Fast Closing Is a Real Benefit

Accounting in SAP R/3 is still characterized by several workflows that need to be carried out at defined periodic intervals. For example, postings in SAP R/3 Controlling previously only impacted on the cost-of-sales procedure at the period-end. A further example would be discounts received when making outgoing payments, which in SAP R/3 only lower procurement and manufacturing costs in asset accounting at a very late stage in the process. The general ledger enables these tasks to be completed in real time.

Real-time integration between controlling and financial accounting

Using SAP/R3, every transaction produces several documents. For example, when posting a purchase document showing a cost center for procurements by the company canteen, a document is produced in both SAP Financial Accounting (FI) and SAP Controlling (CO). This data is linked, but is stored in the modules as two separate documents – one containing all the information important for external accounting and the other additional information such as the cost center in Controlling. Using a distributed data management architecture, as is usual in SAP R/3, inevitably produces intermodular dependencies.
For example, if the canteen costs are assigned to several cost centers in CO, the following scenario is the result. Cost center accounting (CO-OM) disencumbers the canteen cost center by assigning costs to other cost centers and therefore other functional areas. This is a pure controlling transaction. In SAP R/3, a change of functional area cannot be relayed to financial accounting in real time. Users save the information from cost center accounting in a reconciliation ledger, and transfer changes in controlling with relevance for financial accounting at the period-end.
The new general ledger of mySAP ERP Financials maintains a separate data management function in the form of cost center accounting. Two documents are still produced for FI and CO. However, a reconciliation protocol can be activated which asks in real time whether the document is to be posted in financial accounting. This inquiry enables real-time integration between FI and CO for:

  • change of accounting group
  • change of functional area
  • profit center changes
  • segment changes

The result is that companies have at their disposal a reporting system which is constantly reconciled.

Online allocation of follow-up costs

Follow-up costs are incurred when a company does not receive the full amount shown on an original invoice. This would be the case for cash discounts, for instance. Of an outgoing invoice for Euro 1,160, some 16 percent would consist of tax in Germany. So, when posting the invoice, revenue would be recorded in SAP R/3 as Euro 1,000. This Euro 1,000 would also be used in Financial Accounting and in the profit and loss account / profit center account in Controlling, for example Euro 800 for profit center A and Euro 200 for profit center B. If the customer deducts 3 percent discount when making payment then Euro 30 reduced revenues are to be taken into account on a proportionate basis in the profit center account. In SAP R/3 this does not happen in real time, but in a monthly adjustment posting affecting the balance sheet and/or the profit and loss account (reports: SAPF180 / SAPF181).
In the new general ledger, the online assignment of follow-up costs is linked to the “document breakdown” solution. The original document too contains information setting out the procedure for proportionally reducing CO objects in the case of a possible discount. For example, if a debtor deducts discount when paying an invoice, the discount amount has to be used to adjust the appropriate CO object (profit center A and B in the example).

Asset accounting (FI-AA)

Discounts, of course, don’t just apply to outgoing invoices. When a company makes a purchase, a purchase document is created, which then allows discounts to be made when paying incoming invoices. When paid, the discount amount reduces procurement and manufacturing costs. It therefore must be taken into account during asset accounting.
Until now, the entire invoice amount has been activated in the gross amount procedure employed in SAP R/3. For a purchase of Euro 100,000 with input tax of Euro 16,000, an aggregate liability of Euro 116,000 was posted. At payment it was established whether and to what amount a discount received can be posted. With a reduction in the net price of the purchase by Euro 3,000 and a reduction of input tax by Euro 480, a discount of three percent reduces the liability by Euro 3,480 to Euro 112,520. However in SAP R/3, the purchase is still shown in asset account operations as Euro 100,000, even though it should only be Euro 97,000 following payment. When using SAP R/3, procurement and manufacturing costs can only be reduced in asset accounting by adjustment postings at the period-end.
In the new general ledger of mySAP ERP, the “document breakdown” solution helps in this respect too. The original document too contains information setting out the procedure for proportionally reducing purchases in the case of a possible discount. When posting the outgoing payment the asset is reduced to Euro 97,000 directly in asset accounting.
But the new opportunities for real-time integration offered by the general ledger of mySAP ERP do not only make it easier to conduct reconciliation within periods. The solution also provides a more accurate picture of the current situation in a company with regard to assets, finances and returns.

Jörg Siebert
Jörg Siebert