Configuration Options

Note:
It only makes sense to derive a default profit center if a profit center cannot be
determined automatically. This automatic determination takes place from the
cost object, via inheritance from other lines items of the journal entry or via
inheritance from the cleared item. Only for bank accounts can there be cases in
which no predecessor processes exist in the system. For this reason, derivation of
a default profit center is restricted to bank accounts.

Configuration

Figure 250: Default Profit Center

Select an account interval and assign the profit center to be derived. If you leave the Account
to field empty, the system fills it with the entry made in the Acct from field.

General Ledger Migration

General Ledger Migration

Figure 251: Migration of General Ledger Account Balances and Open Items

SAP S/4HANA Cloud Edition offers pre-configured content based on best practices for Cloud
Editions. Migration is part of this end-to-end implementation approach.

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● The data migration activities are executed based on the cloud implementation cockpit.
● Based on the selected Business Scenarios, relevant data migration objects are proposed
(in this case all relevant migration objects for customers).
● Existing SAP customers can connect their SAP Business Suite system. For new
customers, a template-based approach can be used.

In the SAP Fiori launchpad, check under the End-To-End Consumption Experience and see the
Manage Your Cloud Solution app. In this app, you find the Migrate Your Data tool. In the
Migrate your Data app, you can access the dedicated data migration functionality.
Once the data migration sub-screen is opened, the proposed data migration objects are
shown.

Migrating General Ledger Balances and Open Items

Figure 252: Migrating General Ledger Balances and Open Items

With every release there is new and updated documentation available for migration relevant
objects. For each and every object there is a Documentation tab that you can access to learn
more about the specific object. So there is object documentation and migration guidance for
the migration of G/L account balances and G/L account open items.

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Figure 253: Migration Execution

The following objects need to be entered or migrated before the G/L account balances and
account open items data can be migrated:
● Cost Center Master
● Profit Center Master

Figure 254: Template Download

The templates that need to be filled in with the migration data are directly downloadable from
the application. There are different templates for the G/L account balances and G/L account
open items migration, depending on the cloud edition you are implementing.

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Figure 255: Excel Template for General Ledger Balance Migration

The figure displays the General Ledger Balances migration Excel template on the Field List tab
which summarizes the fields available for maintenance in the SAP S/4HANA Enterprise Cloud
solution.
The key fields are always mandatory in the sheets. The other fields that are mandatory are
indicated with an asterisk next to the field description.
To validate the migrated data, you can use the app Display G/L Account Balances.

LESSON SUMMARY
You should now be able to:
● Understand configuration for the General Ledger
● Migrate G/L balances and open items
● Assess your knowledge

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Learning Assessment

1. It is not possible to change the chart of accounts in SAP S/4HANA Cloud. You use the one
provided with best practices.
Determine whether this statement is true or false.

X True

X False

2. Using intermediate accounts for bank transactions is optional.

Determine whether this statement is true or false.

X True

X False

3. It is possible to run several cash journals for one company code.

Determine whether this statement is true or false.

X True

X False

4. Saving the transactions in the cash journal will immediately post them to the universal
journal.
Determine whether this statement is true or false.

X True

X False

5. You are creating a new business transaction for taxi invoices in the cash journal. What kind
of business transaction category do you use?
Choose the correct answer.

X A E - (Expense)

X B R - (Revenue)

X C G/L Account

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Unit 5: Learning Assessment

6. Segments are defined in Customizing and assigned to __________ in their master records.
Choose the correct answer.

X A G/L Accounts

X B Cost Centers

X C Profit Centers

X D Ledgers

7. Before migrating balances, you must have already migrated the cost centers for each
company code.
Determine whether this statement is true or false.

X True

X False

8. A tolerance group for G/L accounts is used to set a maximum amount that you can post to
the G/L account.
Determine whether this statement is true or false.

X True

X False

9. When you enter accounting documents the status of the fields on the line items depend on
the posting key of the line item and the field status variant assigned to the account that
you are using.
Determine whether this statement is true or false.

X True

X False

10. When a line item is posted to a subledger account, the field status group assigned to the
business partner is used.
Determine whether this statement is true or false.

X True

X False

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 Unit 5: Learning Assessment

11. Document types are created at company code level.

Determine whether this statement is true or false.

X True

X False

12. A number range can be assigned to several document types.

Determine whether this statement is true or false.

X True

X False

13. On which level can you differentiate the account assignment determination when you
want to define default account assignment?
Determine whether this statement is true or false.

X True

X False

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 UNIT 6 Accounts Payable

Lesson 1
Scope of Accounts Payable 219

Lesson 2
Exploring Configuration and Data Migration 233

UNIT OBJECTIVES

● Provide an overview of Accounts Payable

● Manage Business Partners for suppliers
● Post transactions in Accounts Payable
● Perform closing activities in Accounts Payable
● Assess your knowledge
● Explore configuration and data migration
● Assess your knowledge

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Unit 6: Accounts Payable

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 Unit 6
Lesson 1
Scope of Accounts Payable

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Provide an overview of Accounts Payable
● Manage Business Partners for suppliers
● Post transactions in Accounts Payable
● Perform closing activities in Accounts Payable
● Assess your knowledge

Overview of Accounts Payable

Figure 256: Accounts Payable

The Accounts Payable application component records and administers accounting data for all
suppliers. It is also an integral part of the purchasing system, where deliveries and invoices
are managed according to suppliers. With Accounts Payable, you can manage your open
payables invoices that are automatically created from purchasing processes. The system
automatically makes postings in response to the operative transactions. In the same way, the
system supplies the Cash Management application component with figures from invoices in
order to optimize cash flow planning.

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Unit 6: Accounts Payable

Payables and Postings

Payables are paid manually or with the automatic payment program. The payment program
supports all standard payment methods (such as checks and bank transfers) in printed form
as well as in electronic form (data medium exchange on file and electronic data interchange).
If necessary, dunning notices can be created for outstanding receivables (for example, to
receive payment for a credit memo).
Postings made in Accounts Payable are simultaneously recorded in the General Ledger where
different G/L accounts are updated based on the transaction involved (such as payables and
down payments). The system contains standard reports with which you can manage and
control open items with various analytical tools, for example, to plan your future payables and
to analyze the outcome of the payments, such as utilization of cash discounts and days
payables outstanding.
You can send balance confirmations, account statements, and other correspondence forms
according to your requirements. There are balance lists, journals, balance audit trails, and
other evaluations available for documenting transactions in Accounts Payable.
You can process your outstanding payables automatically and monitor payment progress.
Optionally, you can also include a two-step approval for all outgoing payments. By connecting
to the SAP Financial Services Network (FSN), you can simplify the connectivity to banks for
payments and bank statement. Alternatively, you can also send the payment file in other
ways. For countries where it is relevant, you can also print checks.

Business Partner for Suppliers

Business Partner for Suppliers

Figure 257: Business Partner Category and Role

The business partner category is the term used to classify a business partner as one of the
following entities:
● A natural person (for example, a private individual)
● A group (for example, community of heirs)
● An organization (legal entity or part of a legal entity, such as a department of a company)

The business partner category determines which fields are - in principle - available for data
entry. For example, if you want to create a business partner as an organization, you are able

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 Lesson: Scope of Accounts Payable

to enter the legal form in one of the fields. For a person, you enter the first name, last name,
gender, and so on. The business partner category cannot be changed once the business
partner has been created.
A business partner can have several roles, such as FI Supplier (FI-AP), FI Customer (FI-AR),
Customer (SD), Supplier (MM), or business partner (general). The business partner (BP) role
corresponds to a business context in which a business partner can appear and provides the
application-specific data.
You can create a single business partner in one or more BP roles. Central data such as name,
address, and bank details only has to be created once. The BP role General Business Partner
is automatically assigned to a new business partner.

Company Code Data

Figure 258: Business Partner - Company Code Data

The company code data contains company code-specific data. Any company that wishes to
do business with a specific business partner has to create a company code segment. The
company code data contains information like the reconciliation account, terms of payment,
payment methods, dunning data, or correspondence settings. You can also maintain settings
for posting blocks.

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Purchasing Data

Figure 259: Business Partner - Purchasing Data

The partner master record of that supplier must have a corresponding Business Partner Role
used for Material Management (for example, BP-Role FLVN01 - Supplier). The purchasing
data is specific to a single purchasing organization, just like the company code data of the
master record is specific to a single company code. In the same way that several company
code segments of the supplier master record can exist, there can be several purchase data
segments of the supplier master record. Every purchase data segment presents data, which
is specific for exactly one purchasing organization.

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One-Time Account

Figure 260: One-Time Supplier Account

In contrast to other master records, a one-time account master record does not contain any
information about a specific supplier because it is used for more than supplier. Therefore, the
customer or supplier specific fields are hidden in these records.
You enter the supplier-specific data directly in the document during posting.

Transactions in Accounts Payable

Supplier Invoices and Credit Memos

Figure 261: Supplier Invoices and Credit Memos

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Unit 6: Accounts Payable

You can easily create and post supplier invoices, credit memos, subsequent debits, and
subsequent credits using the SAP Fiori app Create Supplier Invoice.
To create and post supplier invoices, provide the following details:
● General Information: Enter document header and supplier line item data here. Enter details
such as invoice reference, amount, currency, and date specification here. The foreign
currency amount is translated into local currency using the exchange rates maintained.
● Purchase Order References: For posting integrated with purchasing
● G/L Account Items: The G/L line items for the document are entered here
.
● Tax: VAT or sales tax, and other tax information (such as withholding tax)
● Payment: Details are defaulted from the supplier master record. However, you can change
them on the invoice.
● Unplanned Delivery Costs: Expenses not included in the invoice as line items
● Attachments: For example, a scan of the received invoice

Note:
SAP delivers two roles for invoice entry. In one role, the user can only park an
invoice entry. In the other role, users can park and post the journal entries.

Figure 262: Create Incoming Invoices (Advanced Screen)

You can access a more advanced screen for posting supplier invoices with the Create
Incoming Invoices app. You can post an invoice direct to FI without reference to a PO. You can
maintain the header data, including confirming the payment details defaulted from the
business partner settings. When entering an expense item for an operating expense, you

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 Lesson: Scope of Accounts Payable

must also enter a cost-accounting-relevant assignment, such as a cost center or internal

order.

Figure 263: Controlling Account Assignment Logic

When you post to an expense account with a CO account assignment, the system
automatically creates a controlling document in the background. In the cloud, this is a
completely transparent process.

Recurring Supplier Invoices

Figure 264: Recurring Supplier Invoice

The Manage Recurring Supplier Invoices app enables you to maintain recurring supplier
invoices with certain recurrence patterns and rules. It increases efficiency by providing a
better way to maintain invoices that must be paid at regular intervals. It can minimize typo
errors by using a predefined recurring supplier invoice template.
You can use the Manage Recurring Supplier Invoices app to create, edit, display, and delete a
recurring supplier invoice. When you create a supplier invoice using the Manage Recurring
Supplier Invoices app, you specify the recurrence start date, the recurrence pattern (daily,
weekly, monthly), the interval, the occur day, and the number of occurrences. It is also
possible to show posting forecasts.
The Schedule Accounts Payable Jobs app can be used to define the Schedule Automatic
Posting for Recurring Supplier Invoice job. In the parameters of this job, you can specify the
needed recurrence pattern parameters.

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Unit 6: Accounts Payable

Video: Demo of Recurring Supplier Invoice

For more information on Demo of Recurring Supplier Invoice, please view the
simulation in the lesson Scope of Accounts Payable online in the SAP Learning
Hub.

Payments

Figure 266: Outgoing Payment Process

A payment transaction can be carried out either manually or automatically using the Manage
Automatic Payments app.

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 Lesson: Scope of Accounts Payable

Figure 267: Manual Outgoing Payment Process

A manual payment is a transaction that usually clears one or more open items, such as line
items of an invoice. An outgoing payment used in accounts payable clears open credit
amounts of customers.
After clearing an open item, the invoice can no longer be reversed directly. You must first
reset the clearing and then reverse the invoice.
You can use the Free Form Payments apps to process free form payment requests.
Depending on your role, you can create, check, edit, post, reverse, and release payment
requests. You can use My Free Form Payments to create payment requests and view, edit, or
reverse payment requests that you have created. To create free form payments without
leaving your current screen, you can use the SAP CoPilot app Create Free Form Payments
from any SAP Fiori app. You can use Process Free Form Payments to process all payment
requests regardless of the request creator. After a payment is released, the payment
requests created in the Free Form Payments apps can be processed further through the apps
Monitor Payments and Approve Bank Payments.

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Unit 6: Accounts Payable

Figure 268: Automatic Payments

The Manage Automatic Payments app can be used for international payment transactions
between suppliers and customers. This app can be used for incoming and outgoing
payments. However, it is more common to use it for outgoing payments.
Here are the steps:

1. Maintain the parameters. Use the parameters to define which accounts and items the
payment program is to include in the automatic payment run.

2. Run a payment proposal. During the proposal run, the system takes the following actions:

● Checks the accounts and documents specified in the parameters for due items

● Groups items due for payment

● Selects the relevant payment methods, house banks, and partner banks

3. Check the payment proposal. You are advised to check that the data is accurate before
actually running the payment program.

4. Execute the Payment Run. During the payment run, the system takes the following
actions:

● Posts payment documents

● Clears open items

● Prepares data for the printing of payment media

5. Print payment media. Payment media is generated in this step. One of the following events
occurs:

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 Lesson: Scope of Accounts Payable

● Payment media, such as checks, are printed.

● IDocs are generated for the Electronic Data Interface (EDI).

● A data file is created as part of the data medium exchange.

To create the payment media, SAP S/4HANA uses the Payment Medium Workbench (PMW).
It is a generic payment medium program for all payment medium formats.
You can skip the payment proposal and execute the payment run directly. Business
transactions that balance the open items are posted directly after entering the parameters.

Accounts Payable Closing

Accounts Payable Closing

Figure 269: Accounts Payable Closing

Closing activities can vary depending on the country. However, the following list offers a good
idea of the process for closing of payables accounts:

1. At the start of the new fiscal year, or shortly before the new fiscal year, the balance carry
forward is run for all ledgers. This ensures that the balances of the G/L accounts are
carried forward to the new fiscal year. When the central balance carry forward program in
General Ledger Accounting executes, the balances of the supplier accounts also forward
to the next fiscal year.
Up to SAP S/4HANA Cloud 2008, you execute the balance carryforward by using the
Balance Carryforward app. As of SAP S/4HANA Cloud 2008, this Balance Carryforward
app no longer exists. Instead, the system performs a balance carryforward automatically
two weeks before the start of a new fiscal year. Therefore, you need not usually perform
any manual activities for the balance carryforward. If there are difficulties, you can
manually trigger the balance carryforward. You must schedule the corresponding job.
Then, use the Schedule General Ledger Jobs app with the Balance Carryforward job
template.

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Unit 6: Accounts Payable

To display the status of the balance carryforward, you can use the Balance Carryforward
Status app. With this feature, you can view details about a balance carryforward, for
example, the status when it was run.

2. The posting periods of the old fiscal year are blocked for posting and the special periods
for closing postings are opened.

3. Balances are confirmed, the foreign currency documents valuated, the values adjusted,
and the payables regrouped.

4. The special periods can be closed once balance confirmation is done.

Balance Confirmations

Figure 270: Balance Confirmations

The Create Balance Confirmations For Suppliers app also creates reply requests for
suppliers, a reconciliation list, and a results table. The balance confirmations and reply
requests are sent to the suppliers and the lists are used as to confirm the replies.
The suppliers check the balance information they receive and send their replies. You then
compare the replies with the reconciliation list and enter the results in the results table.
You can also send balance confirmations as attachments to emails.

Note:
You can only send balance confirmation letters by email but not the check lists.

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Foreign Currency Valuation

Figure 271: Foreign Currency Valuation

A foreign currency valuation is necessary if supplier accounts contain open items in a foreign
currency. The amounts of these open items are translated to the local currency at the time
they are entered using the exchange rate that is valid on the posting date.
The exchange rate is most certainly different at the time of closing (period or year-end) so the
open items need to be valuated again. The Perform Foreign Currency Valuation app
revaluates the open items using the new exchange rate and enters the valuation difference in
the valuated line items.
It creates the following valuation postings:
● In the case of loss, debit the account expense from foreign currency valuation and credit
the balance sheet adjustment account.
● In the case of gain, debit the balance sheet adjustment account and credit the account for
revenue from foreign currency valuation.

As exchange rates and valuations might be handled differently in different accounting

principles, you must enter the valuation area in the app. This tells the system which rules to
follow for which ledger to update and how to post the document. The SAP S/4HANA Cloud
system comes with a preconfigured set of valuation areas for each country.

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Unit 6: Accounts Payable

Accounts Payable Regrouping

Figure 272: Accounts Payable Regrouping

Accounts payable and receivable must be listed separately in the balance sheet. It is possible
for some suppliers to have a debit balance (usually from credit memos). As a result, these
accounts must be changed to suppliers with a debit balance before creating the financial
statements. In many countries, it is also necessary to group accounts payable in the balance
sheet based on when they are due.
The figure, Accounts Payable Regrouping, shows how payables are regrouped to adjustment
accounts separately so that the balance sheet complies with local reporting requirements.
Additionally, suppliers with a debit balance are also regrouped. An adjustment account is
used here as the offsetting account because adjustments cannot be posted directly to a
reconciliation account. This accounting manipulation is only for reporting purposes and does
not affect daily operations. As a result, the posting is reversed on the first day of the new year.

LESSON SUMMARY
You should now be able to:
● Provide an overview of Accounts Payable
● Manage Business Partners for suppliers
● Post transactions in Accounts Payable
● Perform closing activities in Accounts Payable
● Assess your knowledge

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 Unit 6
Lesson 2
Exploring Configuration and Data Migration

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Explore configuration and data migration
● Assess your knowledge

Accounts Payable Configuration

Configuration Scope

Figure 273: SSCUIs for Accounts Payable

The figure, SSCUIs for Account Payable, lists the configuration scope available for the
Accounts Payable scope item J60.

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Configuration Example: Tolerance Groups

Figure 274: Tolerance Groups - Example of SSCUI

The figure, SAP S/4HANA Cloud - Example of SSCUI, shows the configuration application that
allows you to configure the tolerance groups you assign to customers and suppliers. You can
define different tolerances per group such as grace periods, maximum payment differences
and various settings for the residual items created from a partial payment.

Configuration Example: Automatic Payments

The following configurations can be made for the payment program:
● You must define some basic specifications for any company codes involved in payment
transactions, such as tolerance days for outstanding payments.
● For each company code that has been defined as a paying company code, you can define
settings such as minimum amounts for payments.
● On the country level, you define which payment methods are valid for a country, and define
settings such as whether the method is valid for incoming or outgoing payments
● For each company code, you select which payment methods are valid from the ones
defined on the country level and make a few further configurations, such as minimum and
maximum payment amount limits.
● For each house bank that you want to use for payments, you can specify the G/L account
to which you want to post the payments.
● You can specify multiple house banks for the same combination of paying company code,
payment method, and currency, and define the order in which the system determines
which house bank to use.

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Supplier Open Item Migration

Supplier Open Item Migration

Figure 275: Migration of Accounts Payable Open Items

SAP S/4HANA Cloud Edition offers pre-configured content based on best practices for Cloud
Editions. Migration is part of this end-to-end implementation approach.
The features of data migration are as follows:
● The data migration activities are executed based on the cloud implementation cockpit.
● Based on the selected business scenarios, the relevant data migration objects are
proposed. In this case, it is all relevant migration objects for suppliers.
● Existing SAP customers can connect their SAP Business Suite system. For new
customers, a template-based approach can be used.

In the SAP Fiori launchpad, check under the End-To-End Consumption Experience and see the
Manage Your Cloud Solution app. In this app, you find the Migrate Your Data tool. In the
Migrate Your Data app, you can access the dedicated data migration functionality.
Once the data migration sub-screen is opened, the proposed data migration objects are
shown.

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Unit 6: Accounts Payable

Figure 276: Migration Project for Accounts Payable

The Simulate Import feature is part of the guided migration activity.

It allows you to carry out the following tasks:
● Test migration data against system customizing without commit. This is a new step in the
migration guided procedure. It allows the user to check structures or if anything is not
fitting to the interface structure.
● With simulation, there is no need to run a productive migration until the simulated import
shows everything green. It is a very flexible tool that allows the user to fix the captured
errors and then run the simulation again and again until all errors are addressed.
● With every release there is new and updated documentation available for migration
relevant objects. For each and every object there is a Documentation tab that you can
access to learn more about the specific object. There is object documentation for
Accounts Payable Open Items and some migration guidance.

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Migration Execution

Figure 277: Migration Execution

The following objects need to be entered or migrated before Accounts Payable Open Items
data can be migrated:
● Chart of Accounts
● Supplier Master
● Cost Center Master
● Profit Center Master

Figure 278: Data Entry Template Download

The templates that need to be filled in with the migration data can be downloaded directly in
the application. There are different templates for the Accounts Payable Open Items migration
depending on the cloud edition you are implementing.

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Unit 6: Accounts Payable

Figure 279: Microsoft Excel Template for Asset Migration

The figure, Microsoft Excel Template for Asset Migration, displays the Accounts Payable
Open Items migration template spreadsheet on the Field List tab, which summarizes the fields
available for maintenance in the SAP S/4HANA Enterprise Cloud solution.
The key fields are always mandatory in the sheets. The other fields that are mandatory are
indicated with an asterisk next to the field description.
To validate the migrated data, you can use the following tiles:
● Manage Accounts Payable
● Relevant Business Role
● Accounts Payable Accountant (SAP_BR_AP_ACCOUNTANT)

Define Payment Terms

You can define rules by which the system can determine the required terms of payment
automatically. The rules are stored under a four-character key. You assign the terms of
payment specified to the business partner in the master record via the key. The key and the
terms determined with it are proposed when entering a document to a customer/supplier
account. The key can be:
● Stored in the master record of the customer account (in the sales and accounting view) /
supplier account (in the purchasing and accounting view),
● Entered when the FI document is created (or changed),
● Entered when the logistics documents (in the purchase order and incoming invoice or in
the order and the outgoing invoice, for example) are created (or changed).

Terms of payment define parameters like due date and cash discount offered for payment of
the invoice within a certain period. You can also specify settings for the day limit, the baseline
date for payment and installment payments.

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 Lesson: Exploring Configuration and Data Migration

Figure 280: Cash Discount

Configuration

Figure 281: Payment Terms

Standard settings
The most usual terms of payment have already been set in the standard system. These
include specifications on the payment conditions, the day limit or the payment period baseline
date, for example.
Recommendation
You do not normally have to make any additions or changes to the default settings, unless you
want to:
● Enter a separate help text for a payment term which deviates from the explanations
created automatically
● Exclude an account type for a payment term (in the standard system, a payment term
applies to all account types of the business partner)

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Unit 6: Accounts Payable

● Change the payment conditions for a payment term

● Indicate that it has to do with an installment payment

Note:
If you want to set up installment payment you must also define the related
payment terms and the partial amounts in a subsequent step (Define Terms of
Payment for Installment Payments app).

Activities
1. Check whether you can use the default settings as they are without making any changes.
You might have to change or extend the default settings.
2. Ensure that the terms of payment key is entered in the customer/supplier master record
which represents the specified terms of payment.
Master records have separate areas for Financial Accounting, Sales, and Purchasing. You can
specify different terms of payment keys in each of these areas. When you then enter a
business transaction, the application in question will use the key specified in its area of the
master record.
When configuring payment terms you can perform the following tasks:
● You can add new entries
● You can copy an existing entry to create a new entry
● You can change the values of any entry.

Define Terms of Payment for Installment Payments

With installment payments you can specify whether an invoice amount is to be divided into
partial amounts with different due dates.
For these terms of installment payment, you must determine the amount of the installment in
percentages and the terms of payment for each installment payment. If you then post an
invoice with terms of installment payment, the system generates the corresponding number
of line items due to your specifications for the installments.

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 Lesson: Exploring Configuration and Data Migration

Figure 282: Installment Payments

Configuration
Steps
● With the configuration app Payment Terms you have created additional payment terms
and specified related due dates.
● With the configuration app Payment Terms you have created a payment term for
installment payment. For this, under Payment Term – General you have set the indicator
Installment Payment.

Figure 283: Installment Payment

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Unit 6: Accounts Payable

● Create partial amounts in percent for the payment term key that represents the payment
term for installment payment. Number the individual partial amounts consecutively.
Specify when the individual partial amounts are due by assigning the corresponding
payment terms.

Figure 284: Configure Terms of Payment for Installment Payments

LESSON SUMMARY
You should now be able to:
● Explore configuration and data migration
● Assess your knowledge

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 Unit 6

Learning Assessment

1. In the SAP S/4HANA cloud system, you create a business partner in one of three
categories. Amongst which categories can you make your selection?
Choose the correct answers.

X A Community

X B Group

X C Person

X D Organization

X E Government

2. Which of the following details are maintained on the General Data segment of the business
partner for a supplier?
Choose the correct answer.

X A Payment Terms

X B Tolerance Group

X C Communication Language

X D Reconciliation Account

3. Supplier invoices must always reference a valid purchase order.

Determine whether this statement is true or false.

X True

X False

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Unit 6: Learning Assessment

4. Which configuration applications are available in the Manage Your Solution app SAP S/
4HANA for Accounts Payable?
Choose the correct answers.

X A Create Special G/L Indicators

X B Payment Terms

X C Blocking Reasons

X D Tolerances for Suppliers

5. For accounts payable, which kind of data do you migrate from a legacy system?
Choose the correct answer.

X A Payment Documents

X B Open Items

X C Supplier Payment Statistics

X D Clearing Documents

6. How many cash discount periods can be entered in the terms of payment?
Choose the correct answer.

X A 5

X B 3

X C 2

X D 8

7. The baseline date is the starting date that the application uses to calculate the invoice due
date.
Determine whether this statement is true or false.

X True

X False

8. With installment payments you can specify whether an invoice amount is to be divided into
partial amounts with different due dates.
Determine whether this statement is true or false.

X True

X False

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 UNIT 7 Accounts Receivable

Lesson 1
Scope of Accounts Receivable 247

Lesson 2
Configuration and Migration Activities 271

UNIT OBJECTIVES

● Maintain Master Data in Accounts Receivable

● Post transactions and manage correspondence
● Perform closing activities
● Assess your knowledge
● Configuration options in A/R
● Understand Migration of AR Open items
● Assess your knowledge

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Unit 7: Accounts Receivable

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 Unit 7
Lesson 1
Scope of Accounts Receivable

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Maintain Master Data in Accounts Receivable
● Post transactions and manage correspondence
● Perform closing activities
● Assess your knowledge

Business Partner
Accounts Receivable Overview

Figure 285: Accounts Receivable Overview

With Accounts Receivable, you can manage your open receivables invoices that are
automatically created from sales processes. You can manage and control open items with
various analytical tools to optimize accounts receivables handling. The primary source of
incoming payments is incoming bank statements loaded within the Cash Management
process. They are automatically reconciled with open invoices. Easy-to-use views make the
post processing of open items easy and efficient.
Alternatively, you can also manually post incoming payments and easily reconcile the
payment with an open position. Several analytical tools are available to monitor the
receivables, allowing you to react quickly if you discover declining payment discipline among

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Unit 7: Accounts Receivable

your customers. You can easily create dunning letters for overdue positions and follow the
dunning history of your customers.

Business Partner

Figure 286: Business Partner General Data

The business partner category is the term used to classify a business partner as follows:
● A natural person (for example, a private individual)
● A group (for example, community of heirs)
● An organization (legal entity or part of a legal entity, such as a department of a company)

The business partner category determines which fields are - in principle - available for data
entry. For example, if you want to create a business partner as an organization, you are able
to enter the legal form in one of the fields. For a person, you enter the first name, last name,
gender, and so on. The business partner category cannot be changed once the business
partner has been created.
A business partner can have several roles, such as an FI Supplier (FI-AP), FI Customer (FI-
AR), Customer (SD), Supplier (MM), or business partner (general). The Business Partner (BP)
role corresponds to a business context in which a business partner can appear and provides
the application-specific data.
You can create a single business partner in one or more BP roles. Central data such as name,
address and bank details only has to be created once. The BP role General Business Partner is
automatically assigned to a new business partner.

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 Lesson: Scope of Accounts Receivable

Figure 287: Business Partner Segments - General and Company Code

A customer account comprises at least the following two segments:

● General data common for all roles
● Company code segment

General Data: Application-neutral data, such as name, address, bank details, and payment
cards, is stored in the general data of the business partner master record.
Company code: Contains company code-specific data. Any company that wishes to do
business with a specific business partner has to create a company code segment. The
company code data contains information like the reconciliation account, terms of payment,
payment methods, dunning data, or correspondence settings.

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Unit 7: Accounts Receivable

Figure 288: Business Partner Segments - General / FI / SD

In the company code segment, enter company code-specific data. A company that wants to
do business with a specific business partner has to create a company code segment. The
company code data contains information like the reconciliation account, terms of payment,
payment methods, dunning data, or correspondence settings. You can also maintain settings
for posting and payment blocks.
The sales and distribution department interacts with customers, so it requires specific data
about all of your customers. For this reason, you can create a sales area segment for each
customer required.
Any sales area that needs to do business with a customer has to first create such a sales area
segment. This segment contains data that is specific to the sales area.
You can access the sales data of Business Partner Master Record using the SAP Fiori app
Maintain Business Partner or Manage Customer Master Data.

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 Lesson: Scope of Accounts Receivable

Figure 289: Sales Area Details

In the figure, Sales Area Details, you can see some of the fields maintained in the sales area
maintenance for customers.

Figure 290: One-Time Customer Account

In contrast to other master records, a one-time account master record does not contain any
information about a specific customer because it is used for more than one customer.
Therefore, the customer or supplier specific fields are hidden in these records.
Enter the required supplier-specific data directly in the document during posting. In reports,
you can search the supplier open items by the name and other characteristics entered during
document posting.

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Unit 7: Accounts Receivable

Transaction Processing
Invoices and Credit Memos

Figure 291: Customer Invoices and Credit Memos

Nearly all invoices and credit memos from customers reach the accounts receivable
component through its integration with the sales order management component. In
exceptional cases, if there is no reference to a sales order, invoices, and credit memos can be
entered in the accounts receivable subledger. The document entry screen is divided into the
following areas:
● Work templates: Here, you can select screen variants, account assignment templates, or
held documents as references.
● Header and customer data: Document header and customer line item data is entered here.
● G/L account items: The G/L line items for the document are entered here.
● Information area: The document balance and information about the customer are
displayed here. It also contains a link to the master data and open items.

This transaction can also be used to create documents in a foreign currency. The foreign
currency amount is translated into local currency using defined exchange rates.

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 Lesson: Scope of Accounts Receivable

Figure 292: Create Outgoing Invoices Application

In the figure, Create Outgoing Invoices Application, you can see the application screen for
posting invoices and credit memos.

Payments

Figure 293: Incoming Payments

Incoming payments can be dealt with in several ways in different companies (and in cases
according to local regulations). Incoming payments are posted as shown in the figure,
Incoming Payments. They operate as follows:

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Unit 7: Accounts Receivable

● The items are cleared if the customer pays open items in the full amount or with an agreed
cash discount.
● If a minor payment difference occurs, this can be charged off automatically. The maximum
amount that constitutes a minor payment difference is defined by the tolerance group
assigned to the BP and the user.
● Any payment difference outside the tolerance group settings must be dealt with manually.

The two methods of posting payment differences are as follows:

● Partial payment: The item being short-paid does not clear. A new open item in the amount
of the payment is created on the credit side. This credit entry shows up right above the
open item being paid and it references the open item being short-paid.
● Residual item: The open invoice is cleared and a new open item (residual item) in the
amount of the payment difference is created.

Figure 294: Post Incoming Payments Manually

All of the elements of the payment transactions are shown in the figure, Elements of the
Payment Transaction.
A payment transaction can be carried out either manually or automatically using the payment
program.

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 Lesson: Scope of Accounts Receivable

Bank Statement Reprocessing Rules

Figure 295: Bank Statement Reprocessing Rules

You can create individual reprocessing rules for G/L account postings during the Bank
Statement post-processing. This way, repeatable tasks during Bank Statement post-
processing can be put to individual rules and allows faster identification, validation, and
clearing of Bank Statement Items.
Automated creation of dispute cases with reprocessing rules is a feature to have the system
automatically create dispute cases if a reprocessing rule cannot process your bank statement
items. In the Manage Bank Statement Reprocessing Rules app, you can define when and how
the system should create a dispute case.

Video: Manual Bank Statement Rule

For more information on Manual Bank Statement Rule, please view the
simulation in the lesson Scope of Accounts Receivable online in the SAP Learning
Hub.

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Unit 7: Accounts Receivable

Dunning

Figure 297: Dunning Functions

The SAP system provides you with a tool that automatically analyzes all the open items and
duns any items that are overdue. The system determines a dunning level, which corresponds
to the number of days in arrears. The dunning level determines the dunning charges and
interest levied, as well as which dunning text is selected. The dunning history keeps a record
of which dunning notices have been issued.
You can trigger automatic dunning for a single account (individual dunning notice), or you can
have the dunning program carry out automatic dunning for a selected number of accounts.

Figure 298: Dunning Procedure

Dunning is controlled by the dunning procedure. Most of the settings for dunning are defined
by the dunning procedure assigned to a customer. A dunning procedure must be entered in
every customer and supplier account that is to be included in automatic dunning.

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 Lesson: Scope of Accounts Receivable

Figure 299: Printing Dunning Notices

You can specify how the dunning run is to be executed by entering parameters in the dunning
program. You can use the parameters of an existing dunning run as a template and adjust the
dates to meet your requirements. Typical parameters are the company codes and accounts
that are to be included in the dunning run.
Dunning Runs
During the dunning run, accounts are selected and checked for overdue items. The system
then checks whether dunning notices have to be sent, and assigns the relevant dunning levels.
All dunning data is stored in a dunning proposal.
You can edit, delete, and recreate the dunning proposal as often as required to achieve the
desired result.
Printing Dunning Notices
The dunning proposal is not a mandatory step; therefore, it can be omitted. If [Link] with
scheduling is not selected, the system does not produce a proposal. Instead, it prints the
dunning notices as soon as the program has been executed.
In one step, the system prints the dunning notices and updates the dunning data in the
master records and documents, including the dunning dates and levels.
In the dunning notice you send to your customers, you can add new custom fields: A header
field, a contacts list, and a new column in the item list.

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Unit 7: Accounts Receivable

Correspondence

Figure 300: Correspondence

You can print an Open Item List and send for confirmation to your customers.

Manage Payment Advice Situations

Figure 301: Business Background

In this concept, we will look at one of the use cases for the Situations Handling framework,
delivered as an enhancement of the SAP Fiori app Manage Payment Advices. The objective of
the scenario is to proactively inform you about potentially unpaid Accounts Receivable (AR)
invoices.

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 Lesson: Scope of Accounts Receivable

This scenario addresses a delaying tactic sometimes used by customers when paying
supplier invoices, in order to take extended credit from them. When chased for payment by
the supplier's AR department, the customer confirms that they will pay – which they do, for
example, to ensure deliveries are not stopped. Conveniently, however, they decide to exclude
the invoice with the highest amount from the payment. Often, the supplier only discovers this
after the payment is received, posted, and allocated, and when the new round of collections
activity starts based on a refreshed collections worklist, which still shows the invoice in
question as overdue. In many companies, this process can take weeks. This is despite the fact
that the customer would have transmitted a remittance advice to the supplier at the time of
making the payment, showing that not all invoices are covered, because companies don't
have the resources to manually analyze each and every advice received. With the Situations
Framework, you can change that and utilize the information contained in the payment advice
to notify users instantly upon its receipt, without waiting for the previously mentioned events
to take place. You can then contact the customer immediately and demand additional
payment much sooner than before, contributing towards more effective working capital
management and lower Day Sales Outstanding.

Figure 302: Request Payment

As a collections specialist, you call a customer – Computer Systems Germany – to obtain a

payment for eight invoices that should have been paid in August, September and October.
Their AP department assures you that a payment will be made the same day, so you conclude
the call and move on to the next customer on your daily worklist. Later, they do in fact make
the payment, but somehow omit the only invoice you really care about: one for 47,000, only
settling the others totaling less than 10,000. Their ERP system automatically generates a
payment advice and e-mails it to your AR payments processing team.

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Unit 7: Accounts Receivable

Figure 303: Manage Payment Advices

When the payment advice is received, your payments processing specialist imports it into the
system using the SAP Fiori app Manage Payment Advices. The app is integrated with SAP
Cash Application and its Payment Advice Extraction service. You drag and drop the PDF
received, and the data contained is automatically processed, using machine learning and
optical character recognition (OCR). A draft payment advice is created in the SAP S/4HANA
system.

Figure 304: Review Information

You can review the extracted information, visually comparing it to the image of the payment
advices submitted. After you confirm it, the object is saved to the database. In the past, as
previously explained, it would then sit and wait there to be used for allocating the payment
when it is received, not really utilizing the information actually presented in the payment
advice itself.

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 Lesson: Scope of Accounts Receivable

Figure 305: Creating Situations

In the Situation Type, SAP has created backend logic that maps the invoice numbers
mentioned on the payment advices to the corresponding open items on the customer's
account in receivables. Looking at the due dates of the respective journal entries, you locate
the date range covered by the payment. Where other documents exist within the same data
range, not included on the advice, a Situation is created. To only flag significant cases, a
threshold for the minimal value of the excluded invoices has been defined. The threshold is 50
percent of the value of all invoices within the given date range. This means that if only lower
value invoices have been missed, there is no Situation.

Figure 306: Recipient Derivation

There is also a functionality that dynamically derives the notification recipient from master
data. Specifically, the business user maintained in the system as the accounting clerk for the
particular customer and company code – which would typically be the collections specialist –
receives an instant notification informing them about a Situation that requires their attention.
Clicking on it takes you to the object page of the Payment Advice in the Manage Payment
Advices app.

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Unit 7: Accounts Receivable

Figure 307: Situation Handling

There, you can now see the generic Situation Message section provided by the framework.
You can also see the Related Information facet inserted into the UI specifically for your use
case listing the relevant information about any skipped open items within the data range as
explained. You can use standard Smart Links to review the journal entry in other SAP Fiori
applications, or use the customer Smart Link to navigate back to another app, such as
Process Receivables.

Figure 308: Situation Handling

You can then either send correspondence to the customer or log a dispute case for the
document in question. Whatever action you choose, you have the opportunity to address a
common business situation much sooner than before, resulting in better performance for
your Accounts Receivable organization.

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Accounts Receivable Closing

Accounts Receivable Closing

Figure 309: Accounts Receivable Closing

At the start of the new fiscal year, or shortly before the new fiscal year, the balance carry
forward is run for all ledgers. This ensures that the balances of the G/L accounts are carried
forward to the new fiscal year. When the central balance carry forward program in General
Ledger Accounting executes, the balances of the customer accounts are also forwarded to
the next fiscal year.
Up to SAP S/4HANA Cloud 2008, you execute the balance carryforward by using the Balance
Carryforward app. From SAP S/4HANA Cloud 2008, there is no Balance Carryforward app.
Instead, the system performs a balance carryforward automatically two weeks before the
start of a new fiscal year. Therefore, you need not usually perform any manual activities for
the balance carryforward. If there are difficulties, you can trigger the balance carryforward
manually. To do this, you must schedule the corresponding job. Then use the Schedule
General Ledger Jobs app with the Balance Carryforward job template.
To display the status of the balance carryforward, you can use the Balance Carryforward
Status app. With this feature, you can view details about a balance carryforward, such as the
status or when it was run.
The posting periods of the old fiscal year are then blocked and the special periods for closing
entries are opened. After this, the following closing operations are carried out:
● Foreign currency documents are valuated.
● Value adjustments are carried out for overdue receivables.
● Accounts receivable are reclassified into short-term and long-term categories for the
financial statement.

The special periods can then be closed.

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Foreign Currency Valuation

Figure 310: Foreign Currency Valuation

A foreign currency valuation is necessary if supplier accounts contain open items in a foreign
currency. The amounts of these open items are translated to the local currency at the time
they are entered using the exchange rate that is valid on the posting date.
The exchange rate is different at the time of closing (period or year-end) so the open items
must be re-evaluated. Using the new exchange rate, the Perform Foreign Currency Valuation
app re-evaluates the open items and enters the valuation difference in the valuated line items.
The app creates the following valuation postings:
● If there is a loss, then debit the account expense from foreign currency valuation and credit
the balance sheet adjustment account.
● If there is a gain, then debit balance sheet adjustment account and credit the account for
revenue from foreign currency valuation.

As exchange rates and valuations might be handled differently in different accounting

principles, you must enter the valuation area in the app. This tells the system which rules to
follow for which ledger to update and how to post the document. The SAP S/4HANA Cloud
system comes with a preconfigured set of valuation areas for each country.

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Individual Value Adjustment

Figure 311: Individual Value Adjustment

Doubtful receivables are written off as an Individual Value Adjustment (IVA) during year-end
closing. The special general ledger method is suitable for this procedure because the
transaction is entered in the customer account and is also posted to a special G/L account,
Individual Value Adjustments for Receivables.
After you have ascertained that the debt is irrecoverable or that the receivable has been paid,
the individual value adjustment is reversed. If the debt is irrecoverable, the receivable is
cleared from the customer account and the amount is posted to the account for depreciation
of receivables. The sales tax is adjusted in the posting.
During financial statement preparation, open overdue customer items are valuated. In
addition to the foreign currency valuation, you can also calculate a flat-rate individual value
adjustment for unsecured or overdue trade receivables. For this periodic task, you can
schedule a valuation run.

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Reporting

Figure 312: Customer Account Reporting

In the figure, Customer Account Reporting, you can see a list of apps available to manage
customer accounts.

Figure 313: Analytical SAP Fiori Apps for Accounts Receivable

Analytical apps give you a role-based insight into real-time operations of your business by
collecting and displaying key figures directly in your browser. Analytical apps combine the
data and analytical power of SAP HANA with the integration and interface components of SAP
S/4HANA. They provide real-time information on large volume data in a simplified front end
to carry out analysis of important accounting data such as the following:
● Overdue Receivables
● Dunning Level Distribution

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● Days Beyond Terms

● Open Disputes
● Total Receivables

The description provides real-time insight into the accounts receivable situation with a set of
important key performance indicators and supports managing the AR and collection team.
Capabilities include the following:
● Filtered KPIs for the user's area of responsibility
● Drill-down to customer level for root cause analysis
● Collaboration via e-mail
● Virtual data model providing harmonized data access to accounts receivable analytical
data

Item Interest Calculation

Introduction to Item Interest Calculation

Figure 314: Item Interest Calculation

In many countries you are legally allowed to claim interest for overdue invoices or late
payments, which can encourage customers to pay in time. Companies judge if they charge
interest as the total amount of interest can be relatively low and might have a negative effect
on the future relationship with their customers.
Item interest calculation in SAP S/4HANA Cloud allows companies to:
● Calculate interest, create new open receivables, and inform the customer about the
interest amount to be paid for each overdue item
● Display interest history including created interest documents, related overdue items, and
interest letters
● Calculate the same interests on the value-added tax, as you've calculated on the items
● Reverse calculated interest

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Note:
To be able to select a business partner in the Schedule Interest Calculation Jobs
app, you must first maintain the Interest indicator in the Company Code section of
the business partner master record.

Manage Interest Runs

Before using the Manage Interest Runs app, interest runs first have to be scheduled with the
Schedule Interest Calculation Jobs app. Interest calculation can be started immediately or
planned periodically.

Figure 315: Manage Interest Runs

With the Manage Interest Runs app, you can perform various tasks for posted interest
documents. When you reverse calculated interest, you can either reverse the created interest
document or delete entries for this interest document in interest history tables. Sending or re-
sending the interest letter can also be triggered from this app, for example, if an interest letter
was not created during execution of interest calculation job due to a missing e-mail address.

Figure 316: Manage Interest Runs Details 1

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You navigate to the details of the calculated interest to see related items subject to interest
and created interest letters. Items Subject to Interest shows the number of journal entry items
processed for this business partner with this interest calculation job. For sending the interest
letter, you can either print them out or send with an e-mail.

Figure 317: Manage Interest Runs Details 2

Go to the details of an item subject to interest, to get information about interest base amount,
and the number of interest calculation jobs in which the item subject to interest was
processed.

LESSON SUMMARY
You should now be able to:
● Maintain Master Data in Accounts Receivable
● Post transactions and manage correspondence
● Perform closing activities
● Assess your knowledge

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 Unit 7
Lesson 2
Configuration and Migration Activities

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Configuration options in A/R
● Understand Migration of AR Open items
● Assess your knowledge

Accounts Receivable Configuration

Self-Service Configuration UI (SSCUI) Scope

Figure 318: SSCUIs for Accounts Receivable

The purpose of this task is to tailor the Finance AR configuration based on the Fit-to Standard
analysis workshops and the configuration definition. The Configure Your Solution applications
can be sorted by area and configured in the order presented by the solution. Any required
Expert Configuration (anything not in scope for self-service) is requested as a separate task
and evaluated.
The figure, SSCUIs for Accounts Receivable, lists the global configuration scope available for
Accounts Receivable.

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Figure 319: SAP S/4HANA Cloud - Example of SSCUI

The figure, SAP S/4HANA Cloud - Example of SSCUI, shows the configuration application that
allows you to manage the assignment of tolerance profiles to customers and suppliers.

Define Tolerance Groups for Employees

You can define tolerances for each employee or for a group of employees. A tolerance group
is used to set the maximum cash discount percentage a user can grant for each line item and
the maximum additional cash amount up to which payment differences can be accepted.
Payment differences within the amount limits you define are posted automatically (Automatic
Account Determination app). The system can post the difference by adjusting the cash
discount or by posting to a separate expense or revenue account.

Configuration

Figure 320: Tolerance Groups for Users

By default, all users are assigned to the "blank" tolerance group. You can configure the
settings on company code level.
You can define the following settings:
● The maximum cash discount percentage a user is allowed to grant.
● The amounts or percentage rates that the system is to automatically post to a separate
expense or revenue account if the cash discount cannot be adjusted.
● The maximum difference amounts for which the system is to adjust the discount. In such a
case, the cash discount is automatically increased or reduced by the difference amount.

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Note:
You can also define tolerances for customers and suppliers using the Define
Tolerances for Customers and Suppliers app. When clearing is carried out, the
respective lower limits from the business partner data and the amount limits
defined in this activity apply.

Define Tolerances for Customers and Suppliers

You can define limits for customers and suppliers that specify the maximum differences in
payment that are acceptable. You can also define settings how to deal with residual items
during a clearing process.

Configuration

Figure 321: Customer Supplier Tolerance Groups

By default all customers and suppliers are assigned to the "blank" tolerance group. You can
configure the settings on company code level.
You can define the following settings:
● The number of grace days to be set after the due date
● The maximum difference amounts for which the system is to adjust the discount. In such a
case, the cash discount is automatically increased or reduced by the difference amount
● The amounts or percentage rates that the system is to automatically post to a separate
expense or revenue account if the cash discount cannot be adjusted

Note:
You can also define tolerances for employees (Define Tolerances for
Employees app). When clearing is carried out, the respective lower limits from
the business partner data and the amount limits defined in this activity apply.

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● In case of creating a residual item you can specify that the payment term of the invoice is
used or that a fixed payment term is used
● In case of creating a residual item you can define if the granted cash discount will be fully
granted or partially granted
● In case of creating a residual item you can define a dunning key, which can contain a
maximum dunning level

Define Dunning Procedures

Dunning is controlled by the dunning procedure. A dunning procedure must be entered in
every business partner that is to be included in automatic dunning. In a dunning procedure,
you can for example define the number of dunning levels, the dunning interval in days, the
minimum days in arrears, minimum amounts for dunning, and charges.

Configuration

Figure 322: Define Dunning Procedure

In a dunning procedure, you can define the following kind of settings:

● The dunning interval in days
● The number of dunning levels
● The dunning level from which all due items are to be totaled
● The days in arrears after which a dunning notice will be sent
● Grace periods per line item
● If special G/L transactions need to be included in dunning
● Minimum amounts for dunning
● Charges to be printed on dunning letters

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 Lesson: Configuration and Migration Activities

Migrate Customer Open Items

Migrate Customer Open Items

Figure 323: Migration of Customer Open Items

SAP S/4HANA Cloud Edition offers pre-configured content based on best practices for Cloud
Editions. Migration is part of this end-to-end implementation approach.
The features of data migration are as follows:
● The data migration activities are executed based on the cloud implementation cockpit.
● They are based on the relevant data migration objects for the selected business scenarios
that are proposed. In this case, this is all relevant migration objects for customers.
● Existing SAP customers can connect their SAP Business Suite system. For new
customers, a template-based approach can be used.

In the SAP Fiori launchpad, check under the End-To-End Consumption Experience and see
Manage Your Cloud Solution. The Migrate Your Data tool can be found in this app. In the
Migrate Your Data app, you access the dedicated data migration functionality.
When the data migration sub-screen is open, the proposed data migration objects are shown.

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Migration Execution

Figure 324: Migration Project for Accounts Receivable

The Simulate Import feature is part of the guided migration activity. It allows you to test
migration data against system customizing without committing the data. You can check
structures or if anything is not fitting to the interface structure.
With simulation there is no need to run a productive migration until the simulated import
shows everything as green. It is a very flexible tool that allows the user to fix the captured
errors and then run the simulation again and again until all errors are addressed.
With every release, new and updated documentation is available for migration-relevant
objects. For every object, there is a Documentation tab that you can access to learn more
about the specific object. So, there is object documentation for Accounts Receivable
(Customer) Open Items and some migration guidance.

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Figure 325: Template Download

The templates that need to be filled in with the migration data are directly downloadable from
the application. There are different templates for the Accounts Receivable (Customer) Open
Items migration depending on the cloud edition you are implementing.

Figure 326: Microsoft Excel Template for Accounts Receivable

The figure, Microsoft Excel Template for Accounts Receivable, displays the Accounts
Receivable (Customer) Open Items migration template spreadsheet on the Field List tab
which summarizes the fields available for maintenance in the SAP S/4HANA Enterprise Cloud
solution.
The key fields are always mandatory in the sheets. The other fields that are mandatory are
indicated with an asterisk next to the field description.
To validate the migrated data, use the Manage Accounts Receivable tile.
The relevant business roles are as follows:

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● Accounts Receivable Accountant (SAP_BR_AR_ACCOUNTANT)

● Master Data Specialist - Business Partner Data (SAP_BR_BUPA_MASTER_SPECIALIST)

Prerequisites

Figure 327: Migration Prerequisites

At the absolute minimum, the following objects need to be entered or migrated before
Accounts Receivable (Customer) Open Items data can be migrated:
● Chart of Accounts
● Customer Master
● Cost Center Master
● Profit Center Master

LESSON SUMMARY
You should now be able to:
● Configuration options in A/R
● Understand Migration of AR Open items
● Assess your knowledge

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Learning Assessment

1. What do you use when you want to close an open item with a payment, even if the
payment isn’t for the full amount of the open item?
Choose the correct answer.

X A Post on Account

X B Residual Item

X C Post to G/L Account

X D Partial Payment

2. Generating and revising the dunning proposal are required steps in the dunning process.
Determine whether this statement is true or false.

X True

X False

3. When executing foreign currency valuation, you enter the ledger value to indicate the
accounting principle for which you are running the valuation.
Determine whether this statement is true or false.

X True

X False

4. With SAP S/4HANA Cloud, you need to align your customer payment terms with the
default terms provided in the best practices package.
Determine whether this statement is true or false.

X True

X False

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5. You download the accounts receivable open item migration templates from the Best
Practices Explorer website.
Determine whether this statement is true or false.

X True

X False

6. When you define a tolerance group for employees, you can specify the maximum amount
that a user is allowed to post.
Determine whether this statement is true or false.

X True

X False

7. When defining a tolerance group for customers you can only define a fixed payment term
in case of residual item creation.
Determine whether this statement is true or false.

X True

X False

8. In a dunning procedure you can define the days in arrears after which a dunning notice will
be sent.
Determine whether this statement is true or false.

X True

X False

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 UNIT 8 Credit Management

Lesson 1
What is New in Credit Management 283

Lesson 2
Scope Credit Management 289

UNIT OBJECTIVES

● What is New in Credit Management

● Get an overview of Basic Credit Management
● Get an Overview of Advanced Credit Management
● Use the SAP S/4HANA Cloud for credit integration

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 Unit 8
Lesson 1
What is New in Credit Management

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● What is New in Credit Management

What is New in Credit Management

Note:
The content in this lesson is to accommodate learners who where going through
the previous release of the course, but the course got upgraded in the meantime.
You can complete the lesson here, retake the module assessment and ignore the
rest of the content, since it is unchanged for you. If you are new to the topic,
please go through the lesson Scope of Credit Management in its entirety.

Business Partner Maintenance

Figure 328: Manage Credit Accounts

Credit data is stored in the SAP business partner. It consists of the credit profile data and
credit segment data.
To enter a credit limit for a business partner, open the Manage Credit Accounts app, choose
your partner, and enter the settings for credit management.

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Unit 8: Credit Management

Credit Profile

Figure 329: Credit Profile

The credit profile is an extension to the SAP business partner used for the central storage of
customer data relevant for risk assessment. It contains data such as the rules for scoring, the
checking rule for controlling the credit limit check for the business partner when creating the
order, scoring, the risk class, customer credit group, credit limit calculation. It also can
include external valuations of the business partner, notes and other information on the
business partner such as negative characteristics, credit security or collateral. Credit profiles
encompass all data that is necessary for the credit check when accepting a sales order (check
of credit limit utilization and other criteria) and the resulting order-related credit decision
(decision on order release and terms of payment).
You can update the profiles with new information. The credit profile can be used by any other
application that uses the SAP Business Partner, so you can share information about the
creditworthiness of a customer with other applications for each field a detailed change log is
kept and made available.
One scoring formula and several credit limit formulas (for each credit segment) are assigned
to the rule for scoring and credit limit calculation, which is assigned to each customer in the
credit profile. The risk class is determined directly from the score.
For the check rule, the system determines the steps which are taken to check the
creditworthiness of a customer when a sales order is created. This may include the static
check of the credit limit or a check of the highest dunning level.

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 Lesson: What is New in Credit Management

Credit Segments

Figure 330: Credit Profile

Credit segments can map various areas of a company (such as sales area, countries,
company codes). They are used for area-specific administration of credit limits (and their
utilization) and to store information on the payment behavior of the customer. The
corresponding credit segment data is used for credit checking when the order is created or on
delivery within a company area.
SAP Credit Management provides the option of maintaining several credit limits for one
customer using credit segments (one credit limit for each credit segment). The credit
segment corresponds to one or several credit control areas - a credit control area relates to a
company code or sales area for example, depending on its configuration. The credit segment
is assigned to a main credit segment that can be used to define a total credit limit on company
level for the customer in addition to the individual credit limits on sub-segment level.
In the course of the credit limit check (for example when creating an order), the credit limit
utilization of the customer in the corresponding credit segment is checked along with the
credit limit utilization of the customer in the main credit segment.

Credit Management Status

Figure 331: Documented Credit Decisions

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Unit 8: Credit Management

You use the Manage Documented Credit Decisions app to review blocked sales orders and
assign a credit analyst or a person responsible to a credit case. The cases displayed are the
ones assigned to your user.
You can also search for specific cases by filtering on the credit analyst or the person
responsible.
You can select the case ID assigned to you as a credit analyst and manually release the case
for further processing.
In order to reject a credit case, choose the Reject button. While rejecting the case, you enter
the Rejection Reason and enter a rejection note for the rejection.

Business Partner Credit Rating

Figure 332: Business Partner - External Credit Information

Credit data consists of the credit profile data and credit segment data. You select the
business partner and scroll down to the External Ratings section to manually input the rating
procedure and the rating.
You select the Rating Procedure from the list and input the rating procedure you want to
assign.

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 Lesson: What is New in Credit Management

Credit Limit Request

Figure 333: Manage Credit Limit Requests

To request a new credit limit for the business partner, use the Manage Credit Limit Request
app to create a new credit limit request in the system. To perform the task, select Create and
enter your business partner. The request details screen is shown in the figure above.

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Unit 8: Credit Management

When you create a credit limit request, the system transfers some master data that exists for
the business partner in SAP Credit Management to the credit limit request. This includes the
score, risk class, and credit limit. In your new credit limit request, set the business partner and
the requested amount (to fulfill, for example, the created sales order). Set the status to New
for your request. Other important information for the credit limit request is also the credit
segment and the reason for the request. You enter the values in the form and save your
entries.

Figure 334: Approve Credit Limit Request

The approver also uses the Manage Credit Limit Request. The approver can search for the
cases, on the top of the screen you have controls for approving or rejecting the request.

New Demos

● Setting a Credit Limit

● Reviewing and Releasing Sales Orders

LESSON SUMMARY
You should now be able to:
● What is New in Credit Management

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 Unit 8
Lesson 2
Scope Credit Management

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Get an overview of Basic Credit Management
● Get an Overview of Advanced Credit Management
● Use the SAP S/4HANA Cloud for credit integration

Basic Credit Management Overview

Basic Credit Management Overview

Figure 335: Basic Credit Management Overview

The credit worthiness and payment behavior of your business partners has an immediate
effect on the business results of your company. Efficient receivables and credit management
reduces the risk of financial losses and helps you to optimize business relationships with your
business partners. SAP Credit Management supports your company in the early
determination of the risk of losses on receivables from your business partners and supports
you in making credit decisions. SAP Credit Management checks the exposure against the
current credit limit for the business partner. In addition, you can also perform other checks,
such as oldest open item, maximum dunning level, or last payment. If the new order is
blocked, the blocked order can be released or rejected by authorized staff.
Some of the key business benefits include the reduction from risk of bad debt, increased
focus on reliable and profitable customers, the ability to quickly check credit-worthiness, and
accelerate the process of checking a customer credit limit.

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Unit 8: Credit Management

The supported key process flows for basic credit are the maintenance of credit limits for
customers, the entry and management of open and blocked sales orders, and the exposure
check against the defined credit limits.

Basic Credit Management Process Overview

Figure 336: Basic Credit Management Process Steps

SAP Credit Management enables companies to control risk via real-time credit allocation and
monitoring, and to lower transaction costs by automating credit application and approval
processes. The scope item will help you to reduce days sales outstanding (DSO) via reducing
payment delays and bad debt, but also to decrease the rate of credit refusal by focusing on
profitable customers.
Common business issues addressed by the solution include slow credit evaluations, legal
compliance requirements, or inconsistent credit methods and policies. All of that is
frustrating for both customers and sales staff. The consequences are delayed or lost sales
orders. Finally, the lack of an overall view of risk exposures can lead to excessive bad debt
write-offs.

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 Lesson: Scope Credit Management

Figure 337: Credit Limit Management

You use this feature to set credit limits for your customers. The system checks the credit limit
when you create or change sales documents. If you change quantities or values in a
document, the check is repeated.
The system totals the receivables, the open items, and the credit value of the sales order for
every item of a sales document. The system displays information about what caused blocks.
When your credit department manually reviews the customer’s current credit situation and
when the sales order is approved, the system removes the block from the sales order.

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Unit 8: Credit Management

Basic Credit Management SAP Fiori Launchpad

Figure 338: SAP Fiori Tiles Overview

In the figure, you can see available apps in Credit Management.

Basic Credit Management Master Data

Business Partner Maintenance

Figure 339: Manage Credit Accounts

Credit data is stored in the SAP business partner. It consists of the credit profile data and
credit segment data.

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 Lesson: Scope Credit Management

To enter a credit limit for a business partner, open the Manage Credit Accounts app, choose
your partner, and enter the settings for credit management.

Credit Profile

Figure 340: Credit Profile

The credit profile is an extension to the SAP business partner used for the central storage of
customer data relevant for risk assessment. It contains data such as the rules for scoring, the
checking rule for controlling the credit limit check for the business partner when creating the
order, scoring, the risk class, customer credit group, credit limit calculation. It also can
include external valuations of the business partner, notes and other information on the
business partner such as negative characteristics, credit security or collateral. Credit profiles
encompass all data that is necessary for the credit check when accepting a sales order (check
of credit limit utilization and other criteria) and the resulting order-related credit decision
(decision on order release and terms of payment).
You can update the profiles with new information. The credit profile can be used by any other
application that uses the SAP Business Partner, so you can share information about the
creditworthiness of a customer with other applications for each field a detailed change log is
kept and made available.
One scoring formula and several credit limit formulas (for each credit segment) are assigned
to the rule for scoring and credit limit calculation, which is assigned to each customer in the
credit profile. The risk class is determined directly from the score.
For the check rule, the system determines the steps which are taken to check the
creditworthiness of a customer when a sales order is created. This may include the static
check of the credit limit or a check of the highest dunning level.

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Unit 8: Credit Management

Credit Segments

Figure 341: Credit Profile

Credit segments can map various areas of a company (such as sales area, countries,
company codes). They are used for area-specific administration of credit limits (and their
utilization) and to store information on the payment behavior of the customer. The
corresponding credit segment data is used for credit checking when the order is created or on
delivery within a company area.
SAP Credit Management provides the option of maintaining several credit limits for one
customer using credit segments (one credit limit for each credit segment). The credit
segment corresponds to one or several credit control areas - a credit control area relates to a
company code or sales area for example, depending on its configuration. The credit segment
is assigned to a main credit segment that can be used to define a total credit limit on company
level for the customer in addition to the individual credit limits on sub-segment level.
In the course of the credit limit check (for example when creating an order), the credit limit
utilization of the customer in the corresponding credit segment is checked along with the
credit limit utilization of the customer in the main credit segment.

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 Lesson: Scope Credit Management

Basic Credit Management Operations

Sales Documents

Figure 342: Create Sales Order

Use the Manage Sales Orders or Create Sales Orders app and choose the order type, sales
organization, and further characteristics according to your requirements. Creating the sales
order and saving it automatically starts the credit check in the background.

Credit Management Check

Figure 343: Credit Check SAP Credit Management

In the figure, Credit Check SAP Credit Management, you can see the sales order failed the
credit check. Sales orders exceeding the credit limit settings are blocked due to credit check
block. A credit case is automatically assigned to the credit analyst or person responsible.

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Unit 8: Credit Management

Credit Management Status

Figure 344: Documented Credit Decisions

You use the Manage Documented Credit Decisions app to review blocked sales orders and
assign a credit analyst or a person responsible to a credit case. The cases displayed are the
ones assigned to your user.
You can also search for specific cases by filtering on the credit analyst or the person
responsible.
You can select the case ID assigned to you as a credit analyst and manually release the case
for further processing.
In order to reject a credit case, choose the Reject button. While rejecting the case, you enter
the Rejection Reason and enter a rejection note for the rejection.

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 Lesson: Scope Credit Management

Basic Credit Management Reporting

Collection Progress

Figure 345: Collection Progress

You can view the worklist statistics of all collection groups you are responsible for. The
statistics show the total number of worklist items, the number of open worklist items, the
number of completed worklist items where the contact person was reached, and the number
of completed worklist items with an unsuccessful contact. The statistics also show the status
of all worklist items per collection specialist. You can create a layout that allows you to show
the statistics per collection group and priority of the worklist item.
The status of a worklist item is determined by customer contacts, so no customer contact so
far means that the worklist item has the status Open. If the customer is contacted and the
contact was not reached, the worklist item receives the status Not Reached. Finally, if the
customer is contacted and reached, the worklist item gets the Reached status.

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Promises to Pay

Figure 346: Promises to Pay

With the Promises to Pay analytical app, you can view the total amount of open promises to
pay by customer or accountant. You can also review broken promises from this overview.

Credit Limit Utilization and Credit Exposure

Figure 347: Credit Limit Utilization

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Figure 348: Display Credit Exposure

Figure 349: Credit Exposure Item Analysis

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Credit Management Log

Figure 350: Credit Management Log

Supervise Collections Worklist

Figure 351: Supervise Collection Worklist

The Supervise Collection Worklist app helps you guide your team to reach cash collections
goals more effectively by offering a complete processing worklist. It provides quick analytics
at the top of the screen to highlight individual and team progress and provides links to
collections progress and other analytical tools.

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 Lesson: Scope Credit Management

Basic Credit Management Configuration Steps

Self-Service-Configuration User Interface

Figure 352: Manage Your Solution

Select the Manage Your Solution app to navigate to the Configuration screen.
The Configure Your Solution task allows you to maintain certain processes.

Self-Service Configuration Tasks

Figure 353: Credit Management Configuration Tasks

SAP Credit Management helps you to make efficient credit decisions. Your system offers
functions to determine the risk of lack of payment early on and helps the credit controller to
make credit decisions quickly. To do this, you can make corresponding pre-settings or adjust
preconfiguration in the following steps.
The individual steps will be explained in more detail in the next screens.

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Figure 354: Activate or Deactivate SAP Credit Management (FIN-FSCM-CR)

To deactivate SAP Credit Management, select the checkbox. You do not need to take any
further action.
To activate SAP Credit Management, deselect the checkbox. If you want to activate SAP
Credit Management after having previously deactivated it, request an expert configuration in
the SAP Service Center. To do so, in the roadmap viewer in SAP Solution Manager, navigate
to SAP Activate Roadmap for SAP S/4HANA Cloud and follow this path: Explore phase →
Deliverable: Configuration Definition → Task: Define Expert Configuration. Download the
Expert Configuration and SSCUI Reference file. Follow the steps described here and send the
request to the SAP Service Center.

Figure 355: Create Credit Segments

Define credit segments for the calculation of the credit limit for your business partner.
For SAP Credit Management, define the credit segments that are useful for your company or
industry. You define the corresponding credit segments later in the master record of your
business partner.
Credit segments are required for calculating the credit limit and enable you to carry out
detailed checks at business partner level.
When you define a credit segment, you also decide the currency in which all credit-relevant
checks are to be carried out.

Figure 356: Define Customer Credit Group

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Here, you can define the customer credit groups that you require. You can use customer
credit groups to group business partners. The customer credit group is used as a selection
criterion in reporting and when generating worklists.
Example
Possible customer credit groups include domestic and foreign customers, regular customers,
and insured customers.

Figure 357: Create Risk Classes

Define the required risk classes for SAP Credit Management. You can define any number of
risk classes.
The system can then determine the risk class of a business partner from the partner's score
automatically or you can define it manually. The risk class determined automatically can also
be changed by the processor in the business partner master data record. In this case, the
manual change overwrites the risk class determined automatically.
Requirements
The automatic calculation of the risk class is controlled via the assignment of follow-on
processes to event types. To ensure automatic calculation, in the Define Events and Follow-
On Processes Customizing activity, define the EVL_RISK_C (Determine Risk Class) follow-on
process.
Activities
To use automatic assignment of the creditworthiness value to the risk class, assign the score
intervals to the corresponding risk classes.

Figure 358: Define Blocking Reasons

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Unit 8: Credit Management

Define the reasons for blocking a credit account. You can define the block reasons as you
require. When a business partner is blocked, the credit analyst sees the block reason in the
credit segment data in the Control screen area.
You can also use predefined event types. Possible block reasons can be the following events,
for example: Bad score, insolvency, high-risk country, or bad payment behavior.

Figure 359: Define Automatic Credit Control

The automatic credit check can target certain aspects during a check and run at different
times during order processing. In this activity, you can define your own credit checks to
correspond to your requirements in the area of Credit Management.
You can determine an automatic credit check for any combination of the following:
● Credit Segment
● Risk Class
● Credit Group

It is possible to define a system response for each credit check (for example, warning
message). In the case of a warning message, a block can be set in the credit status of a
document.
When you define automatic credit checks, you can also freely define requirements which
cause a document or the forwarding of the material requirements to MRP to be blocked. This
is described in the Customizing section Make default settings for Credit Management.

Figure 360: Assign Sales Area to Credit Segment

In this activity, you assign a sales area to a credit segment.

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Figure 361: Set Credit Limit Checks for Sales Document Types

Credit checks can run at different times during order processing.

For delivery creation, you can additionally specify whether the automatic credit check occurs
at the time of delivery creation and/or goods issue.
You can specify the sales document types for which a credit check should be carried out.
Here, delivery types can be controlled separately and specifically at the time of goods issue.
Note that the credit check types A, B, and C are no longer supported. If you have specified the
credit check type A, B, or C, change it to D or null.
At the same time, you specify the system responses if credit checks are set. The system can
responds either with a warning, an error or a delivery block.

Figure 362: Set Credit Limit Checks for Delivery Types

Credit checks can run at different times during order processing.

For delivery creation, you can additionally specify whether the automatic credit check occurs
at the time of delivery creation and/or goods issue.
You can specify the sales document types for which a credit check should be carried out.
Here, delivery types can be controlled separately and specifically at the time of goods issue.
Note that the credit check types A, B, and C are no longer supported. If you have specified the
credit check type A, B, or C, change it to D or null.
At the same time, you specify the system responses if credit checks are set. The system
responds either with a warning, an error or a delivery block.

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Figure 363: Define Checking Rules

A check rule can consist of several individual checks, in addition, you can define which
parameters are relevant for each check step.
To create a check rule, proceed as follows:

1. Choose Check Rule and enter the required data. Here, you also make the setting for using
the check rule as the default setting.

2. To define the check steps required for the check rule, choose Checks.

3. To process the currency-dependent parameters at credit segment level, choose Credit

Segment and enter the required data.

Figure 364: Define Events and Follow-On Processes

In this configuration step, you set the desired dependencies between various occurring events
and those triggered by them in SAP Credit Management.
Define the dependencies required between different events that can occur in the processing
of SAP Credit Management and processes of SAP Credit Management that are to be triggered
when these events occur. For example, if a business partner's score changes, the risk class
should also be changed accordingly.

Figure 365: Define Approval Process

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Create the process for the release of blocked documents for the documented credit decision.
Define the process for the release of documents that have been blocked for credit reasons. It
enables you to ensure that only authorized persons can release a document. This approval
process relates only to the release, and not the rejection of such documents.

Figure 366: Define Info Categories

Use the configuration task to define the required info categories for SAP Credit Management.
You can use these fields to define further information in the credit profile of the business
partner, which can be referenced for credit limit checks.

Figure 367: Assign Company Code to Credit Segment

This configuration task gives you the possibility to assign company codes to a credit segment.
First, you will assign the company code to a credit segment. As a second step you need to
ensure that the appropriate credit limit is specified for the credit segments and/or for the
individual customers.

Figure 368: Define Credit Groups

You can use credit groups to combine different document types for your purpose of credit
management. Once you've assigned document types to one credit group, they will be treated
equally in the credit check.
You enter credit groups in following configuration steps:

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● Define Automatic Credit Control

● Set Credit Limit Checks for Sales Document Types
● Set Credit Limit Checks for Delivery Types

The system offers following default settings:

● 01 Credit Group for Sales Order
● 02 Credit Group for Delivery
● 03 Credit Group for Goods Issue

Figure 369: Determine Active Receivables per Item Category

In this activity, you specify for each item category whether an item of the respective item
category is to be included in credit management, such as credit check and update of open
credit values.
The system offers all valid item categories for the corresponding selection.
Select the Credit Active checkbox for each item category that is to be taken into account for
credit check.

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Advanced Credit Management Overview

Advanced Credit Management Overview

Figure 370: Advanced Credit Management Overview

SAP Credit Management - Extra supports your company with making an early determination
of the risk of losses on receivables from your business partners, and with efficiently making
credit decisions. Using automatic calculation via preconfigured formulas, the credit controller
can efficiently and quickly make credit decisions. With this scope item, you can check the
exposure against the current credit limit for the business partner. Moreover, credit limit
requests can be executed and you can also perform other checks, such as oldest open item,
maximum dunning level, or last payment.

Advanced Credit Management Process

Figure 371: Advanced Credit Management Process Steps

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The business benefits of Advanced Credit Management are a reduction of risk of bad debt, or
the focus on reliable and profitable customers. Furthermore, you can easily check credit
worthiness and thereby accelerate the process of checking a customer credit limit. You can
also enter sales order and manage blocked orders.
Advanced Credit Management also does the calculation of a rating, risk class, and credit limit
for new and existing customers.

Figure 372: Credit Limit Management

You use this feature to set credit limits for your customers. The system checks the credit limit
when you create or change sales documents. If you change quantities or values in a
document, the check is repeated. The system totals the receivables, the open items, and the
credit value of the sales order for every item of a sales document. The system displays
information about what caused blocks. When your credit department manually reviews the
customer’s current credit situation and when the sales order is approved, the system
removes the block from the sales order.

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Figure 373: Sales Cycle with Advanced Credit Management

The Advanced Credit Management is part of the overall sales cycle that ranges from sales,
shipping, credit management through receivables processing. SAP Credit Management is
integral part of the process and seamlessly integrated.

Advanced Credit Management Operations

Credit Rating

Figure 374: Calculate Credit Rating

There are two ways to set the credit rating in the system. The first is to set the rating
procedure to internal rating and to manually provide a rating. The second way is to use the
scope item 1RY - Cloud for Credit Integration and import an external credit rating from a
credit agency through the SAP Business Technology Platform.
Here, you focus on manually entering the credit rating.

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Business Partner Credit Rating

Figure 375: Business Partner - External Credit Information

Credit data consists of the credit profile data and credit segment data. You select the
business partner and scroll down to the External Ratings section to manually input the rating
procedure and the rating.
You select the Rating Procedure from the list and input the rating procedure you want to
assign.

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Credit Limit Request

Figure 376: Manage Credit Limit Requests

To request a new credit limit for the business partner, use the Manage Credit Limit Request
app to create a new credit limit request in the system. To perform the task, select Create and
enter your business partner. The request details screen is shown in the figure above.

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When you create a credit limit request, the system transfers some master data that exists for
the business partner in SAP Credit Management to the credit limit request. This includes the
score, risk class, and credit limit. In your new credit limit request, set the business partner and
the requested amount (to fulfill, for example, the created sales order). Set the status to New
for your request. Other important information for the credit limit request is also the credit
segment and the reason for the request. You enter the values in the form and save your
entries.

Figure 377: Approve Credit Limit Request

The approver also uses the Manage Credit Limit Request. The approver can search for the
cases, on the top of the screen you have controls for approving or rejecting the request.

Schedule Cash Management Jobs

Figure 378: Credit Management Job Templates

There are several templates available in the Schedule Credit Management Jobs app. These
include:
● Check Credit on SD Documents

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With this job, you can schedule a recheck of SD documents. You can reduce the workload
of a credit controller by scheduling this automatic credit check.
● Update Score for Business Partners
With this job, you can perform mass updates to the score of business partners.
● Update Credit Limit for Business Partners
With this job, you can perform mass changes to the credit limit in the credit account of
business partners.
● Update Rules for Scoring and Credit Check
With this job, in the Credit Management data of business partners you can define the rules
for scoring and credit limit calculation, and the checking rule.
● Assign Credit Management Role to Business Partners
With this job, you can assign the Credit Management role (UKM000) to business partners.

All job templates offer the option to filter and restrict processed information. You can also
perform a test run for most of the templates.

Figure 379: Schedule Credit Management Jobs

The app to schedule jobs for SAP Credit Management is called Schedule Credit Management
Jobs and is available in the business role SAP_BR_CREDIT_CONTROLLER.
Key features of this app include the following:
● With this job you can schedule a recheck of SD documents. You can reduce the work load
of a credit controller by scheduling this automatic credit check.
● You can recheck SD documents to find out if the creditworthiness of the customer has
changed in the period between the sales order date and the delivery date.
● You can recheck SD documents that have passed the initial credit check successfully, but
may have been impacted negatively in the meantime. For example, the credit limit of the
customer might have been reduced or the dunning level might have been raised.

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Figure 380: Recurrence Pattern

Use the recurrence pattern to define the job scheduling as required. You could either start the
job immediately or define a pattern for how that should be automatically performed in the
system.

Figure 381: Rebuild Credit Management Data

Use the Rebuild Credit Management Data app to schedule jobs for SAP Credit Management.
You can use the app to recreate the payment behavior summary, or to rebuild the credit
exposure for selected business partners and in selected credit segments.
Rebuild Credit Exposure
This job template is used to rebuild the credit exposure in Credit Management. First, the open
items of all credit exposure categories in SD are deleted. Then the credit exposure is rebuilt
completely.
Schedule this job to run outside of normal business hours. Otherwise, an employee might be
processing a sales order during the runtime of the job, causing it to be locked for the job. In
such cases, the credit exposure would be deleted but not rebuilt in this run.

Note:
You can use this job template only in a one-system scenario. This means that your
SD and your SAP Credit Management are in the same system.

Rebuild Payment Behavior Summary:

Determine the payment behavior summaries from Accounts Receivable Accounting (FI-AR)
so as to update them in SAP Credit Management. You can then evaluate the data in SAP
Credit Management.

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You can use this job template to rebuild the collective table with the existing summaries and
transfer all data again.
If, for example, you make organizational changes in your company, it may be necessary to
rebuild the collective table. In this case, the data is placed in the collective table again.

Note:
If you do not want to rebuild the summaries completely, you can perform delta
processing using the job template Send Delta of Payment Behavior Summary. You
can find this template in the Schedule Credit Management Jobs app. This job
considers only those open items of your customers that have been added or
changed since the last run.

As a prerequisite, you have to define credit master data for your customers.

Credit Management Migration

Figure 382: Credit Management Migration Objects

SAP S/4HANA Cloud customers can take advantage of a template-based migration approach
built into SAP S/4HANA with rapid data migration to SAP S/4HANA. SAP S/4HANA Cloud
supports a limited set of data migration objects, with support for additional objects planned
for later inclusion.
The available migration templates are as follows:
● Credit management profile data
● Credit management segment data

For this template, the following is out of scope:

● No updates of existing fields/records are possible.
● Segment data can only be loaded together with the profile data. It is not possible to add
profile data if segment data is already loaded.

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Figure 383: Migration Cockpit

On your SAP Fiori launchpad, choose the Migrate your Data – Migration Cockpit app. Create a
new migration project and enter the corresponding name.
The system generates a mass transfer ID automatically, which is used for your project. If
required, you can enter an existing mass transfer ID. For example, if you want to use the same
project settings in a different system, you must enter a mass transfer ID that is unique for the
participating systems. In this way, you can manually transport settings from a quality system
to a production system.
The migration object to bring in Credit Management data is Customer – extend existing record
by Credit Management data. After the migration template is created, you can download this
template to fill in the required data. Upload the file also with this application.

Note:
If you submit a credit limit amount, the amount value will be stored in the
Requested field on the Credit Limit tab. This is the standard behavior when
maintaining the credit limit for a business partner. The reason for this is the
configuration of the system. A credit limit change triggers the Change to Credit
Limit Requested event with the LIMIT_REQ follow-on process. This also happens
during migration, because the same save mechanism is applied. We recommend
that you turn off the event during migration. If the event is turned off, the credit
limit is stored directly in the target field.

To turn off the event, follow these steps:

1. In the Manage Your Solution app, navigate to Configure your Solution.

2. Open the Define Events and Follow-On Processes configuration step. You can find it in the
Finance Credit Evaluation and Management Process and Business Transactions area.

3. Remove the LIMIT_REQ follow-on process for the Change to Credit Limit Requested event.

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Figure 384: Data Migration Status

The Data Migration Status app for the configuration expert helps you to check the status of
your migration objects and projects after you’ve started the migration of data to your SAP S/
4HANA Cloud system for at least one migration object.
This app provides the following key features:
● Get an overview of your migration objects and projects in real time.
● Use filters and change view settings to drill down into reports faster.
● See detailed statuses for all records.
● Get info on all messages.
● Navigate to the standard SAP Fiori app directly from each record.
● Export reports to Microsoft Excel files.
● Audit data using the built-in audit function.
● See running jobs at a glance and get notifications.

Advanced Credit Management Configuration Steps

Self-Service-Configuration User Interface

Figure 385: Manage Your Solution

To access the Configuration screen, select the Manage Your Solution app.
The Configure Your Solution task enables you to maintain certain processes.

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Self-Service Configuration Tasks

Figure 386: Credit Management Configuration Tasks

SAP Credit Management helps you to make efficient credit decisions. Your system offers
functions to determine the risk of lack of payment early on and helps the credit controller to
make credit decisions quickly. To do this, you can make corresponding pre-settings or adjust
pre-configuration in the following steps.
The individual steps are explained in more detail in the next sections.

Figure 387: Activate or Deactivate SAP Credit Management (FIN-FSCM-CR)

To deactivate SAP Credit Management, select the checkbox. You do not need to take any
further action.
To activate SAP Credit Management, deselect the checkbox. If you want to activate SAP
Credit Management after having previously deactivated it, request an expert configuration in
the SAP Service Center. To do so, in the roadmap viewer in SAP Solution Manager, navigate
to SAP Activate Roadmap for SAP S/4HANA Cloud and follow this path:Explore phase
→ Deliverable: Configuration Definition → Task: Define Expert Configuration. Download the
Expert Configuration and SSCUI Reference file. Follow the steps described in this file and send
the request to the SAP Service Center.

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Figure 388: Create Credit Segments

Define credit segments for the calculation of the credit limit for your business partner.
For SAP Credit Management, define the credit segments that are useful for your company or
industry. You define the corresponding credit segments later in the master record of your
business partner.
Credit segments are required for calculating the credit limit and enable you to carry out
detailed checks at business partner level.
When you define a credit segment, you also decide the currency in which all credit-relevant
checks are to be carried out.

Figure 389: Define Customer Credit Group

Here, you can define the customer credit groups that you require. You can use customer
credit groups to group business partners. The customer credit group is used as a selection
criterion in reporting and when generating worklists.
For example, possible customer credit groups are domestic and foreign customers, regular
customers, or insured customers.

Figure 390: Create Risk Classes

Define the required risk classes for SAP Credit Management. You can define any number of
risk classes.

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The system can then automatically determine the risk class of a business partner from the
partner's score, or you can define it manually. The risk class determined automatically can
also be changed by the processor in the business partner master data record. In this case, the
manual change overwrites the risk class determined automatically.
Requirements
The automatic calculation of the risk class is controlled via the assignment of follow-on
processes to event types. To ensure automatic calculation, in the Define Events and Follow-
On Processes Customizing activity, define the EVL_RISK_C (Determine Risk Class) follow-on
process.
Activities
To use automatic assignment of the creditworthiness value to the risk class, assign the score
intervals to the corresponding risk classes.

Figure 391: Define Blocking Reasons

Define the reasons for blocking a credit account. You can define the block reasons as you
require. When a business partner is blocked, the credit analyst sees the block reason in the
credit segment data in the Control screen area.
You can also use predefined event types. Possible block reasons can include events such as
bad score, insolvency, high-risk country, or bad payment behavior.

Figure 392: Define Automatic Credit Control

The automatic credit check can target certain aspects during a check and run at different
times during order processing. In this activity, you can define your own credit checks to
correspond to your requirements in the area of Credit Management.
You can determine an automatic credit check for any combination of the following:
● Credit Segment

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● Risk Class
● Credit Group

It is possible to define a system response for each credit check (for example, warning
message). In the case of a warning message, a block can be set in the credit status of a
document.
When you define automatic credit checks, you can also freely define requirements which
cause a document or the forwarding of the material requirements to MRP to be blocked. This
is described in the Customizing section Make default settings for Credit Management.

Figure 393: Assign Sales Area to Credit Segment

In this activity, you assign a sales area to a credit segment.

Figure 394: Set Credit Limit Checks for Sales Document Types

Credit checks can run at different times during order processing.

For delivery creation, you can additionally specify whether the automatic credit check occurs
at the time of delivery creation and/or goods issue.
You can specify the sales document types for which a credit check should be carried out.
Here, delivery types can be controlled separately and specifically at the time of goods issue.
Note that the credit check types A, B and C are no longer supported. If you have specified the
credit check type to A, B or C, change it to D or null.
At the same time, you specify how the system responds if credit checks are set. The system
can respond either with a warning, an error or a delivery block.

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Figure 395: Set Credit Limit Checks for Delivery Types

Credit checks can run at different times during order processing.

For delivery creation, you can additionally specify whether the automatic credit check occurs
at the time of delivery creation and/or goods issue.
You can specify the sales document types for which a credit check should be carried out.
Here, delivery types can be controlled separately and specifically at the time of goods issue.
Note that the credit check types A, B and C are no longer supported. If you have specified the
credit check type to A, B or C, change it to D or null.
At the same time, you specify the how the system responds if credit checks are set. The
system can respond either with a warning, an error or a delivery block.

Figure 396: Define Checking Rules

A check rule can consist of several individual checks. In addition, you can define which
parameters are relevant for each check step.
To create a check rule, proceed as follows:

1. Choose Check Rule, and enter the required data. Here, you also make the setting for using
the check rule as the default setting.

2. To define the check steps required for the check rule, choose Checks.

3. To process the currency-dependent parameters at credit segment level, choose Credit

Segment and enter the required data.

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Figure 397: Define Events and Follow-On Processes

In this configuration step, you set the desired dependencies between various occurring events
and those triggered by them in SAP Credit Management.
Define the dependencies required between different events that can occur in the processing
of SAP Credit Management and the processes of SAP Credit Management that are to be
triggered when these events occur. For example, if a business partner's score changes, the
risk class should also be changed accordingly.

Figure 398: Define Approval Process

Create the process for the release of blocked documents for the documented credit decision.
Define the process for the release of documents that have been blocked for credit reasons.
This enables you to ensure that only authorized persons can release a document. This
approval process relates only to the release, and not the rejection of such documents.

Figure 399: Define Info Categories

Use this configuration task to define the required information categories for SAP Credit
Management. You can use these fields to define further information in the credit profile of the
business partner, which can be referenced for credit limit checks.

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Figure 400: Assign Company Code to Credit Segment

This configuration task enables you to assign company codes to a credit segment.
First, you assign the company code to a credit segment. As a second step, you need to ensure
that the appropriate credit limit is specified for the credit segments and/or for the individual
customers.

Figure 401: Define Credit Groups

You can use credit groups to combine different document types for credit management. Once
you've assigned document types to one credit group, they will be treated equally in the credit
check.
You enter credit groups in following configuration steps:
● Define Automatic Credit Control
● Set Credit Limit Checks for Sales Document Types
● Set Credit Limit Checks for Delivery Types

Standard Settings
The system offers the following default settings:
● 01 Credit Group for Sales Order
● 02 Credit Group for Delivery
● 03 Credit Group for Goods Issue

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Figure 402: Determine Active Receivables per Item Category

In this activity, you specify for each item category whether an item of the respective item
category is to be included in credit management, such as credit check and update of open
credit values.
The system offers all valid item categories for the corresponding selection.
Select the Credit Active checkbox for each item category that is to be taken into account for
credit check.

Figure 403: Create Values for Category Attribute Configuration

SSCUI Task: Finance – Credit Evaluation and Management – General Settings – Create
Values for Category Attribute.
The category is used to further subdivide the case types. You can define any categories for
each case type.

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Figure 404: Create Values for Category Reason Configuration

SSCUI Task: Finance – Credit Evaluation and Management – General Settings – Create
Values for Reason Attribute.
In this task, you define the permitted reasons for case processing.

SAP S/4HANA Cloud for Credit Integration Overview

Overview

Figure 405: SAP S/4HANA Cloud for credit integration

SAP S/4HANA Cloud for credit integration allows you to use external credit risk information
to make better credit decisions and to automate the monitoring of your customers' credit
risk.
It allows credit controllers to quickly access and request the latest credit information provided
by external credit agencies. This way, credit controllers can make faster and more accurate
decisions. In addition, our credit integration solution integrates seamlessly with your SAP
Credit Management system, allowing you to completely automate your customer-related
credit decision.
Without the credit integration solution, external credit agencies have to be integrated with
your system on a project basis, which is costly and time-consuming. Also, you must take care
of the continuous maintenance for every credit agency that you integrate with your SAP
Credit Management system. Or worse, you must manually download credit reports from
credit agencies and manually enter the respective data on your SAP Credit Management
system.
Our credit integration solution reduces your implementation effort and eliminates your
maintenance effort for the integrated credit agencies: it serves as a kind of hub between
your SAP Credit Management system and the credit agencies. Your SAP Credit

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 Lesson: Scope Credit Management

Management system is connected to our credit integration solution, which is located on

the SAP Business Technology Platform. The external credit agencies are integrated with our
credit integration solution on the SAP Business Technology Platform.

Architecture

Figure 406: General Architecture

SAP S/4HANA Cloud for credit integration is a solution running on the SAP Business
Technology Platform which connects your SAP Credit Management (FIN-FSCM-CR) system
to external credit agencies.
With the credit integration solution, you can search for the credit agency ID of a customer,
import new credit reports for a customer, subscribe to monitoring updates, and receive these
updates about the changed credit data of your customers. Changed values, such as the legal
form or the rating, are automatically written back from the credit integration solution into
your SAP Credit Management system.
Integration with SAP Credit Management
SAP S/4HANA Cloud for credit integration extracts information from credit reports that are
provided by the credit agencies and automatically updates the following organizational and
credit data on your SAP Credit Management system:
● Rating for a business partner provided by the credit agency
● Legal form
● Business partner identification number
● Industry code
● Date founded

As a result, in SAP Credit Management, your internal credit scoring is automatically

recalculated according to your settings in Customizing. The business partner's risk class and
credit limit can be recalculated. This automated and simplified process enables the credit
controller to take faster credit decisions based on the latest data.
You can launch the credit integration solution from the Credit Profile tab of your business
partner in your SAP Credit Management system, or from the SAP Fiori launchpad via available
tiles.

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Unit 8: Credit Management

Process Flow

Figure 407: Process Flow Credit Integration

To automatically import external credit information to your SAP S/4HANA Cloud, several
process steps are required.
The following is a typical case where the SAP S/4HANA Cloud for credit integration is used:
Steps in SAP S/4HANA Cloud:

1. A sales order is created in the SAP S/4HANA Cloud system for one of your business
partners.

2. The SAP Credit Management is also activated in this system and the credit check fails
because the credit limit is exceeded.

3. Through the Manage Credit Cases app, the Credit Controller, for example, checks the
credit case and the Credit Profile of the according business partner.

Steps in SAP S/4HANA Cloud for credit integration:

1. From the business partner master data, the Credit Controller can directly manage the
External Credit Information of the partner. This will link the responsible person to the SAP
S/4HANA Cloud for credit integration.

2. The SAP Business Technology Platform solution offers several ways to find and import a
credit report of the company in doubt.

3. The Credit Controller is also able to implement a monitoring in order to automatically

receive updates on the credit worthiness of the partner (optional).

4. From the SAP S/4HANA Cloud for credit integration solution, the Credit Controller is also
able to trigger an investigation into a company's credit-relevant data (optional).

5. Once the required credit report information is available, it is imported to the SAP S/
4HANA Cloud system.

Steps in SAP S/4HANA Cloud:

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 Lesson: Scope Credit Management

1. The Credit Profile and Credit Segment data of the business partner is automatically
updated with the information obtained from the SAP S/4HANA cloud for credit integration
data.

2. In the Manage Credit Cases app, the Credit Controller is now able to check the credit case
and release the sales order after the internal customer credit scoring data with enriched
additional information from the external credit agency.

In this way, the solution helps in making better credit decisions.

Features and Functions

Figure 408: Key Features of SAP S/4HANA Cloud for Credit Integration

Using SAP S/4HANA Cloud for credit integration, the credit controller can perform the
following tasks:
● Look up a business partner in the database of the credit agency. The respective ID
provided by the credit agency is automatically assigned in SAP Credit Management.
● Import new credit reports for business partners. The data required for your internal
scoring is automatically updated in your SAP Credit Management system.
● Process monitoring updates provided by the credit agencies.
● Updates you have subscribed to are automatically imported to your inbox.
● If relevant, data is automatically updated in SAP Credit Management.
● Trigger Investigations through the SAP S/4HANA Cloud for credit integration.

Figure 409: SAP Credit Management - Integrated Rating Agencies

To monitor customers' credit risk, your credit policy should always contain a solid mix of the
following:

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Unit 8: Credit Management

● Internal data (like past payment behavior of a particular customer, DSO, sales forecast,
and so on).
● External data from external credit information providers / credit agencies (that is,
Creditsafe, Dun & Bradstreet, Euler Hermes).

External data is important as it will enhance your internal view with an objective and un-biased
assessment (that is, market trends and global customer assessment).
The combination of both data sources enables you to assess your customers' credit
worthiness in a holistic way. In SAP Credit Management (CM), you can use a scorecard to
flexibly define the parameters that are to be considered.
In addition to the scorecard, SAP Credit Management also supports automated credit
decisions. This covers review and release of blocked orders via Documented Credit Decision
as well as review and approval of credit limit requests (raised by various departments). SAP
Credit Management further supports process automation via eventing processes (that is, the
external rating is changed and this triggers a recalculation of score and limit) as well as
workflows.

Figure 410: Choose from a Wide Base of Credit Bureaus, Easily Expand to Other Agencies

With SAP S/4HANA Cloud for credit integration, you can integrate the shown credit agencies
into your SAP Credit Management system. Please note that each agency provides a different
set of services and reports for different countries and should be checked in detail.
Furthermore, be aware that the scope of the credit product might exceed the range of data
that is integrated with SAP S/4HANA Cloud for credit integration.
SAP is not responsible for the content of the credit products mentioned here. For more
information about the credit products, contact the respective credit agencies.

Figure 411: Available Credit Agency Products and Features

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 Lesson: Scope Credit Management

With SAP S/4HANA Cloud for credit integration, you can integrate several credit agency
products into your SAP Credit Management system.
SAP is not responsible for the content of the credit products mentioned here. For more
information about the credit products, contact the respective credit agencies.

Note:
The scope of the credit product might exceed the range of data that is integrated
with SAP S/4HANA Cloud for credit integration. For more information, see
the Product Overview of our solution.

Note:
For a more insight into the available features per agency, please check the SAP
Help Portal: [Link]
b58727a4a2a54870bfc1b885a0a82f14/DEV_NEO/en-US/
[Link]

SAP S/4HANA Cloud for Credit Integration Usage

Process Flow Credit Integration

Figure 412: Process Flow Credit Integration

The process flow for the SAP S/4HANA Cloud for credit integration consists of the two main
systems: SAP S/4HANA Cloud and the SAP Business Technology Platform application SAP
S/4HANA Cloud for credit integration.
The individual steps on each of the platforms are described in more detail in the following
sections.

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Unit 8: Credit Management

Advanced Credit Management

Figure 413: SAP S/4HANA Cloud - Advanced Credit Management

SAP Credit Management in SAP S/4HANA Cloud

The creditworthiness and payment behavior of your business partners have an immediate
effect on the business results of your company. Efficient receivables and credit management
reduces the risk of financial losses and helps you to optimize business relationships with your
business partners. SAP Credit Management helps your company to determine the risk of
losses on receivables from your business partners early and to make credit decisions
efficiently and in some cases automated.
SAP Credit Management enables your company to operate centralized credit management
even in a distributed system landscape, while taking account of both internal and external
credit information.
Credit Master Data for Business Partner
In the business partner credit master data of SAP Credit Management (FIN-FSCM-CR), you
manage all credit-relevant master data of a business partner.
The credit master data includes the current credit limit, one or more externally determined
rating values, and the risk class. Each of the master data fields has a change history that
provides information about the time of the change, the user, and the old and new values.
In SAP Credit Management, the credit analyst can determine and manage both external and
internal credit information for a business partner. This information is used mainly as input
parameters for the Credit Rules Engine, which companies can use to carry out automatic
business partner ratings (scoring), make credit decisions, or calculate credit limits.
Requesting external credit information is completely integrated in SAP Credit
Management and enables companies to request information electronically using appropriate
interfaces. Credit departments often use several external credit information providers,
so SAP Credit Management can save the information provided by such an interface
separately, according to the data provider. The interface is designed to allow the user to call
up information about both business partners and private customers.

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 Lesson: Scope Credit Management

Figure 414: Business Partner - External Credit Information

In your SAP Credit Management system, you can see a list of imported credit reports for your
selected business partner on the partner's Credit Profile tab. The original credit reports for
your business partner are stored and can be displayed in the SAP S/4HANA Cloud for credit
integration solution. You can display them in the Manage Credit Reports for Business Partner
app which you can access directly from your business partner in your SAP Credit
Management system.
Log on to your SAP Credit Management system. Go to the Business Partner and select
display BP in role: SAP Credit Management.
Choose the Credit Profile tab. In order to load the external credit information from the Cloud
for Credit Integration, choose the Manage Ext. Credit Information button.
From here, a browser window opens the Manage Credit Reports for Business Partner app.

Finding a Company

Figure 415: Finding a Company

You can use the Find Business Partner app on the SAP Business Technology Platform to
search for the Company ID of a company in the database of a credit agency.

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Unit 8: Credit Management

Figure 416: Company ID

Company ID
Company ID is an identifier that a credit agency uses to identify each customer. Once
assigned, it establishes a one-to-one relationship between your business partner and the
company listed in the credit agency. This enables you to order reports and monitoring
services for a business partner.
To import a credit report for a business partner, you must first identify your business
partner's Company ID in the database of the credit agency. You can search for this Company
ID by using the Find Business Partner app.

Figure 417: Find Business Partner

You can search for an entry of your business partner at a credit agency to determine the
Company ID. You can add this ID to the master data of your business partner and then use the
full functionality of SAP S/4HANA Cloud for credit integration.
When you have assigned a Company ID to your business partner, it is listed in the following
areas:
● In the header section in the Manage Credit Reports for Business Partner app.
● On the Identification tab for your business partner in your SAP Credit
Management system.

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 Lesson: Scope Credit Management

When you import a credit report, the relevant credit information is automatically updated for
the business partner in your SAP Credit Management system. Per standard configuration, the
following fields are automatically updated:
● On the Identification tab: Legal Form, Date Founded, Industry code
● On the Credit Profile tab: Rating

Depending on the system configuration of your company, additional fields might be

automatically updated.
As a result, your internal credit scoring is automatically recalculated according to your
settings in Customizing. The business partner's risk class and credit limit can be recalculated.

Credit Reports

Figure 418: Credit Reports

Order a credit report to receive the latest credit information for a company. You can order
credit reports for business partners and for new companies, which are not yet entered as a
business partner in your SAP Credit Management system. You can also bulk-import credit
information in SAP Credit Management.

Figure 419: Ordering a Credit Report for a Business Partner

You can order a credit report for your business partner using the Manage Credit Reports for
Business Partner app. There are basically two ways to perform this task. This is either with an
already assigned Company ID to a Business Partner or without.
Order a Credit Report
You want to order a credit report for a Business Partner. The Company ID of the credit
agency is assigned to this Business Partner.
Access the Manage Credit Reports for Business Partner app and choose Import Credit Report.

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Unit 8: Credit Management

In the dialog box, select your preferred entries and choose OK.

Figure 420: Assign Company ID and Order a Credit Report

Assign Company ID and Order a Credit Report

You want to order a credit report for a Business Partner. The Company ID of the credit
agency is not yet assigned to this Business Partner.
Access the Manage Credit Reports for Business Partner app and choose Find ID.
You are forwarded to the Find Business Partner app. Make your selection in the Credit
Agency and Country of Business Partner fields. Select the required entry in the list of results
and choose Assign ID and Import.

Figure 421: Credit Report information

The app imports a new credit report for your selected business partner. You can display this
report in the app as a PDF. The credit report is stored in the SAP Business Technology
Platform App and can be accessed whenever needed.

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 Lesson: Scope Credit Management

Figure 422: Business Partner Credit Profile - Update

In your SAP Credit Management system, the report for your business partner is listed on
the Credit Profile tab in the External Credit Information section.
When you import a credit report, the relevant credit information is automatically updated for
the business partner in your SAP Credit Management system. In a standard configuration, the
following fields are automatically updated:
● On the Identification tab: Legal Form, Date Founded, Industry code
● On the Credit Profile tab: Rating

Depending on the system configuration of your company, additional fields might be

automatically updated.
As a result, your internal credit scoring is automatically recalculated according to your
settings in Customizing. The risk class and credit limit of your business partner can be
recalculated.
In addition, you can see a list of imported credit reports for your selected business partner on
the Credit Profile tab of your business partner. The original credit reports for your business
partner are stored and can be displayed in the SAP S/4HANA Cloud for credit
integration solution. You can display them in the Manage Credit Reports for Business
Partner app which you can access directly from your business partner in your SAP Credit
Management system.

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Unit 8: Credit Management

Figure 423: Remove Credit Reports

In the Manage Credit Reports for a Business Partner app, there a several other options for
processing Credit Report Data.
For example, you can process Credit Report Data manually in case the synchronization fails
due to connectivity issues or system downtime.
Furthermore, you can remove Credit Reports listed in the Manage Credit Reports and Manage
Credit Reports for Business Partner apps. As a result, these credit reports are marked for
deletion and do not appear anymore in these apps.

Note:
Monitoring updates always refer to a credit report. Therefore, if you remove a
credit report from the Manage Credit Reports app or the Manage Credit Reports
for Business Partner app, the related monitoring updates are also removed. They
are no longer listed in the Display Inbox app.

Monitoring

Figure 424: Monitoring

You can activate monitoring products to receive automatic updates about the credit
worthiness of your business partners.

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 Lesson: Scope Credit Management

Figure 425: Activating Monitoring when Importing a Credit Report

This section explains how you can manually activate monitoring products for a Business
Partner. As an alternative, you can also activate monitoring products when running the Mass
Import of External Credit Information.
For the following procedures, always use the Manage Credit Reports for Business Partner app
as a starting point.
Activating Monitoring on the Monitoring Settings Tab
For Business Partners to whom you have already assigned the Company ID from the relevant
credit agency.
Activating Monitoring when Importing a Credit Report
For Business Partners to whom you have already assigned the Company ID, you can activate
monitoring when you order a credit report. This is only possible when you select a credit
product that also contains monitoring.
Activating Monitoring when Assigning ID
For Business Partners to whom you still need to assign a Company ID, you can activate
monitoring when you assign the ID. This is only possible when you select a credit product that
also contains monitoring.
Result
In the Manage Credit Reports for Business Partner app on the Monitoring Settings tab, the
status of the monitoring product is set to Active.

Note:
The status Active or Inactive reflects the last setting that was made in this app. It
is possible to activate or deactivate monitoring outside of this solution: for
example, at a credit agency's website. These changes are not reflected in the app.
Therefore, you can always activate or deactivate a product, even if this status has
already been set. This way, you can create the corresponding log entry in the app
and avoid data inconsistencies.

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Unit 8: Credit Management

Figure 426: Updating the Monitoring Status

Synchronize the monitoring status in the app with the status registered at the credit agency.
You can synchronize the monitoring status displayed in the app with the monitoring status
registered at the credit agency. The status in the app is updated, if necessary.
Result
A dialog box informs you of the result of the synchronization process for each credit agency.

Note:
This feature is only available for selected credit agencies.

Figure 427: Running the Mass Import of External Credit Information

To receive updated information about the credit worthiness of your business partners, you
can import credit reports and activate monitoring for your business partners with a mass
import. You can use the mass import to request new credit reports for a larger number of
business partners via SAP S/4HANA Cloud for credit integration. Perform this task in
your SAP Credit Management system.
Prerequisites
● Your SAP Credit Management system administrator has activated SAP S/4HANA Cloud
for credit integration for your user.

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 Lesson: Scope Credit Management

● To activate monitoring products with the mass import feature, your SAP Credit
Management Administrator must maintain a default monitoring product.

Result
The system executes the mass change and orders the credit reports according to the criteria
you have entered.
If the administrator has entered a default monitoring product for the rating procedures you
have entered, monitoring products are activated as follows:
● The language of the ordered monitoring product is the same as the language specified for
the credit information during the mass import.
● The end date of the monitoring product that is activated during the mass import depends
on the credit agency.

Investigation

Figure 428: Investigations

You can use the Find Business Partner app to search for the Company ID of a company in the
database of a credit agency. If your search returns no results, you can request an
investigation at the credit agency.

Figure 429: Request an Investigation

You can request an investigation at a credit agency to receive credit-relevant data for a
company.
There are two ways to request an investigation for a company:
Requesting an Investigation for a Business Partner
Open the Manage Credit Reports for Business Partner app and enter a business partner
number and choose Request Investigation.
In the dialog box, select a credit agency. You are forwarded to the Request Investigation app.
In the Investigation Details section, enter the attributes for the credit product you want to
order.

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Unit 8: Credit Management

For selected credit agencies, you can attach a PDF file to document your lawful interest for
requesting information about a company.
Choose Send to Credit Agency and confirm.
Result
You have requested an investigation for the selected company.
The time taken to receive the result depends on the credit agency.
You can check the status of this investigation and see the investigation result sent by the
credit agency in the Manage Investigations app.

Note:
An automatic job fetches the updates for your investigations twice a day.
Choose Update in the Manage Investigations app to see if a result has been sent
by the credit agency in the meantime.

Requesting an Investigation for Customer Without Business Partner Entry

Open the Request Investigation app from the SAP Fiori launchpad. In the dropdown menu,
select the Country in which you want the credit agency to investigate for the company.
In the dropdown menu, select the Credit Agency which should investigate for the company. In
the Company Details section, enter the information about the company.
You have the following options to provide information about the request:
● Enter the Company ID, VAT Number, or Registration Number, or
● Provide the address of the company (Name, Street, and City)

In the Investigation Details section, enter the attributes for the credit product you want to
order.
For selected credit agencies, you can attach a PDF file to document your lawful interest for
requesting information about a company.
Choose Send to Credit Agency and confirm.
Result
You have requested an investigation for the selected company.
The time taken to receive the result depends on the credit agency.
You can check the status of this investigation and see the investigation result sent by the
credit agency in the Manage Investigations app.

Note:
An automatic job fetches the updates for your investigations twice a day.
Choose Update in the Manage Investigations app to see if a result has been sent
by the credit agency in the meantime.

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 Lesson: Scope Credit Management

Figure 430: Automatic Investigations

When you order a credit report, a credit agency may provide the service of automatically
investigating for the company.

Note:
This feature is only available for selected credit agencies. For more information,
see Available Features per Agency on the SAP Help Portal.

The automatic investigation is started in the background of the app. When this happens, a
dialog-box message informs you that an automatic investigation has been started by the
credit agency.
An automatic investigation might be started by the credit agency in cases such as the
following:
● The credit data about the company for which you have ordered the credit product is
outdated.
● The credit agency still needs to collect credit information about this company.

You can see the status of the automatic investigation in the Manage Investigations app.
There, you can also find the result of the investigation once it is completed.

LESSON SUMMARY
You should now be able to:
● Get an overview of Basic Credit Management
● Get an Overview of Advanced Credit Management
● Use the SAP S/4HANA Cloud for credit integration

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Unit 8: Credit Management

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 Unit 8

Learning Assessment

1. The corresponding credit segment data is used for credit checking when the order is
created and on delivery within a company area.
Determine whether this statement is true or false.

X True

X False

2. The Advanced Credit Management is part of the overall sales cycle that ranges from sales,
shipping, credit management through receivables processing.
Determine whether this statement is true or false.

X True

X False

3. Blocking reasons for SAP Credit Management can be defined according to customer
requirements.
Determine whether this statement is true or false.

X True

X False

4. Which data is migrated by the migration template Credit Management data is the
Customer – extend existing record by Credit Management data?
Choose the correct answer.

X A Credit Case Information

X B Credit Limit Utilization Information

X C Sales Order Data

X D Credit Segment Data

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Unit 8: Learning Assessment

5. All of the connected credit agencies offer the exact same range of services.
Determine whether this statement is true or false.

X True

X False

6. Which element establishes a one-to-one relationship between the business partner and
the company listed in the credit agency.
Choose the correct answer.

X A Business Partner Number

X B Company ID

X C Customer Identification

X D Industry Code

7. The Monitoring functionality enables you to receive automatic updates about the credit
worthiness of your business partners.
Determine whether this statement is true or false.

X True

X False

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 UNIT 9 Collections and Dispute
Management

Lesson 1
Collections and Dispute Management 351

UNIT OBJECTIVES

● Get an overview of Collections and Dispute Management

● Maintain Collections and Dispute Management master data
● Use Collections and Dispute Management
● Reporting in Collections and Dispute Management
● Configure Collections and Dispute Management

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Unit 9: Collections and Dispute Management

350 © Copyright. All rights reserved.

 Unit 9
Lesson 1
Collections and Dispute Management

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Get an overview of Collections and Dispute Management
● Maintain Collections and Dispute Management master data
● Use Collections and Dispute Management
● Reporting in Collections and Dispute Management
● Configure Collections and Dispute Management

Collection and Dispute Management Overview

Collections and Dispute Management Overview

Figure 431: Collections and Dispute Management Overview

Streamline your debt collections processes by running our integrated software-and-service

package for resolving customer invoice disputes and managing overdue receivables. With it,
you can also reduce your exposure to the risks and costs of bad debt.
Dispute Management provides dispute managers with tools to process disputes centrally and
protect customer relationships. They can effectively manage disputes by using dispute
resolution tools, dunning integration, and workflow integration.

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Unit 9: Collections and Dispute Management

Collection agents can proactively manage and collect overdue receivables by using
receivables collections tools and dunning integration. The agents have all the information and
support they need to collect payments faster and provide improved customer service. They
can identify bad debt risk potential and take preventative steps to reduce further exposure.

Business Benefits and Key Process Flow

With the solution, you can speed up dispute resolution with advanced workflows and increase
the productivity of the collections agents. Moreover, you are in a position to communicate
effectively with customers and collaborate efficiently across departments. You can
standardize processes for customer dispute resolution of invoices to reduce bad-debt write-
offs or days sales outstanding.
Capture dispute cases or automatically calculate items open for collections are key process
flows covered by the Collections and Dispute Management scope item. Furthermore, you can
contact customers and document results of customer contact.

Collection and Dispute Management Master Data

Collections and Dispute Management Master Data

Figure 432: Maintain Business Partner

Pick your business partner and display it in the BP role: Collections Management, or Business
Partner (Gen.), or under Customer.
From the BP Role Collections Management Collection Profile tab, verify that the collection
profile YT_PRF_01 is assigned. The same is true for BP role: Customer (Financial
Accounting).
In the Correspondence tab, check the accounting clerk setting. Also make sure that the
dunning data is filled with procedure and dunning clerk.

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 Lesson: Collections and Dispute Management

Figure 433: Maintain Accounting Clerks

You can define an identification code and the user ID for the accounting clerks. This
identification code has to be maintained in the company code data of the customer master.
The user assigned to this identification code is used as a collection specialist within
Collections Management if the identification code has been defined in the customer master
data and the customer has been selected for Collections Management.

Collection and Dispute Management Operations

Collections and Dispute Management Integration

Figure 434: Tight Integration with Receivables

Dispute management functionality is offered at certain points within finance processes. This
helps simplify the entry of dispute cases helping accountants in their daily work, assuring
dispute cases are created where they arise, and eliminating the delay between discovering
disputes and opening dispute cases.

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Unit 9: Collections and Dispute Management

Process integration into financial processes basically has two aspects. The first aspect is to
integrate dispute management functionality in financial applications. The second aspect is for
financial transactions related to dispute cases to automatically update the dispute case.

Creating a Dispute Case

Figure 435: Create Dispute Case from Receivable

The transactional app, Process Receivables, is intended for collection specialists whose main
task is to contact customers to request payment of overdue receivables.
As a collection specialist, you can access a list of receivables payable by an individual
customer. Then, you can create promises to pay and dispute cases. You start the app by
entering a customer number directly, by searching for a customer, or by drilling down to an
individual customer from the Process Collections Worklist app.
With the app, you can view the overall status of customer receivables, such as invoice details,
credit memos, credit information, and customer contact history. You can also display the
aging of the receivables in a due date grid.
While on the phone with a customer, a collector attempts to create a promise to pay for
customer invoices. In addition, they can directly create a dispute case for a customer invoice,
create resubmissions, and, at the customer level, write a note.
The promise to pay documents the details of a customer's pledge to pay an invoice and
includes the amount, date, person making the pledge, additional notes, and link to the invoice.
The SAP S/4HANA system automatically checks if the promise is kept. Broken promises
usually result in re-prioritization of the customer on the worklist. The status is logged and can
be either active, kept, partially broken, or broken.
An existing promise can be renewed (increasing promise level), changed, or withdrawn. A
promise can be documented for multiple invoices. In this case, each promise is tracked
separately. There can only be one active promise to pay per invoice at a time.
You can create a dispute case directly in Collections Management from the invoice view.
You can select one or several invoices. If more than one invoice is selected, or if one invoice
has more than one residual item, the system enables you to choose from all open items.
The contact person data is automatically transferred to the dispute case.

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 Lesson: Collections and Dispute Management

If the outcome of dispute resolution is that the dispute is unjustified, the dispute case gets the
status 'to be collected' and appears on the collections worklist.

Creating a Resubmission
Resubmissions are specific reasons for needing to contact a customer. A resubmission puts
the customer back on the worklist on a specified future date because of a specified reason.
You create resubmissions on the Resubmission tab page.
By creating a resubmission, you can influence the automatically created worklist, keeping the
customer off the worklist until the specified date. If you can create a resubmission, the
customer re-appears on the worklist when the resubmission date is reached. The prerequisite
is that the collection strategy contains a corresponding collection rule. You can also suppress
the customer from the worklist by setting the flag No contact until resubmission date. The
customer does not appear on the worklist even if other collection rules of the collection
strategy are fulfilled.
Resubmissions can be changed, for example, postponed by entering a new resubmission
date. You must confirm a resubmission manually when the reason for the resubmission is
settled. In addition, you get an overview of all resubmissions that have not yet been
confirmed.

Managing Dispute Cases

Figure 436: Dispute Manager Tasks

Use this app to analyze and further process existing dispute cases. This involves dispute
cases that are related to open receivables for your customers. You may occasionally find that
customers deduct an amount from a payment without first agreeing this with the payment
recipient. As a result, the payment recipient has to create a dispute. This app makes this
dispute procedure easier for you because it can be used by all of the relevant departments in
your company.
You can use this app to:
● Display the dispute cases in the overview, and use various criteria for a search as
necessary.

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Unit 9: Collections and Dispute Management

● Display the details of an individual dispute case, such as the notes and linked invoices.
● Change the attributes, especially which collection specialist you want to process the
dispute next.
● Add notes to document the result of your enquiry, for example.
● Add attachments to document a complaint, for example.
● Send internal or external emails.
● Preserve your edited data with drafts kept automatically in the apps, thereby preventing
data loss.
● Create customer-disputed objects.
● Create dispute cases without invoice reference, and add the reference later.
● Remove invoice references from dispute cases.
● Reopen dispute cases to enter additional data, for example, after it was automatically
closed.

Processing Collections Worklist

Figure 437: Process Collections Worklist

In the Collections Worklist, the result of a customer contact is tracked. This drives the
reporting and team management statistics.
You can click the customer number to view various details, for example, the customer master
data or process incoming payments. The priority of the collection rule is used to score the
customer on the collection worklist. Depending on the information, the urgency to act is
defined.

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 Lesson: Collections and Dispute Management

Collection and Dispute Management Reporting

Collections Progress

Figure 438: Collection Progress

You can view the worklist statistics of all collection groups you are responsible for. The
statistics show the total number of worklist items, the number of open worklist items, the
number of completed worklist items where the contact person was reached, and the number
of completed worklist items with an unsuccessful contact. The statistics also show the status
of all worklist items per collection specialist. You can create a layout that allows you to show
the statistics per collection group and priority of the worklist item.
The status of a worklist item is determined by customer contacts, so no customer contact so
far means that the worklist item has the status Open, if the customer is contacted and the
contact was not reached, the worklist item receives status Not Reached, and finally, if the
customer is contacted and reached, the worklist item gets status Reached.

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Promises to Pay Overview

Figure 439: Promises to Pay

With the Promises to Pay analytics app, it is possible to view and check the total amount of
open promises to pay by customer or accountant. You can also review broken promises from
this overview.

Supervise Collections Worklist

Figure 440: Supervise Collections Worklist

The Supervise Collection Worklist app helps you guide your team to reach cash collections
goals more effectively by offering a complete processing worklist. It provides quick analytics
at the top of the screen to highlight individual and team progress and provides links to
collections progress and other analytical tools.

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Collections and Dispute Management Configurations Steps

Figure 441: Configure Collections and Dispute Management

For the Collections Management and Dispute Case Management, there are two separate
Configuration Items.
The Application Area for both is Finance with the Sub Application Area Collections
Management and Dispute Resolution.

Collections Management Self-Service-Configuration-Tasks

Figure 442: Collections Management Configuration Steps

The Configuration Item Collections Management contains eight configuration steps. Those
are explained in more detail in the following material.

Figure 443: Define Collection Groups

Define collection groups and assign a collection strategy to the group. Assign collection
specialists to the group and define substitutes for them.
Define the groups of collection specialists that are to contact customers in SAP Collections
Management. Accordingly, use the collection specialists' user names to assign them to each
group. Each collection specialist can also enter a temporary substitute, for example, for

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vacation or when sick. When the specialist is absent, the system assigns the worklist items to
the substitute.
With the same strategy, all specialists in a collection group collect open receivables from
business partners. You therefore assign a collection strategy to each group.

Figure 444: Assign Collection Groups to Segment

Define which collection groups are to contact business partners in the respective collection
segments. In addition, define one of the units as the default unit.
The system proposes this for each related segment when you enter a profile in the business
partner master record. This ensures that, in each segment, a group of collection specialists is
responsible for the customer.
Requirements
You have used the Define Collection Segments and Define Collection Groups steps to set up
collection segments and collection groups.

Figure 445: Define Collection Segments

In this step, you can define which collection segments are to be used and assign company
codes and credit segments to them.
Collection segments group company codes of a company from the view of SAP Collections
Management. This is so transaction data of a business partner, such as open items, dispute
cases, or promises to pay, can be considered together from these company codes. The
collection segment also determines which SAP Credit Management data is considered for
customers in this segment. For each collection segment, specify the credit segments from
which the system determines, for example, the credit limit utilization of the customer.
You can only use collection segments in SAP Collections Management if you released them.
Once you release them, you can no longer remove the company codes that you assigned to
the segment. This restriction is necessary so that after reorganizations the system can assign
customer contacts and resubmissions from old segments to the new segments. This is the
case, for example, for profile changes or changes of the specific data for SAP Collections
Management in the business partner master.

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You use released collection segments when you create the collection profile (see the
configuration step Define Collection Profile).

Figure 446: Define Collection Profiles

In this step, define the collection profiles that can be assigned to the business partners in SAP
Collections Management.
Collection profiles are a grouping of collection segments. They split the company codes that
participate in SAP Collections Management. You can determine how the company codes are
split in a profile and which company codes are not included in a profile. Do this in the view
Assign Collection Segments to Profile using the function Assignment Status of Company
Codes.
Once you assign a profile to a business partner, you can define, for each collection segment,
the collection specialist or group of collection specialists to contact the business partner in
this segment.
As a prerequisite, you must split the company codes into collection segments in the Define
Collection Segments step.

Figure 447: Define Result of Customer Contact

Define the values permitted for the Result of Customer Contact. When you create a customer
contact, you select one of the values defined here for the result.
Define the following properties for each result:
● Remove indicator: If you create a customer contact with a result for which you have set
this indicator, the system changes the status of the worklist item to Completed.
● Reached indicator: The basic rules BR00000019 or BR00000020 valuate a customer
contact as successful if you have set the Reached indicator for the result. The worklist
statistics provide information about the number of customer contacts where the customer

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was reached or not reached. For this purpose, the Reached indicator of the result is also
evaluated.

Figure 448: Define Resubmission Reason

Define the values for the following input helps that are available to you for receivables
processing: reason for resubmission and reason for note.

Figure 449: Define Derivation of Priority

Specify which percentage valuation, in accordance with the collection strategy, leads to which
priority of the related entry in the worklist.
Valuation points are calculated from the key figures of the business partner in accordance
with the strategy. The proportion of these valuation points - to the maximum valuation that
the system calculates automatically or that you can specify in the strategy - results in the
percentage valuation. In this step, you define which percentage valuation leads to which
priority of the related worklist item.
In the SAP standard, the priorities are distributed to the percentage valuation on a linear
basis:
Priority Percentage Valuation
● Low 0-25%
● Medium 26-50%
● High 51-75%
● Very High 76-100%

You can adjust these predefined settings to meet your requirements.

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Figure 450: Settings for Promise to Pay

Specify tolerance days and the use of a dunning block.

Define the number of tolerance days to be considered in the valuation of the state of the
promise to pay.
If you require integration with dunning, enter a dunning block. The system then excludes
items from dunning where there is a promise to pay for the invoice. This promise can be kept
within the deadline agreed.

Dispute Management Self-Service-Configuration Tasks

Figure 451: Dispute Management Configuration Steps

For the Collections Management and Dispute Case Management, there are two separate
Configuration Items.
The Application Area for both is Finance with the Sub Application Area Collections
Management and Dispute Resolution.

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Figure 452: Create Values for Attribute Reason

Where necessary, you can check the standard reason code and add additional case codes to
the same case type. To add a reason code, you can add a new entry and enter the relevant
details. Alternatively, you can copy an existing reason code and change the ID and text.

Figure 453: Create Values for Attribute Root Cause Code

Define the permitted root causes determined for a clarification case. These reasons are used
for reporting.

Figure 454: Create Values for Attribute Category

With this configuration step, you can create different categories for dispute cases.

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Figure 455: Define Triggering Attributes for Document Changes

Define the attributes in the dispute case that are to trigger document changes. Only changes
to the attributes here can lead to changes to FI document attributes.
With the Automatic Document Changes from Dispute Cases function, you can control that
when you create or change a dispute case, certain attributes are changed automatically in the
related FI documents (for example, a dunning block could be set).
Define the attributes in the dispute case that are to trigger document changes. Only changes
to the attributes here can lead to changes to FI document attributes.
In addition to these settings, you must also define the document changes.

Figure 456: Define Document Changes

In this task, you specify which fields in the FI documents are changed when the triggering
attributes in the dispute case change.
With the Automatic Document Changes from Dispute Cases function, you can control that
when you create or change a dispute case, certain attributes are changed automatically in the
related FI documents (for example, a dunning block could be set).
You specify which fields in the FI documents are changed when the triggering attributes in the
dispute case change.
Ensure you already specified which fields in the dispute case trigger document changes under
Define Triggering Attributes for Document Changes since this is a prerequisite for this step.

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Figure 457: Edit Settings for Writing Off Dispute Cases

Specify the G/L account and cost center for the automatic write-off of dispute cases. When
automatically writing off dispute cases, the settings made here are used to determine the G/L
account and the cost center.
In the G/L Account view, for each reason, define which G/L account to which the dispute case
documents are written off. If you leave the reason blank, a default value is defined for all
unspecified reasons for each case type. If you leave the case type and the reason blank, a
default value is defined for the company code.
In the Cost Center view, for each person responsible, define the cost center to which the
dispute case documents are written off. As above, you can enter a default value without
specifying the person responsible.

Figure 458: Define Default Values for Creation of Dispute Cases

You can set default values for the attributes on the dialog screen for creating a dispute case.
You can configure the default values for the attributes on the dialog screen for creating a
dispute case in Financial Accounting processes. Additionally, the category can be derived as a
fundamental value for creating a dispute case that is not ready for input in the dialog box.

LESSON SUMMARY
You should now be able to:
● Get an overview of Collections and Dispute Management
● Maintain Collections and Dispute Management master data
● Use Collections and Dispute Management

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● Reporting in Collections and Dispute Management

● Configure Collections and Dispute Management

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 Unit 9

Learning Assessment

1. A promise to pay defines a specific reason why a customer needs to be contacted again.
Determine whether this statement is true or false.

X True

X False

2. Correspondence can be created automatically without user interaction for events such as
dispute case creation or closure.
Determine whether this statement is true or false.

X True

X False

3. Which of the following tasks can be performed with the Process Receivable app?
Choose the correct answers.

X A View overall status of customer receivables, such as invoice details.

X B Check incoming emails of company’s Dispute Hotline.

X C Display the aging of the receivables in a due date grid.

X D Enter reason and assign processor to dispute cases.

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 UNIT 10 Subscription Billing and
Revenue Management

Lesson 1
Overview of Subscription Billing and Revenue Management 373

Lesson 2
Managing Convergent Invoicing 385

Lesson 3
Managing Contract Accounting 435

UNIT OBJECTIVES

● Get an overview of Subscription Billing and Revenue Management

● Manage the Convergent Invoicing Invoice creation for usage and service (2BG)
● Manage the Convergent Invoicing Invoice correction processing (2BE)
● Understand the Convergent Invoicing recurring and one-off items (2T3)
● Understand the Fiori Analytical Apps for the Convergent Invoicing Manager (2KF)
● Explain the Convergent Invoicing - Rating of Consumption Items (3DX)
● Understand the SAP Hybris Revenue Cloud Integration for Convergent Invoicing (2PT)
● Understand the Contract Accounting Customer Initiated Payments (2BI)
● Understand the Contract Accounting Company Initiated Payments (2DP)
● Understand the Contract Accounting Daily and Monthly Closing (2BK)
● Manage the External Tax Audit (2SJ)
● Understand SAP Fiori Analytical Apps for Contract Accounting Manager (2KH)
● Create and Manage Master Data of Business Partners and Contract Accounts (2AR)
● Understand the Contract Accounting Open Item Management (2UJ)
● Manage the Contract Accounting - Group Ledger IFRS (33X)
● Manage the Contract Accounting - Group Ledger US-GAAP (33V)

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● Understand SAP Cash Application, add-on for Contract Accounting (47I)

● Manage Contract Accounting - Variant Configuration (3L8)

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 Unit 10
Lesson 1
Overview of Subscription Billing and Revenue
Management

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Get an overview of Subscription Billing and Revenue Management

Shipment Plan and Target Customers

Why SAP S/4HANA Cloud for Contract Accounting and Invoicing?

Figure 459: Business Model Innovation in the Digital Economy Requires SAP S/4HANA Cloud for Contract
Accounting and Invoicing

Today new opportunities for business model innovation lead to new approaches for
monetization. These approaches also demand new principles in the areas of billing / invoicing
and in AR/AP handling.
MOVING FROM PRODUCT TO SERVICES AND OUTCOMES: A disruptive change took place
moving away from selling only products and selling services instead. This requires a top-to-
bottom restructuring of the company to focus on becoming an always-on service provider.
Sales, Marketing, Finance, and IT have to rethink their business processes because the
revenue model is now continually varying over time instead of being focused on discrete one-
time transactions. Companies in B2B markets moving towards "Solution Business" are selling
complete offers for hardware, subscription services, project services, and warranty services.
They need the ability to put them all on a single quote, order and bill, and they are increasingly

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moving to offer outcome-based models to their customers, with pricing based on tangible
value delivered.
DIGITAL COMMERCE: Moving from physical store sales to online eCommerce and mobile
commerce means that customers have to be offered choice in payment methods to reassure
them for online purchases. Brands should offer customers credit so that they can choose
whether to pay in advance, pay in arrears, cash-on-delivery, or with installment plans. Do this
at high-volume, even for B2C while streamlining subscription and pay-per-use billing and
ensuring that revenue billed turns into cash collected on a timely basis.
PLATFORM BUSINESS MODEL: The ideal way to not just disrupt an industry market but to
build a long-term defensible position is to move to a multi-sided business models where
transacting business with, through, and behalf-of third parties is key to the success of the
business model and an integral part of the design of the service monetization process and
solution. This creates a virtuous cycle with network effects where the more partners on the
platform, the more value for end-customers. And the more end-customers sign up, then the
more value in the platform for partners. This requires having an equal focus on both end-
customer and partner engagement, and in developing customer pricing and partner revenue
share terms in concert.
INTERNET OF THINGS (IoT) AND CONNECTED DEVICES: Taking a connected device or
product and adding additional services delivered via the Cloud opens up additional revenue
opportunities. These are typically sold as subscription services, often with usage-based
pricing and real-time tracking of entitlements and allowances against available credit. For
companies or business units used to selling and fulfilling one-time product orders, this is quite
a radical change of business model.

Figure 460: SAP S/4HANA Cloud for Contract Accounting and Invoicing Consists of Two Solutions

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 Lesson: Overview of Subscription Billing and Revenue Management

Solution Overview

Figure 461: SAP Offers the Only End-to-End Digital Business Solution Contract Accounting and Invoicing as Part
of the Digital Core

SAP has the breakthrough solutions that customers need to differentiate, grow, and Run
Simple for the Digital Economy.
Our sophisticated technology portfolio of applications, platform, and network solutions
enable our customers to "Run Simple" by effortlessly connecting business, people, devices,
data, and processes across their enterprise, supplier network, customers, and market.
You have to serve your customers in different ways and meet their needs, you have to partner
with your suppliers and collaborate in real-time, you have to engage your workforce, and
manage your assets. All of which must come together through a core system for monetizing
your subscriptions and consumption based services with solid and powerful billing / invoicing
and AR/AP capabilities.

Roadmap and External Links

Figure 462: SAP S/4HANA Cloud for Contract Accounting and Invoicing

● CE 1802 is the first release of SAP S/4HANA Cloud for contract accounting and invoicing.

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Unit 10: Subscription Billing and Revenue Management

● Delivered scope: Best Practices content and a first wave of high volume consumption
billing and invoicing functionality as well as an automated AR/AP sub-ledger (further
scope that exists in SAP Business Suite / SAP S/4HANA on premise Hybris billing,
invoicing, and customer financials will follow in the next versions).
● The target customers are large corporations or start-ups who want to monetize IOT /
cloud services / digital content which is paid immediately.

Figure 463: Further Information

You can visit the following links for further information:

● SAP S/4HANA Release Info
● Best Practices Explorer
● SAP S/4HANA Trials
● SAP S/4HANA Roadmaps
● Join the SAP S/4HANA Community
● S/4HANA Roadmap Viewer
● SAP Learning Hub
● SAP Help Portal

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 Lesson: Overview of Subscription Billing and Revenue Management

Contract Accounting and Invoicing

Figure 464: Scope of SAP S/4HANA Cloud for Contract Accounting and Invoicing

SAP S/4HANA Cloud for contract accounting and invoicing is designed to help our customers
to converge billing streams from different digital platforms along with automated and
streamlined sub-ledger processes within the SAP S/4HANA Cloud ERP.

Figure 465: First Use Case in SAP S/4HANA Cloud for Contract Accounting and Invoicing

Converge digital purchases from any platform (app store, IoT, Cloud, streaming, market
places) and convert them into cash.
Consumers who subscribed to digital services and gave credit card accreditation are eligible
to consume any kind of digital service. Used services and authorized credit card payments are
handed over for billing generating ONE invoice itemizing all billed transactions and hence
providing full transparency to the consumer. Immediate and automatic credit card settlement
via SAP digital payments add-on initiates payment collection.

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All accounting-relevant content is accurately posted in sub-ledger and can be evaluated and
monitored in real-time. SAP S/4HANA Finance Cloud Universal Journal is fed from contract
accounting with reconcilability and traceability.

Figure 466: SAP Hybris Revenue Cloud Integration: Convergent Invoicing

SAP Hybris Revenue Cloud provides a simplified, automated approach to manage your
Configure Price Quote (CPQ), billing, and ordering processes from the Cloud.
The billing application of the SAP Hybris Revenue Cloud solution automatically generates
billing data for subscriptions, and reflects the applicable rates and - for usage-based charges -
the actual usage of a product or service. This data is aggregated and stored in bills containing
pretax amounts.
The integration with SAP Hybris Revenue Cloud allows the automatic transfer of bills
originating from SAP Hybris Revenue Cloud into the invoicing component of SAP S/4HANA
Cloud for contract accounting and invoicing.
Bills for a given period are generated by the SAP Hybris Revenue Cloud and replicated to SAP
S/4HANA Cloud for contract accounting and invoicing as billable items.
Subsequent processes within SAP S/4HANA Cloud for contract accounting and invoicing
produce convergent bills from the billable items, add respective tax amounts, and post the
resulting legal invoice to contract accounting.

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Business Roles

Figure 467: Business Roles in SAP S/4HANA

Business role name: Accounts Payable Receivable Accountant (FI-CA)

Business role ID: SAP_BR_APR_ACCOUNTANT_FICA
The accounts payable receivable accountant deals with payment and credit clarification of
B2B and B2C customers and works off complex customer requests according account
clarification.

Figure 468: Business Roles in SAP S/4HANA

Business role name: Accounts Payable and Receivable Manager (FI-CA)

Business role ID: SAP_BR_APR_MANAGER_FICA
The accounts payable and receivable manager minimizes overdue receivables and bad debt
losses, analyzes and improves customer payment behavior, and optimizes receivables
processing costs.

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Figure 469: Business Roles in SAP S/4HANA

Business role name: Reconciliation Specialist - Accounts Payable and Receivable (FI-CA)
Business role ID: SAP_BR_RECONC_SPEC_APR_FICA
The reconciliation specialist is responsible for the reconciliation of Contract Accounts
Receivable and Payable (FI-CA) with General Ledger (FI-GL) and all reconciliation accounts
and tax on sales and purchases clearing accounts.

Figure 470: Business Roles in SAP S/4HANA

Business role name: Administrator - Accounts Payable and Receivable (FI-CA)

Business role ID: SAP_BR_ADMIN_APR_FICA

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 Lesson: Overview of Subscription Billing and Revenue Management

The administrator is responsible for the planning, scheduling, and execution of jobs and mass
activities within FI-CA, including critical business processes, such as payment run, payment
lot, dunning run.

Figure 471: Business Roles in SAP S/4HANA

Business role name: Data Privacy Specialist - Accounts Payable and Receivable (FI-CA)
Business role ID: SAP_BR_DATA_PRIVACY_SPEC_FICA
The data privacy specialist maintains and performs appropriate tasks specific for Accounts
Payable/Receivable (FI-CA) to comply with the corporate privacy policies and procedures.

Figure 472: Business Roles in SAP S/4HANA

Business role name: Configuration Expert - Accounts Payable and Receivable (FI-CA)
Business role ID: SAP_BR_CONF_EXPERT_APR_FICA
The configuration expert takes care of configuration tasks specific for Accounts Payable/
Receivable (FI-CA).

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Unit 10: Subscription Billing and Revenue Management

Figure 473: Business Roles in SAP S/4HANA

Business role name: Invoicing Manager (Convergent Invoicing)

Business role ID: SAP_BR_INVOICING_MANAGER_CINV
The invoice manager manages billing process, controls revenue leaks (for revenue
assurance), analyzes unbilled revenue, and identifies trends.

Figure 474: Business Roles in SAP S/4HANA

Business role name: Invoicing Specialist (Convergent Invoicing)

Business role ID: SAP_BR_INVOICING_SPEC_CINV
The invoicing specialist is responsible for all customer questions regarding the invoicing
process, such as checks and corrections of customer bills including re-rating out of the
correction process.

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 Lesson: Overview of Subscription Billing and Revenue Management

Self-Service Configuration

Figure 475: Self-Service Configuration UIs

The following self-service configuration UIs are currently offered to allow customers to
maintain their own settings:
● Activate Value Check
● Configure Contract Acct Categories and Assign Number Ranges
● Set Up Company Codes for Contract Accounts Receivable and Payable
● Define Company Code Groups
● Assign Company Codes to Company Code Groups
● Define Variants for Payment Medium Program
● Define Specifications for Paying Company Code
● Maintain Document Types and Assign Number Ranges
● Maintain Main- and Sub-Transactions and Set Parameters
● Define CO Account Assignment Keys
● Define Bank Clearing Account
● Define Write-Off Reasons

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Figure 476: Additional Information

New Application FI-CAC as the basis for cross-industry Convergent Invoicing and Contract
Accounts Receivable and Payable (CI and FI-CA) in SAP S/4HANA Cloud for contract
accounting and invoicing.
Adoption of industry features in SAP S/4HANA Cloud is planned for a later time.

LESSON SUMMARY
You should now be able to:
● Get an overview of Subscription Billing and Revenue Management

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 Unit 10
Lesson 2
Managing Convergent Invoicing

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Manage the Convergent Invoicing Invoice creation for usage and service (2BG)
● Manage the Convergent Invoicing Invoice correction processing (2BE)
● Understand the Convergent Invoicing recurring and one-off items (2T3)
● Understand the Fiori Analytical Apps for the Convergent Invoicing Manager (2KF)
● Explain the Convergent Invoicing - Rating of Consumption Items (3DX)
● Understand the SAP Hybris Revenue Cloud Integration for Convergent Invoicing (2PT)

Invoice Creation Overview

Invoice Creation for Usage and Service Overview

Figure 477: Convergent Invoicing: Invoice Creation for Usage and Service - Overview

Convergent Invoicing: The Invoice Creation for Usage and Service scope item allows you to
deal with the usage-based services that customers consume on a digital content, IoT, or any
other pay-per-use platform. Already rated and priced transactions are uploaded as billable
items. This billing content can be billed and invoiced by either individual or mass processing
and according documents are created. Additionally, billing and invoicing documents can be
displayed.

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Unit 10: Subscription Billing and Revenue Management

Invoice Creation for Usage and Service Process

Figure 478: Convergent Invoicing: Invoice Creation for Usage and Service - Process

The scope item supports you to bill and invoice the billable items according to preconfigured
and adoptable rules.
It is possible to execute billing, to display billing documents, or to execute invoicing with the
item. Furthermore, display invoicing documents and the creation of sub-ledger postings in
contract accounting (FI-CA) is made available.

Invoice Creation Operations

SAP Hybris Billing

Figure 479: Convergent Invoicing Transition into S/4HANA Cloud

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 Lesson: Managing Convergent Invoicing

The on premise end-to-end solution contains powerful and sophisticated billing data
management and invoicing capabilities. With SAP S/4HANA Cloud for contract accounting
and invoicing this component is transferred with an initial scope into the cloud and is available
for high-volume billing and invoicing for consumption based services, also providing the
capabilities to converge billing content from multiple digital platforms into ONE invoice.

Figure 480: Introducing Convergent Invoicing

The consumption billing and invoicing is also known as Convergent Invoicing in the SAP on
premise version.
The main features of this item can be described as follows:
● Pulls rated events or even complete bills from several upstream, multi-vendor rating or
billing streams, and then consolidates the information into a single converged invoice.
● Consolidates service pricing from multiple sources to produce easily understandable
invoices that drive loyalty, enhance cash flow, and increase customer satisfaction.
● Settles immediately paid consumption with the posted receivables.

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Unit 10: Subscription Billing and Revenue Management

Figure 481: Digital Content Paid Immediately by Authorized Credit Card

Today, we live in a highly inter-connected world where digital technology has transformed
entire industries and is having a direct impact on the way we consume all types of products
and services. Each act of engagement on a digital channel has a resulting financial impact,
which must be measured, tracked, collected, recognized, and shared with other partners. The
impact of the digital value chain is so pervasive that it has transformed entire industries from
the ground up.
Take for example the purchase and use of apps. They can be considered as billable items.
These can be sent to Contract Accounting where invoicing is created and Financial postings
take place.

Billable Items

Figure 482: Upload of Billable Items

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 Lesson: Managing Convergent Invoicing

With the tile Upload of Billable Items, files containing billing data are uploaded into to the SAP
S/4HANA Cloud system.
A file on the presentation server or application server can serve as a source.
The schema determines how the data of a source is imported. For this, you have to define, for
example, which format is used for a date in the source, or which character is used as a
separator for the columns. A schema has standard settings, but these can be overwritten.
Using the Create Template button, you can create your own template with the required fields
available.
You have the possibility to read the source with the current settings of the schema. The
system displays this in a preview. Afterwards you load the data that you imported previously.
The system does not store data in simulation mode.

Figure 483: Display Billable Items

The SAP Fiori app Display Billable Items gives you the opportunity to search for and display
billable items for Convergent Invoicing. These billable items provide the basis for the billing
process. You can, for example, search for billable items by entering a value in one or more
filter fields. Navigate from a billable item in the list to review the details of all billable items
from the same source transaction, and navigate further into all details of any of these billable
items.
It is also possible to display the record types that are reused by several billable items from a
source transaction and to display a list of related consumption items.

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Unit 10: Subscription Billing and Revenue Management

Perform Billing

Figure 484: Create Billing Documents

As a pre-invoicing step, billable items can be aggregated periodically in billing documents.

This step can be executed either manually or scheduled in a mass run.
Make use of either the Create Billing Documents tile or the Execute Billing tile to handle this
step.

Figure 485: Display billing document

In the billing document, an agent can display detailed data resulting from the aggregation of
billable items and the enrichment, for example, of tax data. In the Billable Items tab, all billable
items aggregated in this particular billing document are itemized.

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 Lesson: Managing Convergent Invoicing

Perform Invoicing

Figure 486: Invoicing

In the next step, invoices are generated from all billing documents created in the billing
process. Invoicing can be executed again either manually or scheduled in a mass run, for
example with the tile Create Invoicing Documents.

Figure 487: Display Invoicing Document

In the invoicing document, an agent can display data such as invoice line items, assigned
transaction, and tax data. Drill down to underlying billing documents and move forward to the
created contract accounting documents. Also viewing the generated invoice letter that can
contain the entire itemized billing content (billable items) is possible.
Use the SAP Fiori tile Display Invoicing Document to also search for invoicing documents by
entering a value in one or more filter fields, and sort the invoicing documents by different
criteria, or to display a print preview for an invoicing document.
You could furthermore remove an existing printing lock to allow an invoicing document to be
printed, or add an attachment to an invoicing document, and display existing attachments.

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Navigate from a specific invoicing document to a related billing document or the related
contract account.

Figure 488: Invoicing Overview for a Contract Account

The invoicing overview of a contract account provides transparency on all invoice-related

information for a particular customer account.
With this app, you can search for contract accounts, and display an overview of documents in
SAP Convergent Invoicing that are related to specific contract accounts. You can display a list
of invoicing documents, billing documents, credit memos, debit memos, and clarification
cases, and navigate to the details of individual documents.
You can also navigate to the details of a specific contract account, and display information
about consumption items, billable items, reversal requests (for billable items, billing
documents, and invoicing documents), billing plans, provider contracts, and charges and
discounts.

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Invoice Creation Configuration

Manage your Solution

Figure 489: Manage your Solution

Select the Manage your Solution app in order to get to the Configuration screen.
The task Configure your Solution will give you the possibility to maintain certain processes.

Self-Service-Configuration User Interface

Figure 490: Define Item Types

Performing this configuration step you can create your own Bank Guarantee Types to be used
for the Trade Finance Process.

Figure 491: Assign Billable Item Types to Sub Processes

In this activity, you specify which billable item types are supported in which sub processes.
During the transfer and creation of billable items, the system compares the billable items with
the entries in this activity.

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Figure 492: Define Billing Item Types

In this activity, you define the billing item types that you want to use when creating billing
document items.

Figure 493: Assign Billing Item Types

In this configuration step, you assign the billing document item type to a sub process and item
type of the billable item.

Figure 494: Define Billing Form

In this activity, you enter a unique key for each billing form that you want to use for printing
invoicing documents.

Figure 495: Enter Keys for Determining Alternative Billing Forms

In this configuration step, you define the billing form for specific customer groups. It is a two
step approach. First define the key in this activity and afterwards enter the key in the contract
account of the customer.

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Invoice Correction Overview

Invoice Correction Processing Overview

Figure 496: Convergent Invoicing: Invoice Correction Processing - Overview

Invoice Correction Processing allows the invoicing specialist to correct already existing
invoices using billing requests. You can create debit and credit memos of a billing request to
capture correction amounts on the level of line item or billable item. The monitoring of billing
requests allows you to have a detailed view of a billing request and to change a billing request
with several actions depending on the status. This includes, for example, approval, rejection
of the billing request, or reverse the created credit/debit memo.

Invoice Correction Processing Process

Figure 497: Convergent Invoicing: Invoice Correction Processing - Process

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Instead of reversing an invoice, corrections can be initiated resulting in requested debit or

credit memos.
An invoicing specialist can capture an amount correction referencing to an invoice. Resulting
requests must be processed and either accepted or rejected. BITs created from accepted
requests will be processed in the usual billing / invoicing runs.

Invoice Correction Operations

Initiate Invoice Correction

Figure 498: Initiate Invoice Correction Process

The invoice correction process can be started either in the Manage Credit/Debit Memos app
or from the display of an invoice. Once billable items have been created after credit/debit
memo request approval the processes for billing and invoicing are executed like described in
the invoice creation process.
From the display of an invoice, a credit memo or debit memo creation or processing can be
started.

Figure 499: Levels of Invoice Correction

There are different levels an invoice correction can be assigned: As an overall amount on
invoice level, assigned to a particular invoice item, or on single billable item level.
The correction amount can be either entered as an absolute amount or as a percentage of the
posted amount.

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Figure 500: Status

The created credit/debit memo request can be processed following the 4-eyes-principle by a
user who possesses appropriate authorization provided in the business catalog.
A request in the status for checking can be either released or rejected (the later status than
can be processed for checking repeatedly). A request which has been discarded cannot be
processed again and the rejection is final.
Simulate release is a technical check if the according billable items can be created.

Billable Item

Figure 501: Display Resulting Billable Item

The released credit/debit memo results in a billable item available for the next billing/
invoicing process.
Those billable items can be viewed with the Display Billable Items tile and are recognized by
their source transaction type.

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Recurring and One-Off Items Overview

Recurring and One-Off Items Overview

Figure 502: Convergent Invoicing: Recurring and One-Off Items - Overview

Using billing plans in Convergent Invoicing, you define for a customer when and how
frequently an amount is invoiced. For this reason, the billing plan is divided into plan items,
billable items that are already generated, and reference items.
The billable items can be either charges, credits, down payment requests, or a combination.

Recurring and One-Off Items Process

Figure 503: Convergent Invoicing: Recurring and One-Off Items - Process

The Convergent Invoicing Recurring and One-off Items process covers the definition of billing
cycles, to perform billable item management for a billing plan or to perform the billing process
for a billing plan.

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With the help of the scope item, you can invoice recurring charges as a monthly contract fee
or invoice one-time charge like a contract activation fee.
Other features include the creation of down payment requests to build up an advance
payment plan.

Purpose of Recurring Items

Figure 504: Purpose of Recurring Items

Possible scenarios for a billing plan are recurring charges as a monthly contract fee, one time
charge like a contract activation fee or a monthly credit. It could also be a down payment
requests to build up an advance payment plan.

Recurring and One-Off Items Operations

Billing Plans

Figure 505: Billing Plans

Billing plans allow you to schedule invoice amounts for recurring and non-recurring payments.
You then schedule a background job to request the billing plan items, so that these invoice

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amounts can be included in the next billing run. These steps are mandatory if you want to
include billing plan items in your billing process.

Figure 506: Create Billing Plan

With the SAP Fiori app Manage Billing Plans, you can schedule invoices for regular payments
for Convergent Invoicing. It is possible to define when and how often an amount is invoiced to
a customer.
Before a billing plan for a customer can be created, a pre-configured billing plan type must be
selected.

Figure 507: Billing Plan - Plan items

In the general data for the billing plan, you can define the billing cycle by entering start and
end date of the validity.
Use the Plan Items tab to navigate of a specific billing plan to review the details and perform
tasks like to add, delete, or change items in the billing plan.
Change the status of items in the billing plan or create exceptions for a billing plan item.

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Figure 508: Billing Plan Item Typ and Billing Cycle

Additionally, the billing cycle can be determined by selecting a pre-configured billing cycle, in
this example, the monthly periodicity.
The monthly amount / currency must be entered.
Note: Until you save, the billing plan is kept as a draft and can be discarded.

Release Billing Plan

Figure 509: Release the Billing Plan

After saving the billing plan, it must be released to request billable items.

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Request Billing Plan Items

Figure 510: Request Billing Plan Items

Use the Request Billing Plan Items (Individual) tile to request billing plan items and generate
according billable items manually or automatically scheduled with the Request Billing Plan
Items mass run.
The time horizon for the creation of billable items can be entered with the request date.

Figure 511: Billing Plan History

Use the Request Billing Plan Items (Individual) tile to also show monthly billable items through
the Request History tab strip.

Display Billable Items

Figure 512: Display Resulting Billable Items

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The Display Billable Items app provides you with a search functionality for billable items for
Convergent Invoicing. These billable items provide the basis for the billing process.
The app lets you search for billable items by entering a value in one or more filter fields or
sorting billable items by different criteria.
Navigate from a billable item in the list to review the details of all billable items from the same
source transaction, and navigate further into all details of any of these billable items.
The requested billable items can be recognized in their source transaction type BIP and are
now ready for billing/invoicing.

SAP Fiori Analytical Apps for the Convergent Invoicing Manager

SAP Fiori Analytical Apps for Convergent Invoicing Manager Overview

Figure 513: SAP Fiori Analytical Apps for Convergent Invoicing Manager - Overview

The SAP Fiori Analytical Apps for the Convergent Invoicing Manager allow you to analyze
billed and unbilled items. The Convergent Invoicing Manager has the possibility to change the
analyzing view based on different dimensions such as amount, number of items, billable item
types, status, dates, and processes. Analyses can be saved as new tiles in the SAP Fiori
launchpad and are updated on request.
This app is available for the role Invoicing Manager (Convergent Invoicing).

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Unbilled Items Overview

Figure 514: Grouping Criteria

The Analyze Unbilled Items app helps you to follow items that have reached their billing date,
but which were not considered during billing.
Also, you can choose to display the number of affected items, or the total amount for the
items. You can total or filter the amount and number of unbilled items by various criteria.

Figure 515: Settings

Through the tile settings, you can set the display currency, the number of intervals, and how
such a interval is defined.
You can also limit the selection to certain company codes.

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Figure 516: Drill Down

Go further by viewing details of specific items – here, the bar chart.

Figure 517: Mail Functionality

In the detailed view of the specific month, you again have the possibility to set grouping
criteria like the Billable Item Type or the Status of the Billable Items.
Sending out information by e-mail is also supported with this app.

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Rating of Consumption Items Overview

Rating of Consumption Items Overview

Figure 518: Convergent Invoicing - Rating of Consumption Items Introduction

The scope item Convergent Invoicing - Rating of Consumption Items allows you to deal with
consumption items for a customer, including the management as well as the rating process
for consumption items. The rating process for consumption items, offered as an individual or
mass process, end up in the creation of billable items. Consumption Items can be displayed
by SAP Fiori app.
Key business benefits delivered by the scope item are:
● Provide rating process for consumption items
● Offered as an individual or mass process billable items creation
● Display consumption items with SAP Fiori app

Rating of Consumption Items Process

Figure 519: Convergent Invoicing - Rating of Consumption Items Process

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Before you can start the consumption item creation process, make sure that the scope item
2AR - Contract Accounting - Master Data and Basic Functions is taken care of. Business
Partner and Contract Account must be created upfront.
With the upload of an external file (for example, .csv) the consumption item are generated.
Before you start the rating process, you can also check the upload consumption item.
Subsequently you will rate the consumption item. The corresponding billable item will be
generated. You can process with mass run or individual rating.
After rating, the system will create the billable item based on the rated consumption item.
Display the corresponding billable item from consumption item.
The created billable item as part of process 3DX: Convergent Invoicing - Rating of
Consumption Items can be used for further Billing and Invoicing in 2BG: Convergent Invoicing
- Invoice Creation for Usage and Service of Perform Billing Process.

Rating of Consumption Items Operations

Rating process in Convergent Invoicing

Figure 520: Rating in Convergent Invoicing

Rating in Convergent Invoicing performs a mass processing for the valuation of consumption
information based on consumption items. The uploaded consumption items are valuated in
the rating process. As a result of this rating, billable items are created that process billing
further. The consumption items are then transferred from the Rateable status to Rated.
You automate the rating process by scheduling a background job for each step with the
following apps:
● Upload Consumption Items
● Execute Rating - Mass Run

The following are the compulsory steps in the process. However, you can use the optional
features described below to support you.
Throughout the process, you can display the results of a step with the following app: Display
Consumption Items.

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Upload and Display of Consumption Items

Figure 521: Upload of Consumption Items

You can upload consumption items for Convergent Invoicing from an external CSV file or by
using the API Convergent Invoicing Consumption Items - Create - Request (Single) and you
can display the uploaded consumption items.
To upload billable items from an external CSV file, start the Upload Consumption
Items app on the SAP Fiori launchpad.

Figure 522: Display Consumption Item

The consumption item saves the detail data for the consumption of a service that is required
for valuating and billing these items. A consumption item represents a business transaction or
a business event.
The consumption items form the basis for the creation of billable items in rating.
A consumption item can have various statuses. Rating only takes into account consumption
items with the status Rateable. Once these items are successfully processed in the rating, the
system sets the status to Rated.
Using the app Display Consumption Items, you can search for and display consumption items
for Convergent Invoicing. These consumption items provide the basis for the rating process.
You can use this app to:
● Search for consumption items by entering a value in one or more filter fields

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● Sort consumption items by different criteria

● Reverse a consumption item in the list
● Except a consumption item from the rating process and restore excepted items
● Change the master data of a raw consumption item
● Transfer a raw consumption item in the list to status rateable

Rating per Business Partner

Figure 523: Execute Rating - per Business Partner

You can use this app, Execute Rating - Business Partner, to execute rating for selected
business partners. In some special cases, you may want to valuate consumption items in this
way. The standard process for rating is automated.
Consumption items are rated using the condition technique. The prerequisite for these is the
assignment of a provider contract item for the consumption item under which the sales
organization and distribution channel have to be maintained.
If the product is specified in the provider contract item and stored in the material master, this
product can be used for price determination.
You can define the prices that are dependent on the service type. You can define service types
in the Define Service Types configuration step.
The prices with which the system rates the consumption quantity of the consumption item
are determined for the consumption date. The calculated amount is a net amount and is
persisted as an amount of a newly created billable item. The gross amount is calculated at the
billing stage.

Billable Items

Figure 524: Billable Item

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The Display Billable Items app provides you with a search functionality for billable items for
Convergent Invoicing. These billable items provide the basis for the billing process.
The app lets you search for billable items by entering a value in one or more filter fields, or you
can sort billable items by different criteria.
Navigate from a billable item in the list to review the details of all billable items from the same
source transaction and navigate further into all details of any of these billable items.
The requested billable items can be recognized in their source transaction type BIP and are
now ready for billing/invoicing.

Integration Overview
SAP Hybris Revenue Cloud Integration Overview

Figure 525: SAP Hybris Revenue Cloud Integration: Convergent Invoicing - Overview

SAP Hybris Revenue Cloud provides a simplified, automated approach to managing your
Configure Price Quote (CPQ), billing, and ordering processes from the Cloud.
In SAP Hybris Revenue Cloud, the billing application automatically generates billing data for
subscriptions, reflecting the applicable rates and - for usage-based charges - the actual usage
of a product or services. This data is aggregated and stored in bills containing pretax
amounts.
The integration with SAP Hybris Revenue Cloud allows the automatic process of bills
originating from SAP Hybris Revenue Cloud in SAP S/4HANA Cloud Convergent Invoicing.
Bills for a given period are generated by the SAP Hybris Revenue Cloud and replicated to SAP
S/4HANA Cloud Convergent Invoicing as billable items.
Subsequent processes within SAP S/4HANA Cloud produce convergent bills from the billable
items, add respective tax amounts, and post the resulting invoice to contract accounting.

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SAP Hybris Revenue Cloud Integration Process

Figure 526: SAP Hybris Revenue Cloud Integration: Convergent Invoicing - Process

The integration scenario covers a quote-to-cash process, starting with the creation of quotes
in the SAP Hybris Revenue Cloud and ends with the posting of invoices to contract
accounting.
The scope item helps to deliver great customer experience and simplify your front office with
automated billable items creation in SAP S/4HANA Cloud Convergent Invoicing. In addition,
you keep master data in sync with batch and ad hoc business partner replication mode.
The key flows covered are the creation of a quote and respective subscription for a customer
in the SAP Hybris Revenue Cloud and to replicate billing data as billable items to SAP S/
4HANA Cloud Convergent Invoicing. Also you can create contract account for new customers
in SAP S/4HANA Cloud Convergent Invoicing.

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SAP Hybris Revenue Cloud

Figure 527: Go Beyond Quote-to-Cash with SAP Hybris

SAP Hybris Revenue Cloud is designed to help companies rapidly deploy highly innovative and
effective sales processes in an agile, flexible and scalable environment that leverages
disruption and complements on-premise investments. It helps companies synchronize
complex sales and revenue management processes, all within one solution.
SAP Hybris provides a full simplified front office which covers all faces of your business:
● SAP Hybris Commerce allows your customers to buy your products whenever and
wherever they want
● SAP Hybris Marketing manages to reach and engage your customers
● SAP Hybris Sales & Service help your team to simplify the sales cycle and increase
customer satisfaction
● SAP Hybris Revenue to manage the whole cycle from order to cash to insure the growth of
your company

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SAP Hybris Revenue Cloud and Contract Accounting

Figure 528: SAP Hybris Revenue Cloud & S4HC Contract Accounting

SAP Hybris Revenue provides a centralized revenue management platform in the cloud,
connecting front office applications for customer engagement (Sales force automation,
commerce platforms, Service & Marketing platforms) to the back digital core (SAP S/4HANA
Cloud).
The SAP Hybris Revenue scope includes the following process steps for full quote to cash
management:
● Subscription Quoting
- Rapidly deploy innovative quote-to-cash capabilities while complementing your on-
premise investments
- Accelerate deal cycles and sell more by dynamically bundling products and services
- Order and contract lifecycle management
- Automate contract lifecycle management and order fulfillment processes across
multiple systems
- Bridge the gap between front end and complex Order Fulfillment processes in multiple
fulfillment systems and backends
- Business Model Design
- Design and configure your product and service offerings, including bundling conditions
and monetization attributes
- Subscription Monetization
- Manage monetization of subscriptions services, including one-time billing, and usage-
based billing scenarios
- Consumption Billing & Invoicing

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- Collect billable items on contract accounts, generate invoices and post receivables and
payables to the sub-ledger
- Contract Accounting, Receivables & Payables
- View receivables and payables posted to a contract account and manage and clear
payments through digital payment hubs

Figure 529: Open to Integration in Multi-Vendor Landscapes

The SAP Hybris Revenue Cloud is open to integration in multi-vendor landscapes. You can, for
example, integrate with your other cloud apps like Salesforce.

Convergent Invoicing

Figure 530: Introducing Convergent Invoicing

The consumption billing and invoicing is also known as Convergent Invoicing in the SAP on
premise version.

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The main features of this item are:

● Pulls rated events or even complete bills from several upstream, multi-vendor rating or
billing streams, and then consolidates the information into a single converged invoice.
● Consolidates service pricing from multiple sources to produce easily understandable
invoices that drive loyalty, enhance cash flow, and increase customer satisfaction.
● Settles immediately paid consumption with the posted receivables.

Figure 531: Digital Content Paid Immediately by Authorized Credit Card

Today, we live in a highly inter-connected world where digital technology has transformed
entire industries and is having a direct impact on the way we consume all types of products
and services. Each act of engagement on a digital channel has a resulting financial impact,
which must be measured, tracked, collected, recognized and shared with other partners. The
impact of the digital value chain is so pervasive that it has transformed entire industries from
the ground up.
Take for example the purchase and use of apps. They can be considered as billable items.
These can be sent to Contract Accounting where invoicing is created and Financial postings
take place.

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Master Data
Master Data Management for Customers

Figure 532: Master Data Management - Customers

To create a new customer, log in to the SAP Hybris Revenue Cloud and select Customers.

Customer Types

Figure 533: Customer Types

In the SAP Hybris Revenue Cloud, you can define two different types of customers.
Depending on your requirements, either define an Individual Customer or a Corporate
Customer.

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Customer in SAP Hybris Revenue Cloud

Figure 534: Create Customer in SAP Hybris Revenue Cloud

Complete the mandatory fields to create either an individual or an corporate customer, that
is, first name, last name, email, and address and select a market.

Figure 535: Customer to Business Partner Replication

If you have deployed the Customer to Business Partner replication you will find the newly
created customer in SAP S4/HANA Cloud for contract accounting and invoicing.
To check whether the new customer has been replicated, log in to SAP S4/HANA CE, go to
Business Partner Master Data and choose Maintain Business Partner.

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Figure 536: Business Partner and Contract Account

Each Business Partner is linked to a contract account.

If there is no assigned contract account once billing data is replicated from the SAP Hybris
Revenue Cloud to SAP S/4HANA, the system will automatically create a new one.

Contract Account

Figure 537: Maintain Contract Account

To search for a Contract Account in SAP S4/HANA Cloud for contract accounting and
invoicing, use the Maintain Contract Account tile on your SAP Fiori launchpad.
Select BP Role "MKK" and use the first and last name of your business partner to find the
corresponding contract account.

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Products
Master Data Management Products

Figure 538: Master Data Management - Products

To create a new product, log in to the SAP Hybris Revenue Cloud and select Products.

Product Types

Figure 539: Product Types

In the SAP Hybris Revenue Cloud, you can define two different types of products.
Depending on your requirements, either define a Subscription Product or a Product Bundle.

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Products in SAP Hybris Revenue Cloud

Figure 540: Create a New Product in SAP Hybris Revenue Cloud

Complete the mandatory fields, that is, product name, product id, and market.
Add rate plan elements to the product. Rate plan elements define the pricing applied to a
subscription for a particular market.
Rate plan elements may comprise a one-time fee, reoccurring charges, and one or multiple
volume-based charges, for example, amount of songs downloaded or megabytes streamed.
In order to specify particular rate plan elements, go to the section Business Configuration.

Figure 541: Usage-based Charges

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The Hybris Revenue Cloud offers different types for usage-based charges.

Figure 542: Configure Rate Plan

The rate plan defines the pricing for a particular product. Complete the mandatory fields and
select OK.

Quote to Cash
Quote-to-Cash Process

Figure 543: Seamless Quote-to-Cash

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The integration scenario covers a quote-to-cash process, starting with the creation of quotes
in the SAP Hybris Revenue Cloud and ends with the posting of invoices to contract
accounting.

Figure 544: Create a Quote

To create a quote, log in to the SAP Hybris Revenue Cloud and select the Create Quote tile.

Figure 545: Configure Quote

Select a customer and adjust the validity of the quote. Then select a product and adjust its
quantity.
Click on the icon in the action column to adjust the subscription details, for example, the one
time fee, usage charges, and recurring fees.

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Figure 546: Adjust Pricing

If necessary, you can adjust the pricing, for example, give a discount on the one-time charge
or increase the included quantity of a subscription.
Adjust the pricing defined during the creation of the product and its rate plan by, for example,
giving discounts on the recurring charges, the one-time charge, or the unit prize.
Adjustments of a certain degree, dependent on the customizing, may require the approval of
a superior. Approval workflows can be setup in the Business Configuration section of the SAP
Hybris Revenue Cloud.

Order

Figure 547: Accept and Release Order

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After a sales agent created a quote, it has to be released to a customer for validation (or if
customized accordingly approved by a superior).
If the customer accepts the quote, the quote is transferred to an order.
To map the transition of a quote through these different stages, the sales agent has to
complete the following steps:

1. Release the quote to the customer (and get the approval of a superior)

2. Mark as Sent to Customer if the quote has been sent out

3. Accept for customer if the customer decides to accept the quote

4. Transfer the quote to an order

Figure 548: Select Payment Method and Transfer Order

Select the payment method and create a sales order from the quote by selecting Transfer to
Order.
Once the quote is transferred to an order, the system will trigger the creation of a subscription
and activate the tracking of usage-data.

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Order Management

Figure 549: Order Management

To check the newly created order, go back to the SAP Hybris Launchpad and select the
Orders tile.

Figure 550: Monitor Order

Select the most recent order or search for a customer name to find a particular order.
Click on the icon in the Progress Tracker column to get more details on the current status.

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Subscription

Figure 551: Subscriptions

Go to the SAP Hybris Revenue Cloud Launchpad and select Subscriptions to check details on
the subscription.

Figure 552: Check Status of Subscription

Search for a particular customer or select the most recent subscription.

The button in the Action column provides further information on the subscription, such as its
starting end expiration.

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Billing Content and Invoice

Figure 553: Display Billing Data

Go to the SAP Hybris Revenue Cloud Launchpad and select Billing Data to monitor the current
accumulated revenues for a particular subscription.

Figure 554: Check Current Bill

The Billing Data app provides information on accumulated revenues. Furthermore, it provides
insights whether or not the billing data has already been replicated to SAP S/4HANA CE. This
information includes the id of successor documents as well as the current status in the quote-
to-cash process, for example, billed, invoiced, and so on.
Select a particular bill and switch to the Successor Documents tab to see whether or not the
billing document has already been replicated to SAP S/4HANA CE.

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Figure 555: Billing Content and Invoice in S4/HANA Cloud for Contract Accounting and Invoicing

Go to the SAP Fiori tile Display Billable Items in the Billing section.
The billable items transferred from the Revenue Cloud have the source transaction type
REVCL.

Figure 556: Check Invoice

Invoices for a business partner can be displayed in the Invoicing Overview for Contract
Accounts or in the Display Invoicing Documents app.

Configuration
Business Configuration

Figure 557: Business Configuration

To adjust the business configuration, navigate to the SAP Hybris Revenue Cloud launchpad
and select Business Configuration.

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Configuration Overview

Figure 558: Overview of Business Configuration

Within the SAP Hybris Business Configuration, six configuration options are available. These
will be outlined in detail below.

Figure 559: Markets

A market represents the entity that offers a digital product, setting the legal framework
(terms and conditions) and representing various legally relevant attributes, including a
reference to a sales organization and further aspects, such as currency, language, and time
zone. Each subscription to a digital product is associated with a single market.

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Figure 560: Units of Measure

Units of measure are required for pricing and billing. You assign these units to rate plan
elements in the Rate Plan Elements configuration. For one-time charges and recurring
charges, you can define the Each and Each per Period units respectively, for example.

Figure 561: Rate Plan Elements

Rate plan elements define properties that are used in various processes of SAP Hybris
Revenue Cloud, such as product definition, billing, and invoicing. Rate plan element settings
include descriptions, units, and rate types (recurring, one-time, or usage-based). Rate plan
elements are used when defining rate plans.

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Figure 562: Price Field Properties

Price Field Properties define which price fields are editable when quotes are created and
edited, and which price fields are to be hidden within the included quantity usage charge.
These can be defined for different types of charges.
This enables you to control whether discounts are allowed and whether certain price fields are
relevant and displayed.

Figure 563: Approval Rules

Approval Rules are parameters that trigger the approval process in a quote.
You can define each market with discount percentage rules for recurring charges, usage
charges, and one-time charges that serve as a threshold for the approval process. Any single
price type that meets or exceeds the defined threshold triggers the approval process.
If a discount meets or exceeds the specified percentage, the quote requires approval by
another employee.

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Figure 564: Approvers List

The Approvers List contains the User authorization to approve a quote. You can define each
market with the email address of the user who you want to authorize to approve or reject a
quote.

SAP Hybris Revenue Integration

Figure 565: SAP Hybris Revenue Cloud Integration

Further settings that affect the replication of billing and master data between the SAP Hybris
Revenue Cloud and SAP S/4HANA CE are available on the SAP Business Technology
Platform.
The integration flows (iflow) control the replication of master and billing data between the
SAP Hybris Revenue Cloud and SAP S/4HANA CE. The setup of the iflows are described in a
dedicated configuration guide. During the setup you can customize several parameters that
affect the interplay between SAP Hybris Revenue Cloud and SAP S/4HANA CE.

LESSON SUMMARY
You should now be able to:
● Manage the Convergent Invoicing Invoice creation for usage and service (2BG)

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● Manage the Convergent Invoicing Invoice correction processing (2BE)

● Understand the Convergent Invoicing recurring and one-off items (2T3)
● Understand the Fiori Analytical Apps for the Convergent Invoicing Manager (2KF)
● Explain the Convergent Invoicing - Rating of Consumption Items (3DX)
● Understand the SAP Hybris Revenue Cloud Integration for Convergent Invoicing (2PT)

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 Unit 10
Lesson 3
Managing Contract Accounting

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand the Contract Accounting Customer Initiated Payments (2BI)
● Understand the Contract Accounting Company Initiated Payments (2DP)
● Understand the Contract Accounting Daily and Monthly Closing (2BK)
● Manage the External Tax Audit (2SJ)
● Understand SAP Fiori Analytical Apps for Contract Accounting Manager (2KH)
● Create and Manage Master Data of Business Partners and Contract Accounts (2AR)
● Understand the Contract Accounting Open Item Management (2UJ)
● Manage the Contract Accounting - Group Ledger IFRS (33X)
● Manage the Contract Accounting - Group Ledger US-GAAP (33V)
● Understand SAP Cash Application, add-on for Contract Accounting (47I)
● Manage Contract Accounting - Variant Configuration (3L8)

Customer Initiated Payments Overview

Customer Initiated Payments Overview

Figure 566: Contract Accounting Customer Initiated Payments - Overview

Customer Initiated Payments allows you to post invoices that have already been paid. You can
also manage the payment card settlement process interacting with payment service
providers, culminating in either a successful collection of receivables amounts or returns
processing. The payment card process requires an integration of Contract Accounting and
the payment hub (SAP Digital payments add-on).

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Customer Initiated Payments Process

Figure 567: Contract Accounting Customer Initiated Payments - Process

The key process flows integrated in this scope item cover the reconciliation of payment card
transactions with payment advice information provided by the Payment Hub.
Also you can post invoices with automatic clearing due to payment card information in one
step or perform automatic charge-back processing.

Customer Initiated Payments Operations

Credit Card Payment in Contract Accounting

Figure 568: Credit Card Payment in Contract Accounting (Optionally with Invoicing)

Sales of services or other digital content taking place in a web shop will pass the transactions
containing credit card tokens and authorization IDs as billable items into the invoicing
component. Alternatively, if invoicing is not used but posting documents are entered in
contract accounting, these posting documents contain the receivables portion as well as the
payment information.

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The settlement run for credit card institutions collects the according amounts via the SAP
digital payments add-on and posts against credit card settlement accounts.
All postings (receivables, payments, credit card settlement) are transferred from the contract
accounting sub-ledger to General Ledger.
Finally, after the credit card institution transfers the settled amounts, FI processes deal with
bank account statement and journal entries for bank or credit card settlement accounts.

Figure 569: Post Document and Business Partner Items

Use the Post Document SAP Fiori tile to post an item by entering the information for the
header and business partner item. Here, the receivables information is entered.

Figure 570: Post Already Cleared Document with Credit Card Information

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To initiate the immediate payment along with the receivables posting, enter the payment card
information which is passed via the payment hub to a payment service provider. From here,
the credit card token and the masked credit card number is returned.

Post Document

Figure 571: Display Document

Now the document is posted with the tokenized credit card information. The document can
be displayed after posting.

Payment Card Processing

Figure 572: Payment Card Processing

Use the tile Payment Card Processing - Application Jobs to schedule a new job for your credit
card settlement process.

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The job will trigger the transfer of items to be billed by credit card to SAP digital payments
add-on. From there, information is forwarded to the payment service provider and finally to
the relevant credit card institution.

Figure 573: Payment Card Settlement Answer

Answers on the credit card settlement process are returned from SAP digital payments add-
on to Contract Accounting. To receive these answers and to import the settlement postings,
use the Payment Card Processing - Application Jobs tile again.
Schedule a new run and set the Processing Type radio button to Process Received Answer.

Figure 574: Credit Card Online Settlement

You can use the Process Payment Cards app to schedule and monitor the import of payment
advise data and settle card payments.
● Job Templates description has been changed from Standard Variant for Payment Card
Billing to Bill Payment.
● Run the jobs with the Bill Payment template, as follows:

1. Select Send Payments for Settlement to send payment request.

2. Select Process Received Response (Advice) after you get the feedback and post the
settlement document.

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Payment Service Provider Processing

Figure 575: Import Payment Advice Notes from Digital Payments Add-on

SAP digital payments add-on processes the payments and makes them available for the
payment advice notes. With the Process Payment Service Providers app, you periodically
query the payment advice notes from SAP digital payments add-on and then process the
received payment advice notes. Use the job template Import Payment Advice Note Data from
SAP digital payments add-on to perform this task.

Figure 576: Service Provider Refund

Another job template within the Process Payment Service Providers app is the Request
Refund of Credit Memos. This way you can send a refund request to the payment service
provider.

Figure 577: Process Parked Payment Advice Notes

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There is also the option to have the parked payment advice notes processed. Schedule a job
that periodically performs the processing of these items.

Payment Overview

Figure 578: Search Payments

You can use the Search Payments app to search for payments, display them, and, if
necessary, go to clarification processing. You can search in payment lots and in payment
runs. Key features of the app include the navigation to a specific payments to check the
details or to filter payments depending on your needs. It is possible to start clarification
processing or to see associated business partner data for a document.

Negative Postings

Figure 579: Negative Postings

You can create negative postings in Contract Accounts Receivable and Payable. A negative
posting reduces the transaction figures of the posted account in the general ledger. A debit
posting as a negative posting therefore does not lead to an increase in transaction figures on
the debit side, but to a reduction of the transaction figures on the credit side and vice versa.
This enables you to display the transaction figures of accounts after an incorrect posting and
corresponding correction, for example, invoice posting and reversal, as if neither the incorrect
posting nor their correction had taken place.

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Figure 580: Negative Postings in Business Transactions

Reversal:
In the event of a reversal, the document type used decides whether to do the following:
● Never post negatively
● Always post negatively
● Post negatively if the posting and reversal are in the same fiscal year

A special feature is that the items in the reversal document, for which the account to be
posted to was exchanged to settle the original document, are not posted negatively. This can
occur for aperiodic reversals (exchange of P&L accounts) or for incoming payment postings
for which the reversal is used to post back to the clarification account.
Manual Posting:
If you want to post a document manually for which negative postings are required for all
items, you only need to select a suitable document type. However, if only single items are to
be posted negatively, you must enter the entire transaction in two documents.
Example:
Transfer posting from an incorrect G/L account to the correct G/L account. The reset on the
incorrect G/L account would be posted negatively, the posting to the correct account would
not. To do this, you first enter the following negative posting: Clearing account to incorrect
G/L account. Then a “normal” posting is made: Correct general ledger account to clearing
account.
Returns:
Returns are to be handled in the same way as reversals.
The first item of a returns posting, that is, the posting to the returns clearing account, is never
posted negatively. The same applies for return charges.

Repayment Requests

Figure 581: Repayment Requests

If you cannot assign payments received because they were not meant for your business and
qualified bank data is available, you can make repayment in the payment lot. You process
repayment with the payment run.

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To trigger a repayment, in the payment lot, select the field that allows you to pay out a refund.
You use the Display Repayment Requests app to display the repayment requests.
Before the payment run can make a repayment, you have to select the With Repayments field
in the payment run parameters. Make sure that you have specified the payment method for
the repayment for the payment run too. Repayment requests where the payment method is
missing in the list of payment methods, or in which the bank selection has not been
maintained in the bank details are recorded by the system as exceptions with a separate item
indicator.

Customer Initiated Payments Configuration

Manage Your Solution

Figure 582: Manage Your Solution

To navigate to the Configuration screen, select the Manage Your Solution app.
The Configure Your Solution task will give you the ability to maintain certain processes.

Self-Service Configuration Tasks

Figure 583: Maintain Document Types and Assign Number Ranges

Document types differentiate between business transactions. The number ranges assigned to
them also control the way documents are stored. During document posting, the system
determines the document number from these number ranges.
You can use a number range for several document types. Please note, however, that the
number range is required for individual processing and for mass processing.

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Figure 584: Define and Parameterize External Transactions

You define the external main and sub-transactions for your company and assign the
parameters for document control, such as company code and statistics key, to these
transactions.
Main transactions and sub-transactions fulfill three functions:
● They document which aspect of a business transaction or process the line item entry is
based on.
A short description is assigned to each main and sub-transaction for this purpose, and this
can be used in correspondence.
● In many processes, main transactions and sub-transactions can influence automatic
account determination. The sub-transaction differentiates the main transaction.
● In the parameter section the debit or credit indicator can be maintained, as well as
additional individual attributes of a transaction. These attributes can include a specific
interest key, a specific dunning procedure, if a manual posting is allowed, or if posting
items with this transaction are only be created in a mass process.

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Figure 585: Define CO Account Assignment Keys

Define the short key from which the system derives account assignments for the cost
accounting (such as the cost center) in connection with the company code and the business
area.

Figure 586: Define Specifications for Paying Company Code - Payment Methods

A customer can make their specifications for the paying company code. Each company code
where posting may occur must be assigned to at least one company code group; this is then
defined in the contract account.
Afterwards, assign a paying company code to each company code group.

Figure 587: Define Bank Clearing Accounts

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Here, you define the bank clearing accounts and assign them to be used for the various lot
types such as payment lots, returns, and credit card lots.
To activate the account for returns lots, select the Valid for Returns field. If you also select the
F. payt lot field, the account is used for payment lots.
The bank clearing accounts are used as follows depending on the type of returns lot: When
you create or change a returns lot, the system checks the clearing accounts entered. Only
accounts that you have defined in Customizing are permitted.

Figure 588: Define Clearing Variants

SSCUI Task: Finance – Contract Accounting – Clearing Control – Define Clearing Variants
You define the clearing variants. A clearing variant consists of these two components, a
clearing variant key and clearing steps. Additionally, you can define alternative groupings and
ranking orders for the individually used characteristics for each clearing step.

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Figure 589: Define Clearing Variant Details

In this task, you define clearing steps of the clearing variant. Every clearing variant should
consist of at least one clearing step. The individual steps are to run consecutively in ascending
order, as long as no subsequent step rule has been defined explicitly.

Figure 590: Define Defaults for Incoming Payments

SSCUI Task: Finance – Contract Accounting – Clearing Control – Define Defaults for Incoming
Payments
You define clearing for incoming payments with this configuration task.

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Figure 591: Define Defaults for Account Maintenance

SSCUI Task: Finance – Contract Accounting – Clearing Control – Define Defaults for Account
Maintenance
With this configuration task you can define clearing variants for account maintenance. Assign
a clearing variant to a clearing type.

Figure 592: Define Defaults for Collective Invoice/Installment Plan/Summarization Group

SSCUI Task: Finance – Contract Accounting – Clearing Control – Define Defaults for
Collective Invoice/Installment Plan/Summarization Group
In this task you define clearing for installment plans.

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Figure 593: Payment Service Provider Refund

You use the Self-Service Configuration User Interface to configure the payment service
provider refund according to your needs. In order to do this pick the application area Finance,
sub application area Contract Accounting and look up the value Returns.

Figure 594: Configure Return Reasons

Configure your company-specific return reasons First use the step Assign returns reasons to
house banks to you allocate company-specific returns reasons to bank-specific returns
reasons. Afterwards you can set the configuration for the return reasons like the return
activity or return charges.

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Figure 595: Return Reasons

You specify the return reasons depending on the reason and house bank. Within the return
activities you define in the areas of charges (if charges are passed on or are posted
statistically), for payment methods or for other activities like the creation of a
correspondence as the outcome of the return.

Figure 596: Automatic Return Postings

With the specifications for automatic returns you define per chart of accounts the account
determination in case of returns.

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Company Initiated Payments Overview

Outgoing Payment Processing Overview

Figure 597: Contract Accounting Outgoing Payment Processing - Overview

Outgoing Payment Processing allows you to post credit documents. Payment documents and
payment media files can be created automatically by the payment run. A payment media file
could also be created manually. Returns can be processed by mass run or individually.

Outgoing Payment Processing Process

Figure 598: Contract Accounting Outgoing Payment Processing - Process

The main business processes covered with the scope item are to clear credit notes
automatically in the payment run and to process return transactions provided in an electronic
bank account statement to reverse failed payments.

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Company Initiated Payments Operations

Credit Document

Figure 599: Post Credit Documents

In a first step, post a credit (contract accounting document with a negative amount), with
corresponding transaction code and clearing reason “outgoing payment”. After the document
has been successfully posted it can be displayed.
Alternatively, a credit memo can be loaded from an external application or posted in the
invoicing process if appropriate billing content on credited transactions arrives in the system.
To initiate an outgoing payment, either a specific payment method can be assigned in the
document or in the master data of the customer (business partner and contract account). An
individual payment method on document level overrules the assignment in the contract
account.

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Outgoing Payments

Figure 600: Create Outgoing Payment Documents

Use the Payment Run / Debit Memo Run tile to create or schedule a payment run. The
payment run clears the open item of the business partner. The corresponding payment media
is created automatically and can be displayed as well.

Figure 601: Manage Payment Media

The payment media created automatically in the payment run can be checked and managed.
After selecting the payment files, they can be downloaded and transferred to the house bank.
Use the Manage Payment Media tile to view existing payment media and the processing
status, to download payment media, or to display and analyze payment summary information
that corresponds to data media.

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Bank Statements

Figure 602: Upload Bank Statement

External Banks provide the electronic Bank Statements for the customer accounts,
containing the transactions of the specified period.
Depending on the agreement with the Bank, one of the several different bank statement
formats is provided. These formats are generally standardized and are thereby ready for
automatic processing.
You can use the Manage Bank Statements app to manage manual and electronic bank
statements. The app provides an overview of all bank statements for all house bank accounts.
For each bank statement, you can also view detailed information.

Figure 603: Bank Statement Formats

Bank statements are formats used to import payment data received from the bank. The figure
gives an overview of the country specific payment formats available in the SAP S/4HANA
Cloud System.
The formats shown are only a excerpt of the full lust. Several other formats are available for
countries like Spain, Australia, China, or the United Kingdom.

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Return Lots

Figure 604: Create Returns Lot

Payments that could not be processed by the bank are returned. They are introduced to the
system by creating returns lots.

Figure 605: Display Returns History

The Display Returns History tile enables you to check the returns details of selected business
partners in the history overview.

Figure 606: Repayment Requests

If you cannot assign payments received because they were not meant for your business and
qualified bank data is available, you can make repayment in the payment lot. You process
repayment with the payment run.
To trigger a repayment, in the payment lot, select the field that allows you to pay out a refund.

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You use the Display Repayment Requests app to display the repayment requests.
Before the payment run can make a repayment, you have to select the With Repayments field
in the payment run parameters. Make sure that you have specified the payment method for
the repayment for the payment run too. Repayment requests where the payment method is
missing in the list of payment methods, or in which the bank selection has not been
maintained in the bank details are recorded by the system as exceptions with a separate item
indicator.

Payment Lists

Figure 607: Display Payment List

The Payment List of Payment Run - Display Payment Lists app gives you an overview of the
payment runs performed according to your filter criteria. From the list, you can identify the
status of the payment run and also the number of paid items or exceptions that occurred
during the run.

SEPA Mandate

Figure 608: SEPA Mandate Creation

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With the SEPA Mandate Integration for Contract Accounts Receivable and Payable
(SAP_COM_0458), you can integrate SEPA data via API services.

Company Initiated Payments Configuration

Manage Your Solution

Figure 609: Manage Your Solution

Select the Manage Your Solution app in order to get to the Configuration screen.
The Configure Your Solution task allows you to maintain certain processes. The self-service
configuration options for invoicing are in the Finance application area and the Convergent
Contract Accounting subapplication area.

Self-Service-Configuration Tasks

Figure 610: Define Specifications for Paying Company Code - Payment Methods

A customer can make specifications for the paying company code. Each company code where
posting might occur must be assigned to at least one company code group; this is then
defined in the contract account.
Afterwards assign a paying company code to each company code group.

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Figure 611: Define Specifications for Paying Company Code - Payment Medium

The payment medium format controls how the payment order is carried out. In the current
scope, there are non-document payment media (DTA or EDI).

Figure 612: Define Payment Methods

You define the payment methods for each individual country.

Define a document type for the posting of payment documents and a format for each
payment method. The formats contain, for example, a description for the sentence structure
of the files created by the payment medium program.
You can also define instruction keys for the payment methods here. These control which
instructions are given to the banks involved for the execution of a payment order. The
payment medium format defines whether an instruction key is executed.

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Figure 613: Define Parameters for Foreign Payment Transactions

You can define that the house bank (or the first requested institute) creates a message for the
federal bank for Data Medium Exchange abroad.
Specify all data relevant to this transaction. This allows you to define an instruction key with
which you can determine the execution type for the payment order. You can also define
whether the payment data is also to be forwarded.

Figure 614: Define Own Bank Details and User Numbers

In this activity, you define the keys under which you can store the house bank ID, account ID,
and, optionally, the user numbers at the bank and the user names registered at the bank. You
can then enter these keys into the master records for contract accounts and contracts to
control the house bank and the creation of the data medium in the automatic payment
transactions.

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Figure 615: Define Bank User Numbers for Payment Medium Object Identifier

You define a user number for each set of bank details to be used. This is required for the
correct transmission of data media to a bank or main processing center (such as BACS in
Great Britain). The user numbers defined here are automatically transferred to the data
medium if the system could not derive a user number from the own bank details (in the
master record of the contract account or contract).

Figure 616: Define Variants for Payment Medium Program

Define the selection variants to schedule the program for creating the payment medium per
payment medium format. First select a predefined payment medium format short name.
Then, define the variants for the creation of the payment medium.

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Figure 617: Define Bank Clearing Accounts

Here, you define the bank clearing accounts and assign them to be used for the various lot
types such as payment lots, returns, and credit card lots.
To activate the account for returns lots, select the Valid for Returns field. If you also select the
F. payt lot field, the account is used for payment lots.
The bank clearing accounts are used as follows depending on the type of returns lot. When
you create or change a returns lot, the system checks the clearing accounts entered. Only
accounts that you have defined in Customizing are permitted.

Figure 618: Assign Return Reasons to House Banks

You define a company-specific return reason for each house bank return reason for your
house banks.

Daily and Monthly Closing Overview

Daily and Monthly Closing Overview

Figure 619: Contract Accounting: Daily and Monthly Closing - Overview

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Daily and Monthly Closing allows you to prepare and carry out the activities required for day-
end and month-end closing for contract accounting. The major activity for closing is the
reconciliation between contract accounting and General Ledger. In addition, you can write-off
uncollectible receivables in contract accounting.

Daily and Monthly Closing Process

Figure 620: Contract Accounting: Daily and Monthly Closing - Process

The posting totals of the corresponding documents are recorded per reconciliation key. Once
a reconciliation key is closed, no more postings can be completed with it. Accordingly, the
posting totals can no longer be changed. A transfer document is created for General Ledger
Accounting from the posting total of each reconciliation key. An item with an amount equal to
that of the totals record is generated in the transfer document.
Write-offs are required if receivables are uncollectible or payables cannot be refunded, for
example when the payment recipient cannot be identified.

Daily and Monthly Closing Operations

Transfer Contract Accounting Sub-Ledger Postings to General Ledger

Figure 621: Closing Reconciliation Keys

Usually, all reconciliation keys are closed at the end of the day to be transferred into the
General Ledger. It is also possible to execute the transfer several times during the day. The

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reconciliation keys to be closed can be selected, then the closing is executed. This process is
scheduled in the background, so no manual execution is required.
Use the Delete and Close Reconciliation Key SAP Fiori tile to perform this task.

Figure 622: Transfer FI-CA Total Records to the General Ledger

This mass activity is also usually executed automatically and periodically. The transfer run
posts the total records in the General Ledger.
Use the Transfer Total Records to G/L tile to analyze the application log of the transfer run.

Write-Off Items

Figure 623: Manually Write Off Items

You can write off open receivables or credits of a business partner. The write-off reason is
mandatory. The open items to be written off are selected and activated. Then the documents
are posted and will clear the original receivables.
Use the Write Off Items tile to perform the task in the SAP S/4HANA Cloud System.

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Figure 624: Write-Off Mass Run

If many receivables are uncollectable or payables cannot be disbursed, they can be written off
in a mass run scheduled by an administrator. After setting the appropriate selection
parameters, the mass run is scheduled and a corresponding application log written.

Figure 625: Write-off History

All write-offs or only the ones for a specific business partner can be viewed with the amount
written off and the assigned reason.
Display the write-off items with the Write Off Items SAP Fiori tile in the launchpad.

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Reconcile and Ensure Consistency

Figure 626: Execute the Reconciliation Report

Open the Reconcile Open Items with General Ledger tile. This report reconciles open items in
contract accounting with the postings in General Ledger. The results are listed per company
code and show if the transfer to G/L is correct and complete (green status) or incomplete
(orange status) or in exceptional cases incorrect (red status). In the latter case, more check
reports must be executed to find the root cause and possibly correct reconciliation keys.

Figure 627: Month End Closing: Close the Previous Accounting Period

After all accounting content has been transferred completely and correctly to General Ledger
at period end, the posting periods can be closed with the Manage Posting Periods tile. This
means that in contract accounting no postings for the previous periods can be created. Where
there are reconciliation keys not yet transferred to the General Ledger, the transfer cannot
take place until the posting period has been re-opened. The normal and adjustment
accounting periods are set and closed. This ensures that no more postings can be made in the
previous periods.

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EC Sales List

Figure 628: EC Sales List in DME Format

If a German VAT-registered business, resident or non-resident, is selling goods or services to

other VAT-registered companies in Europe, then an EC Sales List (ESL) return may be
required. In this test step, you can issue ESL through following steps.

Daily and Monthly Closing Configurations

Self-Service-Configuration User Interface Tasks

Figure 629: Foreign Currency Valuation for Value Adjustments

SSCUI Task: Finance - Contract Accounting - Organization - Set Up Company Codes for
Contract Accounts Receivable and Payable

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Assign the attributes required for controlling postings in Contract Accounts Receivable and
Payable to each company code that you want to use.
Depending on the company code, you can specify that the foreign currency valuation triggers
the value adjusted receivables and additional postings.

Figure 630: Accounts for Exchange Rate Differences During Value Adjustments

SSCUI Task: Finance - Contract Accounting - Foreign Currency Valuation - Define Accounts
for Exchange Rate differences during Value Adjustments
Define the account to which the system posts exchange rate differences in value adjustments
per Chart of Accounts. You post the exchange rate difference to a separate account to fulfill
the requirement in accordance with IFRS 9.
The exchange rate can change between the document posting in the foreign currency and the
execution of the value adjustment. The system takes the exchange rate differences into
account and posts them for the value adjustment in the foreign currency valuation.

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Figure 631: Maintain Alternative Accounts for Resetting Individual Value Adjustments

SSCUI Task: Finance - Contract Accounting - Doubtful Receivables and Value Adjustments -
Maintain Alternative Accounts for Resetting Individual Value Adjustments.
You define the accounts that are posted alternatively for the reset of an individual value
adjustment, rather than posting to the account that value adjustments are normally posted
to.
The purpose of these additional accounts for an individual value adjustment reset is to enable
you to keep resets separate on the books. If you do not define an account, the reset is posted
to the account generally used for individual value adjustments.
For the relevant reversal processes, the system uses the reset account that is appropriate for
the reverse posting. For example, for resetting of a payment clearing, the system posts to the
account for resetting by payment.

Figure 632: Maintain Account Determination for Flat-Rate Value Adjustments

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SSCUI Task: Finance - Contract Accounting - Doubtful Receivables and Value Adjustments -
Maintain Account Determination for Flat-Rate Value Adjustments
You define, per Chart of Accounts, the accounts that are posted alternatively for the Flat-Rate
Value Adjustment. You must define an account for the expense of the value adjustments and
a correction account for each combination of company code and receivables account.

Figure 633: Maintain Alternative Accounts for Resetting Flat-Rate Value Adjustments

SSCUI Task: Finance - Contract Accounting - Doubtful Receivables and Value Adjustments -
Maintain Alternative Accounts for Resetting Flat-Rate Value Adjustments.
You define the accounts that are posted for the reset of an flat-rate value adjustment, rather
than posting to the value adjustment account that flat-rate value adjustments are normally
posted to.

Figure 634: Make Specifications for EC Sales List

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SSCUI Task: Finance - Contract Accounting - Reporting to Externals - Make Specifications for
EC Sales List
You activate the creation of entries for the EC sales list for each company code. The system
has to have the following prerequisites for an entry to be written for posting:
1. The document is not a sample document.
2. The document item is not statistical.
3. The document item does not contain a value-added tax code.
4. The EU indicator for the VAT code is filled.
5. In this configuration step, the company code is activated for the EC sales list.
For the system to write an entry for a reversal, there must be at least one entry in the report
entry table of the original document.

Figure 635: Define Tax Codes for Sales and Purchases

SSCUI Task: Finance - Statutory Reporting - Tax - Define Tax Codes for Sales and Purchases
Make settings for internal tax calculation. The European Union code (EU code) is used
primarily for classifying tax codes that are considered in the EC sales list.

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Figure 636: Define Account Determination IDs for Contract Accounts

SSCUI Task: Finance - Contract Accounting - Contract Accounts - Define Account

Determination IDs for Contract Accounts
For the EC Sales list, you can define the account determination ID for contract accounts. The
account determination ID is used to identify a G/L account during automatic account
determination.

Figure 637: Define Sales/Purchase Tax Determination

SSCUI Task: Finance - Contract Accounting - Posting and Documents - Define Sales/
Purchase Tax Determination
For the EC Sales list, you can define the VAT determination codes and assign the codes to the
relevant tax on sales/purchases codes.

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Figure 638: Define Account Assignment Data Relevant to Main Transactions

SSCUI Task: Finance - Contract Accounting - Posting and Documents - Define Account
Assignment Data Relevant to Main Transactions
For the EC Sales list, you can allocate receivables and payables accounts to the main
transactions and sub-transactions for each company code and division in the General Ledger.
Entering the division and the account determination ID is optional.

Figure 639: Define Account Assignment Determination Relevant to Transactions

SSCUI Task: Finance - Contract Accounting - Posting and Documents - Define Account
Determination Data Relevant to Transactions
For the EC Sales list, you can allocate revenue accounts to the main transactions and sub-
transactions for each company code. Entering an account determination ID and division is
optional.

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Figure 640: Define Accounts for Sales/Purchase Tax

SSCUI Task: Finance - Contract Accounting - Posting and Documents - Define Accounts for
Sales/Purchase Tax
You can define the numbers of the General Ledger accounts for the tax on sales and
purchases posting sorted by keys. The system determines when the tax-relevant document
items are to be posted.

Figure 641: Define Write-Off Reasons

With the Self-Service Configuration task Write-off Reasons you can define new or change
existing Write Off Reasons for your business.
The validity of write-off reasons specifies whether the write-off reason can only be used for
writing off items, only for the write-off mass run, or for both write-off transactions.
' ': The write-off reason can be used for writing off items manually and for the write-off mass
run.
'1': The write-off reason may only be used for writing off items manually.
'2': The write-off reason may only be used for the write-off mass run.
Example:
You want to prevent a specific write-off reason, which is only defined for waiving receivables in
manual processing, from being used in the write-off mass run. In this case, maintain an entry
for this write-off reason and define the value '1' for the validity of the write-off reason.

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External Tax Audit Overview

External Tax Audit Overview

Figure 642: Contract Accounting: External Tax Audit - Overview

This scope item allows internal and external auditors as well as tax auditors to view, analyze,
and extract accounting relevant data from Contract Accounting (FI-CA).
For file access to tax auditors the relevant data must be extracted from the productive system
first. Tax relevant accounting data provided in files means the relevant customizing extracts,
Business Partner extracts, and extracts of FI-CA documents. Extracts are created by the
Administrator - Accounts Payable and Receivable (FI-CA) and are analyzed by the External
Auditor - Accounts Payable and Receivable (FI-CA). The extracted files are usually imported
by the tax auditor into a specific standard tax auditor software.

External Tax Audit Process

Figure 643: Contract Accounting: External Tax Audit - Process

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The main business benefits of the scope item are to analyze FI-CA documents from a tax
auditor perspective and to extract that information for standard tax auditor software.
You will be able to create data extracts, import data extracts, export data extracts, overview
data extracts, or delete document extracts.

External Tax Audit Access

Figure 644: Contract Accounting: External Tax Audit - Access

The three legally required access types are supported: Direct system access, indirect system
access, and file access.
● Direct System Access: The external auditor is allowed to use the normal accountant
functionality with read-only access. The auditor has direct system access to posting data
and master data to enable the review of single cases in the system. The external auditor
can also verify the reconciliation of the subledger FI-CA with the G/L.
● Indirect System Access: Auditors can also request data analyses from the posting data
according to their legal constraints. In this case, the data is made available by an employee
of the company. This can only be done using analysis functions that are already available in
the IT system. The auditor cannot demand analyses that are not available in the company's
system.
● File Access: The external auditor has no authorization to the system at all. The auditor is
only provided extracted data in files, which is possible by importing into an audit software
designed especially for audit use cases.

Direct Access
External Tax Audit - Direct Access

Figure 645: Contract Accounting: External Tax Audit - Direct Access

For this first access type, the auditor is allowed to use the normal accountant functionality
with read-only access. The auditor has direct system access, allowing the auditing of single
cases in the system. The external auditor also can review the reconciliation of the subledger
FI-CA with the G/L.
The External Auditor - Accounts Payable and Receivable (FI-CA) role is used.

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Reconciliation activities

Figure 646: Execute Reconciliation Report with Direct Access

The Auditor can use the tile Reconcile Open Items with General Ledger to execute a
reconciliation. This report reconciles open items in contract accounting with the postings in.
The results are listed per company code and show if the transfer to G/L is correct and
complete (green status) or incomplete (orange status) or in exceptional cases incorrect (red
status). In the latter case, more check reports must be executed to find the root cause and
correct possibly reconciliation keys.

Figure 647: Itemization for G/L Documents

The view shows the total records for the selected G/L documents. Forward navigation to
display the details of selected documents is possible. Make use of the respective SAP Fiori tile
Itemization for G/L Documents to get this detailed information.

Figure 648: Display for Posting Totals

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An Auditor can use the tile Display for Posting Totals to receive a list with the total records
recorded for the selected reconciliation key. Forward navigation to display the details of
selected reconciliation key is possible.

Figure 649: Itemization for Posting Totals

Use the tile Itemization for Posting Totals to view a list with all the line items. Forward
navigation to display the details of selected reconciliation key is possible.

Figure 650: Account Assignment Details: Single Documents

The Auditor can evaluate FI-CA documents posted to a specific object, for example, CO
account assignment or commitment item.
For each document selected, the data from the totals records, the document header, the
business partner, and general ledger items are displayed.
Perform this task using the tile Acct. Assignment Details: Single Docs.

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Figure 651: Check Transfer Status of Reconciliation Key

External auditors can also verify the transfer status of a reconciliation key using the SAP Fiori
tile Check Transfer Status of Reconciliation Key.

Check Documents

Figure 652: Check Totals Records

Verify that the FI-CA posting totals agree with the totals of the relevant FI-CA documents. The
list shows the differences, if any, between posting totals and FI-CA documents.

Figure 653: Check General Ledger Documents

Reconcile G/L and FI-CA by comparing the transferred FI-CA totals records with the
documents posted in the general ledger during the transfer. A list with the determined
differences during the reconciliation is shown, if any.

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Figure 654: Determine Gaps in Document Number Range

Use the Determine Gaps in Document Number Range tile to create a list of all missing
document numbers in a company code, resulting from postings to other company codes.
In Contract Accounts Receivable and Payable (FI-CA), the system assigns a sequential
document number to documents posted within a given client in a system. If your enterprise
operates with different company codes in a single client - for subsidiaries located in different
countries, for instance - there may be gaps in the document numbers for a company code.
You use this program to create a list of all missing document numbers in a company code,
resulting from postings to other company codes. You then submit this list to the tax
authorities, if required in your country.
The program covers documents posted in FI-CA only, and they must contain a numeric
document number.

Figure 655: Display Open Items at Key Dates

The Auditor is able to generate a list of key-date related open items from the system. They
can use the Open Item List for Key Date tile to perform this.

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Figure 656: Document Journal

Create a document journal that contains data from the document headers and items of the
documents selected. For each item category, it also automatically creates totals per company
code and local currency.
Make use of the Document Journal tile to execute this task.

Figure 657: Display Document Changes

The external Auditor can verify any document changes that have taken place using the SAP
Fiori tile Display Documents Changes.

Figure 658: Display Reconciliation Key

The Auditor can execute the tile Display Reconciliation Key in order to get the details for a
specific reconciliation key. Navigation to a list of totals records, the status of transfers, and a
list of documents is possible.

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Write-Offs

Figure 659: Display Write-Offs

Auditors can run the Display Write-offs tile to check all items written-off, the reason for the
action, and the date when it took place.

Returns

Figure 660: Returns

With the Display Returns tile, it is possible to get detailed information return documents, the
involved business partner, and contract account or the returns lot.
A return reason, for example, Card not valid, is given for the items to get a better
understanding of the transaction.

Monitor Transactions

Figure 661: Display Correspondence History

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From the output of the Display Correspondence History tile, the Auditor is able to understand
who received correspondence, at which time, and with which correspondence type.
Navigation to the details of the individual correspondence is also possible.

Figure 662: Display Invoicing and Billing Documents

Through the Display Invoicing or Billing Documents tile, a list of corresponding documents is
displayed. Navigation to the details of, for example, an invoice is possible. Same applies for
billing documents.

Figure 663: Monitor for Payments with Payment Card

Using the Display Payment Card Details tile, the Auditor can monitor the usage of payments
cards. Forward navigation to the display of the selected document is possible.

File Access
External Tax Audit File Access

Figure 664: Contract Accounting: External Tax Audit - File Access

The file access is required to comply with GDPdU legal rules in Germany.
System data (Customizing data, business partner data and FI-CA documents) can be
extracted from the productive system with a structure that copes with tax relevant data. The
extracted data are created for closed posting periods usually in a periodic rhythm e.g.
quarterly.
Two file formats are possible:

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● SAP audit format (AIS): A tax auditor can import the files into his tax auditor software
● CSV format: The files can be re-imported into the system into appropriate short-tables
(reduced field structure) to merge extracts for the announced audit period by the tax
auditor and - if required - extracted again into files (AIS format).

The auditor gets only the authorization to display the re-imported extracts in the short-tables
with the reduced field sets. The administrator must prepare the system before the audit and
export the data from productive tables into files and import them into the short-tables.
Re-imported extracts can be deleted from the system if they are not needed anymore.
The role "Administrator - Accounts Payable and Receivable (FI-CA)" is required.

Working with Extracts

Figure 665: Export and Import Customizing Extracts

In this activity, you export data extracts of customizing data for auditing.
First you enter the necessary selections and information. An application log is displayed.
Review the output logs and files in a GUI browser.
You must download the files from the GUI browser to your local PC or application server and
store them accordingly for retention reasons.
In the same way a file containing customizing data extracts can be imported.

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Figure 666: Export and Import Partner Extracts

In this activity, you export data extracts of business partner for auditing.
First you enter the necessary selections and information. An application log is displayed.
Review the output logs and files in a GUI browser.
You must download the files from the GUI browser to your local PC or application server and
store them accordingly for retention reasons.
In the same way a file containing business partner data extracts can be imported.

Figure 667: Export and Import Documents Extracts

In this activity, you export data extracts of documents for auditing.

First you enter the necessary selections and information. An application log is displayed.
Review the output logs and files in a GUI browser.

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You must download the files from the GUI browser to your local PC or application server and
store them accordingly for retention reasons.

Overview of Extracts

Figure 668: Display Overview of Extracts

This activity provides an overview of re-imported extract files and the according detailed
displays. The extract types are:
● FI-CA Business partner
● FI-CA Customizing
● FI-CA Document

SAP Fiori Analytical Apps Overview

SAP Fiori Analytical Apps for Contract Accounting Manager Overview

Figure 669: Contract Accounting: SAP Fiori Analytical Apps for Contract Accounting Manager - Overview

With SAP Fiori Analytical Apps for Accounts and Receivable Manager, you can use the
following apps to analyze data in Contract Accounts Receivable and Payable (FI-CA):
● Analyze Overdue Items

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● Analyze Open Credits

● Analyze Write-Offs
● Analyze Clearing Reasons
● Analyze Payment Run Exceptions
● Analyze Returns

Within these apps, you can create worklists for your colleagues to perform further checks and
resolve the detected problems. With the My Open Worklists app, you can track the status of
the processing of these worklists.

SAP Fiori Analytical Apps Operations

Analyze Overdue Items

Figure 670: Analyze Overdue Items

The Accounts Payable and Receivable Manager (FI-CA) needs a total overview of the overdue
items, as overdue items are a potential lack of revenue - the longer an item is (over)due, the
smaller the chance of it being cleared.
With the Analyze Overdue Items app, you can follow the number of overdue items that are
overdue in Contract Accounts Receivable and Payable (FI-CA) or, the total value of those
overdue items. You can total or filter the amount and number of overdue items by various
criteria.
It is possible to display the total amount of open items within a period, or for example, filter
the amount and number of overdue items by company code, contract account category,
segment, business area, main transaction, net due date, dunning procedure, collection
strategy, among others.
Further, you can display additional information for selected business partners from the list of
business partners, as for example, the business partner financial overview.

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Analyze Open Credits

Figure 671: Analyze Open Credits

The Accounts Payable and Receivable Manager (FI-CA) needs a total overview of the open
credits in the system – there might be the need to clear or refund them.
The Analyze Open Credit Items app enables you to display the number of credit items that
have been posted and to which total amount the open items amount to.
You can restrict the selection of the total amount of open items to a specific company code
and a contract account category.

Figure 672: Analyze Clearing Reasons

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The Accounts Payable and Receivable Manager (FI-CA) needs to have an overview of the
different ways in which the receivables in the system have been cleared.
Within the Analyze Clearing Reasons app you can follow the clearing reason of receivables of
a certain time frame, to check what has already been cleared and how, as well as information
about the open amount of the analyzed receivables.
It is also possible to display the total amount of receivables presented in a chart as pre-
defined groups of clearing reasons. You can further filter the receivables, for example, by
company code, contract account type, payment method, lock reason, start date, end date, or
duration using the tile.

Figure 673: Analyze Return Reasons

Using the Analyze Returns app you can display the number of returns and the total amount
that these returns amount to. You can restrict the selection of the total amount and the
returns to a specific company code and a contract account category.
As an Accounts Payable and Receivable Manager (FI-CA), you need an overview of the returns
in the system. Payments not processed successfully at the end are potential lack of revenue.
Therefore you can display the return charges that you or the financial institution have levied
separately from the return amount. Filter the amount and number of returns, for example, by
returns lot, return reason, returns category, and house bank.
Run the report to group the returns by the posting date or value date, for example, by month
or day or display the amounts in different currencies to achieve your reporting goals.

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Analyze Write-Offs

Figure 674: Analyze Write-Offs

You, as the Accounts Payable and Receivable Manager (FI-CA), need a total overview of all
write-offs in the system.
With the Analyze Write-Offs tile, you can display the amount and number of write-offs made in
Contract Accounts Receivable and Payable (FI-CA). You can sum or filter the amount and
number of items using various criteria. Group the write-offs according to write-off date, write-
off reason, dunning procedure and collection strategy, contract account category, write-off
type, or company code in order to extract the information relevant to your business.
You can also display the total amount for documents written-off within a period, and of write-
off documents created to fulfill your reporting requirements.

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Payment Run Exceptions

Figure 675: Analyze Payment Run Exceptions

The Accounts Payable and Receivable Manager (FI-CA) needs an overview of payment
processes in general and in this context receivables that caused exceptions during a payment
run. The result is that no clearing via payments initiated by the company will be carried out for
these items / this amount as long as the exceptions are not fixed.
Using the Analyze Payment Run Exceptions app, you can display the number of payments and
for which total amount a payment run that could not be processed successfully and the
exceptions that therefore arose.
You can restrict the selection of the total amount and the dunning exceptions to a specific
company code and a contract account category. Additionally in the selection, you can define
whether the system takes the processed payments into account and is to relate them to the
exceptions.

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Open Worklists

Figure 676: My Open Worklists

The Accounts Payable and Receivable Manager (FI-CA) has to manage the work lists he
created based on irregularities he found in the apps and needs to react on delays within
processing.
With this SAP Fiori application, you display the results of all open worklists and their
corresponding items, which you have created in one of the following apps:
● Analyze Overdue Items
● Analyze Payment Locks
● Analyze Clearing Locks
● Dunning Locks

Using this app, you can easily track the working status, and set the status of a worklists and
their items to obsolete as required.
To work more efficiently, you can personalize the layout of the tables, and save your settings
as variants.

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Business Partner Overview

Figure 677: Business Partner Financial Overview

The Business Partner Financial Overview app helps you to display a comprehensive financial
overview for a business partner. As this overview is helpful in several situations, you can
launch this app not only by its own tile but also from several apps via a link on the business
partner name/ID.
The Accounts Payable and Receivable Manager (FI-CA) makes use of this functionality to get
very detailed information about the financial situation of a particular business partner, for
example, before he decides on triggering follow-up processes based on the results of his
analysis.
The tile gives you an overview of the following transaction documents for the business
partner:
● - Invoicing documents for Convergent Invoicing
- Payment documents
- Returns
- Dunning notices
- Clarification cases
- Installment plans
- Promises to pay
- Items from worklists that have been created by means of the apps from the
role Accounts payable/receivable manager
- Receivables submitted to collection agencies

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- Write-Offs

Collection Success

Figure 678: Analyze Collection Success

If you are using collections management, the Analyze Collection Success app gives an
overview of what percentage of collections has been successful within a certain time frame or
related to the collection strategies and collection steps applied.

The app analyzes what percentage of dunned open items has been paid as a probable result
of the dunning notice you sent. The analysis reflects a success percentage rate assigned to
the dunning notice including the paid items.
You can display the success rate of dunning notices created over a period of time or filter
dunning notices, for example, by company code, contract account category, collection
strategy, collection step, dunning amount, and date of issue.

SAP Fiori Analytical Apps Configuration

Manage your Solution

Figure 679: Manage your Solution

Select the Manage your Solution app in order to get to the Configuration screen.
The task Configure your Solution will give you the possibility to maintain certain processes.
The self-service configuration options for invoicing are in the application area 'Finance' and
sub application area 'Convergent Contract Accounting'.

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Self-Service-Configuration Tasks

Figure 680: Define Actions for Worklists

In this activity, you define which follow-on activities that the user of an app can propose when
creating work lists. The activity is adopted in the work items created by the app, and it is also
displayed in the work items (in the back-end). In the work list, employees can then select work
items explicitly using the proposed activity. The activity entered in a work item is only a
proposal. When processing the work list, the employee can also derive other activities.

Contract Account Master Data Overview

Business Partner and Contract Account Master Data Overview

Figure 681: Contract Accounting: Business Partner and Contract Account Master Data - Overview

Business Partner and Contract Account master data allow you to create and manage master
data of a business partner and a contract account as the required objects in SAP S/4HANA
Cloud for contract accounting and invoicing.

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To comply with data protection and privacy rules analyzed can be executed to determine if
customer data can be blocked and eliminated.
Furthermore, you can create and print correspondence and get an overview of a customer's
correspondence history.

Business Partner and Contract Account Master Data Process

Figure 682: Contract Accounting: Business Partner and Contract Account Master Data - Process

The scope item helps you to create and change contract accounts to allow the invoicing of
customers and posting of receivables and credits.
Key process flows like checking if a business partner can be blocked or how to analyze
business partner data is covered.

Contract Account Master Data Operations

Business Partner

Figure 683: Business Partner

The SAP Business Partner is used in many industries. It is a very powerful, flexible, and well
performing tool to manage Business Partner information.
Three Categories of Business Partners are distinguished: Person, Organization, and Group.

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Figure 684: Maintain Business Partner

Use the Maintain Business Partner SAP Fiori tile to create a new Business Partner for the
Contract Accounting and Invoicing.
With this app, you can manage business partner master data. You can create, change, search,
display, and copy business partner master data.

Figure 685: Business Partner Roles

Different business processes require different business partner data. In some cases, you need
to have contact data for business partners to be able to call them or to write them a mail. In
other cases, you need the information about a business partner’s bank account in order to
pay the rental fee.
Therefore, you must maintain certain business partner data depending on the type of
business processes. For this reason, a business partner can have more than one role.
It is recommended to use the standard roles delivered by SAP or at least to use these roles as
templates when creating customer-specific roles.
Business Partners are created in role Contract Partner (role ID: MKK).

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Figure 686: Customer Data Model Overview

The customer and the contract account are central master data in Contract Accounts
Receivable and Payable (FI-CA).
In a B2C context, the business partner corresponds to the customer and the contract account
contains the information needed to handle the financial relationship. One business partner
can be assigned to several contract accounts.
In a B2B context, the business partner corresponds to a company that receives services,
possibly for its subsidiaries as well. This hierarchy can be modeled by the business partner
relations.

Contract Accounts

Figure 687: Contract Accounts

With the specifications in the master records of contract accounts, you can control your
business processes and business relationships with your customers. The contract account
specifies the structure that the system uses. For example, posting data for contracts or
settles contract items for which the same agreements apply.
Every contract account master record consists of general data that applies to all business
partners assigned to the contract account. This data includes the contract account category,
the account number from the legacy system and the name of the contract account.
Alternatively the master record from business partner-specific data for each business partner
in the contract account can be set differently.

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You assign each contract account to the contract account category when it is created. The
contract account category determines the technical attributes of the contract account and in
doing so ensures the creation of the master record. This determines the contract account
category: for example, the fields that appear when you create a contract account.
You can assign more than one contract account to a given business partner. Similarly, a single
contract account can be assigned to more than one business partner.
In the contract account, you define business partner-specific procedures that the system
applies for posting and processing document items of the relevant account. In this way, you
make specifications for payment and dunning. You also define recipients and alternative
recipients for correspondence. All transactions relating to contract accounts access data
from the contract account master record (such as payments and dunning).
Several transactions change data in the contract account master record. The system
executes a return: for example, to automatically set a payment block in the contract account.
The system executes contract accounts with open item management. Each business partner-
relevant posting is assigned to one business partner and to one contract account.

Figure 688: Contract Account Category

The contract account category defines the characteristics of a contract account.

On creation, assign a contract account category to each contract account. You can define the
following by using the contract account category for a contract account:
● Whether only one or several business partners can be allocated.
● Whether one or more contracts can be allocated.
● Whether you are allowed to maintain a contract account online.
● The number range that is allowed for external or internal number assignment.
● Whether it is a collective bill account is to be used.
● Whether it is a one-time account.

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Figure 689: Creating, Changing and Displaying Contract Accounts

You can create, change, and display contract accounts online in the Maintain Contract
Account app. Additionally, you can use the Contract Account – Manage API to create, read,
and change contract accounts singly.
You create contract accounts with the Maintain Contract Account app as follows:
1. Go to the Create app and enter the following data:
● The business partner to which you want to allocate the account.
You have to allocate at least one business partner to each account. The master data for
the business partner for whom you are creating the account has to have already been
entered on the system. The business partner must have the role of contract partner.
● A contract account category.
You can choose either a contract account number yourself or the system can assign the
number.

2. Confirm your entries.

3. Define the required parameters and data that control processing processes. The master
data is structured in the contract account in accordance with the processing processes.
In the Maintain Contract Account app, you change or display a contract account by choosing
Change or Display. To view the contract account, enter the contract account number or the
business partner. If the contract account is specified, the system determines the business
partner automatically. If you specify the business partner and assign multiple contract
accounts to it, a dialog displays all assigned contract accounts. You select the relevant
account for processing.

Figure 690: Entering, Changing and Displaying Locks

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By specifying a lock reason in the contract account, you can prevent certain processes such
as the creation of outgoing payments. You can limit the locks. In the contract account master
record, you can set locks for the following business transactions:
● Incoming and outgoing payments
● Postings
● Interest
● Invoice creation
● Dunning
● Invoicing

If you are create or change an account in the Maintain Contract Account app, enter the
desired lock in the master record under General Data, Payments / Taxes, Dunning /
correspondence, or Convergent Invoicing.
You can set a lock for a limited period or set multiple locks using the pushbutton next to the
Lock field. You can also use this option display and change locks or display lock history. The
system logs changes to the locks without the change documents, but records them in the lock
history.

Note:

● If you only specify one lock reason, the lock will be for an unlimited period of
time.
● If there is only one lock reason specified, you can change or delete the lock
reason. If multiple or limited-time locks have been set, choose the pushbutton
next to the lock field to make the change. You can then make changes in the
dialog box that follows.
● If multiple or even limited-time locks have been set, the Lock field in the screen
Change contract account: Payment / Dunning Data can only display ~. To
display the locks, choose the pushbutton next to the lock in this case.

Figure 691: Manage Contract Accounts

This app provides a central entry point for contract account maintenance. You can use this
app to:

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● Display a list of contract accounts

Filter the list according to your needs. For example, by business partner and company code.
● Display a contract account by clicking on it
● Change a contract account

To change a contract account, select the desired contract account in the list and press
Change. This takes you to the app for changing contract accounts.
● Create contract accounts

To create a new contract account, press Create. This takes you to the app for creating
contract accounts.

Situation Handling
Overview

Figure 692: Situation Handling

Situation Handling is a framework that helps you increase the quality and efficiency of your
business processes. The right users are automatically alerted to situations and provided with
the information they need to solve them.
With Situation Handling, you can inform specific end users proactively about issues requiring
their attention, for example:
● Upcoming deadlines or events
● Exceeded thresholds, such as consumption rates and business relevant KPIs
● Delays
● Pending tasks, such as approvals and confirmations
● Warning and error messages from system runs

Situation Types

Figure 693: Monitor Mass Exceptions (Rate and Time)

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You can use situation handling to inform users about issues that occurred during the
processing of scheduled application jobs.
Working with the Manage Situation Types -Message-Based app, using the
FICA_MASSACT_ERROR_RATE_AND_TIME (Mass Activity Exception (Rate and Time))
situation type template, you can monitor application runs that exceed a specified error rate or
run time where the error rate is defined as the percentage ratio of items that could not be
processed in relation to the items selected.
The situation is triggered when the error rate or run time exceeds the error rate defined in the
template. The system checks the error rate and time for the defined conditions based on an
event. The event is raised once a scheduled run is finished. Conditions belong to the core
settings of the situation type because they define the circumstances under which the
situation occurs. The conditions in this template define that a situation is created with the
status Open when the error rate or time exceeds the specified rate during an application run.
Based on the predefined settings for the template, notifications are sent to the members of
the Contract Accounting team category. For situations based on this template, you can
choose specific members of the Contract Accounting team category defined in the Manage
Teams and Responsibilities app.

Figure 694: General Business-Critical Errors in Application Jobs

Using the Manage Situation Types -Message-Based app, you can create situation types from
the FICA_MASSACT_MESSAGE_BASED standard situation template to notify business users
of problem messages that are issued by scheduled application jobs.
In this way, you can ensure that critical errors (for example, during the payment run), do not
lead to losses for your company. In addition, you can collect message statistics for situation
types created from this template. Select the FICA_MASSACT_MSG_MONITOR situation
scenario for situation types created from this template.
The Run Types tab shows which messages you can monitor for which application jobs. This
situation template can be used to monitor several application jobs scheduled like for Reverse
Dunning Notices Run, Recall Receivables from Collection Agency or to Process Payment
Cards.
When a situation occurs, users are informed by texts sent through different channels, such as
in-app situation messages or notifications on the SAP Fiori launchpad. On the Situation
Display tab, you can change texts as well as the display settings for notifications.
On the Recipients tab, you define which users receive a notification when a situation instance
is triggered or which users can display an the instance in the My Situations – Message Based
app. The template has been set up with the FICA (Contract Accounting) team category. That
is, the template covers application jobs scheduled in contract accounting. The responsibility
attributes Mass Activity Type and Company Code assigned in the template represent the
filters applied to display situations in the My Situations – Message Based app.
Example:

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You have defined two teams, team A and team B, for the FICA Contract Accounting team
category. You assign team A the company code 0001 as responsibility attribute. You assign
team B the company code 1010 as responsibility attribute.
You execute a payment run in company code 1010. During the payment run in company code
1010, a system message is issued for which the system creates a situation. Only a user
assigned to team B is able to display the situation created for company code 1010 in the My
Situations – Message Based app.

Figure 695: Business Critical Locks in Application Jobs

Using the Manage Situation Types-Message-Based app, you can create situation types from
the FICA_LOCK_MESSAGE_BASED standard situation template to notify business users of
problem messages related to business locks that are issued by scheduled application jobs. In
this way, you can ensure that critical errors (for example, during the payment run), do not
lead to losses for your company.
The Run Types tab shows which messages you can monitor for which application jobs. This
situation template can be used to monitor several application jobs scheduled like for
Submission Run to Collection Agency, Recall Receivables from Collection Agency or Payment
Runs.
When a situation occurs, users are informed by texts sent through different channels, such as
in-app situation messages or notifications on the SAP Fiori launchpad. On the Situation
Display tab, you can change texts as well as the display settings for notifications.
On the Recipients tab, you define which users receive a notification when a situation instance
is triggered or which users can display an the instance in the My Situations – Message
Based app.
The template has been set up with the FICA (Contract Accounting) team category. That is, the
template covers application jobs scheduled in contract accounting. The responsibility
attributes Mass Activity Type and Company Code assigned in the template represent the
filters applied to display situations in the My Situations – Message Based app.

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Figure 696: Business Critical Master Data Errors in Application Jobs

Using the Manage Situation Types -Message-Based app, you can create situation types from
the FICA_MASTER_DATA_MESSAGE_BASED standard situation template to notify business
users of problem messages related to master data that are issued by scheduled application
jobs. In this way, you can ensure that critical errors (for example, during the payment run), do
not lead to losses for your company.
In addition, you can collect message statistics for situation types created from this template.
Select the FICA_MASSACT_MSG_MONITOR situation scenario for situation types created
from this template.
The Run Types tab shows which messages you can monitor for which application jobs. This
situation template can be used to monitor several application jobs scheduled like for Maintain
Accounts Run, Recall Interest Run or Payment Runs.
When a situation occurs, users are informed by texts sent through different channels, such as
in-app situation messages or notifications on the SAP Fiori launchpad.
On the Recipients tab, you define which users receive a notification when a situation instance
is triggered or which users can display an the instance in the My Situations – Message
Based app.

Figure 697: Business Critical SEPA Errors in Application Jobs

Using the Manage Situation Types -Message-Based app, you can create situation types from
the FICA_SEPA_MESSAGE_BASED standard situation template to notify business users of

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problem messages related to SEPA mandates that are issued by scheduled application jobs.
In this way, you can ensure that critical errors (for example, during the payment run), do not
lead to losses for your company.
In addition, you can collect message statistics for situation types created from this template.
Select the FICA_MASSACT_MSG_MONITOR situation scenario for situation types created
from this template.
The Run Types tab shows which messages you can monitor for which application jobs. This
situation template can be used to monitor several application jobs scheduled like for Interest
Runs, Dunning Runs or Write-off Runs.
When a situation occurs, users are informed by texts sent through different channels, such as
in-app situation messages or notifications on the SAP Fiori launchpad. On the Situation
Display tab, you can change texts as well as the display settings for notifications.
On the Recipients tab, you define which users receive a notification when a situation instance
is triggered or which users can display an the instance in the My Situations – Message Based
app. The template has been set up with the FICA (Contract Accounting) team category. That
is, the template covers application jobs scheduled in contract accounting. The responsibility
attributes Mass Activity Type and Company Code assigned in the template represent the
filters applied to display situations in the My Situations – Message Based app.

Figure 698: Business Critical Customizing Errors in Application Jobs

Using the Manage Situation Types -Message-Based app, you can create situation types from
the FICA_CUSTOMIZING_MESSAGE_BASED standard situation template to notify business
users of problem messages related to system settings that are issued by scheduled
application jobs. In this way, you can ensure that critical errors (for example, during the
payment run), do not lead to losses for your company.
In addition, you can collect message statistics for situation types created from this template.
Select the FICA_MASSACT_MSG_MONITOR situation scenario for situation types created
from this template.
The Run Types tab shows which messages you can monitor for which application jobs. This
situation template can be used to monitor several application jobs scheduled like for Post
Value Adjustments, Release Run to Collection Agency or to Reconcile Postings.
When a situation occurs, users are informed by texts sent through different channels, such as
in-app situation messages or notifications on the SAP Fiori launchpad. On the Situation
Display tab, you can change texts as well as the display settings for notifications.
On the Recipients tab, you define which users receive a notification when a situation instance
is triggered or which users can display an the instance in the My Situations – Message Based
app. The template has been set up with the FICA (Contract Accounting) team category. That
is, the template covers application jobs scheduled in contract accounting. The responsibility
attributes Mass Activity Type and Company Code assigned in the template represent the
filters applied to display situations in the My Situations – Message Based app.

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Integration with SAP Credit Management

Overview

Figure 699: Integration with Credit Management Overview

SAP Credit Management enables your company to operate centralized credit management.
To do this, the connected components, such as Contract Accounts Receivable and Payable,
report the commitment of a business partner to SAP Credit Management. SAP Credit
Management consolidates these reports into a credit exposure and checks this against the
current credit limit of the business partner. This means that you can centrally manage the
score, the payment behavior summary, and the credit exposure (that is, the total of all open
items) of your business partners.

Figure 700: Business Partner - SAP Credit Management

If you use SAP Credit Management, the internal processes of Contract Accounts Receivable
and Payable do not use the score (creditworthiness) determined in FI-CA; instead, they
automatically access the score in SAP Credit Management.
The open items of business partners are managed in Contract Accounts Receivable and
Payable; the credit decisions take place in SAP Credit Management. To ensure credit
decisions are based on a current dataset, you therefore have to transfer the credit exposure
(the total of open items) to SAP Credit Management at regular intervals.
In the credit exposure update from Contract Accounts Receivable and Payable, the total of all
current open items for the business partner is always transferred to SAP Credit Management.
It is not a delta update.

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In Contract Accounts Receivable and Payable, there are mass activities for the following
functions:
● Sending the credit exposure of a business partner to SAP Credit Management
● Sending the payment behavior summary to SAP Credit Management
● Replicating the rating values between Contract Accounts Receivable and Payable, and SAP
Credit Management

Contract Accounts Receivable and Payable supports the commitment query of SAP Credit
Management. In SAP Credit Management, you can specify whether the current credit
exposure is queried in the connected components for a credit check.
Contract Accounts Receivable and Payable supports the partner messages of SAP Credit
Management. Partner messages enable the credit exposure to be updated in SAP Credit
Management for a business transaction across module and system boundaries, with no
chronological gaps.

Credit Exposure

Figure 701: Calculating and Transferring Credit Exposure

You can transfer credit exposure from Contract Accounts Receivable and Payable
to SAP Credit Management. In Contract Accounts Receivable and Payable, you can display
the credit exposure of a business partner in the master record per credit segment and go
from there to the details of the credit exposure.
The credit exposure in SAP Credit Management is increased by not yet invoiced items in
Billing as well as open receivables in Contract Account Receivable and Payable.
The credit exposure is therefore the sum of all open items, billable items and billed items of
the business partner that are not yet invoiced.

Note:
Contract Accounts Receivable and Payable transfers only those billable and billed,
but not yet invoiced, items that you have created for billing in postpaid scenarios.

The utilization of the credit limit by the credit exposure is one of the check criteria for
a credit check in SAP Credit Management.
In Contract Accounts Receivable and Payable, you can calculate the credit exposure of a
business partner and then transfer it to SAP Credit Management.

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To improve performance, you can calculate the credit exposure and transfer it
to SAP Credit Management in one step or in two separate steps. The procedure described
below uses two steps.
You can enter a percentage rate during the calculation of credit data. Using this percentage
rate, you can limit the update of credit data to that percentage of your business partners that
was not updated for the longest period of time.

Figure 702: Transfer of Credit Data

You calculate credit data in Contract Accounts Receivable and Payable using the
transaction Transfer Credit Data.

1. To reschedule a run, create a new application job. Choose FI-CA Transfer Credit Data as
the job template.
If you want to use the data found in the system of an existing payment run as a template,
you can copy the parameters of this run.

2. Under Scheduling Options, choose the start date and time, or execute the run
immediately.
If you choose Start Immediately, the job starts directly.

a. You define a run identification under the Run ID in the Run ID Prefix field that you use
to identify the run at a later stage.

b. Under Selection Criteria, you restrict the data to be processed according to business
partner and credit segment.

c. Under Parameters, set the Update Credit Data indicator and enter the required
percentage in the Percentage Rate field.

This means that the credit data (credit exposure and payment behavior summary) in
Contract Accounts Receivable and Payable (FI-CA) is updated as follows:

● All critical business partners

● All newly created business partners

● plus x% of the business partners with the oldest update date

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3. Set the Update BusPartners for Special Attention indicator if required. If you do not set
this indicator, then the business partners for special attention in Contract Accounts
Receivable and Payable are not updated.
This causes new business partners with special attention, and the business partners for
whom the Special Attention field is no longer set, to be determined
in SAP Credit Management and updated in Contract Accounts Receivable and Payable (FI-
CA).
Set the Transfer of Credit Data indicator to transfer credit exposures
to SAP Credit Management. If you do not set this indicator, you then have to schedule
another run (see below).

4. Schedule the run.

Transfer of Credit Data to SAP Credit Management

After you have calculated the credit data in Contract Accounts Receivable and Payable, you
can also transfer it to SAP Credit Management by using the Transfer Credit Data to app. To do
this, proceed as described in the section on calculating the credit data, but set the Transfer
of Credit Data indicator and then schedule the run.
After the transfer, the credit exposure appears in the business partner master data
of SAP Credit Management. The system adds the credit exposure amount from Contract
Accounts Receivable and Payable to the credit exposure of the relevant credit segment of the
business partner.

Figure 703: Calculating and Transferring Payment Behavior Summary

Using payment behavior summaries, you can calculate the creditworthiness score and the
credit limit in SAP Credit Management.
The payment behavior summaries of business partners are determined in Contract Accounts
Receivable and Payable. In the same way, you can determine the credit exposure including an
interest calculation.
In the standard system, payment behavior summaries contain the valuated credit exposure,
as well as information on the following:
● Open items
● Payment methods
● Payments
● Dunning by collection strategy
● Dunning by dunning procedure
● DSO (days sales outstanding)
● Promises to pay

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● Returns
● Deferrals and installment plans
● Write-offs

The amount of the valuated credit exposure is the total of all open items, including the interest
for overdue items. For simulating the interest calculation for overdue items, the system uses
the interest rate you entered in the system configuration.
The system updates the valuated credit exposure in the currency of the credit segment. The
key figures are transferred using the Transfer Credit Data app. If you make according system
settings, the app transfers the individual key figures from Contract Accounts Receivable and
Payable to SAP Credit Management.
The Transfer Credit Data app forwards the payment behavior summary for those business
partners with negative payment behavior (such as dunning, returns, or broken promises to
pay).
You determine the time period over which the system is to evaluate a key figure in the Define
Evaluation Period for Key Figures configuration step. The value applies for all key figures that
you have stipulated for transfer, and especially for the following standard key figures:
● COL (Collections)
● DUN (Dunning notices)
● P2P (Promises to pay)
● RET (Returns)
● TIP (Installment plans)
● WRO (Write-offs)

If you do not make any entries, the system uses the default value of 30 days.
To calculate and transfer the payment behavior summary, use the Transfer Credit Data app.
After the transfer, the valuated credit exposure is displayed in the business partner master
data of SAP Credit Management in the respective credit segment for the payment behavior
summary. You can find the payment behavior summary in the business partner master data
of SAP Credit Management in the credit segment views under KPI Payment Behavior.

Figure 704: Compare Credit Score

The credit score managed in Contract Accounts Receivable and Payable is forwarded to SAP
Credit Management and can contribute to the credit score managed there. For internal
processes such as dunning and returns processing in Contract Accounts Receivable and
Payable to be able to react to the score from SAP Credit Management, you also have to
transfer the score to Contract Accounts Receivable and Payable.

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If you transfer the FI-CA credit score to SAP Credit Management by using
transaction Replicate Credit Score, the updated credit score of SAP Credit Management is
returned automatically to Contract Accounts Receivable and Payable. This means that you
can only replicate the credit score in Contract Accounts Receivable and Payable by
scheduling replication using the Replicate Credit Score app. SAP Credit Management saves
the FI-CA credit score as external credit information in the rating procedure FICA.
Transfer of FI-CA Credit Score to SAP Credit Management

1. To transfer FI-CA credit scores to SAP Credit Management and replicate the credit score
of SAP Credit Management to Contract Accounts Receivable and Payable at the same
time, choose the Replicate Credit Score app.

2. To reschedule a run, create a new application job. Choose Replicate FI-CA Credit Score as
the job template.
If you want to use the data found in the system of an existing payment run as a template,
you can copy the parameters of this run.

3. Under Scheduling Options, choose the start date and time, or execute the run
immediately.
If you choose Start Immediately, the job starts directly.

4. Under Parameters for Run ID in the Run ID Prefix field, define a run ID that you use to
identify the run at a later time.

5. Under Selection Criteria, restrict the number of business partners to the area for which
you want to replicate their creditworthiness.
By setting the indicator Only Changed Scores, you can restrict the transfer to SAP Credit
Management to those business partners whose credit score has changed since the last
transfer in FI-CA. In the same way, setting this indicator for the transfer of the scores
from SAP Credit Management to FI-CA has the effect that only those score values are
replicated where the FI-CA credit score has changed.

6. Schedule the program run.

Contract Account Master Data Configuration

Manage Your Solution

Figure 705: Manage Your Solution

Select the Manage Your Solution app to navigate to the Configuration screen.

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The Configure Your Solution task will give you the possibility to maintain certain processes.

Self-Service Configuration Tasks

Figure 706: Set up Company Codes

You define the company codes that you want to use in Contract Accounts Receivable and
Payable. Assign the attributes required for controlling postings to each company code that
you want to use in Contract Accounts Receivable and Payable.

Figure 707: Define Authorization Groups

The authorization groups enable you to protect the access of individual objects. To perform a
particular activity, a user has to have the authorization for the activity and authorization group
combination.

Figure 708: Define Company Code Group

For each contract account you define the company codes to be used for posting to the
contract account. These company codes are summarized in company code groups.

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Figure 709: Assign Company Codes to Company Code Groups

Assign the desired company code to the company code group that you have defined.

Figure 710: Configure Contract Account Categories

Here you define contract account categories.

The attributes that can be defined for a contract account category include whether:
● One or more than one business partner can be assigned per contract account
● The contract account can have one or more than one contract
● Collective bills are possible for the contract account
● Which number ranges (external/internal) are valid for the contract account
● Which processing screens or data fields can be used to process the contract account
● The contract account can be processed online

Each category is assigned to a specific internal and external number range.

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Figure 711: Application Area Data Protection

To access the relevant SSC UIs you must have a business user with a business role
SAP_BR_BPC_EXPERT assigned.
With respect to Data Protection the following SSCUI must be maintained. Find the Assign
Application Rule Variants and Rule Groups for EoP Check in the Application area: Application
Platform and Infrastructure
and Sub Application Area: Data Protection.

Figure 712: Define and Store Application Rule Variants for EoP Check

Make sure application rule variant "FICA_NO_BUSI" is defined for the business partner for
Application MKK.
The following are prerequisites for both settings:
● In the application ILM Policies, you define residence rules for the ILM object CA_BUPA in
audit area BUPA_DP.
● In the application ILM Policies, you define retention rules for the ILM object CA_BUPA in
the audit area BUPA_DP.

To access application ILM Policies you must have a business user with a business role
SAP_BR_DATA_PRIVACY_SPECIALIST assigned.

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Open Item Management Overview

Open Item Management Overview

Figure 713: Contract Accounting: Open Item Management - Overview

In this scope item, you handle open item management for contract accounting. This includes
dunning, installment plans, interest calculation, and credit clarification.

Open Item Management Process

Figure 714: Contract Accounting: Open Item Management - Process

The scope item helps you to create and send payment reminders or dunning letters to your
business partners to remind them of overdue payables and to request payment. Further it is
possible to divide source items to several installment receivables that have a due date in the
future.
Key process flows also include the determination and posting of interest receivables and
payables plus the processing of existing credits in accounts for your business partners.

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Open Item Management Operations

Dunning

Figure 715: Dunning

Dunning notices are created in a mass process which checks the receivables of business
partners. Information about the dunning notices of a business partner and the activities,
which have been executed, is important for the further interaction with the business partner.
A dunning notice contains the following details:
● Information about when and how the business partner has been dunned
● Information about the dunned receivables items
● Information about the activities which have been triggered for the dunning notice

Figure 716: Dunning Activity

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The process steps are offered in different SAP Fiori apps. Use the tile Dunning Runs and the
job template FI-CA Dunning Activity Run indicated. Give the scheduling options; if it should
start immediately or at a certain point in time.

Installment Plan

Figure 717: Installment Plans

Figure 718: Installment Plan Items

An installment plan enables you to distribute source items among several installment
receivables that have a due date in the future. After posting an installment plan, the
installment plan items are used for a bank collection or a dunning run instead of the original
items.
You create an installment plan for business partners who are willing to pay but are
temporarily having payment difficulties. One or more source items can be included in an
installment plan. However, you can only include receivables and items of one currency, and
from one contract account, in an installment plan.
An installment plan consists of a statistical document with several installment receivables.
The system clears the individual installment receivable on payment. The system saves the
installment plan number in the original items. In this way, the connection is also guaranteed
between the installment plan and the source receivables, as well as between the source
receivables and the installment plan. If interest is calculated in an installment plan, then it also
contains an interest supplement.

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Figure 719: Create an Installment Plan

You create an installment plan, if there are one or more open items in the contract account of
a business partner, and the business partner cannot fulfill the payment obligation within the
scope of the usual payment rules.
When you calculate interest, the system creates an interest document automatically. When
you enter a charge amount, the system posts a document for the installment plan charges.
During posting, interest and charges documents are automatically transferred to the
installment plan of the original receivables.
To create an installment plan, call up the Maintain Installment Plan app and choose Create.
Enter the selection parameter for open items and posting parameters then choose Continue.
Now select the open items from the list that you want to include in the installment plan.

Figure 720: Create a Installment Plan - Details

Enter the installment plan parameters for your desired open item document of the customer.
The start date defines the due date of the first installment.
You can either transfer default values to the initial screen using the Installment Plan Type, or
enter the installment plan parameters directly.

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You must enter the installment interval and the interval type; You also have the option of
entering an amount for the installment plan charges as well as the installment plan category,
and a value for the Remaining Amount field.
The system creates an installment plan proposal based on the parameters set. There are two
ways to create an installment plan proposal.
Enter an amount in the Installment Amount field. The system determines the number of
installments by means of the installment amount and the total sum of the source items. You
can also add partial amounts to the installment plan.
● Enter values in the fields Rounding Amount and No. of Installments. The installment
amount is calculated from the total sum of the original receivables, the rounding amount,
and the number of installments. If you enter a rounding amount, the system automatically
checks whether this amount complies with the rounding rules defined in the configuration
settings.
● Regardless of whether you have the system create an installment plan proposal by
entering the installment amount or by entering the rounding amount and number of
installments, there may be a remaining amount when the individual installments are
calculated. This is because the total of the individual installments must always equal the
total of the original receivable (installment amount * number of installments + remaining
amount = total of original receivable).

Figure 721: Display and Change Installment Plan

Using the Maintain Installment plan app, you can view or change existing installment
agreement for a business partner.
If an installment plan is active and has not yet been cleared, you can change an installment
plan and thus:
● Delete installments or add additional installments
● The due date and the amount of each individual installment receivable change provided
that the installment receivable has not yet been paid.

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Note:
If you want to change the amounts in an installment plan, the total of the
installment receivables always has to correspond to the total of the source
receivables. In the example there is an additional installment payment in August
2021 with EUR 50 and to match the overall amount five of the upcoming monthly
installments were lowered by EUR 10.

Figure 722: Installment Plan History

The installment plan history shows the original items that an installment plan consists of. In
the installment plan history, the system records a period in which a source item was part of an
installment plan.
If you want the system to carry out history updates, installment plan categories and
deactivation reasons must be configured (see Finance → Contract Accounting → Installment
Plans → Define Categories for Installment Plan or Define Deactivation Reasons for Installment
Plan
For each installment plan, the system automatically updates an installment plan history. The
system then also updates the history when you deactivate the installment plan. The
installment plan history refers to the original receivables and stores the following data:
● Installment plan category
● Deactivation reason
● Deactivation date (to be entered when deactivating)
● Deactivation date and time (time stamp)
● The open remaining amount when deactivating

You access the installment plan history with the app Display Installment History.

Figure 723: Manage Installment Plans

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The Manage Installment Plans app provides a central entry point for installment plan
maintenance. With this app, you can display, change, and create installment plans, as well as
display the installment plan history and analyze installment plans as a key figure.
Some of the key functions include:
● You can change an open installment plan. Mark the desired installment plan in the list and
then choose Change.
● You can create new installment plans by selecting Create.
● You can display the history for an installment plan. Mark the desired installment plan and
then choose Installment Plan History.
● You can access the Analyze Installment Plans app. Select an installment plan number in
the list and choose Analyze Installment Plans to get an overview of installment plans that
have been created.

Figure 724: Analyze Installment Plans

Using the Analyze Installment Plan app, you can display the number of installment plans that
have been created and the total amount that has been paid into the original receivables in the
installment plans.
The installments and installment plans are displayed in a diagram. For the total amount that
has been created for the installment plan, you can filter the number of installment plans or the
installments, for example, by the status of the installment plans or installments, by the
number of installments, or the fulfillment quota.
You can group the installment plans by the creation date or due date, for example, by month
or day.
If the selected grouping refers to installment plans and not to installments, you can display
the goodwill value. The goodwill value of the installment plan is an indicator for the equal
distribution of the installment due dates.

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Figure 725: Interest and Charges for Installment Plans

You can calculate interest for original items and installment plan items, as well as levy charges
on installment plans. You calculate interest on installment plans when creating or changing an
installment plan.
In the Manage Your Solution app under Configure Your Solution, you make the system
settings for the clearing control under Finance Contract Accounting Installment Plan.
In Customizing choose Define Default Values for Interest on Installment Plans. Using the Only
int. on arrears and the Never int. on arrears indicators, you can specify how the system
handles interest:
● Calculates interest only for installment payments that are received late
● Calculates interest for both installment payments that are received late and those received
early
● Calculates interest regardless of the receipt date of the installment payments

In the Maintain Installment Plan app, you calculate interest on an installment plan proposal
with Interest Calc..
For an existing installment plan select interest update during the processing of the installment
plan. You can use the following options to calculate interest retroactively:
● Only overdue installments are taken into account in other words, only installments that
have been paid too late.
● The interest on the installment plan is recalculated. In this case, the interest calculation
takes account of individual installments that were paid too early (before the due date), as
well as installments that were paid too late. Recalculation may result in an interest credit or
an interest receivable.

Post Interest

Figure 726: Post Interest

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With Interest Calculation, you can determine and post interest for receivables and payables.
First the items are selected and in a second step, the interests are posted.
Use the Post Interest tile to define your posting parameters, the reconciliation with the
General Ledger and the interest parameters to run the report.

Figure 727: Display Interest Calculation

The calculated interests can be displayed in a list and printed using the Display Interest
Calculation tile.

Clarify Credits

Figure 728: Clarify Credits

In this process step, you systematically clarify existing credits which are part of the credit list.
Use the Clarify Credit tile to perform one of the following activities for a particular credit item:

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● Transfer: The system creates a repayment request for the credit(s).

● Payment: The system creates a payment specification for the credit(s).
● Check: The system creates a repayment request of the type check for the credit(s).
● Writing Off: The system writes off the credit(s).
● Clearing: The system clears the credit(s) against open items of the business partner.
● Business Partner Transfer: The system transfers the credit(s) to another business partner.
● General Ledger Transfer: The system transfers the credit(s) to a general ledger account.

Security Deposits

Figure 729: Security Deposits

You can request cash security deposits from your business partners and manage them in the
system and assign security deposits to contract accounts or contracts. Furthermore, it is
possible to issue or clear cash security deposits provided a return date defined in the system
configuration has been reached.
You can manage security deposits via an API in the SAP S/4HANA Cloud system. To do this,
in the Communication Agreements app, define a communication agreement for
communication scenario SAP_COM_0380 (Finance - Contract Accounting Integration of
Security Deposits).

Figure 730: Manage Security Deposits

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 Lesson: Managing Contract Accounting

With the Manage Security Deposits app, you can display, create, clear, release, and reverse
cash security deposits. Using the available filters, you can enter search criteria in order to find
specific security deposits. You can use this app to:
Create a new security deposit
Choose Create or Copy if you would like to use an existing security deposit as a template.
Then, enter a contract account and if necessary, a contract. Enter the reason for the request
and the amount, as well as the currency and the start date. When you save the data entered,
the system displays the new security deposit. The request document is posted at the same
time.
Clear a security deposit
To clear, mark the desired security deposit in the list and choose Clear.
Release a security deposit
To release, mark the desired security deposit in the list and choose Release. Alternatively, you
can select a security deposit to display the detail view and then fully or partially release it. To
reverse, mark the desired security deposit in the list and press When you release a security
deposit, the system removes the clearing restriction of the security deposit payment. This
means that the payment can now be cleared. You can only release security deposits if their
status is either Paid or Released Partially. When you release a security deposit in part, you can
offset the released portion, or pay it out if a payment method is defined in the partial release.
Reverse a security deposit
To reverse, mark the desired security deposit in the list and choose Reverse.
Reduce the amount of cash security deposit request
To reduce the amount of cash security deposit request, clear the request. The system then
clears the unpaid portion of the security deposit request and writes off the original receivable.
Increase the amount of a cash security deposit
To increase the amount of a cash security deposit receivable, edit the security deposit
request. Then choose Create to post an additional security deposit request. When you save
the data, a new cash security deposit receivable is posted with reference to an existing cash
security, provided that this has not been reversed or released.
Create a security deposit request
To request a security deposit, you can send customers correspondence. To create the
correspondence, select the desired security deposit from the list. Then choose Create
Correspondence. In the following dialog, specify the channel and select a print queue. Choose
Create and Print to print immediately. Choose Create to set the correspondence in the print
dataset of mass printing.

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Figure 731: Release Security Deposits

Using the Release Security Deposits app, you can release several security deposits for return
simultaneously.
The app selects all security deposits for the contract accounts selected.
If you do not specify a return date, the app releases all security deposits that have already
reached their return date. If you specify a return date, the app releases all security deposits
whose return date is in the period specified.

Figure 732: Calculation of Interest for Security Deposits

You can use the Interest Run for Security Deposits app to calculate interest on cash security
deposits in a mass run.
The determination of the interest key for a cash security deposit is different from the standard
item interest calculation:
● If an interest key is defined in the payment, this is valid.
● If an interest key is not defined in the payment, the system attempts to determine a key
from the corresponding security. If no interest key can be determined, no interest
calculation takes place.

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An interest lock at the level of the contract-account-dependent data is not taken into account
in the interest calculation for cash security deposits.
You can display posted cash security deposit interest for the security deposit in the Display
Interest Calculations and Manage Security Deposits apps. The Display Interest Calculations
app displays the interest calculation both for simulation runs and update runs.

Presenting Customer Data

Figure 733: Presenting Customer Data Outside SAP S/4HANA Cloud

Using APIs provided through the SAP API Business Hub, you can present information about
customer accounts in your internet portal.
To establish communication, you have defined a communication agreement for the
communication scenario SAP_COM_0361 (Finance - Contract Accounting Open Item
Management Integration) in the Communication Agreements app.
The following APIs are available:
● Operations on business partner
● Operations on SEPA mandates
● Payment card processing
● Contract account
● List of invoices
● Operations for payments

Collections Management
Collections Management

Figure 734: Collections Management

You can use Collections Management to draw your customers' attention to overdue payables,
and request payment. You can create corresponding hard copies.
Flexible rules that you define using BRFplus are the central control attribute for the dunning
process flow and define the procedure for situations where a business partner is in arrears.

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Collection Strategy

Figure 735: Configuration of Dunning by Collection Strategy

To map and control the collection processes you require by using the dunning programs, you
must first create the system settings described in this section.
The determination of the dunning activities in the dunning programs takes place using
the Business Rules Framework plus (BRFplus).
Process Flow

1. In the Manage My Solution app, under Configure My Solution, create the configuration
steps under Finance → Contract Accounting → Dun by Collection Strategy.

2. Define the required dunning locks manually in the master records of the contract
accounts and/or in the document in the Post Document or Change Document apps.

3. The dunning proposal run evaluates the parameters and derives the actions to be
performed.

Figure 736: Collection Strategy Configuration

Collection Strategy
In the Collection Strategy you define rules that decide on the sequence of the collection
steps in Receivables Management.
Collection Step
The Collection Step of a dunning notice in turn defines which dunning activities are executed.
In the Define Collection Step configuration step, for each collection step you define the
dunning interval, charges schedule, interest key, and the dunning activities to be executed.
Dunning Activities
In the configuration step Define Collection Steps, you assign the dunning activities to the
collection steps. The dunning activity run executes the dunning activities defined for each
collection step.
Measure when a specific collection step is reached. SAP delivers the following dunning
activities:

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● Creation of a Dunning Notice (0001)

● Trigger Administrator Notification (0002)
● Set Dunning Lock in Contract Account (0003)
● Deactivate Installment Plan (0004)
● Release for Transfer to External Collection Agency (0006)
● Recall Receivables from Collection Agency (0007)
● Release to Collection Agency with Entry in FKKMAKT (0008)
● Service Disconnection Request (0020)

Figure 737: Dunning by Collection Strategy Attributes

Grouping of Master Data

During dunning by collection strategy, you can group the master data of business partners in
master data groups. The dunning activity then considers the group as a whole. This means
that the system performs the necessary dunning activities separately for each master data
group.
Dunning Charges
These are charges that are calculated as a result of a payment being outstanding and that are
levied when a dunning notice is created. The charges are calculated automatically based on a
charges schedule defined in the system settings.
You can levy dunning charges as absolute amounts, or as percentages. Percentages are
applied to the dunning balance. In the subtransaction, you can define whether additional
receivables should be considered in this balance.
The dunning activity run posts the dunning charges defined in the charges schedule for each
charges type of a collection step automatically. From the main transaction and
subtransaction, you can derive a statistics indicator that determines whether the charges are
posted statistically or relevant to the general ledger.
Dunning Lock
You can lock individual items or entire contract accounts for dunning by specifying the
relevant dunning lock reasons at the required level. You can also restrict the validity of a
dunning lock to a specific period. If you set a dunning lock for a line item, only that item is
excluded from the dunning run. A dunning lock at the business partner-contract account
relationship level means that all items posted to this contract account are not dunned until
the lock has expired or has been removed. If an item has a deferral date, it is not dunned until
the deferral date has been exceeded.

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Dunning

Figure 738: Dunning Run

Once you have configured the dunning parameters described, the system can identify
overdue receivables in the system and dun your business partners.
Receivables are dunned as part of a dunning run. Executing a dunning run involves two partial
steps:

1. Dunning proposal run with the Dunning Runs app and the FI-CA Dunning Proposal job
template.

2. Dunning activity run with the Dunning Runs app and the FI-CA Dunning Activity Run job
template.

In the first step, the dunning proposal run determines the following:
● The contract accounts to be dunned, together with the items due for dunning
● The master data groups in which the items are to be summarized
● The strategy for dunning the master data groups

The result of the dunning proposal is processed further in the dunning activity run. In the
second step, the first dunning activity run determines the dunning activities required,
depending on the collection step and then carries out these activities. You can specify the
frequency in which you want to carry out dunning runs. Dunning proposal runs and dunning
activity runs can be executed in parallel and therefore enable you to process large quantities
of data.
The dunning proposal run proposes a reconciliation key for the documents posted during
dunning. You can change this proposal manually. The dunning activity run only uses this
reconciliation key if the run ID agrees with that of the dunning proposal run.

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Figure 739: Dunning Proposal Run

The dunning proposal run groups the overdue items into dunning notices.
By specifying the selection criteria in the dunning proposal run, you control which items are
dunned. A successfully completed dunning proposal run is therefore the prerequisite for
executing dunning activities.

1. Choose the Dunning Runs app. You enter the app with which you schedule and monitor
application jobs.

2. Under Scheduling Options, specify a start date and time.

3. You define a run identification under the Run ID in the Run ID Prefix field that you use to
identify the run at a later point in time.

4. Under General Selections, enter the parameters that the program is to use to select the
items to be dunned.

5. Under Dunning Parameters, specify the following parameters required for the dunning
notices:

6. Schedule the program run.

Figure 740: Dunning Activity Run

Once you have successfully executed the dunning proposal run, start the second subprocess
of the dunning run - the dunning activity run.
Features
The dunning activity run determines and runs the dunning activities defined in the collection
steps. A dunning activity run relates only to those overdue items determined in a dunning
proposal run.

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If the dunning activity run carried out a dunning activity successfully, it sets the print date in
the dunning proposal. The print date is the same as the run date.
If errors occurred during the execution of the dunning activities run, the system only sets the
print date in some of the dunning headers. If the cause of the error is in the dunning proposal,
you have to reverse the dunning notices concerned. If the cause of the error is in the dunning
activity run, you have to correct the error and then start the dunning activity run again for this
dunning proposal run. In this second run, the dunning activity run only processes the dunning
notices that have not been executed yet: that is, dunning notices that have not received a
print date (run date). If a long time has elapsed since the error occurred, we recommend that
you reverse the dunning notices that have not been manually executed, or by using
the Dunning Runs app and job template Reverse FI-CA Dunning Notices (Paralleliz.), and then
start the dunning proposal run again.
If you run the dunning activity run in simulation mode, you can also test the correspondence
creation. If you simulate a run again, but print after the first simulation run, in the second
simulation the correspondence container is filled again and you can repeat the print.
However, if you do not print between two simulation runs, the data in the correspondence
container is overwritten and you can only print once at the end.
Activities
You schedule and start a dunning activity run in the same way as for a dunning proposal run.
Enter the run parameters of the dunning proposal run that you want to execute, then
schedule the run.
For parallel processing, the system divides the data into ranges according to business
partners.
The program does not process business partners and contract accounts, for which locks exist
during the program run due to dialog processing. The system records all business partners
that could not be processed during processing. The job that processes the last interval again
selects the business partner processed in the first attempt. This does not have to be the
interval with the highest number. If the reason for the lock no longer exists at that time, these
business partners or contract accounts concerned are processed. Therefore, there is no need
to schedule the run again.

Creditworthiness

Figure 741: Updating Creditworthiness

The creditworthiness of a business partner provides information about his payment behavior.
Various different business transactions, such as returns, dunning notices, and write-offs
update the creditworthiness in the system automatically. You can also transfer a
creditworthiness record from external systems or manually.
The current status of a business partner's creditworthiness is determined as a weighted total
on the basis of the creditworthiness figures recorded over the last 48 months. You define the
monthly weightings in the system configuration. A creditworthiness of zero means that the
business partner has an excellent payment history. The maximum value is 9999.

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The level of creditworthiness depends on the following:

● Initialization in the system configuration
● The creditworthiness factor in percent
● Manual creditworthiness
● Number of dunning notices, returns, and write-offs

The creditworthiness figure is adjusted if a dunning notice or return is reversed.

The system automatically determines the creditworthiness of a business partner in returns
processing and in a dunning run. The creditworthiness influences the activities and the
charges levied, provided that you have defined the activities and charges dependent on
creditworthiness in the system configuration.

Factoring
Overview

Figure 742: Factoring Overview

To get cash quickly, thereby improving liquidity and the equity ratio, you sell receivables from
your customers to a factoring company (factor) during factoring. The apps described below
are available for processing the individual process steps when selling receivables to a
factoring company (factor).
The factor is represented and posted as a business partner with a contract account. It is
therefore possible to display the postings to the factor in the account balance. Dunning
notices and interest calculations are also possible.

Note:
Contract Accounts Receivables and Payable only supports non-notified factoring.
With this type of factoring, open receivables of a company are sold to a factor
without informing the paying business partner who receives correspondence
regarding receivables. All collection measures (such as dunning and submission to
collections) continue to run.

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Process

Figure 743: Offer Receivables for Sale

The Offer Receivables for Sale app selects receivables for sale to the factor. Only open
receivable are selected: credit items are not selected.
If items are already contained in an earlier offer run, but were rejected after, you can specify
whether these items, depending on the confirmation reason, are to be selected again.
The selection of the receivables is principally independent of the due date, enabling you to
also sell the items before the due date.
You can also simulate the creation of the quotation. This is useful for checking the total
number or total amount of the receivables to be offered. Simulated data is deleted
automatically during a repeated simulation (under the same run ID) or during the execution of
an update run after a simulation. You can also delete the simulation data explicitly by using
the Simulated Offer app.
Simulated data is displayed in the monitor on a custom header of its own.
The data is transmitted to the factor by using the SOAP API Factoring - Offer Data.

Note:
Using the BAdI implementation Factoring: Process/Exclude Items in Quotation in
the business context Contract Accounting, you can exclude certain receivables
from the selection. For example, if you only want to select, or not select, items
with certain main transactions and subtransactions. Statistical receivables are not
selected.
In the BAdI implementation you can, for example, also offer only receivables for
sale for which no automatic collection (payment method in document or in the
contract account/contract) is available.
Using the BAdI implementation FI-CA Posting: Check Entire Document, Set
Customer Fields in Business Context Contract Accounting: Document that runs
when the document is posted, you can set the status Not Relevant for
Sales (FASTA status 9) for line items.

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Figure 744: Reverse Offer

You can use the Reverse Offer app to reverse the offer of a receivable for which you have not
received a factor’s response.
In the simplest case, if you want to cancel a complete offer, select the run ID of the offer as the
selection parameter in the reversal run. To do this, specify a reversal reason that you defined
in the system configuration under Finance Contract Accounting Factoring Define
Confirmation Reasons.
The reversal reason is used in documentation and is displayed in the display of the factoring
data.
Offered receivables that were reversed can be selected again later for submission. In the
document item, the status reversed only specifies that the document item has already been
offered once and the offer was then reversed.

Figure 745: Receive the Factor's Response

The factor returns a response by SOAP API Factoring - Answer Data. The response
contains a return reason for each individual receivable.
The confirmation reason determines whether the receivable was accepted (sold) or rejected
(not sold). If the receivable was not accepted, you can determine whether a repeat offer is
allowed. Additionally, a corresponding confirmation reason is to be defined for an acceptance
(successful sale).
If there are several responses to the same receivable as part of the sequence "offer - response
- repeat offer - repeat response", a different run ID must be used for every response.
The system saves all offers and responses. You can display these in the dialog of the factoring
data, for example, from the document display.

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Receivables that are offered for sale and for which no response from the factor has yet been
processed: that is, no acceptance or rejection is known yet, are not collected in the payment
program.

Figure 746: Process Response of Factor

After you receive the answer of the factor, you process it with the Execute Response of
Factor app. You can make the selection using one of the following options:
● The run ID of the offer run
● By business partner, contract account, document number, and factor ID

In the event of a positive response about the acceptance on the part of the factor (sale), you
can define a prepayment for the factor in the system configuration. In this case, the system
creates a receivable (debit posting) for the factor. If a commission is also set, this posting of
charges is either separately posted as a credit posting (using the transactions for the credit
posting from the named system configuration) or the total of both postings is posted net.
For the G/L account items of the sales document, the required accounts are determined from
the system configuration under Finance → Contract Accounting → Contract Accounting →
Factoring Define Accounts for Factor Posting:
● Account for Sold Receivables
● Adjustment Account for Sold Receivables
● Clearing Account for Prepayments
● Expense Account for Sale of Receivables

For expense posting (if a commission has been specified), you can also specify a CO account
assignment key. Define these under Finance → Contract Accounting → Posting and
Documents → Define CO Account Assignment Keys. Depending on the company code,
segment, and profit center, you can define which account assignment (such as cost center
and profit center) is to be set.
If a receivable was accepted for sale, the following steps are executed:
● The status of the responses is set to Processed.
● The posted document is recorded as a posting.
● In the sold receivables, the status is changed from Offered to Sold.

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● The factoring data is changed from Offered to status Sold.

If a receivable was not accepted for sale, the following steps are executed:
● The status of the responses is set to Processed.
● In the sold receivables, the status is changed from Offered to Rejected.
● The factoring data is changed from Offered to status Rejected.

Figure 747: Forward Clearing Information to Factor

In the general clearing processes, there are no restrictions regarding clearing of sold
receivables. Since only undisclosed factoring is supported, the selling company still takes on
responsibility for payment and clearing. For this reason, the sold receivables, like other
receivables, can also be cleared. In the processing of open items, a sold receivable is
therefore neither blocked nor specifically indicated. Functions for collection, such as dunning,
submission to collection agency, creation of an installment plan, deferral, and installment
plan) are also possible for sold receivables.
Clearing and clearing resets for sold receivables must be reported to the factor so that the
appropriate transfers can be executed. To do this, you use the Send Update to Factor app.
The following clearing information is determined for sold receivables:
● Payments (for example, payment run, payment lot, or account maintenance)
● Clearing reset
● Returns
● Write-offs
● Reversal

With sold receivables, clearing in general leads to a reversal of the posting to the general
ledger accounts “Account for Sold Receivables” and “Clearing Account for Sold
Receivables” (configuration step Define Accounts for Factor Posting). In addition to this,
depending on the business transaction, further postings in the general ledger and postings in
the contract account of the factor are created.
Incoming payments that are assigned to sold receivables lead to the corresponding credit
postings in the contract account of the factor, if prepayments have been made. The offsetting
posting is made to the general ledger account “Clearing Account for
Prepayments” (configuration step Define Accounts for Factor Posting). Additionally,
commission is paid out to the factor.
You can notify information about the payment for sold receivables to a factor by using an API
Factoring - Clearing Data. Clearing resets for sold receivables are recognized
accordingly and the previous postings for payment are reset. In the same way, returns for
paid sold receivables are processed. This means that the previous postings for the payment
are reset. If a new receivable item arises for returns because, for example, a clearing can no

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longer be reset because the posting period is already closed, this is taken into account.
Clearing resets and returns can be notified as reset payment amounts in the file.
When a sold receivable is written off, the factor bears the default risk. This means that the
factor pays the payment amount to the company. The system posts the corresponding
receivables to the contract account of the factor. If the factor has made a prepayment for the
sold receivable, this is deducted form the system during the receivable posting. The
corresponding offsetting posting is made to the general ledger account “Clearing Account for
Write-Offs of Sold Receivables” (configuration step Automatic G/L Account Determination for
Writing Off Sold Receivables). The factor may be informed about the write-off by using
API Factoring - Clearing Data.
If a sold receivable is reversed, the prepayment made by the factor is paid back to the factor.
Additionally, commission is paid out to the factor by default. The system posts the
corresponding credit items for both transactions to the contract account of the factor. It is
also possible to reverse the commission paid to the factor. To do so, when defining the factor
in Customizing, choose No Commission During Reversal (configuration step Define Factor). In
this case, the factor is not paid any commission and the expense posting for the commission
is paid back again to the general ledger account “Expense Account for Sale of
Receivables” (configuration step Define Accounts for Factor Posting). Information about the
reversal of sold receivables can be transferred to the factor by using the API Factoring -
Clearing Data.
For the receivable and credit items in the contract account of the factor, define the
appropriate main and subtransactions in the system configuration under Finance → Contract
Accounting → Factoring → Define Transaction for Factor Posting.

Figure 748: Monitor Factoring

You can display all data for the business processes of factoring in the Monitor Factoring
Services app (factoring monitor).
The life cycle of the sold receivables is evaluated on tab pages. Each tab page represents a
process and you can select the data independently by using selection criteria.
Monitor Factoring Services App Tab Pages
Summary → Amounts in the balance accounts (accounts corresponding to Customizing of
Contract Accounts Receivable and Payable)
Simulation Runs → Receivables that were offered in the simulation run (Offer Receivables for
Sale app)
Quotation Runs → Receivables that were offered in update runs (Offer Receivables for
Sale app)
Responses of Factor → Responses that already exist in the system
Processing Runs for Responses of Factor → Receivables that were posted in processing runs of
factor responses (Execute Response of Factor app)

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Clearing Runs → Receivables that were posted in clearing runs (Send Update to Factor app)
Totals → Totals on different hierarchy levels
History → Receivables history

Integration with SAP Credit Management

Overview

Figure 749: Integration with Credit Management Overview

SAP Credit Management enables your company to operate centralized credit management.
To do this, the connected components, such as Contract Accounts Receivable and Payable,
report the commitment of a business partner to SAP Credit Management. SAP Credit
Management consolidates these reports into a credit exposure and checks this against the
current credit limit of the business partner. This means that you can centrally manage the
score, the payment behavior summary, and the credit exposure (that is, the total of all open
items) of your business partners.

Figure 750: Business Partner - SAP Credit Management

If you use SAP Credit Management, the internal processes of Contract Accounts Receivable
and Payable do not use the score (creditworthiness) determined in FI-CA; instead, they
automatically access the score in SAP Credit Management.
The open items of business partners are managed in Contract Accounts Receivable and
Payable; the credit decisions take place in SAP Credit Management. To ensure credit
decisions are based on a current dataset, you therefore have to transfer the credit exposure
(the total of open items) to SAP Credit Management at regular intervals.

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In the credit exposure update from Contract Accounts Receivable and Payable, the total of all
current open items for the business partner is always transferred to SAP Credit Management.
It is not a delta update.
In Contract Accounts Receivable and Payable, there are mass activities for the following
functions:
● Sending the credit exposure of a business partner to SAP Credit Management
● Sending the payment behavior summary to SAP Credit Management
● Replicating the rating values between Contract Accounts Receivable and Payable, and SAP
Credit Management

Contract Accounts Receivable and Payable supports the commitment query of SAP Credit
Management. In SAP Credit Management, you can specify whether the current credit
exposure is queried in the connected components for a credit check.
Contract Accounts Receivable and Payable supports the partner messages of SAP Credit
Management. Partner messages enable the credit exposure to be updated in SAP Credit
Management for a business transaction across module and system boundaries, with no
chronological gaps.

Credit Exposure

Figure 751: Calculating and Transferring Credit Exposure

You can transfer credit exposure from Contract Accounts Receivable and Payable
to SAP Credit Management. In Contract Accounts Receivable and Payable, you can display
the credit exposure of a business partner in the master record per credit segment and go
from there to the details of the credit exposure.
The credit exposure in SAP Credit Management is increased by not yet invoiced items in
Billing as well as open receivables in Contract Account Receivable and Payable.
The credit exposure is therefore the sum of all open items, billable items and billed items of
the business partner that are not yet invoiced.

Note:
Contract Accounts Receivable and Payable transfers only those billable and billed,
but not yet invoiced, items that you have created for billing in postpaid scenarios.

The utilization of the credit limit by the credit exposure is one of the check criteria for
a credit check in SAP Credit Management.

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In Contract Accounts Receivable and Payable, you can calculate the credit exposure of a
business partner and then transfer it to SAP Credit Management.
To improve performance, you can calculate the credit exposure and transfer it
to SAP Credit Management in one step or in two separate steps. The procedure described
below uses two steps.
You can enter a percentage rate during the calculation of credit data. Using this percentage
rate, you can limit the update of credit data to that percentage of your business partners that
was not updated for the longest period of time.

Figure 752: Transfer of Credit Data

You calculate credit data in Contract Accounts Receivable and Payable using the
transaction Transfer Credit Data.

1. To reschedule a run, create a new application job. Choose FI-CA Transfer Credit Data as
the job template.
If you want to use the data found in the system of an existing payment run as a template,
you can copy the parameters of this run.

2. Under Scheduling Options, choose the start date and time, or execute the run
immediately.
If you choose Start Immediately, the job starts directly.

a. You define a run identification under the Run ID in the Run ID Prefix field that you use
to identify the run at a later stage.

b. Under Selection Criteria, you restrict the data to be processed according to business
partner and credit segment.

c. Under Parameters, set the Update Credit Data indicator and enter the required
percentage in the Percentage Rate field.

This means that the credit data (credit exposure and payment behavior summary) in
Contract Accounts Receivable and Payable (FI-CA) is updated as follows:

● All critical business partners

● All newly created business partners

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● plus x% of the business partners with the oldest update date

3. Set the Update BusPartners for Special Attention indicator if required. If you do not set
this indicator, then the business partners for special attention in Contract Accounts
Receivable and Payable are not updated.
This causes new business partners with special attention, and the business partners for
whom the Special Attention field is no longer set, to be determined
in SAP Credit Management and updated in Contract Accounts Receivable and Payable (FI-
CA).
Set the Transfer of Credit Data indicator to transfer credit exposures
to SAP Credit Management. If you do not set this indicator, you then have to schedule
another run (see below).

4. Schedule the run.

Transfer of Credit Data to SAP Credit Management

After you have calculated the credit data in Contract Accounts Receivable and Payable, you
can also transfer it to SAP Credit Management by using the Transfer Credit Data to app. To do
this, proceed as described in the section on calculating the credit data, but set the Transfer
of Credit Data indicator and then schedule the run.
After the transfer, the credit exposure appears in the business partner master data
of SAP Credit Management. The system adds the credit exposure amount from Contract
Accounts Receivable and Payable to the credit exposure of the relevant credit segment of the
business partner.

Figure 753: Calculating and Transferring Payment Behavior Summary

Using payment behavior summaries, you can calculate the creditworthiness score and the
credit limit in SAP Credit Management.
The payment behavior summaries of business partners are determined in Contract Accounts
Receivable and Payable. In the same way, you can determine the credit exposure including an
interest calculation.
In the standard system, payment behavior summaries contain the valuated credit exposure,
as well as information on the following:
● Open items
● Payment methods
● Payments
● Dunning by collection strategy
● Dunning by dunning procedure
● DSO (days sales outstanding)

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● Promises to pay
● Returns
● Deferrals and installment plans
● Write-offs

The amount of the valuated credit exposure is the total of all open items, including the interest
for overdue items. For simulating the interest calculation for overdue items, the system uses
the interest rate you entered in the system configuration.
The system updates the valuated credit exposure in the currency of the credit segment. The
key figures are transferred using the Transfer Credit Data app. If you make according system
settings, the app transfers the individual key figures from Contract Accounts Receivable and
Payable to SAP Credit Management.
The Transfer Credit Data app forwards the payment behavior summary for those business
partners with negative payment behavior (such as dunning, returns, or broken promises to
pay).
You determine the time period over which the system is to evaluate a key figure in the Define
Evaluation Period for Key Figures configuration step. The value applies for all key figures that
you have stipulated for transfer, and especially for the following standard key figures:
● COL (Collections)
● DUN (Dunning notices)
● P2P (Promises to pay)
● RET (Returns)
● TIP (Installment plans)
● WRO (Write-offs)

If you do not make any entries, the system uses the default value of 30 days.
To calculate and transfer the payment behavior summary, use the Transfer Credit Data app.
After the transfer, the valuated credit exposure is displayed in the business partner master
data of SAP Credit Management in the respective credit segment for the payment behavior
summary. You can find the payment behavior summary in the business partner master data
of SAP Credit Management in the credit segment views under KPI Payment Behavior.

Figure 754: Compare Credit Score

The credit score managed in Contract Accounts Receivable and Payable is forwarded to SAP
Credit Management and can contribute to the credit score managed there. For internal
processes such as dunning and returns processing in Contract Accounts Receivable and

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Payable to be able to react to the score from SAP Credit Management, you also have to
transfer the score to Contract Accounts Receivable and Payable.
If you transfer the FI-CA credit score to SAP Credit Management by using
transaction Replicate Credit Score, the updated credit score of SAP Credit Management is
returned automatically to Contract Accounts Receivable and Payable. This means that you
can only replicate the credit score in Contract Accounts Receivable and Payable by
scheduling replication using the Replicate Credit Score app. SAP Credit Management saves
the FI-CA credit score as external credit information in the rating procedure FICA.
Transfer of FI-CA Credit Score to SAP Credit Management

1. To transfer FI-CA credit scores to SAP Credit Management and replicate the credit score
of SAP Credit Management to Contract Accounts Receivable and Payable at the same
time, choose the Replicate Credit Score app.

2. To reschedule a run, create a new application job. Choose Replicate FI-CA Credit Score as
the job template.
If you want to use the data found in the system of an existing payment run as a template,
you can copy the parameters of this run.

3. Under Scheduling Options, choose the start date and time, or execute the run
immediately.
If you choose Start Immediately, the job starts directly.

4. Under Parameters for Run ID in the Run ID Prefix field, define a run ID that you use to
identify the run at a later time.

5. Under Selection Criteria, restrict the number of business partners to the area for which
you want to replicate their creditworthiness.
By setting the indicator Only Changed Scores, you can restrict the transfer to SAP Credit
Management to those business partners whose credit score has changed since the last
transfer in FI-CA. In the same way, setting this indicator for the transfer of the scores
from SAP Credit Management to FI-CA has the effect that only those score values are
replicated where the FI-CA credit score has changed.

6. Schedule the program run.

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Group Ledger IFRS Overview

Contract Accounting - Group Ledger IFRS - Overview

Figure 755: Contract Accounting - Group Ledger IFRS - Overview

In this scope item, you handle ledger-specific transactions and reports for IFRS within
contract accounting. This includes Doubtful Receivables, Foreign Currency Valuation, Day-
End Closing, and Month-End Closing. Using the scope item you ensure complete and accurate
accounting data in parallel accounting.

Contract Accounting - Group Ledger IFRS - Process

Figure 756: Contract Accounting - Group Ledger IFRS - Process

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The scope items main processes help you to mark selected receivables as doubtful and
thereby individual value adjustments are done. Furthermore adjusted and doubtful
receivables are transferred cumulative in the general ledger.
Using the Day-End Closing you will be able to close the selected reconciliation keys. This lays
the groundwork to transfer FI-CA total records to the General Ledger. After all you close the
previous period and make sure that Contract Accounts Receivable and Payable are reconciled
with the General Ledger.

Group Ledger IFRS Configuration

Manage your Solution

Figure 757: Manage your Solution

Select the Manage your Solution app in order to get to the Configuration screen.
The task Configure your Solution will give you the possibility to maintain certain processes.

Self-Service Configuration Tasks

Figure 758: Define Valuation Areas

Define the areas for which the foreign currencies are to be valuated or for which receivables
are indicated as doubtful/ individually value adjusted.
For each set of accounting principles (HGB, IAS, US GAAP, and so on), define a separate
valuation area.

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Figure 759: Define Valuation Variants

Define the variants for the foreign currency valuation.

Create the valuation variants and define with which of the valuation methods and for which
evaluation area the various local currencies of a company code are to be valuated.
As a prerequisite you have to define the valuation methods and evaluation areas.

Figure 760: Define Valuation Areas for Receivable Adjustments

Assign the valuation areas to the respective company codes for the doubtful entry/individual
value adjustment.

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Group Ledger US GAAP Overview

Contract Accounting - Group Ledger US GAAP - Overview

Figure 761: Contract Accounting - Group Ledger US GAAP - Overview

In this scope item, you handle ledger-specific transactions and reports for US GAAP within
contract accounting. Using the scope item you ensure complete and accurate accounting
data in parallel accounting.
With Monthly and Daily Closing - Group Ledger - US GAAP, you can prepare and carry out the
activities required for day-end, month-end closing for Contract Accounts Receivable and
Payable (FI-CA), and to support parallel accounting. These transactions include Adjust
Receivables, Foreign Currency Valuation, Transfer FI-CA Total Records to the Parallel Ledger.

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Contract Accounting - Group Ledger US GAAP - Process

Figure 762: Contract Accounting - Group Ledger US GAAP - Process

The scope items main processes help you to mark selected receivables as doubtful and
thereby individual value adjustments are done. Furthermore adjusted and doubtful
receivables are transferred cumulative in the general ledger.
Using the Day-End Closing, you will be able to close the selected reconciliation keys. This lays
the groundwork to transfer FI-CA total records to the General Ledger. After this, you close the
previous period and make sure that Contract Accounts Receivable and Payable are reconciled
with the General Ledger.

Group Ledger US GAAP Configuration

Manage your Solution

Figure 763: Manage your Solution

Select the Manage your Solution app in order to get to the Configuration screen.

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The task Configure your Solution will give you the possibility to maintain certain processes.

Self-Service-Configuration Tasks

Figure 764: Define Valuation Areas

Define the areas for which the foreign currencies are to be valuated or for which receivables
are indicated as doubtful/ individually value adjusted.
For each set of accounting principles (HGB, IAS, US GAAP, and so on), define a separate
valuation area.

Figure 765: Define Valuation Variants

Define the variants for the foreign currency valuation.

Create the valuation variants and define with which of the valuation methods and for which
evaluation area the various local currencies of a company code are to be valuated.
As a prerequisite you have to define the valuation methods and evaluation areas.

Figure 766: Define Valuation Areas for Receivable Adjustments

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Assign the valuation areas to the respective company codes for the doubtful entry/individual
value adjustment.

SAP Cash Application, Add-on for Contract Accounting Architecture

Overview

Figure 767: SAP Cash Application Add-on for Contract Accounting

Contract accounts receivable and payable processes incoming payment data with a high
degree of automation achieved by applying configuration options defined in the system
configuration for Clearing Control. If exceptions occur during automatic processing, the
system creates clarification cases for manual follow up activities.
While many payments can be cleared automatically by applying these simple rules,
automation is not sufficient, as many payments do not come with references to the invoices
to be paid. Accountants are faced with multiple challenges when matching incoming
payments with open receivables. They must consider many possible exceptions when looking
themselves for matches, which can be very time consuming.
To reduce the number of clarification cases and improve the overall service quality, you
integrate with SAP Cash Application, add-on for contract accounting (requiring a separate
license).

Figure 768: Key Features of SAP Cash Application, Add-on for Contract Accounting

Create machine learning model

To clear bank statement items automatically and to receive machine learning proposals, SAP
Cash Application, add-on for contract accounting creates a machine learning training model
from historical records of successfully cleared bank statement items.
Receive selection criteria proposal
You can schedule jobs to receive a list of selection criteria proposals for matching receivables
to existing bank statement items.

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Clear incoming bank statement

You can have bank statement items cleared automatically based on machine learning
proposals if the following conditions are met:
● The matching confidence of the proposal is higher than specified in the configurations.
● The proposed receivables are still open.
● All other clearing rules are fulfilled.

Challenges in Applying Cash

Figure 769: Challenges Facing in Matching Incoming Payments

Applying cash to invoices while processing bank statements is a manual task, which leads to
large team sizes for order-to-cash organizations.
● Many customers set up complex clearing rules with the Contract Accounting standard
clearing control.
● Still, a significant volume of payments need to be processed manually, for example, if
payment contain no or incomplete invoice references, master data is not up-to-date,
customers pay multiple invoice at once, and so on..
● AR accountants have to investigate such issues
● Tailored rules were required in the past for achieving higher automation, reflecting
customer and country specifics. This carries high implementation costs
● Automation with simple rules is not sufficient as many payments do not contain sufficient
remittance information
● AR accountant needs to consider many possible exceptions when manually looking for
invoices

The overall process is too time consuming especially when it comes to high volumes of data.
To overcome this tedious situation, SAP is introducing the SAP Cash Application, add-on for
contract accounting.

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System Landscape

Figure 770: Contract Accounting - Cash Application Integration

You create payment lot items from bank statement files in the SAP system. When the
payment lot is posted the payments are posted to the appropriate contract accounts applying
the matching logic defined in Clearing Control. For payments that cannot automatically be
posted to a contract account, the system creates clarification cases and adopts them into a
clarification worklist.

1. Before you train a model for the first time, you adjust the historical payment data in the
SAP system by adding the object for parallel processing to the payment and clarification
data.

2. For the machine learning algorithm to be able to train accordingly, you forward the
configuration data of the selection categories to the machine learning server. You repeat
this step in the live system if you change the configuration.

3. You push the master data, such as business partners, contract accounts, contracts, and
bank details, into a training dataset provider API to enable training. You repeat this step to
keep the predictions up-to-date.

4. You query the master data status.

5. You push historical payment lot items into a training dataset provider API to enable
training.

6. You query the training status.

7. You push open clarification cases for payment lot items that could not be cleared
automatically into the prediction API. SAP Cash Application, add-on for contract
accounting analyzes the notes to payee transferred with the bank statement and makes
clarification proposals with a confidence level.

8. You process returned and reserved clarification cases by requesting proposals from the
machine learning server. Based on the percentage rating a proposal achieves, the SAP
system decides whether a proposal is followed up, whether it is displayed in the Clarify
Incoming Payments app, or whether it is used to clear a receivable automatically.

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SAP Cash Application, Add-on for Contract Accounting Training

Training Microservice

Figure 771: Next-Generation Intelligent Incoming Payment Matching Powered by Machine-Learning

SAP Cash Application, add-on for contract accounting comprises a microservice that helps to
match open receivables to incoming bank statement items. In this way, you can automate and
simplify further the order-to-cash process in contract accounting with machine learning
intelligence. By applying machine learning, SAP Cash Application, add-on for contract
accounting trains a model from manual post-processing activities. When you apply this model
to new data, SAP Cash Application, add-on for contract accounting helps reduce the manual
effort for follow up activities.
To train the machine learning model before productive use, historic payment data needs to be
sent to the platform. Based on this data, the intelligent machine learning logic will be set up
and matching proposals will be made. The AI platform permanently learns based on the
available data and automatically adapts the machine learning model.

Training Process

Figure 772: Learning from Historical Data

SAP Cash Application, add-on for contract accounting builds the machine learning model
from the data you transfer from your SAP system and finds the matching selection category
by learning from historical data.
Historical Information as Input

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● Electronic Bank Statements

● Note-To-Payee
● Payer bank account information
● Payment Lot Items with selection categories and selection values

Master Data as Input

● Internal and external IDs: Business Partner, Contract Account, Contract
● Business Partner Full Name
● Technical Resource ID (customer specific)
● Bank Master Data

Customizing Data as Input

● Selection Category
● Selection Field Name

Figure 773: Data Exchange with Machine Learning

You use this app to schedule the following jobs required to train and apply the appropriate
machine learning model or your payment clarification process:
Adjust Historical Payment Data (Data Migration)
Before you train a model with SAP Cash Application, add-on for contract accounting for the
first time, you have to add the object for parallel processing to the payment and clarification
data in the system. This entry is required for training the model. A scheduled job determines
and stores the required object for parallel processing in the table of payment lot items, as well
as in the table of clarification cases. You select the existing (historical) data by company code
and by posting date of the payment lot.
Transfer Configured Selection Categories
For the machine learning algorithm from SAP Cash Application, add-on for contract
accounting to be able to train accordingly, you have to forward the configuration data of the
selection categories to SAP Cash Application, add-on for contract accounting. A scheduled
job selects the configuration data, converts it to an CSV file, and sends it to the machine
learning server.

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You then only have to pass on the data again in the live system if you change the
configuration.
Transfer Master Data
A scheduled job retrieves extracted master data, such as business partners, contract
accounts, contracts, and bank details, and pushes them into a training dataset provider API to
enable the training or to keep the predictions up-to-date.
Query Master Data Status
A scheduled job queries the status of the master data processing. You query the status for the
date and run ID of the respective Transfer Master Data job.
Transfer Payment Lot Items and Trigger Training
A scheduled job retrieves historical payment lot items and pushes them into a training dataset
provider API to enable the training.
When the data volume of the training data is high, several CSV files are sent to the Machine
Learning server for each run date and run ID. In this case, you get back the relevant status for
each CSV file (represented by the job ID).
Query Training Status
A scheduled job can query the status of training for the Machine Learning server. You query
the status for the date and run ID of the respective Transfer Payment Lot Items and Trigger
Training job.
Transfer Clarification Cases
A scheduled job (inference job) retrieves open clarification cases for payment lot items that
could not be cleared automatically and pushes them into the prediction API. When the data
volume of the inference data is high, several CSV files are sent to the Machine Learning
server.
Process Returned and Reserved Clarification Cases
Using this job template, you can process further the jobs that were generated (inference jobs)
with the Transfer Clarification Cases job. You reference the Transfer Clarification Cases by
the respective date and run ID.
Several CSV files (with various job IDs) are sent to the Machine Learning server for each run
date and run ID when there are large data volumes. A status is designated for each job ID.
If you want to request the proposals from the machine learning server, you have to select data
(jobs) sent successfully. You have the following options:
● Adjust confidence rating

You want to check uncertain proposals automatically for correctness. In the event of success,
the confidence rating of these proposals is to be raised to a value that leads to display in
manual clarification processing. Additionally, you want to check certain proposals
automatically for correctness. In the event of errors, the confidence rating of these proposals
is to be lowered to a value that prevents automatic posting but leads to display in manual
clarification processing.
● Clear automatically

If the proposal achieves at least the confidence rating for clearing (certain proposals), an
automatic posting is triggered. If the outcome is successful, manual clarification case
processing is no longer necessary.

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● Release clarification cases

You request the proposals and release the clarification cases if the proposals cannot be
requested. By releasing the clarification cases, you can enable manual processing as is usual
without using Machine Learning.
If you select data (jobs) transferred with errors, you have two options:
● Release clarification cases

You suppose that a clarification case transferred again will still contain errors. When the
clarification cases are released, this allows for the processing to be done manually as this is
usually done using Machine Learning.
● Delete jobs

You start a new transfer of the clarification case with the Transfer Clarification Cases job.
Afterwards, you can delete the jobs containing errors for the former mass run.

SAP Cash Application, Add-on for Contract Accounting Process

Cash Application Process

Figure 774: SAP Cash Application, Add-on for Contract Accounting Process

Process Flow

1. You create payment lot items from bank statement files.

2. When the payment lot is posted, the payments are posted to the appropriate contract
accounts applying the matching logic defined in the Clearing Control.

3. For payments that cannot automatically be posted to a contract account, the system
creates clarification cases and adopts them into a clarification worklist.

4. SAP Cash Application, add-on for contract accounting analyzes the notes to payee
transferred with the bank statement and makes clarification proposals with a confidence
rating.

5. Based on the percentage rating a proposal achieves, the system decides whether a
proposal is followed up, or whether it is displayed in the Clarify Incoming Payments app, or
whether it is used to clear a receivable automatically.

In the Manage Your Solution app, under Configure Your Solution Finance → Machine
Learning → Make Settings for SAP Cash Application for Contract Accounting, you specify
minimum percentages for confidence ratings.

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Confidence Ratings

Figure 775: Confidence Ratings

Let's assume you have defined the following values in the Make Settings for SAP Cash
Application for Contract Accounting configuration step:
X1 = 90%
X2 = 70%
X3 = 50%
The system applies these values to the following examples:
Example 1: Proposal with a confidence rating of less than 50%
The system ignores the proposal. The clarification case has to be processed manually, as
previously.
Example 2: Proposal with a confidence rating between 50% and 70%
If you have selected the Adjust Confidence Rating option for the Process Returned and
Reserved Clarification Cases job, the system checks ("follows up"), whether the proposal can
clear a receivable.
If the receivable can be cleared, the system increases the confidence rating to 70 % and
proceeds as illustrated by example 3.
If you did not choose this option, the system ignores the proposal as illustrated by example 1.
Example 3: Proposal with a confidence rating between 70% and 90%
A proposal with a confidence rating between 70% and 90% is displayed in the Clarify
Incoming Payments app.
Example 4: Proposal with a confidence rating of 90% or more
If you have selected the Adjust Confidence Rating option for the Process Returned and
Reserved Clarification Cases job, the system checks ("follows up"), whether the proposal can
clear a receivable.
If the receivable cannot be cleared, the system reduces the confidence rating to 70% and
proceeds as illustrated by example 3.
If you did not choose this option, the proposal can lead to an automatic clearing if you choose
the Clear Automatically option for the Process Returned and Reserved Clarification Cases job.

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Contract Accounting - Variant Configuration Overview

Variant Configuration Overview

Figure 776: Enabling of Products with Variant Configuration Overview

Based on the Contract Accounting - Master Data and Basic Functions (2AR) scope item, you
can enable variant configuration material in provider contract with variant pricing for the
subsequent Convergent Invoicing - Recurring and One-Off Items (2T3) scope item. Rating,
billing, and invoicing takes variant configuration materials into consideration. As a result,
contract accounting can cover variant pricing for variant configuration products.

Variant Configuration Process

Figure 777: Enabling of Products with Variant Configuration Process

The variant configuration runs together with two other processes. Starting from the scope
item 2AR - Contract Accounting: Master Data you create a provider contract with variant
configuration. The output and subsequent invoicing is performed with scope item 2T3 -
Convergent Invoicing: Recurring and one-off items.

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Contract Accounting - Variant Configuration Operation

Provider Contract Display

Figure 778: Provider Contract Display

Access the VC Modeling Environment app from the SAP Fiori launchpad. Give the material you
would like to define a variant pricing for. On the right hand side, you can define your variant
characteristic and characteristic value.

LESSON SUMMARY
You should now be able to:
● Understand the Contract Accounting Customer Initiated Payments (2BI)
● Understand the Contract Accounting Company Initiated Payments (2DP)
● Understand the Contract Accounting Daily and Monthly Closing (2BK)
● Manage the External Tax Audit (2SJ)
● Understand SAP Fiori Analytical Apps for Contract Accounting Manager (2KH)
● Create and Manage Master Data of Business Partners and Contract Accounts (2AR)
● Understand the Contract Accounting Open Item Management (2UJ)
● Manage the Contract Accounting - Group Ledger IFRS (33X)
● Manage the Contract Accounting - Group Ledger US-GAAP (33V)
● Understand SAP Cash Application, add-on for Contract Accounting (47I)
● Manage Contract Accounting - Variant Configuration (3L8)

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Learning Assessment

1. What are the outcomes of the Business Model Innovation driven by the Digital Economy?
Choose the correct answers.

X A The distributor plays a new vital role in commerce.

X B Companies are moving away from products to services and outcomes.

X C Digital e-commerce is on the rise.

X D Platform Business is managed best by only a single company.

2. The two product types available in SAP Hybris Revenue Cloud are subscription products
and one-time products.
Determine whether this statement is true or false.

X True

X False

3. Which of the following usage-based charges are available in SAP Hybris Revenue Cloud?
Choose the correct answers.

X A Volume Pricing

X B Shared Pricing

X C Batch Pricing

X D Tiered Pricing

4. The invoice correction process can be assigned to which of the following levels?
Choose the correct answers.

X A Invoice level

X B Vendor level

X C Billable item

X D Invoice Item

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5. A request for a credit/debit memo which has been discarded cannot be processed again
and the rejection is final.
Determine whether this statement is true or false.

X True

X False

6. SAP S/4HANA Cloud for contract accounting and invoicing is made for high-volume billing
and invoicing for consumption-based services.
Determine whether this statement is true or false.

X True

X False

7. Consumption billing and invoicing consolidates service pricing from multiple sources to
produce easily understandable invoices that drive loyalty.
Determine whether this statement is true or false.

X True

X False

8. Which of the following are item types of a billing plan?

Choose the correct answers.

X A Billable items

X B Invoice items

X C Plan items

X D Reference items

9. Using billing plans in Convergent Invoicing, you define for a customer when and how
frequently an amount is invoiced.
Determine whether this statement is true or false.

X True

X False

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10. SAP Fiori Analytical Apps for the Convergent Invoicing Manager allows you to analyze
billed and unbilled items. Which of the following dimensions does it have?
Choose the correct answers.

X A Amount

X B Business Partner

X C Billable item types

X D House Bank

11. Through the tile settings you can define the display currency, the number of intervals and
how such a interval is defined.
Determine whether this statement is true or false.

X True

X False

12. Closing the reconciliation keys is one of the main things to be done at the Day-End Closing.
Determine whether this statement is true or false.

X True

X False

13. The payment card process requires Contract Accounting, but no further integration.
Determine whether this statement is true or false.

X True

X False

14. Which of the following entities deals with processing the bank account statement and
journal entries for bank / credit card settlement accounts?
Choose the correct answer.

X A SAP Digital Payments add-on

X B Financial Accounting

X C Contract Accounting

X D Point of Sale Systems

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15. Payments that could not be processed by the bank are returned. They are introduced to
the system by creating returns lots.
Determine whether this statement is true or false.

X True

X False

16. One of the most common bank statement formats is the SWIFT Communication standard
MT101.
Determine whether this statement is true or false.

X True

X False

17. Which of the following write-off reasons is correct if you want to define one that can only
be used for writing off items manually?
Choose the correct answer.

X A Empty

X B 1

X C 2

X D 3

18. Contract Accounts Receivables and Payable only supports non-notified factoring.
Determine whether this statement is true or false.

X True

X False

19. Posting periods are closed at the end of the month with the tile Manage Posting Periods.
This means that in contract accounting no postings for the previous periods can be
created.
Determine whether this statement is true or false.

X True

X False

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20. In Contract Accounts Receivable and Payable (FI-CA), the system assigns a sequential
document number to documents posted within a given client in a system.
Determine whether this statement is true or false.

X True

X False

21. With SAP Fiori Analytical Apps in Contract Accounts Receivable and Payable you can
create worklists for your colleagues to perform further checks and resolve the detected
problems.
Determine whether this statement is true or false.

X True

X False

22. With the Fiori application My Open Worklists, you display the results of all open worklists
and their corresponding items from other apps such as Analyze Overdue Items.
Determine whether this statement is true or false.

X True

X False

23. Which of the following roles the must be assigned to the Business Partner for the Contract
Accounting processes?
Choose the correct answer.

X A Counter Party (TR0151)

X B Contract Partner (MKK)

X C Customer (FLCU01)

X D Supplier (FLVN01)

24. Each contract account is assigned to one business partner at creation.

Determine whether this statement is true or false.

X True

X False

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25. Which of the following activities can be performed for a particular credit item with the tile
Clarify Credit?
Choose the correct answers.

X A Transfer: System creates a repayment request for the credit(s)

X B Payment: System creates a payment specification for the credit(s)

X C Delete: System deletes all credit items from the credit list

X D Writing Off: System writes off the credit(s)

X E Dispute: System creates a dispute case for a credit

26. Which configuration parameters must be set if you choose to Dun by Collection Strategy?
Choose the correct answers.

X A Collection Strategy

X B Collection Step

X C Business Partner Creditworthiness

X D Dunning Activities

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 UNIT 11 Asset Accounting

Lesson 1
Scope of Asset Accounting 569

Lesson 2
Assets Under Construction 589

Lesson 3
Configuration and Migration for Asset Accounting 593

UNIT OBJECTIVES

● Understand Fixed Asset Organizational Units and Master Records

● Perform Daily Postings in Asset Accounting
● Perform Asset Closing Operations and Reporting
● Manage Assets Under Construction
● Configuration in Asset Accounting
● Explore Data Migration functionality and tools

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Unit 11: Asset Accounting

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 Unit 11
Lesson 1
Scope of Asset Accounting

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand Fixed Asset Organizational Units and Master Records
● Perform Daily Postings in Asset Accounting
● Perform Asset Closing Operations and Reporting

Fixed Asset Organizational Units

Asset Accounting

Figure 779: Asset Accounting

Asset Accounting in the SAP S/4HANA cloud system is used for managing and monitoring
fixed assets. In Financial Accounting, it serves as a subsidiary ledger to the general ledger,
providing detailed information on transactions involving fixed assets.
As a result of the integration in the SAP system, Asset Accounting transfers data directly to
and from other components. For example, when an asset is purchased or produced in-house,
you can post the invoice receipt or goods receipt directly, or post the withdrawal from the
warehouse, to assets in the Asset Accounting component.
The Asset Accounting functions in the system cover the entire life of the asset from the
purchase order or initial acquisition (which can be managed as an asset under construction)
all the way to the asset retirement. The system calculates, largely automatically, the values
for depreciation, interest, and other purposes between these two points in time. This
transactional information can be accessed through the use of standard reports.

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Unit 11: Asset Accounting

Chart of Depreciation

Figure 780: Chart of Depreciation

A chart of depreciation is a directory of depreciation areas arranged according to business

requirements and is used to manage various legal requirements for the depreciation and
valuation of assets. Each chart of depreciation contains the rules for the evaluation of assets
that are valid in a specific country or economic area. Each company code that uses Asset
Accounting is assigned to a chart of depreciation. Each asset created is assigned to the
company code and through the company code inherits the valuations configured in the chart
of accounts.
In addition to providing for the management of assets and their values, asset accounting
should offer an organizational structure for assets that reflects the organizational structure of
the enterprise. This is why the component Asset Accounting supports different SAP
organizational units. An asset is clearly assigned to these organizational units at any given
point in time.
Assets are classified according to various accounting criteria (such as depreciation methods).
This classification assists in controlling-oriented tasks, and in the summarization of asset
values in the general ledger.

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 Lesson: Scope of Asset Accounting

Depreciation Areas

Figure 781: Depreciation Areas

With depreciation areas, you calculate the values of fixed assets according to different
accounting principles or certain other separate valuation purposes (like tax valuations).
Manage the depreciation terms and values necessary for the valuation in the depreciation
areas assigned to each asset. A depreciation area can serve to update the general ledger
through posting in accounting or to calculate statistical values for reporting purposes.
In line with Universal Parallel Accounting, asset postings are ledger specific. The ledger is
ready for input on the selection screens (that is, you can select by ledger). The accounting
principle is displayed for information purposes only.

Note:
The SAP S/4HANA cloud system comes with pre-configured depreciation areas
per chart of depreciation, according to the standard country requirements.

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Unit 11: Asset Accounting

Asset Master Records

Asset Class

Figure 782: Asset Class

The asset class is the main grouping criterion when defining an asset. Each asset must be
assigned to one asset class. Based on the asset class, certain control parameters are
predefined and default depreciation terms are proposed.
In the asset class, a screen layout rule, an asset number range, and an account determination
key are assigned.

Note:
You can also create asset classes for intangible assets and leased assets.
Functions are available for processing leases.

Assets that do not appear in the same line item of the balance sheet (such as buildings and
equipment) are typically assigned to different asset classes (with different account
determination assignments). Additionally, there are special asset classes for assets under
construction and low-value assets.

Note:
In the SAP S/4HANA system, an asset under construction acts as a capitalized
cost container during its lifecycle and the capitalized costs are settled onto final
assets when the asset is finalized. Low-value assets are assets that are fully
depreciated at the period of purchase.

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Fixed Assets

Figure 783: Fixed Assets Master Data

An asset is typically an object, a right, or an item owned by an enterprise that is intended for
long-term use, and can be identified individually in the balance sheet. Each asset belongs to a
company code. All postings made for the asset (acquisitions, retirements, depreciation, and
so on) are posted in the assigned company code.

Video: Create Asset Master Record

For more information on Create Asset Master Record, please view the simulation
in the lesson Scope of Asset Accounting online in the SAP Learning Hub.

Figure 785: Asset Sub-number

An asset sub-number is a separate asset still connected to the main asset number. An
example of a use case for sub-numbers is for monitoring subsequent improvements made to
an asset. In cases, it might also make sense to be able to report on the separate components
that comprise an asset, each component could be defined as a sub-number. The main asset is

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always and automatically assigned the sub-number 0000. The sub-number is created in the
separate application Create Sub-number. The number range of the sub-number is internal,
meaning the system assigns it sequentially.

Video: Manage Fixed Assets

For more information on Manage Fixed Assets, please view the simulation in the
lesson Scope of Asset Accounting online in the SAP Learning Hub.

Transaction Types
Transactions in Asset Accounting

Figure 787: Asset Accounting Overview

You can use the Asset Accounting Overview tile to get a quick view of recent transactions and
values for asset accounting, including open asset related purchase orders.

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 Lesson: Scope of Asset Accounting

Figure 788: Transaction Type

You post various types of transaction in Asset Accounting, such as acquisitions, sales,
scrapping, and transfers. Each transaction is assigned to a transaction type. Among other
things, the transaction type specifies where the asset posting is listed in the asset history
sheet, a report that is commonly a legal requirement for companies to produce.
The transaction type is entered in addition to the posting keys for asset line items: 70 (debit)
and 75 (credit). In most SAP Fiori apps, the transaction type is defaulted and the user doesn’t
need to be aware of it. An exception is the integrated acquisition with a supplier. In this case,
you need to enter both the posting key and the transaction types for the asset line(s).
The transaction type is the distinguishing characteristic of the various asset postings, for
example:
● Buying and selling
● Credit memos
● Acquisitions from internal production
● Adjustment postings
● Retirements without revenue
● Transfers
● Depreciation and appreciation

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Unit 11: Asset Accounting

Asset Acquisition
Acquisition Types

Figure 789: Supplier Integrated Asset Acquisition

Asset transactions for acquisitions can be posted in various ways to meet the organizational
and business requirements of the company. In assets accounting, you can post in the
following ways:
● Without a supplier or purchase order:
In this case the offsetting entry is posted to a pre-configured clearing account.
● To a supplier:
Posted directly through Financial Accounting without reference to a purchase order.
● Integrated with purchasing:
Using the standard flow with a purchase order, goods receipt, and invoice receipt.

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 Lesson: Scope of Asset Accounting

Figure 790: Document Entry Screen for Integrated Asset Acquisition

In the figure, Document Entry Screen for Integrated Asset Acquisition, you can see the entry
for an integrated acquisition with supplier. In the bottom of the screen, you can see the Next
line item where the Posting Key, Asset Account, and Transaction Type have to be maintained
to post the acquisition to the asset. On the following screen you enter the values relevant for
the asset.

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Unit 11: Asset Accounting

Acquisition Documents

Figure 791: Integrated Asset Acquisition — Technical Clearing Account

For an integrated asset acquisition posting, the system divides the business transaction into
an operational part and a valuating part:
● For the operational part (supplier invoice), the system posts a document valid for all
accounting principles against the technical clearing account for integrated asset
acquisitions.
● For each valuating part (asset posting with capitalization of the asset), the system
generates a separate document that is valid only for the given accounting principle. This
document is also posted against the technical clearing account for integrated asset
acquisitions.

In this way, the system ensures that the technical clearing account for integrated asset
acquisitions has a balance of zero (for each accounting principle and account assignment
object) for every accounting principle in the chart of depreciation. To allow the system to
ensure the zero balance, manual posting cannot be made to the account.

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 Lesson: Scope of Asset Accounting

Acquisition Values

Figure 792: Asset Acquisition Value Fields

After an acquisition is posted to an asset, the asset master record is updated with the
capitalization date and also the depreciation start date (in accordance to legal regulations).
The system also calculates the depreciation amounts to be posted in the current year.
In the figure, Asset Acquisition Value Fields, you can see an example for an asset acquisition
posted on August 21st. The useful life has been maintained differently in the two depreciation
areas. The depreciation start date for both is the beginning of the month of acquisition. The
planned values for the year are the annual depreciation amount divided into the remaining
periods for the year.

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Unit 11: Asset Accounting

Asset Retirement
Asset Retirement

Figure 793: Important Parameters for Integrated Asset Retirement

When you select the Asset Retirement checkbox while posting to the revenue from the asset
sales account, a dialog box appears.
In this dialog box, you enter the following data:
● Asset number
● Retirement transaction type
● Asset value date (date of retirement)
● Portion of an asset being retired or complete retirement indicator

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 Lesson: Scope of Asset Accounting

Figure 794: Asset Retirement T-Accounts Model

The example in the figure, Asset Retirement T-Accounts Model, shows complete retirement
with revenue. The system automatically calculates the gain or loss (in the example, loss of
€1,300). In addition, the system determines the asset balance sheet value and the
proportional value adjustments that is equivalent to accumulated depreciation.
The following are different ways of posting retirements:
● Retirement with revenue and customer (integrated asset retirement)
● Retirement with revenue but without customer (not integrated)
● Retirement without revenue (asset retirement by scrapping)
These three ways can be entered either as complete or partial retirement.
● Retirement of mass asset (with worklist)
● Retirement of several assets (within the manually posted retirement transaction)

The values of the accounts for revenue from asset sales and clearing asset retirement can be
shown in notes to the financial statement.

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Unit 11: Asset Accounting

Calculating Gain or Loss

Figure 795: Asset Retirement – Calculating Gain or Loss

The system determines the asset retirement period based on the asset retirement date. Using
the period control method (period control key of the depreciation key), the system
automatically calculates how long depreciation is to be calculated for the asset. The system
automatically determines the proportional value adjustments (depreciation) until the period
that applies to the part of the asset being retired cancels this depreciation.
The gain or loss result depends on the balance of the following amounts:
● Amount of the asset retirement
● Amount of value adjustments
● Revenue (for example, the sales price) that is received for the asset

Asset Transfers
There are two major types of transfers:
● Transactions within one company code (intracompany transfer)
● Transactions between different company codes (intercompany transfer)

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Intracompany Transfers

Figure 796: Transfers

Possible reasons for posting intracompany transfers include:

● You created and posted a master record in the wrong class
● You want to split up an asset or move part of an asset

Note:
The transfer method is used to control the transferring of values from the source
to the target asset. On a high level, there are three basic transfer methods:
● The gross transfer method, where the historical values of the asset are
automatically transferred to the target asset
● The net method, where the net book value of the source company code is
capitalized on the target asset
● The new value method, where the system capitalizes the amount of the sales
revenue on the target asset (only for intercompany transfers)

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Unit 11: Asset Accounting

Intercompany Transfer

Figure 797: Automatic Intercompany Asset Transfer

The automatic intercompany asset transfer function is used when an asset has been sold or
transferred to another company code.
The following distinction is made for transfers:
● Transfers within a legal unit within one company (ID).
In the case where both company codes belong to the same company (ID), SAP refers to a
transfer of relationship type 02. Both company codes are to be considered legally
dependent.
● Transfers taking place between legally independent organizational units (company codes)
that are assigned to a different company (ID).
The company codes are not linked to one another through the company, but still belong to
a single company group.

The system determines the relationship type automatically, using the company IDs of the
company codes.

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Asset Period-End Closing Activities

Periodic Activities

Figure 798: Depreciation Posting Run

The depreciation posting run posts the different value adjustments (depreciation) and
interest to the G/L accounts in Financial Accounting. All types of depreciation are calculated
and initially kept in the form of planned values in the Asset Accounting application. Examples
of depreciation types are normal depreciation, special depreciation, and unplanned
depreciation. After the depreciation posting run, depreciation values are also displayed in the
G/L accounts and the financial statement. Besides the postings to the corresponding
depreciation accounts in general ledger accounting, depreciation values are posted to
controlling account assignments that are assigned in the asset master records (such as the
cost centers).

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Unit 11: Asset Accounting

Asset Year-End Closing

Figure 799: Asset Closing

Closing in fixed assets (FI-AA) can be divided into the following two types of preparations:
● Legal requirements
Mandates required by the government
● Technical and organizational tasks
Preparatory steps that are technically necessary or necessary to support the accounting
organization

The carryforward of asset balances takes place during the balance carryforward in General
Ledger Accounting. The balance carryforward is performed for a combination of company
code and ledger.
Up to SAP S/4HANA Cloud 2008, you execute the balance carryforward by using the Balance
Carryforward app. As of SAP S/4HANA Cloud 2008, this Balance Carryforward app no longer
exists. Instead, the system performs a balance carryforward automatically two weeks before
the start of a new fiscal year. Therefore, you do not usually need to perform any manual
activities for the balance carryforward. If there are any difficulties, you can manually trigger
the balance carryforward. To do this, you must schedule the corresponding job. Then use the
Schedule General Ledger Jobs app with the Balance Carryforward job template.
To display the status of the balance carryforward, you can use the Balance Carryforward
Status app. With this feature, you can view details about a balance carryforward, such as the
status or when it was run.
In asset accounting, you must execute the year-end closing program. This checks the
following:
● Asset value postings

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 Lesson: Scope of Asset Accounting

Depreciation values must be posted completely.

● Asset master record information
Asset master records must not contain any errors (they must be complete).

You execute the year-end closing of FI-AA after the auditors have finished their work and
before the GL is ready to close for the year. The year-end closing program typically executes
in Q1, before the books are presented for external purposes. If the year-end closing program
finds no errors, it updates the last closed fiscal year for each depreciation area and blocks
posting in asset accounting for the closed fiscal year. You can have a maximum of two open
years in asset accounting.
In the Schedule Asset Accounting Jobs app, the following job template is available: Year-End
Closing Asset Accounting (Cross-Company Code and Ledger). You can use the job template
to close a fiscal year from an accounting perspective for one or more company codes or
ledgers. Subsequently, neither postings nor value changes (for example, through
recalculating depreciation) are possible in Asset Accounting for the closed fiscal year.

Note:
To execute the year-end closing for a single ledger, you can still use the app Make
Company Code Settings - Asset Accounting-Specific. You can also use this app to
undo the year-end closing for individual ledgers.
The tile Execute/Undo Year-End Closing is deleted since
SAP S/4HANA Cloud 2105. You now need to use the tile Make Company Code
Settings – Asset Accounting-Specific.

Figure 800: Asset History Sheet

The asset history sheet is a legally required report in many countries. In any case, it is a useful
report in all countries, as it shows the beginning and ending book values of the assets and the
relevant transactions.

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Unit 11: Asset Accounting

Each asset history sheet version groups information in the following areas:
● Book values at the beginning of the fiscal year
● Acquisitions
● Retirements
● Adjustment postings
● Depreciation
● Book values at the end of the fiscal year

LESSON SUMMARY
You should now be able to:
● Understand Fixed Asset Organizational Units and Master Records
● Perform Daily Postings in Asset Accounting
● Perform Asset Closing Operations and Reporting

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 Unit 11
Lesson 2
Assets Under Construction

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Manage Assets Under Construction

Assets Under Construction

Asset Under Construction

Figure 801: Asset Under Construction Asset Class

Assets under construction (AuC) require a separate asset class and corresponding G/L
account because they have to be shown separately in the financial statement. The standard
depreciation key 0000 ensures that depreciation is not calculated for the depreciation areas
in the financial statement. Special tax depreciation and investment support are possible for
AuC.

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Unit 11: Asset Accounting

Figure 802: Assets Under Construction

When an asset is under construction, you can post invoices and settle expenses directly to the
AuC. You can use Investment Management (IM) to manage larger investment projects.

Settlement of AuC to Completed Assets

Figure 803: Settlement of AuC to Completed Assets

Assets under construction have the following two basic phases of interest:
● Under construction

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 Lesson: Assets Under Construction

● Useful life

At these two phases, the asset values are on different balance sheet items. This is why, they
are managed using different objects or asset master records for the under construction
phase and for the completed assets.
The transfer from the under construction phase to the completed assets is referred to as
capitalization of the AuC.
Depending on the functions needed, you can manage AuC in FI-AA in the following ways:
● As an asset master record for summary settlement
● As an asset master record with line item management

Down payments on AuC can be entered through accounts payable accounting processes.

AuC – Settlement on a Line Item Basis

Figure 804: AuC – Settlement on a Line Item Basis

When you capitalize the AuC, you transfer the values to one or more completed assets on a
line item basis. The system automatically separates the transactions from the current year
and previous years. In doing this, the system uses different transaction types.
To settle the AuC on a line item basis to one or more completed assets, proceed as follows:

1. Select all line items that you want to settle in the same value amount to the same receiver.

2. Define the distribution rules for these line items.

3. Post the settlement of line items to the specified receivers using the distribution rule.

Note that this posting procedure settles all line items to which you assign a distribution rule.

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Unit 11: Asset Accounting

If you want to settle using amounts, select and distribute one line item after the other. When
you settle, you do not have to settle all line items at once, and you do not have to distribute
100% of each line item.
You can use Investment Management (IM) for large investment measures, where you would
also like to add internal activities and map these activities in the system. As of SAP S/4HANA
Cloud 2108, you can settle the costs of a WBS-element-based investment measure to several
assets under construction. These assets under construction are managed as main asset
[Link] AuCs belonging to a WBS element are automatically created as soon as the
WBS element is saved and released. When the settlement is performed, the AuCs are
capitalized.

LESSON SUMMARY
You should now be able to:
● Manage Assets Under Construction

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 Unit 11
Lesson 3
Configuration and Migration for Asset
Accounting

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Configuration in Asset Accounting
● Explore Data Migration functionality and tools

Define Asset Class

The asset class is the main grouping criterion when defining an asset. Each asset must be
assigned to one asset class. Based on the asset class, certain control parameters are
predefined and default depreciation terms are proposed. You can use the asset classes
provided without creating your own asset classes. You also have the option of creating your
own asset classes; you do this by copying an existing asset class and then changing at least
the key and, if necessary, the description in the copy.

Figure 805: Asset Class

As of release SAP S/4HANA Cloud 2102, the following new asset classes are available for
assets under construction:

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Unit 11: Asset Accounting

● 4010 Assets Under Construction (Intangible)

● 4011 AuC as Investment Measure (Intangible)

For these additional asset classes, you have the option of choosing the corresponding new
account determination 160100 Assets Under Construction (Intangible).

Configuration

Figure 806: Configure Asset Class

To create your own asset classes, proceed as follows:

● Select an asset class that you want to use as a template and copy it. Enter a key for the
new asset class and a description.
● Set the Number range of the asset class.
● Set the Layout.
● Set the account determination (Account Determ.) and assign a new account determination
to the asset class if necessary, so that the fixed assets and the transactions are assigned
to G/L accounts.
● To prevent fixed assets being created for an asset class, you can set the Blocked indicator
to lock the asset class.
● If you set the Include Asset indicator, then the fixed assets of the asset class can be
displayed in the asset list of Asset Accounting.
● To define that the assets under construction of an asset class are only created during the
processing of investment measures, you can set the indicator Investment Measure.
● If you want the assets under construction of the asset class to be managed with line item
settlement on target assets or cost centers, then set the indicator Line Item Settlement.
● If you want to allow down payments for fixed assets of the asset class, set the indicator
Downpayment Allowed.

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 Lesson: Configuration and Migration for Asset Accounting

Fixed Asset Migration

Legacy Asset Migration

Figure 807: Fixed Asset Migration

SAP S/4HANA Cloud Edition offers pre-configured content based on best practices for Cloud
Editions. Migration is part of this end-to-end implementation approach.
In the SAP Fiori launchpad, check under the End-To-End Consumption Experience and see
Manage Your Cloud Solution. In this app you find the Migrate Your Data tool. In the Migrate
Your Data app, you access the dedicated data migration functionality.
Once the data migration sub-screen is opened, the proposed data migration objects are
shown.

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Unit 11: Asset Accounting

Figure 808: Migration Project for Fixed Asset (Including Balances)

The Simulate Import feature is part of the guided migration activity.

It allows you to carry out the following tasks:
● Test migration data against system customizing without commit. This is a new step in the
migration guided procedure.
● Check structures or if anything is not fitting to the interface structure. In the past, if an
asset master ID number was already used in the target system (because, for example, you
used external numbering), the migration would fail with a Duplicate Record error. With
simulation, there is no need to run a productive migration until the simulated import shows
everything green. It is a very flexible tool that allows you to fix the captured errors and then
run the simulation again and again until all errors are addressed.

With every release, there is new and updated documentation available for migration relevant
objects. For every object, there is a Documentation tab that you can access to learn more
about the specific object. There is object documentation for Fixed Asset and some migration
guidance.

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 Lesson: Configuration and Migration for Asset Accounting

Performing the Migration

Figure 809: Migration Execution

Depreciation areas assigned to a parallel currency will inherit the values from the leading
depreciation area for the currency conversion that takes place. This means that you do not
enter cumulative values for the parallel currency depreciation areas in the upload file, as these
are calculated by the system.
The following objects need to be entered or migrated before Fixed Assets data can be
migrated:

Cost Center Master

Profit Center Master
Activity Master

Depending on the scenarios, you might also have to migrate the list for the following objects:

Supplier
Material
Profit Center

The customizing settings of the depreciation areas determine which input is accepted from
the upload file. For example:
As a default, acquisition values have to be positive, while depreciation values have to be
negative. The upload will fail, in case the values are not in line with the depreciation area
settings.

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Unit 11: Asset Accounting

Figure 810: Template Download

The templates needing to be filled in with the migration data are directly downloadable from
the application. There are different templates for the fixed asset migration depending on the
cloud edition you are implementing.

Figure 811: Microsoft Excel Template for Asset Migration

The figure, Microsoft Excel Template for Asset Migration, displays the asset migration
template spreadsheet on the Field List tab which summarizes the fields available for
maintenance in the SAP S/4HANA Enterprise Cloud solution.
The indicated acquisition values have to be positive, while depreciation values have to be
negative. The upload will fail, in case the values are not in line with the depreciation area
settings.
The key fields are always mandatory in the sheets. The other fields that are mandatory are
indicated with an asterisk next to the field description.
To validate the migrated data, use the following tiles:

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 Lesson: Configuration and Migration for Asset Accounting

● Create Asset Master Record

● Display Asset
● Asset Balances

The required Business Role to start the applications is the Asset Accountant
(SAP_BR_AA_ACCOUNTANT).

LESSON SUMMARY
You should now be able to:
● Configuration in Asset Accounting
● Explore Data Migration functionality and tools

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Learning Assessment

1. What objects are managed by the chart of depreciation?

Choose the correct answer.

X A The general ledger accounts

X B The depreciation areas

X C The asset classes

X D The transaction types

2. In the SAP S/4HANA cloud solution, you can create new depreciation areas in the guided
configuration.
Determine whether this statement is true or false.

X True

X False

3. For which of the following reasons do you have separate asset classes?
Choose the correct answers.

X A To support low-value asset acquisitions

X B To monitor assets under construction

X C To track the location of the asset

X D To control the supplier of the asset

4. What do you enter to start creating a new asset master record?

Choose the correct answers.

X A Another relevant asset

X B The relevant asset GL account

X C The relevant asset class

X D The relevant depreciation areas.

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5. What is the main distinguishing characteristic of the various asset postings?

Choose the correct answer.

X A Asset Class

X B Posting Key

X C GL Account

X D Transaction Type

6. You can create an asset in the same transaction you post a non-integrated asset
acquisition.
Determine whether this statement is true or false.

X True

X False

7. Which programs are executed as steps of the asset accounting year-end closing?
Choose the correct answers.

X A Balance carryforward

X B Year-end closing

X C Depreciation Posting

X D FI-AA/FI-GL Reconciliation

8. You can manage assets under construction directly with a final asset, as long as the
depreciation calculation is switched off.
Determine whether this statement is true or false.

X True

X False

9. You enter cumulative values for all the valid parallel currency depreciation areas in the
Microsoft Excel upload file.
Determine whether this statement is true or false.

X True

X False

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10. In the Microsoft Excel template, which fields must always be maintained?
Choose the correct answers.

X A Fields that are part of the key

X B Field marked with an asterisk

X C All fields in the template

X D Only the fields in the Master Details tab

11. What can you define in an asset class?

Choose the correct answers.

X A Number range

X B Screen layout rule

X C Cost center

X D Reconciliation account

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 UNIT 12 Intercompany Processes

Lesson 1
Explaining Intercompany Processes 607

UNIT OBJECTIVES

● Perform Cost Allocation in General Ledger

● Post Intercompany Asset Transfers

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 Unit 12
Lesson 1
Explaining Intercompany Processes

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Perform Cost Allocation in General Ledger
● Post Intercompany Asset Transfers

Intercompany Cost Allocation in General Ledger

Intercompany Documents Overview

Figure 812: Intercompany Processes - Intercompany Documents

In an SAP S/4HANA Cloud system with two company codes in the same country, you can
post a document between the two company codes. In a cross-company code transaction, the
system posts a separate document with its own document number in each of the company
codes.

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Unit 12: Intercompany Processes

Intercompany Document Management

Figure 813: Intercompany Document

Individual documents are linked by a common cross-company code number. The system
generates line items to balance the debits and credits in each document.

Figure 814: Intercompany Document Change and Reverse

Using the Change Journal Entries Cross-Company Code app, you can make changes that also
get updated on the individual documents for the company codes. Changes are, of course,
limited to texts and other non-accounting relevant data. In addition, the Reverse Journal
Entries Cross-Company Code app ensures that all relevant documents are reversed at the
same time.

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Hint:
You can set up a workflow to require an accountant from each company code
involved to approve the cross-company code document before it is posted.

Intercompany Asset Transfers

Intercompany Asset Transfer Overview
In SAP S/4HANA Cloud, you can perform intercompany asset transfers between company
codes, as long as they are both in the same country. For the individual companies, an
intercompany transfer represents a retirement for the one company and an acquisition for
the other. An intercompany asset transfer may be necessary, for example, the physical
location of the asset has changed, making it necessary to assign the asset to a new company
code.

Intercompany Asset Transfer Journal Entries

Figure 816: Journal Entry

With the Post Transfer Across Company Codes app, the system can post the retirement
transfer and the acquisition transfer in one step (automatic intercompany transfer). After the
transfer is completed, you can post the invoices for the transferee and the transferror in a
separate step, to depict the tax. You can create an asset history sheet, or use other reports to
view the intercompany results. You must run two separate reports, one for each company
code.

LESSON SUMMARY
You should now be able to:
● Perform Cost Allocation in General Ledger
● Post Intercompany Asset Transfers

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 Unit 12

Learning Assessment

1. When posting intercompany transactions, the system keeps a separate intercompany

journal entry assigned to both company codes.
Determine whether this statement is true or false.

X True

X False

2. When reversing a cross-company journal entry, you have to make sure to manually
reverse it in both company codes.
Determine whether this statement is true or false.

X True

X False

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 UNIT 13 Advanced Accounting and
Financial Close

Lesson 1
Advanced Financial Close 615

Lesson 2
SAP S/4HANA Finance for Group Reporting 643

UNIT OBJECTIVES

● Describe Advanced Financial Close

● Use Advanced Financial Close
● Configure Advanced Financial Close
● Asses Your Knowledge
● Discuss the Key Terms, Features, and Architecture
● Discuss the Month-end Closing Process
● Review Intercompany Matching and Reconciliation

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 Unit 13
Lesson 1
Advanced Financial Close

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Describe Advanced Financial Close
● Use Advanced Financial Close
● Configure Advanced Financial Close
● Asses Your Knowledge

Solution Overview

Figure 817: Solution history

SAP S/4HANA Cloud for advanced financial closing is SAP's strategic Record-to-report
orchestration solution and builds upon decades of proven technology.

Figure 818: Planning, automation and monitoring

Benefits & Capabilities:

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● Closing is faster and efficient because it's orchestrated with tasks automatically triggered
by completion of the earlier tasks - along an optimized timeline, with minimized downtime.
- The solution delivers many automated closing tasks - alerts tell you if there's been any
issues.
- The solution has workflow-supported intuitive apps for manual tasks - users are notified
when it's time to do manual tasks - and have access to collaboration and escalation
tools to keep the process moving smoothly.
● Closing is optimally governed and auditable. Your users can define a Global game plan for
the entity close. This template gets serialized for multiple org units and closing cycles.
- The performance of all steps (automatic and manual) are documented with a complete
audit train of status changes and incidents.
- Approval workflows can be configured for specific tasks and comments can be added
as necessary.
- The Audit trail with detailed logging and documentation for each step in the process is
available for review.
● Transparency and Insight - management reporting analytics are built directly into the tool
to let everyone know exactly what the status is at all times.
- Comprehensive analytics provide real-time insight into the closing status - you can see
exactly the status of the area you're responsible for.
- Close analysis also provides monitoring for subsidiaries and the headquarter - this is
information you can use to improve your close with each cycle.

Figure 819: Role-based approach coordinates tasks across your team

Advanced Financial Closing allows you to plan, execute, monitor, and even analyze financial
closing tasks for the entities of your group. Five easy-to-use apps with a uniform look and feel
have been specifically designed to support periodically recurring closing activities. This can be
done in a fixed chronological or dependent sequence and allows for multiple stakeholders.
The solution provides support for the various stakeholders such as:
● Business Experts, who define the overall plan.
● Accountants, who process manual tasks and monitor automated steps.

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 Lesson: Advanced Financial Close

● Approvers, with a dedicated App.

● Management with comprehensive Analytics.

Figure 820: Closing Hub with out-of-the-box connectivity

The SAP Cloud Connector ([Link]

cca91383641e40ffbe03bdc78f00f681/Cloud/en-US/
[Link]?q=cloud%20connector) is required in all
scenarios between an SAP S/4HANA or SAP ECC system and SAP S/4HANA Cloud for
advanced financial closing on the SAP Business Technology Platform to establish a secure
communication scenario. It is a non-modifying add-on, and it is not separately priced.
The Integration Component ([Link]
SAP_ERP_CONNECTOR_FOR_ADVANCED_FINANCIAL_CLOSING/1.0/en-US) is required in
all scenarios between an SAP ECC system (EHP4+) and SAP S/4HANA Cloud for advanced
financial closing on the SAP Business Technology Platform to enable scheduling. It is a non-
modifying add-on and is not separately priced.
From back-end Accounting Systems to AFC:
● Organizational Data: such as Company Codes
● Accounting Principles
● Ledgers
● Fiscal Year Variants
● Factory Calendars
● Results of jobs (view-only of spools)
● SAP S/4HANA and ECC spools are redundantly saved in dedicated AFC tables of the Back-
end Accounting systems

From AFC to Back-end Accounting Systems:

● Triggers for scheduling background jobs
● Parametrization of SAP Fiori apps for intent-based navigation
● Authorization data (User ID and E-Mail) for access checks in the Back-end Accounting
Systems

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Figure 821: Key Roadmap Areas

The key roadmap topics are divided into three main buckets.

1. Closing Hub Scenario: This is about extending the integration and connectivity capabilities
of AFC so that it can even better serve as a centralized closing hub in heterogeneous
system landscapes. Today we can already connect to both ECC and S/4 systems and
looking at your future move to S/4 - this would already integrate and work out-of-the-box.

2. Intelligent Closing is about leveraging modern technologies to further automate and

streamline the close - this includes even smarter automation, alerting, and simulation
capabilities than we have today.

3. Central Steering is about aligning our multiple tools along the Record-to-Report process
and enabling AFC to be the core orchestration engine. This would include using AFC to
monitor processes like statutory reporting, organizational changes and to integrate the
entity close tighter with the Group Close.

Check the SAP Roadmap Explorer for all the latest innovations.

Business Objects and Process Flow

Figure 822: Major business objects in financial close management

The most important business objects in AFC are outlined in the following:

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1. Task represents a single closing activity, for example the foreign currency valuation run or
the asset depreciation run.

2. Task List is an organized worklist for a specific closing cycle's execution. It is generated
from a predefined Task List Template and can be further adjusted.

3. Task List Template is a predefined worklist to be used as the template for repeatable Task
List generation.

4. Task List Model is the predefined abstracted Task List Template for a dedicated business
context in the Communication System. It is delivered as customizing/ content to be
copied when defining Task List Templates in AFC.

5. Task Model Type and Task Model are abstracts of the tasks with detailed attributes like
program name, parameter variant, web address, closing types, etc., maintained.

You can include different types of task types:

● SAP Fiori Application: Process closing task manually by means of transactional or
analytical application defined on the SAP Fiori launchpad. Parameters defined on the
folders or on the tasks of the folders such as company code are automatically transferred
to ensure that the assigned processor has all necessary authorizations to process the
assigned application.
● Job - Schedule automatic process steps. If the closing task is marked as automatic, the job
is scheduled automatically once the start time is reached and the predecessor task is
completed. Otherwise, you can schedule jobs manually.
● Note - Process closing tasks manually by external means.
● Web Application - Closing steps that are processed using external web services or to
assign documentation resources. A web application is any service or HTML page
accessible via a URL. In the web application use case, parameters are not transferred to
the web application.

Figure 823: Process Overview

This flow diagram represents the typical process steps and roles per system. In the following
concepts, each step will be described in detail.

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Task Modeling

Note:
SAP provides standard content for task models, customers with on-premise SAP
S/4HANA and SAP ERP systems can customize the task models with the
transactions mentioned in following slides, SAP S/4HANA Cloud customers can
directly use the standard content but can't currently change it.

Figure 824: Task Modeling - Overview

Through Task Modeling in the Communication System, customers can abstract the existing
applications as Task Models to be selected when defining a Task List Model or Task List
Template. Right now, the following application types are supported:
1. ABAP programs can be scheduled as a job, for example, fixed asset depreciation run
2. SAP Fiori apps or GUI transaction codes (SAP Internet Transaction Server needed)
3. Notes
4. Web applications, can be web services or HTML pages, accessible via URL

Note:
Task Model Type is currently also known as Closing Business Transaction Type
(BTY). This will be fully renamed as Task Model Type in all AFC- supported ERP
releases.

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Figure 825: Task Modeling - Define Task Model Type

Task Modeling is done in the Communication System as configuration step. SAP delivers
sample content for the supported SAP ERP product releases. Users can define business
transactions and link them with existing applications.

Note:
Task Modeling is necessary for job type tasks, SAP Fiori app type tasks. Users can
directly maintain the web or note type tasks information when defining a Task List
Template in AFC.

Figure 826: Task Modeling - Define Task Model and Task List Model

Customers further define the Task Model by maintaining the important attributes like linked
business transaction type, applicable closing cycles, context and country assignment, and so
on.

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1. Define the Task Models. If needed, assign country codes to Task Models so that they are
only applied to specific countries when assigning a Task List Model to a Task List
Template.

2. Organize the tasks models as a hierarchy in a Task Model set to model a task structure
applicable to all of your organizational units.

3. Define task dependency to control the execution sequence.

Other configuration data, replicated from Communication Systems to AFC:

To define and to execute the tasks, the following master data objects are automatically
replicated from connected Communication Systems to AFC:

1. Company Code: the ID, description, and attributes value like Country, Fiscal Year Variant,
and so on are copied

2. Accounting Principles

3. Ledgers

4. Fiscal Year Variants

5. Factory Calendar

Hint:
Tips:
● The system automatically syncs changes of configuration data once per day.
Users can also manually sync changes immediately by choosing the
Synchronize now button for a selected system in the Specify Communication
System app.
● All of the above configuration data is system-dependent - if multiple systems
are assigned to one Task List (*1), those configuration data need to be defined
in each corresponding system folder or on organizational unit folder level.
● If the Fiscal Year Variants used by companies in one system are different,
separate Task Lists should be considered for each Fiscal Year Variant as a
best practice.

Note:
The assignment of multiple communication systems to one Task List in AFC is not
possible in the first release, but is planned to be enabled in the future.

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Task List Definition

Figure 827: Task List header

To generate executable Task Lists, accounting experts need to plan tasks by defining the Task
List Template. It includes the Organizational Units, the tasks that need to be executed, the
process controls and parameter settings, and so on.
A Task List Template comprises two main parts: Task List header and Closing Structure.
Task Detail Information
The following aspects should be considered for task execution, therefore they need to be set
up on Task List Template level:

1. What tasks should be executed (Closing Structure)

2. Who should execute and monitor the tasks? (Roles/authorization, approval settings)

3. How should the tasks be executed? (Parameters, additional task knowledge like
attachment, notes, and so on)

4. When should the tasks be started and finished? (Scheduling settings)

5. How should users be informed about important events? (E-mail and notification settings)

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Figure 828: Closing Structure

1. The Closing Structure consists of Folders (for example, system, org. unit, folder) and
Tasks. It defines which Tasks apply for which Organizational Units and shall be executed in
which sequence. The structure can be defined in different ways:

2. Manually add the tasks, Organizational Units

3. Use organizational hierarchy, and then manually add tasks to Organizational Units

4. Use organizational hierarchy, apply predefined Task List Model to all units in the hierarchy,
then manually adjust

5. It's possible to display the structure by hierarchy view, list view, or tasks dependency view.
AFC orchestrates closing tasks in multiple systems and organizational units from one
Task List; typically, there are the following levels of hierarchy nodes:

6. Communication System level

7. Organizational Unit level

8. Sub-folder level to group the tasks

9. Tasks can be added below each hierarchy node level

Note:
The assignment of multiple communication systems to one Task List in AFC is not
possible in the first release, but is planned to be enabled in the future.

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Figure 829: Closing Structure and Parameter Derivation

Settings can be maintained on hierarchy node or task level, with the following derivation
concept:
● Parameters are inherited top-down
● Parameter values can be overwritten on any level of the hierarchy
● Task List header attributes serve as global, "SAP managed" Parameter Types and hold for
all tasks of the list
● Org.-Units assigned to Org.-Unit-type folders serve as ("SAP managed") Parameter Types
to sub ordinate tasks
● Any folder can host Parameter Types and Job parameters for subordinate tasks

Figure 830: User Roles and Access Control

The setup depends on the customers' authorization governance model, there are two ways to
control the tasks access:
● By user/user group: You can directly assign a user or a user group as responsible person
or processor on Closing Structure items; those users are then automatically granted the
access to Task List Template, Task List (for responsible person) and tasks (for both
processor and responsible person).
● By Authorization Group: You can indirectly give Authorization Groups access to Closing
Structure items; those users who get authorization groups via assigned user roles can
execute operations as illustrated in the figure.

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There are two roles for task execution:

● The processor, who needs to execute the tasks
● The responsible person, who is responsible for the task status and the approval of the task
completion

Additionally, Substitutes can be defined for the responsible person or the processor and can
automatically inherit the object access of substituted persons.

Note:
By enabling the Enforce SOX Requirements compliance setting, the system will
not allow the processor and responsible user to be the same.

Note:
The responsible user or user group must be maintained if a task needs an
approval process, so that the workflow items can be sent to the responsible
persons.

Figure 831: Approvals for Formal Task Sign-Offs

● Completed Approval Required: Task completion approval needed, it's not possible to
execute successor tasks without this task being approved
● Pending Approval Required: Task completion approval needed, but the pending approval
does not impact the successor tasks execution
● No Approval Required

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Figure 832: Approval Status Flow

It depends on the setting of the task approval type whether the system triggers the workflow
for the task responsible user's approval. The figure explains the approval status flow in the
system.

Figure 833: Parameters for Tasks of Type Job

For job type Tasks, parameter values are assigned generically to ensure automatic job
execution. There are two places where parameters values can be maintained in AFC:

1. Parameter Types:

2. SAP managed for automatic value assignment, or not SAP managed for manual value
assignment

3. Modeled in the Communication Systems

4. Assigned on Folder level to assign common parameters on multiple tasks

5. Job parameters: Individually set for each specific task of type Job

Note:
If job parameters get values from both job parameter value settings and
parameter type value settings, job parameter settings overwrite the more generic
parameter type value settings.

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Note:
AFC can transfer SAP managed parameters values to URLs – it depends on the
SAP Fiori app or web service whether the parameter values can be successfully
transferred.

Figure 834: Parameters for Tasks of Type Job

For Job type tasks, program parameter values must be correctly derived so that the tasks can
be scheduled without errors. It is possible to pre-populate job parameter values in two ways:
First, by maintaining Program Parameter Variants in the Communication Systems and
second, by setting them specifically in a Task List Template or Task List in AFC.
Tips:
● With the Program Parameter Variant maintenance, functions are provided to automatically
derive values for recurring job executions, for example fiscal period from current period.
● If for one task of type Job a value is found in both the Program Parameter Variant and the
AFC Task List, the Program Parameter Variant value is prioritized.
● Users need to ensure that all mandatory job parameter values are predefined, to avoid
errors during automatic job scheduling.

Figure 835: Parameters for Tasks of Type Job, Cont.

There are a few functional restrictions and hidden features:

● Tasks of type Job can in principle run without additional parameters
● Parameter Types can in principle also control parameter derivation for tasks of type Fiori
Application

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● There is no F4 value help available yet for Parameter Types

Figure 836: Scheduling

Task scheduling and monitoring are important functions to enable an accelerated and
accurate close. Each task has planned scheduling data and actual status change data to
enable tracking of the closing process.
The Factory Calendar is considered by AFC for scheduling manual task types (Fiori
Application, Note, Weblink) so that the planned start date is on a working day; automatic task
types like tasks of type Job are planned without considering the Factory Calendar.

Figure 837: Notifications per Scenario

You can use Notification Configuration to activate E-mail notification per scenario and to
decide who should be notified. A scenario defines the event or circumstance at which the
notification is to be sent.

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Figure 838: Notifications

Users and users' substitutes can get an E-Mail notifications and SAP Fiori notifications when
there is a predefined event happening on the Task List or single task level.

Figure 839: Attachments and Notes Handling and Storage

To provide additional information like detailed working instructions within the Task Lists and
tasks, customers can add attachments and notes to each task – all of this additional
information will be copied to the generated tasks for the user's reference.
Link addresses must start with http:// or https://
Attachments and Notes are stored with draft logic. When generating task lists, only links to
the attachments are copied. This means the file is only stored once. As soon as the last link is
deleted, the file is deleted. Attachments are encrypted.
Attachments can be uploaded to store documentation and provide proof about completed
tasks:
● Attachments created in the Define Closing Tasks app cannot be deleted in the Process
Closing Tasks app
● Attachments created in the Process Closing Tasks app can be deleted in both processing
and defining closing tasks apps
● Once the task list is set as completed, attachments can no longer be changed

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Task List Creation and Execution

Figure 840: Task List Generation

Once the Task List Template is fully maintained, users can generate executable Task Lists.
Dynamic scoping:
● A Task List Template can cover tasks of all Closing Types. At Task List creation, the
system will only consider the tasks which are assigned to the chosen Closing Type.
● A Task List Model covers tasks for all countries. When assigning a Task List Model,
country-specific(*1) tasks are added only to Company Code Folders with matching(*2)
country.

Note:
Country assignments of Task Models are maintained in the communication
system.

Note:
Company Code Master Data are defined as assigned to countries in the
communication system (table T001, "Company Codes").

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Figure 841: Processing Task Lists

For released Task Lists, users can schedule the execution, change the status, and monitor the
progress.
Different actions can be done, based on the type of tasks:
● For tasks of type Note, users can give notes and change the task status.
● For tasks of type SAP Fiori Application or Web Application, users can navigate to the local
or remote system, execute the task, and then go back to AFC to change the status, add
notes and attachments, and so on.

Figure 842: Job Tasks

For tasks of type Job, users can schedule the task to plan the execution of the jobs in
connected Communication Systems.

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Figure 843: Define Tasks Dependency

If tasks need to be processed in a logical sequence, users can define dependencies. There are
additional checks on allowed task status changes and it is possible to automatically trigger
the execution of successor tasks of type Job.
The system will auto check:
● Dead loop of task's sequence.
● Successor task's start time cannot be earlier than the predecessor task's start time.

Figure 844: Display Task Dependencies

You can visualize the dependencies in diagram form.

Figure 845: Execute Task with Dependencies

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Figure 846: Task Logs

Users can check the task logs like the status change logs, job logs, spool lists (PDF), and
additional notes which are attached.

Task Approvals and Analysis

Figure 847: Approve Task Completion

If tasks are relevant for approvals, once the processor user sets the status as Completed
Without Errors, Completed With a Warning, or Checked, the system will trigger a workflow
item for the task responsible person's approval.
In the Approve Closing Tasks app, the responsible person gets the list of tasks for approval
and a list of already approved or rejected tasks.
Once the task is approved or rejected, the task approval status will be updated, the rejected
task status will auto-reset to Completed with Error. Processors can check the approver's
comments on the task status change log and reprocess the task.

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Figure 848: Task Execution Analysis

Managers can check the analytics reports to get the closing status overview and drill down to
the lowest level of detail, using multiple filter attributes like Task Lists, Countries, Country
Groups, Task Status, or Company Codes.

Figure 849: Change Log

The Change Log app is to track the changes made to Task List Templates, Task Lists, or
tasks. Users can filter by specific object names, types of changes, User IDs, and so on.

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Figure 850: Monitor Business Logs

The Monitor Business Logs app shows AFC administrators logs of possible technical errors
that can occur in closing-relevant activities. You can review the logs, for example, in the case
of issues due to the missing connection to a back-end system during scheduling or master
data replication.

Configuration

Figure 851: General SAP Fiori Settings

Define User Settings

● Certain settings that impact the user's daily work in AFC have implications for closing
tasks
● Turn off E-Mail notifications from notification service
● Substitutes - who should take over when you are on leave

These user settings are not specific to SAP S/4HANA Cloud for advanced financial closing.
So, if you aren't receiving E-Mail notifications regarding closing tasks, and you think you
should, check to see if you have ticked the no E-Mails box in the general user settings. Also,

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 Lesson: Advanced Financial Close

who receives your tasks when you are on leave is also a general setting affecting ALL types of
SAP S/4HANA tasks - not just closing-specific tasks.

Figure 852: Best Practice Scope for Cloud to Cloud integration

Leverage Best Practice Scope Item 4HG for the out-of-the-box integration between AFC and
multiple SAP S/4HANA Cloud, Essentials Edition systems.

Figure 853: User and Role Management

Users, Authorizations and User / Role assignments can be maintained with dedicated apps in
AFC.
It is possible to integrate AFC with any identity provider (IdP) solution such as SAP Identity
Authentication Service to embed the solution seamlessly in existing security architectures.

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Unit 13: Advanced Accounting and Financial Close

Figure 854: Overview of Configuration Options

The following configurations are available:

● Authorization Groups
● Country / Region Groups
● E-Mail Notification Configurations
● User Groups
● User Roles

Figure 855: Manage Authorization Groups

Authorization Concept in Scenarios: Define Closing Tasks. The Define Closing Tasks app
supports two kinds of objects: templates and task lists.
● A template serves as a global master and model for Financial Closing. Read access to
display templates and write access to create and edit templates can only be granted
globally, or not at all.

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 Lesson: Advanced Financial Close

● Task lists, in turn, are generated instances of a template. You may want to provide read
and write access for task lists to authorize your staff to make adjustments and corrections
to task lists in case of already started closing activities. Read and write authorizations to
task lists can be granted either by means of authorization groups or just by ownership.

Authorization Concept in Scenarios: Process Closing Tasks. A staged concept of

authorization checks is supported for all activities in the Process Closing Tasks app.
● You can delegate the responsibility for the assignment of authorizations to the
management of your local organizations, thereby benefiting from a decentral control of
authorizations for closing activities.
● You can define authorizations centrally at design time and on task template or task list
level by means of authorization groups.

Figure 856: Manage Country / Region Groups

Defining country/region groups enables you to monitor the completion rate and status of
financial close activities on the level of regional groups as an additional reporting attribute.
The assignment between an Organizational Unit and the country is automatically derived.
You can then filter for country/region groups in the Financial Close Overview app and Closing
Task Completion app.
This affects the countries and country groupings that you see in the filters for the built-in SAP
Fiori reporting.

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Figure 857: Manage Email Notification Configurations

A notification configuration controls when and how processors or responsible agents are
notified via calendar items, mails or SAP Fiori notifications. In the Define Closing Tasks app,
you can then assign a notification configuration to task templates and task lists.
Independently, a Notification Configuration can be assigned to a folder and/or to a single
task, effectively overruling the Notification Configuration assigned at Task List level.
You can configure the system to send E-Mail notifications to the responsible agent of a task
list and the responsible agent and the processor of a task when the conditions for triggering
any of the assigned notification scenario are met. A notification scenario describes the
circumstances or events in which E-Mail notifications should be sent.
For example, an E-Mail can be sent to the responsible agents and the processors of the tasks
in the list to inform them that they have been assigned tasks when Task List Released, Task
Scheduled, Task Overdue, and so on, in the pre-delivered notification scenario.

Figure 858: User Groups

Define User Groups that can be assigned in the Define Closing Tasks app to tasks or task lists
as users responsible and processing users.
For each task, you can choose whether a single user or a group of users shall be assigned.

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Figure 859: Manage Compliance Settings

This configuration allows to enforce data privacy and compliance settings for financial
closing. Specify whether you want real names to be visible in E-Mails sent by the SAP financial
closing notification service. Define the delay (time offset) in months for when user names are
removed from completed task lists.
Determine whether Sarbanes-Oxley Act (SOX) compliance should apply. That is, you want:
● The processor to add a comment when updating the task status.
● To prevent that the processor and the responsible person are the same person
(segregation of duties).

LESSON SUMMARY
You should now be able to:
● Describe Advanced Financial Close
● Use Advanced Financial Close
● Configure Advanced Financial Close
● Asses Your Knowledge

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 Unit 13
Lesson 2
SAP S/4HANA Finance for Group Reporting

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Discuss the Key Terms, Features, and Architecture
● Discuss the Month-end Closing Process
● Review Intercompany Matching and Reconciliation

Overview, Architecture, and Key Terms

Business Example
Your organization wants to install SAP S/4HANA Finance for group reporting to streamline its
processes so that it can focus on profitable growth. For this reason, you require the following
knowledge about the application:
● An understanding of the key terms and components.
● An understanding of the features and benefits.

SAP S/4HANA Finance for Group Reporting

Figure 860: SAP S/4HANA Finance for Group Reporting - Key Benefits

Group Reporting provides a seamless process between the local and group closing activities
since both are in the SAP S/4HANA core. Both local and group closing activities utilize the
same user interfaces as well. Utilizing continuous accounting, you speed up the closing
process to provide more time to analyze and act on results when it matters most.

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Unit 13: Advanced Accounting and Financial Close

Figure 861: Continuous Accounting and Group Reporting

SAP S/4HANA Finance for group reporting is inspired by other SAP consolidation solutions
such as Financial Consolidation (FC), Enterprise Controlling-Consolidation System (EC-CS),
Business Consolidation Systems (BCS), and Business Planning and Consolidation (BPC).

SAP Consolidation Solutions

Figure 862: SAP Consolidation Solutions

Animation: SAP Consolidation Solutions

For more information on SAP Consolidation Solutions, please view the animation
in the lesson SAP S/4HANA Finance for Group Reporting, online in the SAP
Learning Hub.

While Group Reporting has its own unique features, it also includes features taken from other
SAP consolidation solutions and enhances them.
For example:
● Data collection features are based on FC (Cloud specific).

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● Document principle is based on EC-CS / BCS.

● FS item property selections are based on BPC and FC concepts.

The Group Reporting Suite

The Group Reporting suite includes more than just a consolidation engine.
All of the products in the following figure (The Group Reporting Suite) are new solutions and
are not legal successors to any existing SAP Consolidation application.
Advances in group reporting technology are also helping companies accelerate their
corporate closing processes.
The ability exists to run consolidation on data which has been captured in the Universal
Journal either directly for those companies using S/4HANA Accounting as their Accounting
system or via Central Finance, which can take data into SAP S/4HANA Accounting in real-
time, even if the Group has many different SAP and non-SAP ERP systems.
In addition to these real-time capabilities, where data is released to Consolidation in real-time,
customers can also load the data directly to the consolidation application via file-upload in a
traditional periodic manner from source ERP systems. Other options to get data into Group
Reporting are Advanced Programming Interfaces (APIs) and Group Reporting Data
Collection, and they will all do the required consolidation checks or breakdown checks before
updating Group Reporting.

Figure 864: The Group Reporting Suite

Group Reporting on-line help: [Link]

4ebf1502064b406c964b0911adfb3f01/1909.002/en-US/
[Link]
Find latest official roadmap at: [Link]

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Unit 13: Advanced Accounting and Financial Close

Figure 865: SAP Disclosure Management

For information on SAP Disclosure Management: [Link]

SAP_DISCLOSURE_MANAGEMENT/DM%20Stack%2017xx/en-US
The benefit of integration is enhanced when a significant amount of data is being sourced
from the Universal Journal. Accordingly, there is often a logical point at which it makes sense
to transition from a legacy consolidation solution to SAP S/4HANA Finance for group
reporting based on the proportion of data available within the core central Finance
environment.

Deployment Options

Figure 866: Deployment Options

S4HANA Finance for group reporting: [Link]

4ebf1502064b406c964b0911adfb3f01/1909.000/en-US/
[Link]
2659672 - FAQ About SAP S/4HANA Finance for group reporting (on premise): https://
[Link]/#/notes/2659672

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2659656 - FAQ About SAP S/4HANA Cloud for group reporting: https://
[Link]/#/notes/2659656

Central Finance

Figure 867: Central Finance

With Central Finance, customers can connect their distributed system landscape to a
centralized SAP S/4HANA Finance system. This can be made up of a combination of SAP
systems of different releases and non-SAP systems. Financial Accounting (FI) and
Management Accounting (CO) postings can be replicated into this Central Finance system.
SAP Central Finance in SAP S/4HANA: [Link]
finance-in-sap-s4hana-classroom-011-g-en/

The Group Reporting Process

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Unit 13: Advanced Accounting and Financial Close

Animation:
For more information on , please view the animation in the lesson SAP S/4HANA
Finance for Group Reporting, online in the SAP Learning Hub.

The Group Reporting Process consists of 4 main steps:

1. Data collection: Load data from SAP S/4HANA and outside sources.

2. Preparation: Perform currency translation if needed, adjust the data to align with
corporate accounting standards, and match intercompany.

3. Consolidation: Eliminate intercompany transactions and post ownership related

adjustments.

4. Reporting: Analyze the results.

Table 1: Key Terms

Term Definition

Posting Level Differentiator between reported financial data (00), stand-

ardized(10), interunit eliminations (20), and group-depend-
ent consolidation postings (30).
Document Type Audit trail of automatic and manual consolidation entries.
Consolidation Unit Legal entity or management reporting entity.
Consolidation Group A group of consolidation units on which you create a con-
solidated result.
Partner Unit The partner consolidation unit relating to intercompany
transactions and eliminations. Commonly known as trading
partner.
Financial Statement item Group account for consolidation.
Version Differentiator between Actuals / Plan / Forecast /... or dif-
ferent rules applied to the same raw data.
Subitem There two types of subitems:
● Transaction type: used for balance sheet data for open-
ing balance, variation etc.
● Functional area: used for income statement data. For
example administration, sales, marketing.

Data Model

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Figure 868: Group Reporting Related Tables

The accounting document actual (ACDOCA) table consolidates data that was traditionally
stored in separate tables:
● General ledger
● Profitability analysis
● Controlling
● Asset Accounting
● Inventory

These structures provide aggregation on the fly and support for local, operational, and group
reporting.

Delivered Content
With the preconfigured content, SAP S/4HANA Finance for group reporting provides out-of-
the-box features for users. Customers can also make their own configuration settings based
on the content delivered by SAP, which will accelerate the implementation process.
Getting the most recent SAP Best Practices content: [Link]
S4HANA1909_AdminGuide/[Link]
Frequently Asked Questions: OSS Note 2659672.

● The delivered content includes the Best Practices Scope Items.

● Delivered content is used to speed up implementations.
● Use the content as is or copy and adapt.

Best Practices Scope Items

Group Reporting - Financial Consolidation (1SG): This scope item provides statutory financial
consolidation capabilities for SAP S/4HANA customers.
Group Reporting - Matrix Consolidation (3LX): This scope item supports consolidation for
managerial organizational entities such as profit center and business segment. This
functionality includes inter-unit eliminations and flexible management consolidation reports
generated at report run-time.
Group Reporting - Plan Consolidation (28B): With this scope item, the plan data can be
collected from a file using the flexible upload feature of SAP S/4HANA, or generated from

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Unit 13: Advanced Accounting and Financial Close

previous year actual data. The user can then run a full consolidation process including
currency translation, intercompany elimination, and investments eliminations and reporting.
The application includes several versions to enable reporting (Actual versus Plan, Plan, and
Forecast).
Intercompany Reconciliation Process (40Y): This scope item covers the process of
reconciling the accounting documents that describe the accounting transactions within a
corporate group in accordance with the predefined matching method. It allows early analysis
in the closing process to avoid differences altogether and to reduce the deadline pressure
that normally arises during the end of a closing period.
Data Migration
SAP S/4HANA Finance for group reporting is a new implementation.
Data model and solution concepts from BCS and BPC may be useful when implementing SAP
S/4HANA Finance for group reporting but are not readily transferable.
Transition from EC-CS to SAP S/4HANA for Group Reporting: https://
[Link]/#/notes/2833748

SAC BI & Planning Integration

SAP Analytics Cloud (SAC) - Integration & Business Intelligence

Figure 869: SAC Integration

SAP Analytics Cloud is a single solution for business intelligence and enterprise planning,
augmented with the power of predictive analytics and machine learning technology. It helps
everyone in your organization make fast, confident decisions for better business outcomes.
BI or Business Intelligence is the analytics component of SAC.
● SAC has data persistence as well as live connection options.
● SAC stories are also embedded into SAP Fiori apps.
● Data is released from ACDOCP into ACDOCU from the Data Monitor based on the planning
settings in the consolidation version.

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● For more information on Consolidation Planning: [Link]

4ebf1502064b406c964b0911adfb3f01/2021.000/en-US/
[Link]

Financial Consolidation for S/4HANA Cloud (Best Practice Analytics scope item 2K6) enables
a pre-built set of analytical dashboard and reports that help to analyze the balance sheet,
profit & loss and cash flow for robust analytics on SAP S/HANA Cloud data.

Best Run SAC Stories for Group Reporting

Figure 870: Best Run SAC Stories for Group Reporting

As shown in the preceding image, the data can either be live or imported into SAC models. If
the data is imported, the actual data can be copied to a plan version and then planning can be
performed in SAC.

SAC Embedded (for SAP S/4HANA Cloud for group reporting 1911+)

Figure 871: SAC Embedded (for SAP S/4HANA Cloud for group reporting 1911+)

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Unit 13: Advanced Accounting and Financial Close

In the preceding figure, the story has been launched from a SAP Fiori tile.
SAC embedded is based on live connections. Several formatted reports are provided in pre-
built stories. There are also self-service capabilities for creating custom Analytic Apps

The Month-End Closing Process

Figure 872: The Consolidation Process

Note:
In the preceding figure, all possible tasks are shown however not all are
necessarily required.

Regarding the Consolidation Process figure above, here are the key points:
● Check master data: this includes FS items and mapping to g/l accounts, consolidation unit
method assignments, etc..
● There are several types of IC (intercompany eliminations) … including:
- Eliminate gross profit.
- Eliminate other income and expense.
- Eliminate balance sheet.
- Eliminate dividends.

Consolidation
A complete consolidation process typically starts with preparatory steps, such as setting
global parameters, checking the master data of your organizational units and financial
statement (FS) items, and specifying exchange rates.
After that, you can proceed with collecting data reported by consolidation units, and
standardizing the data with features available in the Data Monitor. When the data is ready for
consolidation, go to the Consolidation Monitor to perform the consolidation tasks, such as
various interunit eliminations and data validation.

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Data Validation:
Throughout the process, you can cross check your processed data using delivered/custom
reports in real time.
For more information about consolidation, see Consolidation.

Set Global Parameters

Before accessing the monitors, users should set their global parameters. These selections will
then act as defaults that are used as the month-end closing tasks are performed.

Figure 873: Global Parameters

Animation: Global Parameters

For more information on Global Parameters, please view the animation in the
lesson SAP S/4HANA Finance for Group Reporting, online in the SAP Learning
Hub.

Inputs to the following global parameter fields are required:

● Version: Criteria or valuation methods configured for consolidating different sets of
financial data such as actuals or budget data according to different reporting needs.
● Fiscal Year/Period: Select the time-frame for your closing activities.
● Consolidation Chart of Accounts: A systematic grouping of financial statement (FS) items
that belong together and are used on the group reporting or consolidation level.

Accessing the Monitors

● Group Reporting uses two monitors:

- Data Monitor: Local | Consolidation unit related tasks.
- Consolidation Monitor: Group | Consolidation group related tasks.

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Unit 13: Advanced Accounting and Financial Close

● The monitors are used to:

- Open and close the period.
- Provide process control.
- Run and schedule month-end closing tasks.
- Ensure a logical sequence and data consistency.
- Provide a one-stop-shop | launchpad for all closing activities.

For more information about the features of the Data Monitor, see Features in the Data
Monitor.

Figure 875: Data Monitor with All Tasks Locked

Tasks can also be scheduled via the Scheduling app.

Perform Month End Closing

Simulation: Perform Month End Closing

For more information on Perform Month End Closing, please view the simulation
in the lesson SAP S/4HANA Finance for Group Reporting online in the SAP
Learning Hub.

Intercompany Matching and Reconciliation Overview

The Need for Intercompany Matching and Reconciliation
Companies face a long list of challenges in a global economy with a significant increase in the
number of mergers and acquisitions. The most common one is a lack of transparency
between the legal entities and subsidiaries therefore making it more challenging to reconcile
intercompany transactions between the legal entities and subsidiaries in a cost efficient
manner which causes a significant delay in closing the books.

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Figure 877: The Need for Intercompany Matching and Reconciliation

The Intercompany Matching & Reconciliation Functionality supports users by allowing early
analysis in the closing process to avoid intercompany differences and reduces delays when
closing the books.
Intercompany Matching and Reconciliation Features

● Transactional-level matching and real-time reconciliation.

● Flexible modeling based on various organizational dimensions, such as company, profit
center, and consolidation unit.
● Automatic discrepancy resolution.
● In-app communication and workflow.
● Integrated with intercompany eliminations.
● For more information, see [Link]
4ebf1502064b406c964b0911adfb3f01/2021.000/en-US/
[Link].

Matching is designed for directly accessing the source data, for example, the Universal
Journal Entries (or external data). In this way, the ETL processes can be eliminated.
Noticeably, the matching logic is executed in SAP HANA, which allows massive amounts of
data to be processed within minutes.
The following link is a video showing how to use the ICR solution, from running document
matching, checking matching results, making and approving adjustment postings, to viewing
reconciliation reports and drilling through to their matching items and original documents
(English only): Features
The S4F15 Financial Closing in SAP S/4HANA course includes ICMR from a central journal
perspective. For more information, see [Link]
closing-in-sap-s4hana-classroom-017-us-en/?.
Intercompany Matching and Reconciliation (ICMR) is introduced to speed up your
intercompany reconciliation process from company close to corporate close. As a built-in
solution in SAP S/4HANA, it matches transactions without any ETL (extract, transform, load)
processes and reconciles your financial data in real time.
By defining flexible matching and reconciliation rules, you can achieve high degrees of
automation and continuous accounting. In addition, its in-app communication and workflow
features eliminate the latencies very often seen in dealing with intercompany discrepancies,
and, at the same time, improves visibility and transparency of your reconciliation process.

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Unit 13: Advanced Accounting and Financial Close

For more information, see Quick Start.

Based on your defined reconciliation case, which aggregates amounts of your selected data
sets, you can view the reconciliation status and balance details between companies or
between other organizational units.
With the matching engine, intercompany document items can be auto-matched line by line.
Matching rules can be defined flexibly, for both exact-match, suggested, or exceptional-
match patterns. You can trigger matching runs either directly from the SAP Fiori apps or by
scheduling recurring background jobs. Upon completion of a matching run, you can check the
matching results and process the discrepancies by executing workflows and auto-
adjustments.

Process Overview

Figure 878: The Reconciliation Process

For perfectly matched and still with variances, reason codes are be provided to facilitate
future analysis and explanations. Reason codes can be reported along with the balance sheet
and income statement data. In addition, the recommended solutions can be attached to the
assignment documents to increase efficiency and achieve automatic resolution.

Matching
For the continuous incoming documents from the underlying data sources, you can launch
the matching run individually or via background jobs. Matching populates the ICADOCM table.
Manage Assignments - By Reconciliation Case
From each data row of any trading unit pair within the Reconciliation Balances app, you can
navigate to the Manage Assignments - By Reconciliation Case app, where you can view the
matched items and manually assign the items that are not matched yet.

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 Lesson: SAP S/4HANA Finance for Group Reporting

Figure 879: Manage Assignments by Reconciliation Case

Animation: Manage Assignments by Reconciliation Case

For more information on Manage Assignments by Reconciliation Case, please
view the animation in the lesson SAP S/4HANA Finance for Group Reporting,
online in the SAP Learning Hub.

For more information, see Manage Assignments

Reconciliation Status Overview

With this app, you can monitor the line item-level matching status and aggregation-level
reconciliation status for your specified reconciliation case, fiscal year/period, and
organizational units.
For more information, see Reconciliation Status Overview

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Unit 13: Advanced Accounting and Financial Close

Figure 881: Reconciliation Status Overview

Manage the Reconciliation Close

Manage the Reconciliation Close Process
With the Manage the Reconciliation Close app, you can set reconciliation close status, view
reconciliation differences by reason code, trigger approval workflow for reconciliation close,
and generate reconciliation statements for your specified unit pairs and period.

Figure 882: Manage the Reconciliation Close Process

In the preceding figure, the elimination status is Completed since the elimination was run in
the consolidation monitor.
When closing the reconciliation, any variances above the tolerance generate an approval
workflow to users based on the reconciliation team members. In the resulting inbox, the

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 Lesson: SAP S/4HANA Finance for Group Reporting

trading partner data is displayed. The user can then approve or reject the approval request.
They can also download a pdf with the summary.
In order to use workflow, see the prerequisites in the following link: [Link]
wiki/display/ICA/Configurations+for+Recon+Close+Request

Note:
Workflow also requires:
● Reconciliation Team - use the Manage Teams and Responsibility app to
maintain a team with a Reconciliation Close Request for Consolidation
(ICAMT_RCC) type.
● Workflow - use the Manage Workflow app to maintain a workflow with two
steps:
- Approve Reconciliation Close Request
- Confirm Reconciliation Close Request

Workflow Status: This status is relevant for the reconciliation cases that require an approval
workflow to close reconciliation. The possible workflow statuses are Waiting, Ready, In
Process, Error, and Completed. Only when the workflow is completed, that is, the
reconciliation close request is approved, can the reconciliation close status be set to Closed.
Elimination Status: The execution status of consolidation monitor task "IC Balance Sheet
Elimination". It's only relevant for the reconciliation case that is consolidation related and is
assigned with the elimination method SC001 in configuration step Define Elimination
Methods. The following statuses are possible:
● Initial: The elimination task hasn't been executed yet.
● In Process: The elimination task is initiated and running.
● Completed: The elimination task has finished successfully.
● Failed: The elimination task ran into an error, for example, due to system error or
misconfiguration. The error details can be viewed in the Task Logs app.
● Outdated: The elimination task was once executed and finished successfully, but after
that, a new matching run was triggered and brought new posting data, which makes the
prior Completed status outdated. Therefore, the elimination task needs to be executed
again.

For more information on the Manage Reconciliation Close app, use the following link: https://
[Link]/viewer/4ebf1502064b406c964b0911adfb3f01/2020.000/en-US/
[Link]

Intercompany Matching and Reconciliation Overview

Matching has already be run and now you want to see the differences and close the pairs
under the limit.

1. Go to the Fiori Launchpad.

2. On the upper right, select More Groups and choose Intercompany Reconciliation
Operation.

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Unit 13: Advanced Accounting and Financial Close

3. Open the Manage Reconciliation Close tile.

4. Use these selections: U00RC | 012.2019| Y1 | U00. Choose Go.

US and CA are over the limit so their difference is in red.

5. Select all and choose Close. When prompted choose Yes.

US and CA are pending approval.

6. Choose Go again.
The workflow status is In Process.

7. Go into the Details and download the PDF to see the output.
After a follow-up, the team lead will approve the item. The Elimination hasn't been run yet.

LESSON SUMMARY
You should now be able to:
● Discuss the Key Terms, Features, and Architecture
● Discuss the Month-end Closing Process
● Review Intercompany Matching and Reconciliation

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 Unit 13

Learning Assessment

1. Where do you perform task modelling?

Choose the correct answer.

X A SAP Customer Data Cloud

X B Source SAP ERP

X C SAP Process Integration

X D Communication system

2. When do you generate executable Task Lists?

Choose the correct answer.

X A Tasks are fully scheduled

X B Task List Template is fully maintained

X C Task dependencies are defined

X D SOX compliance is verified

3. Which of the following describes the SAP S/4HANA Finance for group reporting (GR) on
premise solution?
Choose the correct answers.

X A It runs on the SAP Business Warehouse (BW) platform and uses BW queries.

X B It is completely integrated into the SAP S/4HANA core.

X C It is implemented in a SAP S/4HANA landscape but can access data from external
sources.

X D It uses SAP Analysis for Microsoft Office and SAP Fiori for reporting.

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Unit 13: Learning Assessment

4. Which of the following describes consolidation tasks?

Choose the correct answers.

X A Manual postings can be used for posting levels 10, 20, and 30.

X B Bundling is not allowed.

X C Tasks can be scheduled.

X D Global parameters are used to set the data region when using the data and
consolidation monitors.

5. Which of the following challenges companies face with an increase in the number of
mergers and acquisitions?
Choose the correct answer.

X A A disrupted visibility of the reconciliation process between legal entities and

subsidiaries

X B An increased communication between legal entities and subsidiaries which makes

it challenging to maintain data security between the legal entities and subsidiaries

X C A lack of transparency between legal entities and subsidiaries which makes it

complicated to reconcile intercompany transactions between the legal entities and
subsidiaries

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 UNIT 14 Overhead Cost Accounting

Lesson 1
Scope of Overhead Cost Accounting 665

UNIT OBJECTIVES

● Understand the scope of Overhead Cost Accounting

● Understand the scope of SAP Financial Statement Insights
● Understand the scope of SAP RealSpend

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Unit 14: Overhead Cost Accounting

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 Unit 14
Lesson 1
Scope of Overhead Cost Accounting

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand the scope of Overhead Cost Accounting
● Understand the scope of SAP Financial Statement Insights
● Understand the scope of SAP RealSpend

Overhead Cost Accounting Overview

Figure 883: Overhead Cost Accounting Overview

Management Accounting provides information that facilitates the coordination, supervision

and optimization of all processes within a company. In SAP S/4HANA, all relevant cost
information from Financial Accounting and Management Accounting is available in real-time
on line item level in the universal journal. During postings to FI, costs and revenues are
assigned to CO objects such as cost centers and projects. Overhead costs are costs that
cannot be directly assigned to a product or a service and are collected within overhead cost
accounting to be allocated later. Cost center accounting takes the costs incurred in a
company and allocates them to the actual subareas that caused them. Cost center
accounting takes the costs incurred in a company and allocates them to the actual sub-areas
that caused them. During period-end closing, these costs are distributed to the cost centers
through automatic allocations. By allocating the cost to cost centers in overhead cost
controlling, you can control your costs at their source and compare plan and actual costs. The
plan/actual comparison at the end of the period helps you to plan, control, and monitor cost
behavior.

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Unit 14: Overhead Cost Accounting

Figure 884: Operating Concern and Controlling Area

The operating concern is the highest reporting level for profitability and sales and marketing
controlling, and the central organizational unit in Profitability Analysis (CO-PA) used to
segment and structure the market.
Right under the operating concern in the organizational unit hierarchy is the controlling area.
The controlling area structures the internal accounting operations of an organization within
Management Accounting. All internal allocations relate solely to objects that belong to the
same controlling area. There is no SSCUI to configure the operating concern or controlling
area in the SAP S/4HANA cloud system.
By default, the SAP S/4HANA cloud system comes with a single controlling area and
operating concern, common for all company codes. You can see the standard settings of the
controlling area in the figure.

Overhead Cost Accounting Master Data

Overhead Master Data Overview

Figure 885: Overhead Master Data

The main master records to maintain for overhead cost management are cost centers,
activity types, and statistical key figures.

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 Lesson: Scope of Overhead Cost Accounting

Figure 886: Automatic Account Assignment

There is an SSCUI that allows you to define default account assignment for a combination of
characteristics, allowing you to propose values for users for manual transactions and for the
system to assign a cost account assignment for automatic transactions where a user can't
input one manually. In the figure, Automatic Account Assignment, you can see for a company
code and account (cost element), you can define a default (overwritable) account assignment
that includes the cost center, profit center, and profitability segment. If needed, you can also
define the valuation area as an additional identifier (in addition to company code and
account).

Cost Centers

Figure 887: Master Data - Cost Centers

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Unit 14: Overhead Cost Accounting

Cost centers are separate areas within the controlling area at which costs are incurred. The
definition can be based on functional requirements, allocation criteria, activities or services
provided, physical location, and/or area of responsibility.
In the figure, Master Data - Cost Centers, you can see some basic entries you maintain for the
cost center. These include a cost center code (up to 10 digits), a description, a validity period,
the person responsible and the cost center category. You then define the organizational units
the cost center is assigned to, various controls for which postings are allowed, address and
communication details, and any other language texts relevant.

Figure 888: Cost Center Categories

The available cost center categories can be maintained in the Cost Center Category SSCUI.
SAP delivers standard ones as shown in the figure. For each category you enter the name,
whether cost centers of the category can record quantity, whether you can post primary,
secondary or both types of costs, whether commitments are recorded and a default
functional area. Another function of the cost center category is to define with which activity
types it can be used. For each activity type, you enter the valid cost center categories allowed.

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Activity Types

Figure 889: Master Data - Activity Types

The activity type defines the various activities provided by a cost center. Activity outputs
supplied by one cost center (the sending cost center) to other cost centers, or projects,
represent the utilization of resources for this sending cost center. You valuate activities using
a price calculated on the basis of certain business or management information.
During maintenance, you enter the code (up to six digits), the name and description, the valid
cost center categories, the unit of measure, the activity type category, the allocation account,
the price indicator and various additional settings as seen in the figure.

Figure 890: Maintain Activity Type Price

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You enter the planned price for an activity performed in a cost center per period. You can
differentiate between fixed and variable prices.

Statistical Key Figures

Figure 891: Statistical Key Figures

Statistical key figures are certain non-financial statistical data measured for one cost center,
which, when compared to the total of such data for all cost centers, yields a ratio that can
used for the allocation or planning of costs. Examples of statistical key figures are the number
of employees, the office space square footage, or consumed kilowatt hours.
Statistical key figures can be used to allocate costs when using an activity types are not is
impossible or impractical. There are two types of statistical key figures, fixed value ones are
for key figures such as employees, which remain fairly constant throughout a year. In this
case the quantities are automatically populated for all periods based on the initial value (10
employees). When a change occurs, Total Value is used for one particular period, but not the
following ones (for example, kilowatt hours).

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Overhead Cost Accounting Operations

External Postings

Figure 892: External Event-Based Postings

When a Financial Accounting document posts to an expense or revenue account, the lines are
posted to the universal journal. The common line items are connected to two separate
documents: one for financial accounting, and one for controlling.
Payroll accounting calculates the various salary and wage amounts. The system then
generates FI postings and posts the costs to the cost centers to which the employees are
assigned.
You can assign goods issue transactions posted in Materials Management to a cost center. An
example could be parts issued to an R&D cost center for constructing a product prototype.
From the point of view of the cost center, this type of transaction is known as material
consumption. A goods issue to a cost center creates a Financial Accounting (FI) transaction
that debits a material consumption expense account and credits a material stock (inventory)
account. The cost center is debited by the value of the goods issued using a primary cost
element.
Posting costs and revenues to Management Accounting can result in real and statistical
posting. The system defines the distinction with the so called "value type" parameter. Posting
with value type 04 (true) has a direct impact on the result; posting with value type 11 is
statistical. True objects can act as sending or receiving objects during cost or revenue
allocation. Examples of true objects include cost centers (for account assignment of costs),
projects (real), networks, make-to-order production orders, cost objects and so on. Statistical
objects cannot allocate costs to other objects. You can make a statistical account assignment
to any number of cost accounting objects per posting. Statistical controlling objects include
statistical projects, and profit centers.
There is always a single object in a posting that receives the real posting, other objects posted
to are updated statistically. Cost centers are always true objects, but if you post to a second
true object, like a project, the cost center is updated statistically.

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Internal Postings

Figure 893: Posting in Controlling

During day-to-day operations, a cost center might perform a service for another Management
Accounting object. For example, a plant maintenance cost center may perform services for
cost centers for preventive maintenance or for repairs. This internal cost for this service is
based on the number of units of the activity type performed in preventive maintenance.
For direct activity allocation, enter the cost center providing the activity (sender cost center),
the object receiving the activity (receiver), the type of activity provided, and the activity
quantity. Only a cost center can be the sender in an activity allocation. The receiver, however,
can be any controlling object, for example, a cost center, or project. Direct activity allocation
credits the sender cost center and debits the receiver cost center using a secondary cost
account. The activity allocation value is calculated by multiplying the quantity with the
planned price per unit of activity of the period. The internal allocation of activities performed
for other cost center, project or other controlling objects is usually posted using the time
sheet with background processing of the allocation.

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Figure 894: Manual Allocations

By entering a manual cost allocation, you can transfer costs from a cost center to other
objects such as other cost centers and projects. The CO document posts also to FI with the
specified document type and to the ledger specified (or to all ledgers if the field is left blank).

Commitments by Cost Center

Overview

Figure 895: Introduction, Scenario Description, and Value Proposition

The budget is essentially a New Variant of Plan values; one plan version is defined to the
budget.

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Unit 14: Overhead Cost Accounting

Video: Commitment Management

For more information on Commitment Management, please view the simulation
in the lesson Scope of Overhead Cost Accounting online in the SAP Learning
Hub.

Figure 897: Analyze Commitments in a Purchasing Process

Process flow for use case: A business user needs a laptop, screen, phone, mouse, keyboard,
and docking station with a total value of 3000€.

1. The business user triggers a purchase requisition to his procurement department. By that
an accounting document for commitments gets created in ACDOCA. The Commitment
Report now shows 3000€.

2. Procurement Member verifies purchase requisition and recommends to remove the

docking station as they have a used one left. He then triggers the PO towards the vendor.
The Commitment Report now shows 2700€ in the commitments column.

3. Vendor receives the PO and confirms that he is able to deliver. Commitment Report shows
2700€ (unchanged)

4. Vendor sends Goods Receipt along with the ordered goods. An accounting document is
posted into ACDOCA. Commitments will decrease with 2700€ and actuals will increase
with 2700€

5. User is notified that the ordered items arrived and so that he can confirm that everything
was properly delivered.

6. Vendor issues the invoice.

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7. Procurement Department Member verifies the invoice against goods receipt an release
the payment. Corresponding accounting documents are created for invoice and payment
in ACDOCA.

Figure 898: Commitments by Cost Center - Business Process Flow

The Business Roles involved are:

● Purchaser
● Warehouse Clerk
● Accounts Payable Accountant
● Overhead Accountant

As a prerequisite, commitments need to be enabled in Cost Center Master Data.

The Scope Items are:

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Unit 14: Overhead Cost Accounting

● J54 - Overhead Cost Accounting → Contains Commitments by Cost Center Report

● J45 - Procurement of Direct Materials

Commitments by Cost Center App

Figure 899: Analytical List Page for Commitments by Cost Center

Key Capabilities:
● Interactions in one area triggers update of the other areas.
● Filter Area can be switched from standard compact filters into visual filters (minicharts)
● Each area can be individually customized with different filters, different charts, different
table structure
● A set of variants for each are is to be provided out of the box

The analytical list page (ALP) offers a unique way to analyze data step by step from different
perspectives, to investigate a root cause through drilldown, and to act on transactional
content. All this can be done seamlessly within one page. The purpose of the analytical list
page is to identify interesting areas within datasets or significant single instances using data
visualization and business intelligence.
Visualizations help users to recognize facts and situations, and reduce the number of
interaction steps needed to gain insights or to identify significant single instances. Chart
visualization increases the joy of use, and enables users to spot relevant data more quickly.

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Figure 900: Filter Area Content: Visual Filters Example

Visual Filters - Bar charts, Donut Charts, Line Charts

● Top 3
● Actuals
● Commitments
● Planned
● Center Available
● Center Cumulative Actuals
● Cumulative Commitments
● Cumulative Assigned
● Cumulative Available
● by Cost Center or Cost Element

The main target group are users who work on transactional content. They benefit from fully
transparent business object data and direct access to business actions. In addition, they have
access to analytical views and functions without having to switch between systems. These
include KPIs, a visual filter where filter values are enriched by measures and visualizations,
and a combined table/chart view with drill-in capabilities (hybrid view). Users can interact
with the chart to dig deep into the data. The visualization enables them to identify spikes,
deviations and abnormalities quickly, and to take action right away.

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Unit 14: Overhead Cost Accounting

Figure 901: Smart Chart Area: Chart Example

List of compact filters available:

● Company Code
● Display Currency
● Period
● Cost Center
● Cost Element
● Plan Category
● From
● To
● Controlling Area

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Roadmap

Figure 902: Outlook - Considered Future Enhancements

Appendix

Figure 903: Appendix: UI Table Content - Measure Definition

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Unit 14: Overhead Cost Accounting

Figure 904: Appendix: Commitment Reporting Vision - The Broader View/ Commitment Architecture

Budget Availability Control

Figure 905: Budget Availability Control

Budget availability control allows you to control budget consumption in objects which you are
responsible for Budget availability control supports business processes, from budgeting to
cost postings, and it offers specific budget reporting for the budget and cost-carrying objects.
Within budget availability control, you must configure the relevant cost items, specify
tolerance limits for budget consumption, and specify the system response if the budget
consumption has reached a defined threshold. This configuration is bundled into a budget

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 Lesson: Scope of Overhead Cost Accounting

availability control profile and must be assigned to the object, such as a project, whose budget
you want to control.
After a budget availability control profile is assigned to an object, and actual costs are posted
to it, the budget availability control calculates the available budget and reacts with a system
response. The system response is based on the thresholds for budget consumption that you
have specified. Therefore, you should first maintain the budget for each cost item in the
object before you use the object for operative business processes. You can maintain your
budget using a predefined planning/budgeting template in SAP Analytics Cloud. Alternatively,
you can use an Excel upload with the Import Financial Plan Data app.
If you want to control the budget consumption for some business processes more strictly
than others, configure your budget consumption limits specifically for these processes in the
budget availability control profile.
You can view the current commitments, actual costs, and available budget, for a specific
object, in the Project Budget Report app.

Figure 906: Prerequisites and Configuration

Activity Group:
In the former AVC logic, the user could use „++" for „all" activity groups and could maintain
one tolerance limit, which worked for all processes except the ones, where the coding worked
differently. The user had no transparency of the processes actually checked. Some processes
took part in the calculation of the available amount, but were not included in the "++"
definition for the message handling. The new AVC makes this more transparent to the user.
Note: This step is performed in the Q-System
For additional information, check: [Link]
9b74aa2eb6054f14afd06f402d75f747/1902.500/en-US/
[Link]

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Unit 14: Overhead Cost Accounting

Figure 907: Maintain Budget Availability Profile and Tolerance Limits

The budget profile ID is assigned to a project or cost center. Different budget profiles can
have different tolerance limits.
Tolerance Limits are set for defining what actions are to be taken when the budget is overrun,
such as:
● The Activity Group defines the process for which you want to set the tolerance limit for
example, purchase order, payroll. So, if you configure tolerance settings for purchase
requisitions, these will be applied only for Budget overrun due to a Purchase Requisition.
● A Warning or Error message can be triggered if the defined tolerance limit is exceeded.
● Different budget profiles and activity groups can have different tolerance limits.

Figure 908: Activity Groups and Relevant Business Transactions

In the figure, Activity Groups and Relevant Business Transactions, you can see the current
groups and related business transactions for which you can configure separate limits.

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 Lesson: Scope of Overhead Cost Accounting

Figure 909: Activate AVC for Projects

Budget can be defined by various parameters like fiscal year, period or company code. Ensure
that the Budget is imported for all relevant WBS Elements of a Project.
More Information can be found here: [Link]
9b74aa2eb6054f14afd06f402d75f747/1811.500/en-US/
[Link]

Figure 910: Create and Release Project

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Unit 14: Overhead Cost Accounting

Figure 911: Activate Budget Availability Control and Assign Profile to Project

Figure 912: AVC and Reporting for Budget and Actual Data

Project Budget Report - Open the Project Budget Report app and analyze the cost structure of
your project and check the planned budget to available budget. It is also possible to view the
project budget report in line item level. Features include:
● View Actual Costs and commitments
● Analyze Budget Consumption
● Available Budget

Additional information can be found here: [Link]

f369b2eff700401494ba6e7c9a573288/1902.500/en-US/
[Link]
Project Cost Report - The budget and the actual costs can be analyzed, select the Planning
category Budget in order to analyze the budget assigned to the project. Features include:
● The rows of the report show the WBS elements.
● In the report you can analyze plan costs, actual costs, commitments and analyze the
variances.

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 Lesson: Scope of Overhead Cost Accounting

Additional information can be found here: [Link]

f369b2eff700401494ba6e7c9a573288/1902.500/en-US/
[Link]
Project Consumption Cards - View the budget consumption cards together with other project
review process cards, such as upcoming milestones list, overall status and so on with the
Project Financial Controller Overview page. You can use the budget consumption card to
navigate to the Monitor Projects app with relevant budget variance data displayed. Features
include:
● Determine projects with assigned in current fiscal year
● Determine the total Budget, the Total Actual + Commitment costs for the current fiscal
year
● Determine % consumption of budget -
● Sort the projects in descending order of consumption

Project Budget Report - Open the Project Budget Report app to analyze the cost structure of
your project and check the planned budget versus available budget. You can also view the
project budget report in line item level. Features include:
● View Actual Costs and commitments
● Analyze Budget Consumption
● Available Budget

Figure 913: Budget and Actual Data Reports

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Unit 14: Overhead Cost Accounting

Figure 914: Activate AVC

Budget can be defined by various parameters like fiscal year, period or account/cost element
group. Excel Upload for Plan/Budget Data is available.
More Information can be found here: [Link]
9b74aa2eb6054f14afd06f402d75f747/1811.500/en-US/
[Link]

Figure 915: Manage Cost Centers App

The budget carrying cost center can be a single cost center or a cost center group. AVC can
be activated per cost center.

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 Lesson: Scope of Overhead Cost Accounting

Figure 916: Reporting for Budget and Actual Data

Figure 917: Cost Center Budget Report

The rows of the report show the Cost Centers and the used semantic tags. In the report the
assigned budget can be compared with the commitments, actuals and available budget.

Cost Rate Maintenance

Maintain Cost Rates

Video: New Cost Rate Maintenance

For more information on New Cost Rate Maintenance, please view the simulation
in the lesson Scope of Overhead Cost Accounting online in the SAP Learning
Hub.

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Unit 14: Overhead Cost Accounting

Figure 919: Maintain Cost Rates Options

Several apps are available for maintaining cost rates (activity prices). Each app has a different
purpose, depending on how the rates can be defined and which objects can receive activity
allocations:
● Manage Cost Rates - Professional Services
Manage Cost Rates - Professional Services can be used to enter cost rates based on a
variety of criteria, for example, service cost levels and specific employees. The cost rates
are used in activity allocations to the following receiver objects: cost centers, projects,
profitability segments, or sales order items. This app is mainly useful for professional
services providers, however, it also has to be used by manufacturing companies if activity
allocations are assigned to one of the above mentioned receiver objects.
● Manage Cost Rates - Plan
Manage Cost Rates - Plan can be used to plan cost rates for cost center activities in a
manufacturing environment. The rates are used in: activity allocations to production
orders, or material costing.
● Manage Cost Rates - Actual
Manage Cost Rates - Actual is used to enter actual cost rates for cost center activities. The
cost rates are used in actual costing.

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Universal Allocation
Overview of Allocation

Figure 920: Allocation Context

The allocation context enables you to choose whether values from cost centers or profit
centers should be allocated.
The SAP Fiori app, Manage Allocations allows you to define and change allocation cycles.
The SAP Fiori app, Run Allocations allows you to:
● Run allocation cycles
● Display results

The apps are the generic entry point for all types of allocations currently supported, namely
cost center and profit center allocations. The scope will be enhanced in future releases, for
example, to include top-down distribution in account-based profitability analysis. The two
apps will gradually replace all separate apps used for various allocations or similar processes.
The apps are included in following business template roles:
● SAP_BR_OVERHEAD_ACCOUNTANT for cost center allocations
● SAP_BR_DIVISION_ACCOUNTANT for profit center allocations

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Unit 14: Overhead Cost Accounting

Manage Allocations

Figure 921: Universal Allocations - Manage Allocations

The universal allocations support:

● Allocation of actual data (table ACDOCA) and plan data (table ADOCP)
● Statistical key figures (actual or plan) as tracing factor
● Custom fields in the universal journal (tables ACDOCA and ACDOCP) are inherited from
sender to receiver

The allocations are organized by ledger and company code.

Run Allocations

Figure 922: Universal Allocations - Run Allocation

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With the Run Allocations app, you can choose a Live Run or a Test Run. You can perform
reversal jobs. You can create allocation cycle groups to run multiple cycles one after the
other. The app uses the smart notifications (Situations Framework) to update those who need
to check the allocation results.
Functionality coming soon:
● Scheduler (planned for 1911)
● Advanced Financial Close integration (2020)

Video: Universal Allocation - Intro and Demo

For more information on Universal Allocation - Intro and Demo, please view the
simulation in the lesson Scope of Overhead Cost Accounting online in the SAP
Learning Hub.

Overhead Cost Accounting Reporting

Reporting

Figure 924: Overhead Cost Reporting

For the offered reporting apps, a subset of which you can see in the figure, you can specify
search criteria using variables or filters, export query results to Microsoft Excel, manipulate
the query results grid by moving available characteristics to and from the grid axes.
Authorization for the reporting is granted on the company code level.

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Unit 14: Overhead Cost Accounting

SAP Financial Statement Insights

SAP Financial Statement Insights

Figure 925: SAP Financial Statement Insights

SAP Financial Statement Insights for profit and loss is a self-service tool that you can use to
analyze profit-and-loss (P&L) statements in real time. Analysis can be done online in real
time, leading to more timely and accurate decision making.
You can simulate organizational changes on the fly. You can identify areas of strategic focus
and business improvement. Machine learning capabilities, so-called business exceptions,
allow you to reveal hidden trends and leverage automated detection of unusual business
situations in revenue and cost accounts. Overall, business exceptions support your in-depth
analysis with smart guidance and let you know where to focus first.

Transformation of Financial Analysis with SAP

Figure 926: Transformation of Financial Analysis

Today, the business world has changed and the pace at which business is accelerating is
increasing exponentially - a trend that is sure to continue.

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New challenges for business analysts and controllers igniting this accelerating pace of
business can be broken down into two key areas: Internal Challenges and External Challenges.
Internal Challenges
● Rigid data structures, making it difficult to instantly respond to unforeseen trends and
requirements for analysis, driving strategic business decisions
● Possible, planned, or to-be-executed organizational changes, to be taken into account
instantly when analyzing and simulating financial performance
● Ad-hoc inquiries from upper management, requiring flexible analysis, and potentially,
views deviating from the current applicable reporting structure that is needed for strategic
business decision making

External Challenges
● Volatility in markets changes the market reactions, requiring flexible ways to get insights
and respond to potentially unforeseen trends
● Need to get insights into the impact of digitization of the economy and to answer the need
for digital finance
● Increasing business complexity - commodity prices, stocks, new regulations, and other
global macro-economic conditions

Machine learning capabilities, so-called business exceptions, let you reveal hidden trends and
leverage automated detection of unusual business situations in revenue and cost accounts.
Overall, business exceptions support your in-depth analysis with smart guidance and let you
know where to focus first.

Figure 927: Landscape Overview

You can access the SAP Financial Statement Insight app through the usual devices and
browsers. The app is delivered from the SAP Business Technology Platform. To retrieve
financial numbers and other information from the business systems, the app connects to the
SAP S/4HANA system in your landscape. This access uses secure channels and doesn't
replicate any data.
This way, you benefit from fast innovation cycles and get immediate delivery of new features
without maintenance effort. Your data stays in the ERP system and data is accessed in a
secure and transparent manner from the SAP Business Technology Platform without data
replication. The functionality of SAP S/4HANA is extended with native integration and you

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Unit 14: Overhead Cost Accounting

can start using the app immediately after you connect your system. There is no modeling
required.

Analyze P/L Data in Real Time

To support the need for real-time reporting from a high-level overview down to transactional
line items, the app allows you to explore the profit-and-loss-account groups of any hierarchy.
The app gives you quick access to the P&L Key Performance Indicators that you want to
analyze. You can explore financial performance along the full hierarchy of profit and loss
account groups, starting from any aggregated level (such as operating profit, revenue, or
expenses), navigating along the hierarchy down to individual G/L accounts.

Figure 928: Adding Account Groups to the Timeline

The app supports multiple hierarchies, based on financial statement versions with G/L
accounts. You can quickly switch between the hierarchies (provided that they have the
corresponding authorizations). The app allows you to freely group hierarchies in reports
(defined by admins) and any account group within the account hierarchy can be defined as
the root node. Both options give you easy access to relevant hierarchies and relevant
excerpts of hierarchies.

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 Lesson: Scope of Overhead Cost Accounting

Figure 929: Performance of Account Groups over Time with Daily Granularity

The app can also prepare visualization of the performance of an account group over time with
daily granularity. Any account group from the P&L hierarchy (see before) can be selected for
analysis. The line chart displays the balance of the selected account group as it is
accumulating over time, with daily granularity.

Simulate and Evaluate Organizational Changes

The app also allows for dynamic adaptation of hierarchical structures. You can create custom
profit center hierarchies and use these for analysis and reporting purposes. You can create
new nodes and child nodes as required and assign existing profit center groups or profit
centers. You can essentially rearrange a hierarchy or create a new one according to your
needs. At the same time, you do not need to start from scratch but can reuse existing
structures where they fit. This flexible approach supports diverse use cases such as creating
a completely new (organizational) perspective on the data or making slight tweaks to the
hierarchy to reflect business analysis requirements.

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Unit 14: Overhead Cost Accounting

Figure 930: Modifying Hierarchies on the Fly

You do not require specific authorizations in the ERP system to perform this dynamic
modeling, because hierarchies are not exported back to the SAP S/4HANA system, but used
for analysis in SAP Financial Statement Insights. This makes the powerful capability easily
accessible by those who need this flexibility, without being hindered by administrative
overhead for master data changes, technical user interfaces, or long round trips between
hierarchy changes and updated reports.
While creating or modifying hierarchies, balances are simulated on the fly, giving you instant
insight into the impact of their modifications. The app can thus be used to simulate the impact
of reorganizations or different reporting structures on the fly. The quick turn around times
and instant feedback for numbers of any account group allow exploring different options and
analysis paths. You can move entities around, analyze the results, and repeat until you are
satisfied with the structure.

Discover Hidden Trends

A core capability of the app is analysis over time. You can choose to display the balance trend
for the previous period next to the current year to compare year over year or quarter over
quarter. You can also use the hierarchy modeling capabilities and apply them on actuals from
any period. Hierarchies are calculated on the fly and retroactively applied to the actuals of any
time period.

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 Lesson: Scope of Overhead Cost Accounting

Figure 931: Compare Performance Across Different Time Periods

This allows you to look beyond aggregates and identify trends and anomalies. You can
analyze seasonal differences by flexibly adapting the chart to accumulate by quarter instead
of by year. This gives a quick comparison option for trends between quarters, as each quarter
stands on its own. You can further zoom into any area on the chart to pinpoint and analyze
areas of special interest. Each data point on the chart gives detailed information in a tooltip, to
give more number-oriented users the information they expect.

Figure 932: Navigate to Underlying Account Documents

You can navigate to underlying accounting documents to investigate further or verify

hypotheses. The SAP Fiori app Display G/L Account Line Items opens in a separate window
and displays the accounting document line items for the currently selected time range and
context. The context includes all applied filters, so that the user can immediately analyze the
line items that contribute to the trends seen on the chart.

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Unit 14: Overhead Cost Accounting

Identify Strategic Focus

The dimensions can be used to filter the account group balance displayed on the chart, and in
the filter area to a set of products, customers, segments, and so on. For example, you can
visualize the revenue of product XYZ in a specific profit center group.
You can also filter on nodes of custom hierarchies. This gives users the ability to explore the
data according to their analysis needs in dynamic hierarchies that are more suitable than
static structures.
You can combine the filters to focus on the area in question and find the cause of trends or
anomalies apparent from the visual display.

Figure 933: Combine Filters to Focus on Specific Data

There are also additional comparison options that allow you to identify areas for improvement
by flexibly comparing the financial performance across divisions, products, and organizations.
You can add multiple series to the chart, as many as necessary for your analysis needs, and
flexibly compare them. These series can represent different account groups (profit vs.
expenses; visually correlate different expense groups) or they can show the same P&L item
filtered to different dimensions as outlined previously. For example, different divisions,
products, and customers. If necessary, more advanced combinations are possible, such as
combining data from different account groups with different filters for more advanced
comparison. For example, service revenue for one product correlated with sales revenue for a
different product.

Business Exception Detection

Solution Overview

Video: SAP Financial Statement Insights - Exception Detection

For more information on SAP Financial Statement Insights - Exception Detection,
please view the simulation in the lesson Scope of Overhead Cost Accounting
online in the SAP Learning Hub.

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 Lesson: Scope of Overhead Cost Accounting

Business exceptions in SAP Financial Statement Insights is a feature that uses a machine
learning algorithm that detects unusual business values and compares the actual values
against the expected values. The SAP S/4HANA system looks at your historic profit and loss
data and tries to fit this data to a model for every possible timeline. An automated regression
algorithm is applied to generate an expected booked value for every profit and loss account
and every filter combination. The model behind this algorithm generates a retrospective
expectation value rather than a prediction for the next weeks. It relies on several features to
predict the account balance of a particular day.

Figure 935: Detect Business Exceptions

Solution Demonstration

Video: Detection Demonstration

For more information on Detection Demonstration, please view the simulation in
the lesson Scope of Overhead Cost Accounting online in the SAP Learning Hub.

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Unit 14: Overhead Cost Accounting

SAP Financial Statement Insights Configuration

System Landscape Overview

Figure 937: Landscape Overview

To configure the application with SAP S/4HANA Cloud, consult the SAP Best Practices
Explorer for scope item 1KU. You can implement this scope item by using a guided workflow
with the Cloud Integration Automation Service.
The Cloud Connector establishes a secure connection to a specific customer account in SAP
Business Technology Platform and provides secured access to the SAP S/4HANA system.
The application in the SAP Business Technology Platform sends a request with end-to-end
signing to an ABAP HTTP Interface in SAP S/4HANA (through Cloud Connector).
Results are calculated in the SAP S/4HANA system and temporarily transferred through SAP
Business Technology Platform to the end user's browser (SAP Business Technology Platform
only processes, but does not store financial numbers persistently).
The figure, Landscape Overview, gives a more detailed view of the different components of
the architecture from a customer's point of view.
When buying the app, the customer gets their own tenant subscription of the app in the SAP
Business Technology Platform. Only the configuration data and the master data of custom
hierarchies are stored in the SAP Business Technology Platform.
All other data is retrieved through secure channels from the customer landscape. The
connection between SAP Business Technology Platform and the customer landscape is
established via a component called Cloud Connector. This connection is established from
within the customer landscape to the customer's SAP Business Technology Platform account
and can be terminated at any point in time. It handles the connection to the SAP S/4HANA
system. To ensure that only valid queries and trusted SAP applications have access, the SAP
S/4HANA system only accepts signed requests.

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Results are calculated in the SAP S/4HANA system and transferred via SAP Business
Technology Platform to the end user's browser. The app on SAP Business Technology
Platform only processes, and does not store financial numbers persistently.
This architecture is also used by other Finance SAP Business Technology Platform apps.
Therefore, many components only need to be set up once and can be shared among all SAP
Business Technology Platform apps that follow this architecture.

Connection Setup

Figure 938: Overview of Required Setup Steps - Connection

You need to set up and configure all three components of the architecture as shown in the
figure, Overview of Required Setup Steps - Connection, and establish trusted connections
between them.
You must install and configure the Cloud Connector, including a secure connection to SAP S/
4HANA. Then, you configure the SAP Business Technology Platform account to connect to
SAP S/4HANA via the Cloud Connector and enable propagation of users. The ABAP HTTP
Interface should be available (you need to check this). After installation, a few configuration
steps are required to create a secure database connection and establish a trusted connection
with the application and the Cloud Connector.
For more information, see the following resources on the SAP Help Portal:
● SAP Real Spend: [Link]
● SAP Financial Statement Insights: [Link]
SAP_FINANCIAL_STATEMENT_INSIGHTS_FOR_PROFIT_AND_LOSS

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Unit 14: Overhead Cost Accounting

Configuration Options

Figure 939: Available Configuration Options to Adapt the Application

For currencies, SAP Financial Statement Insights gives flexible configuration options to define
which balance amounts to display and how to convert them, independent of the original
currency. You can choose the amount field of each accounting document from which
balances are calculated based on group currency, company code currency, and converted
local currency amounts.
In the case of converted amounts, you need to define the conversion type (exchange rate
type) and the target currency. Any type of conversion maintained in a connected SAP S/
4HANA system can be chosen. For example, standard exchange rate “M" or customer-
defined exchange rate types. Any target currency can be used as long as the corresponding
exchange rates are maintained in SAP S/4HANA.
For the SAP Fiori app, you need to define the URL of the SAP Fiori launchpad to be used. SAP
Financial Statement Insights then refers to the SAP Fiori app Display G/L Account Line Items
available in this SAP Fiori instance. The administrator only needs to specify the URL of the
corresponding SAP Fiori launchpad.
For the fiscal years, the application allows you to specifically define which fiscal years should
be available for analysis. You define the first and last fiscal year of financial data that should
be available in the application. This allows you to restrict the available time range to those
years for which reasonable data is available. You can select any fiscal year from the selected
time range. The last year of the time range is selected by default when launching the
application.

Configuration Interface

Figure 940: Configuration Interface: Web-based Access to All Settings in One Place

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 Lesson: Scope of Overhead Cost Accounting

To give the customer web-based access to all settings in one place, the application includes
an SAP Business Technology Platform-based administrator web interface to conduct the
configuration steps mentioned previously. All configuration can also be maintained
specifically for each SAP S/4HANA client. However, settings that apply to all clients only need
to be maintained once.

SAP RealSpend
SAP Real Spend Overview

Figure 941: SAP RealSpend

SAP RealSpend is an easy-to-use self-service that provides a complete and accurate picture
of your spending situation in real time. It allows you to actively manage your spending and
improve your decision making. You can also run fine-grained analyses on any spend category.
You can rearrange available budgets to dynamically prioritize and structure spending objects
to better cope with unforeseen situations.

Video: Manage your Expenses with SAP RealSpend

For more information on Manage your Expenses with SAP RealSpend, please
view the simulation in the lesson Scope of Overhead Cost Accounting online in
the SAP Learning Hub.

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Unit 14: Overhead Cost Accounting

Cloud Infrastructure

Figure 943: SAP Business Technology Platform Cockpit

SAP RealSpend is a cloud application running on the SAP Business Technology Platform. The
application can be connected against any SAP S/4HANA or SAP S/4HANA Cloud system.
The setup is fast and seamless.
Finance data is not stored in the cloud. And as it's a cloud application, there is no upgrade
effort.

Analyzing Expenses and Budgets

SAP RealSpend provides you with spending visibility at any point in time. It offers an easy way
to analyze spending at any level of aggregation down to the line items. With an integrated view
on budget targets, budgets spent and future expenses, a spend analysis provides all required
inputs to quickly respond to volatility on operational level. Traditional budgets based on
corporate structures can be supplemented and personalized through customized dimensions
in the app.

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 Lesson: Scope of Overhead Cost Accounting

Figure 944: SAP S/4HANA Configuration

If you want to analyze financial data, for example of one cost center, you need to use variants.
Variants are used to set up the connection to your SAP S/4HANA or SAP S/4HANA Cloud
system. Based on your centrally connected system, you can restrict the view to the data you
are interested in. You can create multiple variants. This allows you to effortlessly switch
between different analytical views on your SAP S/4HANA or SAP S/4HANA Cloud data.
These variants can also be shared with other users for easier setup.

Figure 945: Timeline View

The timeline visualizes your actual, committed, approved, and requested costs for a selected
period of time. You get an overview of your budget and your current and future expenses.

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Unit 14: Overhead Cost Accounting

Figure 946: Relations View

Besides the main timeline, the Relations view offers another way to analyze your expenses.
You can look at two dimensions in relation to each other. Dimensions can be either master
data or tag groups, which are user-specific reporting dimensions created by using
the Tagging Manager.

Figure 947: Line Item Table

You've already gotten an overview of your expenses and how they affect your budget in the
timeline. To learn more about the individual line items, you can use the line item table.

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 Lesson: Scope of Overhead Cost Accounting

Planning and Budgeting

Figure 948: Upload Expenses

SAP RealSpend lets you maintain certain costs that you anticipate but that have not yet been
booked in the system. You can upload spreadsheets with your financial data. You can either
upload individual financial data that you've manually entered into a spreadsheet template or
upload spreadsheets that you've downloaded from your SAP S/4HANA or SAP S/4HANA
Cloud system.
You can set and adjust sub-budgets easily and ensure adherence to corporate budgets. The
app supports you with task-specific dimensions and allows for moving planned spending
between planning periods (weeks, months, quarters). It also allows increased speed and
agility on the corporate budget process as a less granular budget and fewer iterations are
necessary.

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Unit 14: Overhead Cost Accounting

Figure 949: Set a Budget

You can adjust planned spending at operational level to improve flexibility and
responsiveness, based on changing needs and priorities (without jeopardizing corporate
budget targets). You can structure current and future spending via task-specific, personalized
local hierarchies, enabling you to react and manage situations appropriately at the time of
decision making.

Video: Planning and Budgeting with SAP RealSpend

For more information on Planning and Budgeting with SAP RealSpend, please
view the simulation in the lesson Scope of Overhead Cost Accounting online in
the SAP Learning Hub.

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 Lesson: Scope of Overhead Cost Accounting

Customizing Cost Dimensions

Figure 951: Tagging Manager

With SAP RealSpend, you can flexibly create and update your own cost dimensions. In SAP
RealSpend, you use tags and tag groups to group and analyze line item elements. The tags
and tag groups dynamically define user-specific reporting dimensions. The Tagging Manager
is a straightforward tool to tag master data: for example, values from existing dimensions
such as account, cost center, or internal order. Tagging is a way of defining new reporting
views to enable reporting: for example, by priority of a project, a region, or a simple user-
specific view on the chart of accounts. In addition to grouping tags based on the dimensions
of your SAP S/4HANA or SAP S/4HANA Cloud system, users can also assign tags on the level
of individual line items.

Video: Customizing Cost Dimensions for SAP RealSpend

For more information on Customizing Cost Dimensions for SAP RealSpend,
please view the simulation in the lesson Scope of Overhead Cost Accounting
online in the SAP Learning Hub.

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Unit 14: Overhead Cost Accounting

SAP RealSpend Anomaly Detection

SAP Real Spend Anomaly Detection

Figure 953: Anomaly detection

With the SAP RealSpend anomaly detection, you can track down unusual expenses, like false
bookings and fraud, thanks to a machine learning algorithm. The Anomaly Detection function
helps you detect, report, and clarify several types of anomalies and uses your input to
improve the anomaly algorithms to ensure your cost accuracy, budget usage, and adequate
decision-making.

Video: SAP RealSpend Anomaly Detection

For more information on SAP RealSpend Anomaly Detection, please view the
simulation in the lesson Scope of Overhead Cost Accounting online in the SAP
Learning Hub.

LESSON SUMMARY
You should now be able to:
● Understand the scope of Overhead Cost Accounting
● Understand the scope of SAP Financial Statement Insights
● Understand the scope of SAP RealSpend

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 Unit 14

Learning Assessment

1. When defining a new company code in SAP S/4HANA Cloud, you must define the
controlling area it is assigned to also.
Determine whether this statement is true or false.

X True

X False

2. Which of the following allocation cycle types is supported in SAP S/4HANA Cloud for cost
centers?
Choose the correct answer.

X A Distribution

X B Assessment

X C Periodic Reposting

X D Settlement

3. You can create hierarchies and structures within the Financial Statement Insights app or
use those predefined in standard groups and hierarchies.
Determine whether this statement is true or false.

X True

X False

4. The Business Exception Detection uses machine learning capabilities to detect unusual
business values and to compare the actual values against the expected values.
Determine whether this statement is true or false.

X True

X False

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Unit 14: Learning Assessment

5. Which values can be displayed with the Timeline view in SAP RealSpend?
Choose the correct answers.

X A Actual Costs

X B Committed Costs

X C Approved Costs

X D Planned Costs

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 UNIT 15 Profitability and Cost Analysis
(J55, 1HB, 2FD)

Lesson 1
Margin Analysis 715

UNIT OBJECTIVES

● Understand the scope of Profitability and Cost Analysis

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 Unit 15
Lesson 1
Margin Analysis

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand the scope of Profitability and Cost Analysis

Margin Analysis Overview

Process Overview

Figure 955: Margin Analysis Process Overview

Margin Analysis enables you to analyze profits and contribution margins for segments of your
company's business, broken down according to products, customers, divisions, and so on, in
any combination. The objective is to support sales, product management, and company
planning with information for cost accounting and decision-making from a market-oriented
point of view.
You can gain more insight into the profitability of market segments like product, customer,
orders, or strategic business units (such as sales organizations or profitability segments) with
respect to your company's profit or contribution margin. The information is analyzed in
profitability reports on profitability characteristics.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

Figure 956: Profitability Characteristics in the Journal Entry

Income statement items can carry true or attributed account assignments to profitability
segments. For income statement items with true account assignment to a profitability
segment, the profitability segment is normally determined in the sending application (sales
order or billing document, for example). Only the costs and revenues for true account
assignments are available in follow-on processes such as allocations. The costs and revenues
for income statement items with an attributed profitability segment are only shown in reports.
They are not available in follow-on processes.
The corresponding G/L account for attributed profitability segments must be either Primary
Costs/Revenue or Secondary Costs. The derivation of attributed profitability segments
depends on the account assignment of the income statement item and works for Projects and
Sales Orders.
The program logic depends on whether true or attributed profitability segments are involved:
● For income statement items with true account assignments, a profitability segment is pre-
determined by the sending application and the profitability segment number is transferred
to G/L. When the income statement line item is created, the combination of
characteristics is read and moved to the item according to certain rules. An example of the
case includes a goods issue item or billing document item in a sell-from-stock scenario or
even just a manual FI posting to profitability segment.
● For an attributed profitability segment, this is determined only at the time the income
statement item is created. The requirement is to fill as many characteristics in the item as
possible to enable maximum drill-down analysis capability. This is achieved by taking the
CO-PA relevant data from the income statement item as a basis and performing
automated rule-based derivations.

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 Lesson: Margin Analysis

Margin Analysis Operations

Assessment

Figure 957: Defining Assessment Cycles

The assessment function allows you to transfer the variances in production cost centers as
well as the costs in sales and administrative cost centers to Margin Analysis. The cost centers
are credited by the amount allocated, so, costs are allocated once. To perform assessments,
you define cycles and execute these on a periodic basis. These cycles contain the control
information for the assessment and can be maintained in Customizing.
A cycle controls how an assessment is processed. It contains all the relevant information
about the senders, receivers, sender rules, receiver rules and tracing factors.

Figure 958: Segments in the Assessment Cycle

Each cycle can contain a number of segments. The segment describes a combination of
senders and receivers that are to be processed together and the rules for processing.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

During the cycle execution, the sender cost centers are credited in the assessment cost
element specified in the segment of the cycle. The receiver is defined by a combination of
characteristic values (margin segment).

Figure 959: Segment Definition

For each segment, you specify an assessment cost element, which is a secondary cost G/L
account. You also specify which amounts are to be sent and based on which rules.
In the Senders/Receivers tab, you specify the groups of senders such as the relevant cost
center group.

Figure 960: Performing an Assessment Run

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 Lesson: Margin Analysis

Using the app Run Actual Overhead Assessment, you execute the cycle or cycles for a specific
period and year. The cycles you enter are identified also by the cycle start date. This is a cycle
attribute that differentiates cycles with the same name as they might be changed at various
intervals, for example, when you need to change the segments defined in them.

Realignment

Figure 961: COPA Realignments

A realignment makes organizational changes in your product, customer, or sales structure -

such as a reassignment of sales districts to regions or products to product groups - effective
for all past data.
A realignment might be required in some of the following cases:
● To reflect organizational changes in your product, sales or customer structure in
previously posted documents.
● To make corrections to inconsistencies or incorrectly assigned characteristics at the time
of the original postings.
● To enrich profitability data with information not available at the time of posting.

Changes to journal entries must always follow the guidelines of standard accounting
principles and can only be processed for non-GL relevant information (such as the company
code, controlling area, functional area, profit center, and segment).
The changeable CO-PA characteristics are predefined by SAP and the selection cannot be
changed by users. Some examples of changeable characteristics include industry, sales
district, sales office, sales group, country, and customer group.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

Figure 962: Create a Realignment Request

You maintain realignment runs and realignment requests in an easy-to-use hierarchical

display. You define which fields a realignment run can change.

Figure 963: Execute Profitability Realignment Run

Upon execution, the characteristics values are changed in the universal journal table
ACDOCA.

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 Lesson: Margin Analysis

Figure 964: Analyze Profitability Realignment Run

After realignment, the characteristics in the original journal posting are changed. However,
the initial characteristic values are still available for the as posted view of the document. You
can find and analyze the results of a realignment using the app Realignment Results.

Top Down Distribution

Figure 965: Top Down Distribution for Margin Analysis in Universal Journal

Top-down distribution is a functionality that allows you to allocate values from higher-level
margin analysis (CO-PA) characteristics (for example, the sales organization) to lower-level
characteristics (for example, products) based on a specified reference base (for example,
quantity).
In Margin Analysis, sales revenues, sales deductions, and costs of goods manufactured are
generally stored at the customer and product level. However, for many other relevant
business transactions, such as freight invoices or marketing invoices, cannot easily be
assigned to such a detailed level in CO-PA. Consequently, these need to be posted at a
summarized level, for example on the division, sales organization, or company code level.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

Figure 966: Comparison: Allocation and Top Down Distribution

Top down distribution differs from allocation, as shown in the figure. The processes are
independent and can run in any order. The major difference is that allocation actually
transfers values whereas top down distribution essentially just adds the additional
characteristics information.

Figure 967: Before Top-Down Distribution

In the figure above, you can see that the analytical information of revenue per product and the
summarized information of cost, revenue, and margin by product group. The requirement is
to get the same level of analysis available for the product group also for the product.

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 Lesson: Margin Analysis

Figure 968: After Top-Down Distribution

With a top down distribution, based on the values for the cost by product, the system derives
the values of the other characteristics as well.

Figure 969: Manage Allocations

In the system, the process starts with creating the distribution cycles in the Manage
Allocations app. Here, you define the cycle name and choose the settings for top down
distribution as shown in Step 1 in the figure.
The top down distribution template defines the basis for distribution. SAP delivers standard
template for the cloud, including:
● Distribute by Customer
● Distribute by Product
● Distribute by Customer and Product

After defining the cycle, you define the segments. Here, you enter the information for
distribution rules, senders, receivers, and the receiver basis.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

Figure 970: Run allocations

After defining the cycles, you execute the top down distribution with the Run Allocations app
as shown in the figure.

Plan Data Import

Import Plan Data

Figure 971: Import Plan Data from File (1HB)

Using the Import P&L Data SAP Fiori application, you can load a semicolon separated file for
PLAN data into the SAP S/4HANA Cloud application. A template is provided to ensure that
the file is successfully loaded into the application. Once uploaded, the user can open the
Actual versus Plan P&L application to see the results.
The attributes you specify include the ledger in General Ledger Accounting, the general ledger
fiscal year, the posting period, the company code, the material group, the customer group,
the account number, and the amount in global currency.

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 Lesson: Margin Analysis

Once uploaded, the user can open the Actual versus Plan P&L application to see the results.
The system also supports redistributing plan cost via predefined allocation cycles. By defining
sender/receiver rules based on fixed amounts or percentage, you define the cycles and
execute them within a specific company code. This allows for better control of costs with
direct visibility into how actual costs compare with plan.

Planning with SAP Analytics Cloud

Financial Planning Process

Video: Integrated Financial Planning

For more information on Integrated Financial Planning, please view the
simulation in the lesson Margin Analysis online in the SAP Learning Hub.

Figure 973: Financial Planning - Business Process Overview

Financial Planning provides integrated financial planning, budgeting, and forecasting

processes based on detailed and up-to-date information to support business decisions.
The main planning table ACDOCP can be connected to SAC and serves as single source of
truth for planning data in SAP S/4HANA helping to connect predecessor and successor
processes.
Financial Planning Content for P&L, Balance Sheet Planning, Cash Flow, Cost & Activity
Planning, Cost Center and Project Budgeting has already been provided in SAP Analytics
Cloud and is connected to SAP S/4HANA.
The vision of SAP is to cover all main planning and budgeting processes, to offer flexibility to
adjust the model and functionality you need.

SAP S/4HANA and SAP Analytics Cloud

Video:
For more information on , please view the simulation in the lesson Margin
Analysis online in the SAP Learning Hub.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

Figure 974: Overall Architecture

SAP Analytics Cloud integrates out of the box with SAP S/4HANA Cloud and is the preferred
solution for planning functions. The integration covers transaction and master data exchange.

SAP Analytics Operations

Figure 975: Planning with SAP Analytics Cloud

Planning Capabilities
What if Simulations, Allocations, Collaboration, Workflow, Driver based planning, Multi Model
Support, Built in financial Intelligence, Plan at any level, Alternative Hierarchy support, Private
Versions, Comments, Data Entry, Disaggregation, Versions, Fiscal Year Support, FX, and
more.

Video:
For more information on , please view the simulation in the lesson Margin
Analysis online in the SAP Learning Hub.

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 Lesson: Margin Analysis

Plan Simple with:

● - Rich modeling
- Top down or bottoms up planning
- What-if simulations
- Private versioning
- Driver based planning
- Predictive forecasting
- Collaboration and cell commentary
- Workflow and task assignment
- Graphical allocations
- Variance analysis reporting
- Excel integration

Accounting for Incoming Sales Orders

Predictive Accounting for Sales Orders

Figure 976: Incoming Sales Orders

The system, based on this function, creates journal entries in accounting for sales orders
before they are billed. In this way, you have a prediction of future revenue available for
analyzing in reports.
To do this, the journals based on sales orders are posted in an extension ledger (0E) and are
hidden from reports that are used for legal reporting purposes (as sales orders do not signify
revenue in the traditional accounting sense). In the figure, Incoming Sales Orders, you see the
Incoming Sales Order report, available for analyzing all orders and their values for a time-
period, irrespective of their billing status.

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Unit 15: Profitability and Cost Analysis (J55, 1HB, 2FD)

LESSON SUMMARY
You should now be able to:
● Understand the scope of Profitability and Cost Analysis

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 Unit 15

Learning Assessment

1. To plan data for a market segment, you upload a worksheet file with a specific template.
Determine whether this statement is true or false.

X True

X False

2. Which of the following characteristics can be changed during a realignment run?

Choose the correct answers.

X A Profit Center

X B Plant

X C Customer Group

X D Project

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Unit 15: Learning Assessment

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 UNIT 16 Event-Based Revenue
Recognition

Lesson 1
Revenue Recognition 733

UNIT OBJECTIVES

● Understand the scope of Revenue Recognition

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Unit 16: Event-Based Revenue Recognition

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 Unit 16
Lesson 1
Revenue Recognition

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Understand the scope of Revenue Recognition

Event-Based Revenue Recognition

Event-Based Revenue Recognition Overview

Figure 977: Event-Based Revenue Recognition

The purpose of Event-Based Revenue Recognition is to support real-time soft close, with no
reconciliation, providing full transparency on the posted documents.
With event-based revenue recognition, the costs and revenues associated with project-based
transactions are recognized as they occur, enabling real-time reporting. Cost postings are
matched to revenues of the period and immediately reported as expenses, while revenues are
immediately posted to an income statement account. Recognition and adjustment postings
are generated simultaneously with the transactions. The revenue recognition process is fully
integrated with G/L. Revenue recognition data is stored in the same location as cost and
revenue data, hence there is no need to run periodic batch jobs for reconciliation. Costs and
revenues always match, reported profit and margins are always up to date, and income
statements or cost-of-sales reports can be produced at any time.

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Unit 16: Event-Based Revenue Recognition

Figure 978: One Prima Nota Creates Two Accounting Documents

In the figure, One Prima Nota Creates Two Accounting Documents, you see an example from
an employee time confirmation on a fixed price project using the cost based percentage of
completion costing method. For this scenario, you can use the Project WIP report to display
WIP project details by employee.

Project-Based Services

Figure 979: Event Based RevRec for Project-Based Services

You use the rev rec monitor to check and analyze postings.
Event-based Revenue Recognition calculates and posts real-time revenue and cost
adjustment for professional service for fixed price, time and materials (T&M), and periodic
service projects. Processes that do not write a general ledger entry do not result in any real-
time revenue recognition postings. For example, changes of plan data do not directly result in
revenue recognition postings.
You can make adjustments for imminent loss, anticipated sales deductions, and unrealized
costs.

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 Lesson: Revenue Recognition

Figure 980: Project Details

The entry of a source document assigned to a WBS element, such as a time confirmation or
billing document, produces two separate journal entries:
● A journal entry for the initial cost or revenue posting
● A journal entry for the revenue recognition posting

Full transparency into the revenue recognition process, as well as reduced auditing effort, is
achieved by the ability to drill down from a revenue recognition journal entry to the cost or
revenue journal entry and to the source document.

Figure 981: Support for Down Payment - T&E projects - Posting Logic

Customer project - Contract Type: Time and Expenses project supports down payment where
a down payment request can be created and billed prior to delivery of goods and/or services.

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Unit 16: Event-Based Revenue Recognition

The down payment process includes the following:

● Creation and billing of a down payment request (DPR). DPR posting creates a DPR
receivable and corresponding contract liability account. The liability is shown as deferred
revenue in the profitability report. DPR is not taken into account for revenue recognition.
● Posting of incoming payment on the DPR. Full or partial payment on the DPR clears out the
DPR balance and creates a new 'Contract Liability DP' account. This is reported as
deferred revenue and customer down payment is taken into account for revenue
recognition.

The next period-end run will take into account the customer down payment for revenue
recognition and will net out the balances of accrued revenue and contract liability DP
accounts.
Finally invoiced: ENFA flag set from the system on item level and WBS element is technical
completed (teco).
For RevRec key SPFC, cost-based PoC accruals will remain also when the "finally invoiced"
indicator is set for all items.

Figure 982: Usage-Based Billing - Periodic Services projects - Posting Logic

Customer project - Contract Type: Periodic service supports usage-based billing, where
customers can be billed for services that are based on a certain usage volume.
For Usage-based billing, within the contract type Periodic Service:
● There are ten materials and activity types pre-delivered by SAP – U001-U010 – for usage-
based billing. In the billing plan definition, the item "Usage-Based Billing" can be selected to
schedule a usage-based billing plan.
● Timing of revenue recognition:
- If using the standard rev rec key that is derived for Periodic Services (SPPC), revenues
will be realized with period-end closing. This means that no revenues are realized
directly upon posting of usage item quantities.
- If rev rec key for Time & Expenses (SPTM) is assigned to the usage-based billing
materials, revenues will be directly recognized upon posting of usage quantity.

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 Lesson: Revenue Recognition

● It is highly recommended to create your own sales/contract material for usage-based

billing (for example, create P004 by copying material P002).

Finally invoiced: ENFA flag set from the system on item level and WBS element is technical
completed (teco).
For RevRec Key SPFC, cost-based PoC accruals will remain also when the "finally invoiced"
indicator is set for all items.

Project-Based Services

Figure 983: Event Based RevRec for Sales Orders

Event-based revenue recognition calculates and posts real-time revenue and cost adjustment
for sales orders. Processes that do not write a prima nota don't result in any real-time revenue
recognition postings. For example, changes of plan data do not directly result in revenue
recognition postings.
You can make postings for temporary adjustments, sales deductions, and unrealized costs.
You can also run a simulation.

Figure 984: Service Contract Scenario - Periodic Service

Process Steps - Service contract item 10:

1. Quarterly Invoice € 3600

2. EBRR for Invoice

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Unit 16: Event-Based Revenue Recognition

3. Revenue Recognition period end January € 1200

4. Revenue Recognition period end February € 1200

Figure 985: Monitor Revenue Recognition for Service Documents

New SAP Fiori App Revenue Recognition (Event-Based) - Service Documents

Business role: Sales_Accountant
Purpose: Monitor revenue recognition values for service contracts
With the app, you are able to do the following:
● Review the posted revenue values for service documents.
● Revalue the revenue values for service documents.
● Manually post accruals.
● Navigate to G/L account line items report.

Figure 986: Run Period End Closing for Service Documents

App: Run Revenue Recognition - Service Document

Business role: Sales_Accountant
Purpose: Run period end activities for service documents

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Figure 987: Report Revenues for Service Documents

SAP Fiori App: Service Orders - Actuals

Business role: Sales_Accountant
Purpose: Report actual values for service contracts in real time
With the app, you are able to do the following:
● Review the costs and revenues associated with service contracts in real time, including
costs from the assigned service orders.
● Adjust dimensions for reports in a very flexible way.

Event-Based Revenue Recognition - Customer Projects

Support for down payment (for T&E projects only):
● Down Payment Request can be created and billed prior to services rendered.
● Revenue recognition takes into account customer down payment.

Usage-based Billing (via Periodic Service projects only):

● Allows billing of customers for services with a certain usage volume (for example, number
of service tickets processed, or number of licenses used within a period).
● Revenues are realized as follows:
- At period-end closing if using standard derived rev rec key for Periodic Services (SPPC)
- At posting of volume of item usage if you assign the rev rec key for Time & Expenses
(SPTM) to usage-based billing materials

Info for RevRec Key: Cost based PoC the finally billed indicator -> for this method, the
accruals will remain also when the finally billed indicator is set for all items.

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EBRR for Service Contracts

What's New in Event-Based Revenue Recognition?

Figure 988: New in 1905

In SAP S/4HANA Cloud 1905, Event-Based Revenue Recognition is enhanced to support

various scenarios in service contracts management.

Service Contracts with Price Adaptation Items

Figure 989: Prerequisites for Service Contracts with Price Adaptation Items

Prerequisites for revenue recognition processing:

● Service contract item with the item category price adaptation is released
● A billing plan is created

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Figure 990: Example for Service Contracts with Price Adaptation Items

In the example in the figure, there is a one-year service contract with a quarterly billing plan
assigned. The monthly price of the product is adapted at the beginning of the second half year
from 120USD to 150USD.
01/01/2019 - 06/30/2019:
● Quarterly billing = 120USD × 3 = 360USD
● Monthly revenue recognition = 120USD

07/01/2019 - 12/31/2019:
● Quarterly billing = 150USD × 3 = 450USD
● Monthly revenue recognition = 150USD

Figure 991: Example - Initial Period

Period 01
(1) Invoice Q1 - 360USD
(1') Defer Invoice - 360USD
(2) Revenue recognition at month end 01 - 120USD

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Unit 16: Event-Based Revenue Recognition

Figure 992: Example: New Price from Period 7

In period 07
(9) Invoice Q3 - $450
(9') Defer Invoice - $450
(10) Revenue recognition at month end 07 - $150
The price adaptation is reflected in revenue recognition.

Service contracts with Credit Memos

Figure 993: Service Contracts with Credit Memos

A 6-months service contract with a quarterly billing plan assigned:

● Service contract value: 720USD
● Duration: 1st January 2019 to 30th June 2019
● Quarterly billing = 720USD / 2= 360USD

At the end of June, the service contract is fully billed and the revenue is recognized.

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The billing clerk creates a credit memo based on the earlier invoice with an amount of
360USD.

Figure 994: Revenue Adjustment for Credit Memos

Values from credit memos are considered for revenue recognition:

● For service contracts in the status fully billed and all billing documents have been posted
● With period end closing, the adjustments of revenue recognition for credit memos are
carried out.

At the end of period 6, the service contract is fully billed and the period-end closing is
completed for period 6:
(1) Credit memo 360USD
(1') Revenue adjustment for credit memo 360USD
(2) Clearing of deferred revenue with period end closing 360USD

Configuration for EBRR Service Documents

Figure 995: SSCUI for Derivation of Revenue Key for Service Documents

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Unit 16: Event-Based Revenue Recognition

In 1905, Event-Based Revenue Recognition is enhanced to provide more flexibility with the
new revenue recognition SSCUI.

Figure 996: Settings for Derivation of Revenue Key

With the configuration app, you can:

● Assign recognition key to item category and optional for certain materials.
● Unassign recognition key to deactivate Event-Based Revenue Recognition for the
maintained entries, validate only for the new service documents.
● Delete wrongly created entries, validate only for the new service document. It is not
possible to delete pre-delivered entries.

Note: if you want to discontinue Event-Based Revenue Recognition for the existing service
documents, you could change the recognition key to CCSN in the "Revenue
Recognition(Event-Based) - Service Documents" app. With the period end run, the system
clears the remaining balance on EBRR accounts.

Contract-Based Revenue Recognition for Subscription-Based Billing

Figure 997: Contract-Based Revenue Recognition - Solution Scope

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Contract-Based Revenue Recognition enables revenue recognition according to IFRS 15

covering multi-element arrangements of provider contracts in Contract Accounting and
Invoicing following the five-step model.
Supported scenario: Subscription-based billing in Contract Accounting and Invoicing
(Contract Accounting and Invoicing is separately priced and a prerequisite. It is currently only
available for DE and US).
Scope:
● Revenue recognition for time-based and/or one-off charges
● Contract management including searching or displaying revenue contracts and their
performance obligations
● Calculation of time-based revenue, contract liabilities and contract assets
● Revenue postings to post journal entries to general ledger
● Changes in operational contracts such as price or scope changes result in prospective
changes (contract modifications) in the revenue contract

Figure 998: Contract-Based Revenue Recognition for Subscription Based Billing Scenarios in Contract
Accounting and Invoicing

Use Case Example

A company sells software usage via a web shop on a subscription basis. The duration of the
contract is one year. Realization of the revenue will be spread periodically over the duration of
the contract and installing the software revenue will be realized as a one-off fee.
RevAdmin and RevAccountant are authorized to process RAIs.

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Unit 16: Event-Based Revenue Recognition

Figure 999: Subscription Based Billing Scenarios

Contract-Based Revenue Recognition for subscription-based billing scenarios in Contract

Accounting and Invoicing is mapped to the five-step model.
Sub-processes:
● 3KK - 01: Creation of Revenue Contracts
● 3KK - 02: Update of Revenue Contracts - Invoicing
● 3KK - 03: Period End Activities
● 3KK - 04: Revenue Posting Reversal and Repost
● 3KK - 05: Shift Revenue Contracts to Next Period
● 3KK - 06: Change of Revenue Contracts - Upsell
● 3KK - 07: Change of Revenue Contracts - Cross Sell
● 3KK - 08: Change of Revenue Contracts - Down Sell
● 3KK - 09: Change of Revenue Contracts - Renewal
● 3KK - 10: Change of Revenue Contracts - Termination

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Figure 1000: 3KK: Contract-Based Revenue Recognition - IFRS

Key Capabilities:
● Search and Display Revenue Contracts including the associated POBs
● Display Price Allocation and Revenue Schedule
● Calculate time-based revenue, contract liabilities and contract assets and post to sub-
ledger
● Post revenue to general ledger
● Reverse and repost revenue postings
● Display results of changes (prospective changes) of operational contract in revenue
contract (contract modification)
● Reconcile revenue accounting sub-ledger and general ledger
● Shift contracts to next period

Figure 1001: Business Roles - Accountant: Revenue Accounting

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Unit 16: Event-Based Revenue Recognition

Business role name: Accountant: Revenue Accounting

Business role ID: SAP_BR_REV_ACCOUNTANT
Major functions: Display all details of revenue contracts and performance obligations,
simulate and post revenue posting runs, and execute reconciliation and analytics reports

Figure 1002: Business Roles - Administrator: Revenue Accounting

Business role name: Administrator: Revenue Accounting

Business role ID: SAP_BR_REV_ADMIN
Major functions: Responsible for the planning, scheduling and execution of jobs and mass
activities within Contract-Based Revenue Recognition, such as calculation of contract
liabilities and assets and revenue postings to General Ledger.

Figure 1003: Self Service Configuration UIs

The following self-service configuration UIs are offered in 1902 to allow customers to maintain
their own entries:
● Assign Company Code to Accounting Principle

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● Derive POB Attributes

● Configure Account Determination Rules
● Derive Revenue Accounting Item General Ledger Account
● Derive Revenue Accounting Item Account Assignment
● Derive Standalone Selling Price

IFRS15 Revenue Recognition Keys

Figure 1004: New Revenue Recognition Keys

Figure 1005: Completed Contract Method - Customer Project Scenario

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Unit 16: Event-Based Revenue Recognition

Figure 1006: Customer Project Scenario with Active IFRS 15 - Posting Logic

Rev Recognition Key: SPFCCM

Relevant Status:
● Project header stage: completed
● Project item level: finally invoiced (ENFA) - WBS element technical completed (teco)

Figure 1007: Customer Project Scenario with Active IFRS 15 - Posting Logic

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Figure 1008: Completed Contract Method - Sell from Stock Scenario

Figure 1009: Sell from Stock Scenario - Posting Logic

Rev Recognition Key: SFSCCM

Relevant Status: Sales order item completely invoiced

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Unit 16: Event-Based Revenue Recognition

Figure 1010: Sell from Stock Scenario - Posting Logic

Figure 1011: Customer Project: RevRec at Time of Billing (Revenue Based)

Figure 1012: Customer Project: Revenue Recognition at Time of Billing - Posting Logic

Rev Recognition Key: SPFCR

Relevant Status: Project item fully invoiced

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 Lesson: Revenue Recognition

Figure 1013: Customer Project: Revenue Recognition at Time of Billing with IFRS15

Rev Recognition Key: SPFCR

Relevant Status: Project item fully invoiced

Figure 1014: Sell from Stock: RevRec at Time of Billing (Revenue Based)

Figure 1015: Sell from Stock: RevRec at Time of Billing w/Active IFRS 15 - Posting Logic

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Unit 16: Event-Based Revenue Recognition

Rev Recognition Key: SFSR

Relevant Status: Sales order item fully invoiced

Figure 1016: Sell from Stock: Revenue Recognition at Time of Billing - Posting Logic

Project Billing
Enhancements of Project-Based Services

Video: Project Billing with Revenue Recognition

For more information on Project Billing with Revenue Recognition, please view
the simulation in the lesson Revenue Recognition online in the SAP Learning Hub.

Video: Project Billing Demo

For more information on Project Billing Demo, please view the simulation in the
lesson Revenue Recognition online in the SAP Learning Hub.

Figure 1019: New Project Billing with Revenue Recognition

Event-Based Revenue Recognition covers revenue recognition for all contract types in
professional services. With the release of the new Project Billing in CE2008, we provide the
first revenue recognition functionality for Fixed Price and Time and Expenses projects, in
which the billing elements are processed with the new Project Billing. Revenue recognition

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 Lesson: Revenue Recognition

values are updated immediately based on the transactions in the new project billing process,
including write-offs, postponements, on account payments and repricing for projects.

Figure 1020: Project Billing Write-offs

New Project Billing with Revenue Recognition - Write-offs

In the Manage Project Billing app, you can write off billing amounts, which are due for Time
and Expenses billing elements.
The written off amounts/quantities will not be billed to clients. By submitting the project
billing request, the revenue recognition corresponding to the written off amounts also gets
updated.
In the figure, 6 hours are written off, revenue recognition values are reduced accordingly
(service price =100 EUR/h).
New Project Billing with Revenue Recognition - Repricing
In the following situations, the billing specialist might need to run repricing of the billing
amounts:
● The sales rate changes
● There's a change in material configuration leading to a change in sales rate
● The To Be Billed amount is not displayed correctly in the Manage Project Billing app due to
errors

You have to consider some rules to understand revenue recognition postings for repricing:
● The amounts locked in the billing document requests are not repriced with the repricing
job. Hence, the revenue recognition values for the corresponding items are calculated
based on the original sales rate.
● If repricing happens in the current period, the revenue recognition values for all unbilled
costs posted in this period are updated even if the unbilled costs were posted before the
validity date of the new sales rate.
● In case any future postings exist, with the repricing job, revenue recognition does not
update the revenue recognition values for the future items. You need to run another

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Unit 16: Event-Based Revenue Recognition

repricing in the period of the future item in order to get revenue recognition values
updated.

Figure 1021: Best Practice Content for T&E Projects and Usage-Based Billing Projects

For companies that have the requirement to distinguish several WIP accounts for Time and
Expenses and match the revenue adjustments accounts to the WIP accordingly, we provide 6
new empty source lines in SAP Best Practices Content of Event-Based Revenue Recognition.
As a user, you have the flexibility to configure revenue recognition by different sources for
projects of contract type Time and Expenses or Usage-Based Billing. You can change the
description of the new source lines based on your business needs.
The new lines are assigned to usage 100, 400 and 401 in assignment rule COSPTM-Service
Time and Material DIP based.

Figure 1022: How to Use New Source Lines

User Action 1: Change the GL account in Sales/Distribution via Automatic Account

Determination (SSCUI 100297)

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Figure 1023: How to Use New Source Lines

User Action 2: Map same GL account to respective new line via Source assignment for Event-
Based Revenue Recognition (SSCUI 102530)

Figure 1024: How to Use New Source Lines

User Action 3: Maintain the revenue recognition accounts for new source lines in assignment
rule COSPTM-Service Time and Material DIP based via Source assignment for Event-Based
Revenue Recognition (SSCUI 102530)
User Action 4: Add these revenue source GL to Financial Statement Version YPS2 to existing
line for Revenue for revenue and Deduction via Maintain financial statement version (SSCUI
102669). Any account flipped in accrued revenue (B/S column) should be mapped under
existing Accrued Revenue under Rev Recognition Balances Accounts. Any account flipped in
Cost Element should be mapped to Revenue Adjustments under Net Sales/Revenue.

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LESSON SUMMARY
You should now be able to:
● Understand the scope of Revenue Recognition

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Learning Assessment

1. Which of the following scenarios does Event-Based Revenue Recognition cover?

Choose the correct answers.

X A Projects

X B Production orders

X C Cost centers

X D Sales orders

2. The system adds line items to the source document for revenue recognition.
Determine whether this statement is true or false.

X True

X False

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 UNIT 17 Product Costing

Lesson 1
Product Costing 763

UNIT OBJECTIVES

● Describe Period-End Closing for Integrated Components

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 Unit 17
Lesson 1
Product Costing

LESSON OBJECTIVES
After completing this lesson, you will be able to:
● Describe Period-End Closing for Integrated Components

Period-End Closing for Integrated Components

Period-End Closing and Year-End Closing Overview

Figure 1025: Period-End Closing and Year-End Closing

During period-end, modules integrated with financials in SAP S/4HANA Cloud have process
steps that are executed as part of the financial period and year-end close. These process
steps concern the inventory valuation at year end, as well as period-end closing activities for
maintenance orders, plants, and projects.

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Unit 17: Product Costing

Period-End Closing - Maintenance Orders

Figure 1026: Period-End Closing - Maintenance Orders (BF7)

Period-end closing for maintenance orders supports the activities required for the Preventive
Maintenance (BJ2) and Corrective Maintenance (BH1) scope items. Once the cost is recorded
for the Maintenance Order, Preventive Maintenance, and Unplanned Maintenance order
types, you close the period by means of settlement, closing, and reporting.
In the first step, you settle the maintenance orders to the responsible cost centers or other
relevant cost objects. Then, you check and close the orders that are completed. In the final
step, you verify that the actual values on maintenance orders through reporting.

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Period-End Closing - Plant

Figure 1027: Period-End Closing - Plant (BEI)

This process ensures that all costs incurred during the manufacturing process are assigned to
production activities.
The steps generally include running an assessment to allocate quality activity related costs
onto the cost centers designated for manufacturing. Then, all open purchase orders (POs) are
analyzed for correctness, the blocked invoices are released, and any goods movements with
errors are reprocessed in accordance to their errors.
Stock and valuation data are managed by period. For values and goods movement to be
posted to the correct period, the period must be set whenever a new period starts to perform
material movements. This activity must be run when no one is handling a material in the
system.
When the new MM period is open, you allocate the actual overheads to production orders,
process orders and product cost collectors according to pre-specified overhead rates. You
also calculate the work in process (WIP) for production orders. You perform the variance
calculation for the orders and then settle these to Financial Accounting. Finally, you close any
completed production orders.

Period-End Closing - Projects

Figure 1028: Period-End Closing - Projects (BNA)

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Unit 17: Product Costing

The period-end closing activities for projects support the settlement of costs that are
temporarily collected in projects, to one or more receivers as part of period-end processing
for projects.
When you maintain a project, you create the settlement rules for the associated costs and
revenue. You can either define a settlement strategy or configure direct settlement (which is
simpler). If you have complex projects or changes to settlement rules, you can generate the
settlement rules periodically, as part of period-end closing. Costs and revenues posted to a
project during the period are settled onto multiple receivers during period-end by executing
the settlement run, in accordance to the rules maintained for each project. With overhead
costing you can allocate indirect costs (like those settled from projects) to the appropriate
objects. Using the costing sheet, you can transfer indirect costs to the final cost of the
product or process. Finally, you can execute plan - actual reporting to track the project
execution.

Note:
When executing the plan actual report, you should filter out the RMRP (purchase
order payable liability) and KOAO (result of settlement) transaction types to
provide a detailed view of costs and nature of the charges of the project.

Inventory Valuation for Year End Closing

Figure 1029: Inventory Valuation for Year End Closing (BEJ)

Balance sheet valuation in Inventory Accounting enables you to evaluate your inventories at
the end of reporting periods according to local legislation and international accounting
standards. Standard settings are provided including settings for the overhead structure,
valuation variant, and stock valuation with devaluation based on movement rate.
You can perform stock valuation for raw materials and trading goods. To perform a material
valuation for balance sheet purposes using the lowest value principle, physical inventory
prices are required. These prices are used to calculate the value for balance sheet valuation.
The lowest value based on market prices should be determined. The system searches for the

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lowest price (or alternatively the most recent price) among the various prices stored for each
material. The determination can be done at material level or based on other selections, for
example the material type used. The system determines a costing result that can differ from
the costs of goods manufactured. This value is updated in the material master to determine
the lowest value. The system compares the costing result with the current price in
accordance with price control and the price from the previous period. The lowest value is then
updated in the commercial price.
You can also perform stock valuation of semi-finished and finished products based on lowest
value principle, the net realizable value is entered manually based on the market price in the
Commercial Price field of the Material Master. Net realizable value is determined manually
offline.
In addition, you can analyze stock valuation for materials. The price comparison report
supplies the current stock values and the lowest stock value at various aggregation levels:
material stock account, material type, and material. The difference between the stock values
can then be posted in FI as a stock value adjustment.
Adjust stock value by posting manually to the relevant stock adjustment account. A stock
value adjustment represents a balance sheet valuation. Therefore, you should not post it to
the material stock accounts for updating the goods movements.

Standard Cost Calculation

Figure 1030: Standard Cost Calculation (BEG)

Standard cost calculation enables you to update standard costs for products as part of annual
operations planning. You plan activity prices for the following year manually (you can enter
fixed and variable prices), then you create a costing run for the first day of the new year, and
finally, you execute the run to update the current prices in the relevant material master data.

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Unit 17: Product Costing

Inventory Balance Sheet Valuation

Figure 1031: Maintain Devaluation Percentages by Range of Coverage

What is a digital value network and how does a digital value network enable business
transformation?
The digital value network starts with a digital core which interconnects all aspects of the value
network in real-time to drive business outcomes. The digital core gives consumer products
companies the opportunity to re-platform core business processes and bring together
business process with analytics in real-time to enable a smarter, faster and simpler
enterprise. This includes connecting every aspect of internal operations, but also enables
real-time:
● Workforce engagement to retain and grow existing talent, attract new talent and preserve
enterprise intelligence with a smarter, engaged workforce.
● Supplier collaboration through business networks to mitigate supply risk, accelerate
growth and help ensure global compliance all while maximizing product availability and
margins.
● Outcome-based omnichannel consumer experiences enabled by the capacity to reach,
engage and serve consumers with timely, tailored and relevant information and offers
along the entire consumer path to purchase.
● The Internet of Things and Big Data, combining internal, external, social and sensor data to
enable real-time visibility to quantifiable measures of consumer demand and other market
dynamics with qualitative measures of consumer sentiment, intent and behavior.

This entire value chain, including the core, is digitized, and serves as the platform for
innovation and business process automation.

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 Lesson: Product Costing

Figure 1032: Floorplan: Determine Lowest Value - Range of Coverage

● Execution in Foreground with the app Determine Lowest Value - Range of Coverage (part of
the catalogue Periodic Activities for Inventory Accounting).
● Execution in Background with the app Schedule Inventory Accounting Jobs (part of the
catalogue Periodic Activities for Inventory Accounting)=> Create a new job and select the
corresponding job template.

Figure 1033: Determine Lowest Value: Range of Coverage (Based on ACDOCA)

You can exclude materials from devaluation:

● Exclude materials whose accounting view was created after a certain date.
● Exclude materials for which the receipts divided by the stock is greater than a certain
percentage.

Update of the results:

● Update Valuation Alternative in legal valuation currency (company code currency). If you
select this option, you can view the updated lowest value with the Valuation Alternatives
app.
● Update Explanation. If you select this option, details that show how the lowest value was
determined are available in the Inventory Balance Sheet Valuations app under Explanation.
You can see for example the range of coverage that was used.

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Unit 17: Product Costing

Figure 1034: Analyzing the Results

You can analyze the results of lower of cost or market determination with the Inventory
Balance Sheet Valuations app (part of the catalogue Analytics).
Based on the results, you can decide how to write down your balance sheet accounts:
● Filters on Analytical List Page
● Object Page with:
- General information about the material: Total stock, total value, valuation class, …
- Explanation about devaluation: Range of coverage, Devaluation Percentage, Valuation
Result, …
- Graphical display of Inventory Balance Sheet Valuation History: Values by period or
fiscal year
- Graphical display of Inventory History: Quantities by period or fiscal year

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 Lesson: Product Costing

Figure 1035: Analyze Valuation Result

Solution Outlook:
● Configuration of Devaluation Percentages per Accounting Principle
● Ledger an Currency specific determination of Lowest Values
● Determine Lowest Value by Movement Rate
● Enhancements of Inventory Balance Sheet Valuations App: Display of difference between
lowest value and current stock value, chart with historical data of range of coverage
● Ledger specific Delta Postings

Real-Time WIP Calculation

Video: Real-Time Production Costs and WIP

For more information on Real-Time Production Costs and WIP, please view the
simulation in the lesson Product Costing online in the SAP Learning Hub.

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Unit 17: Product Costing

Figure 1037: What is the Advantage of Real-Time WIP's Value?

Product Costs Control gives an insight into the cost of goods manufactured for your product,
so that you can establish control product costs which include planned costs, target costs,
actual costs, and work in process. The new solution delivered in the scope item Real-time
Production Cost Posting updates work-in-process calculation and overhead calculation in real
time by linking the posting to the events in the make-to-stock and make to order scenarios. All
manufacturing orders are executed according to this scope item and are then triggered as
real-time orders.
Real-time WIP is a solution which offers you more storage space, better access to tied-up
capital, and speeds up your cash turnover. With real-time access to long with it customer
could convert their investment into cash flow in a more timely manner.

Figure 1038: Real-Time WIP: Production Lifecycle with Final Delivered Order

Innovations offered by the solution:

● - Insight in to Real-Time WIP

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 Lesson: Product Costing

- Multiple Currencies
- Eliminated closing steps
- Simplified customizing

Enhancements to SAP Fiori applications:

● Real-Time Work in Process
● Real-Time Production Costs
● Inspect WIP/Variance Posting

Real-Time Work in Process enablement for the following scope items:

● 1BM (Make-to-Order Planning & Assemble)
● BJE (Make-to-Order Sales & Assemble)
● 1YT (Make-to-Order Production with Variant Configuration)

Figure 1039: New Apps - Real-Time Production Costs

This app shows full production costs for real-time orders.

Video:
For more information on , please view the simulation in the lesson Product
Costing online in the SAP Learning Hub.

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Unit 17: Product Costing

Figure 1040: Enhancement to SAP Fiori App

Real-Time Work in Process to report real-time WIP insight for new processes

Figure 1041: Enhanced App - Analyze Costs by Work Center/Operation

You can view overhead values per work center and operation if real-time overhead is used for
productions orders and process orders. Parallel currencies are supported.

Figure 1042: Enhanced Apps / Reports / Processes - Production Cost Analysis

Real-Time Orders are moved from this app to the new Real-Time Production Costs App.

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 Lesson: Product Costing

Figure 1043: New SSCUI WIP Source Account Assignment

This new SSCUI provides customer flexibility to define their own source of WIP in Cloud.

LESSON SUMMARY
You should now be able to:
● Describe Period-End Closing for Integrated Components

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Unit 17: Product Costing

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 Unit 17

Learning Assessment

1. You can generate settlement rules for projects periodically, as part of period-end closing
to manage complex projects.
Determine whether this statement is true or false.

X True

X False

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