Identifying and Eliminating Differences

Almost every corporate group has subsidiaries or national offices that have independent balance sheets. Posting transactions for intercompany consolidation are a normal part of daily business for these companies. For example, company code “3000 IDES USA” can receive a loan from a subsidiary, “1000 IDES Netherlands.” The posting records for “3000 IDES USA” can be subdivided into posting lines for liquid funds in debits (open items in the general ledger) and credits (subledger account). For the subsidiary, “1000 IDES Netherlands,” a payment request in debits and a payment in credits are posted to offset each other.

In a pure SAP environment, these kinds of transactions are simply not a problem because SAP software can reconcile the payment requests and credits. Cross-company-code documents enable automatic posting in both companies and avoid intercompany differences up front.

But if the subsidiary “1000 IDES Netherlands” does not have SAP software, the group’s SAP software must perform additional reconciliation – usually for accounts payable, accounts receivable, and general ledger accounting. The SAP ERP Financials solution can handle this situation. The solution can collect data from SAP and non-SAP systems, so it involves general ledger accounts along with accounts receivable and accounts payable in the reconciliation process. Because it can do this, SAP ERP Financials enables a central reconciliation process, regardless of the type of account and the accounting system. Effective intercompany reconciliation can occur only on this foundation.

Messages when clarification is needed

SAP ERP Financials supports intercompany reconciliation in steps. First, the required data is collected – from SAP software with remote function calls (RFCs) and from non-SAP systems in ASCII format. Second, SAP ERP Financials stores the data in a dedicated area. In technical terms, the software accesses the special ledger. This procedure has the following advantages over the commonly used Microsoft Excel solutions:

  • Posting of individual items
  • Analysis with standard reporting from SAP
  • Version management
  • Options to enhance customer-specific fields

With the assistance of flexible rules stored in customizing, the software can find related items in the intercompany accounts and reconcile them. For the sample transition, a document and a contract number in the reference field in the document is enough to identify the loan uniquely. Two documents need to be present in each of the two company codes (1000 and 3000) and must be reconciled. If a document is missing, you need to clarify the difference.
Items that need clarification can be e-mailed directly to the clerk responsible at each company, and SAP ERP Financials stores the related correspondence. If another document is missing and the person responsible does not respond to the message, SAP ERP Financials can correct the difference with an automatic posting in distributed SAP and non-SAP systems.

This kind of software-driven clarification within the defined intercompany process assigns the clerk an active role. If the clerk needs no further clarification, no other action is necessary. The notification also makes it easier to find a solution rapidly to a problem that would otherwise be pushed off until the closing date.

Data monitor for a common view

Because both a clerk working on an individual close and one working on consolidation can perform the intercompany reconciliation business process, it is helpful to make all the related transactions in SAP ERP Financials explicitly visible. Two quite different structural transactions are involved here. The first stores intercompany accounts at the level of individual items. During consolidation, the second requires all accounts at the totals level. It is helpful to integrate all transactions on intercompany reconciliation as milestones in the data monitor for consolidation.
In the real world, two people must always discuss differences, but a central reconciliation tool adds a great deal of value, particularly in a distributed environment of SAP and non-SAP systems. If employees involved in reconciliation have worked so far with spreadsheet programs, this kind of software tool accelerates the process considerably. A direct link to the operating data enables a view of the original documents: manual version and status management are no longer necessary. The central view of differences and correspondence structures the reconciliation process and makes it transparent.

Reading recommendation

SAP PRESS: New General Ledger in SAP ERP Financials