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You Are Now a Step Closer to Real-Time Profitability in SAP S/4HANA Finance with Fewer Settlements

by Ajay Maheshwari, Associate Director, SAP Practice, itelligence, India

January 23, 2017

Ajay Maheshwari explains how you can now see real-time profitability from Profitability Analysis (CO-PA) even without settling the related expenses or incomes to CO-PA. You now have a feature that helps you to make a posting to the internal order and the data is updated in real time to CO-PA characteristics as well, without settlements.

So far you may know this about SAP S/4HANA:

  • The new data model in SAP S/4HANA Finance merges the general ledger (G/L) account and cost elements
  • It offers a universal table to manage the financial and management accounting information at one single place
  • It helps you get rid of redundant data in the form of index tables and summary tables
  • It makes many reconciliations redundant, too

However, you must also know that there are many innovations in SAP S/4HANA Finance. I describe one feature that can help you simplify the business processes with fewer and faster steps. Many businesses processes now run in real time, not just in SAP ERP Financials, but also in logistics (for example, Material Requirements Planning).

Did you ever feel that postings to time-bound cost objects such as internal orders or Work Breakdown Structure (WBS) elements are cumbersome? First, you need to post the expenses to the cost objects (internal orders or WBS elements). Second, you need to settle them.

The settlements are usually a period-end affair so you need to wait until the period end to see the posted data settled to Profitability Analysis (CO-PA). Until then, the profitability analysis would be incomplete. If you forget to settle them, the profitability between General Ledger Accounting (FI-GL) and CO-PA may not reconcile.

What if I tell you that you no longer need to settle the internal orders to CO-PA, and yet you will see the data posted to the internal orders in CO-PA in real time? Yes, it is now a reality. Let’s see how to set this up.

How to Set Up the Real-Time Data Flow to CO-PA

To set up the real-time data flow to CO-PA, you need to complete the following customizing steps.

Step 1. Activate account-based CO-PA. To complete this step, execute transaction code KEA0 or follow menu path SPRO > Controlling > Profitability Analysis > Structures > Define Operating Concern > Maintain Operating Concern.

In the screen the system displays (Figure 1), you need to ensure that account-based CO-PA is active for your operating concern. To complete this step, select the Account-based check box as shown in Figure 1.


Figure 1
Account-based CO-PA activated for the operating concern

When you activate account-based CO-PA, all the profitability characteristics from the operating concern are included in table ACDOCA, thereby offering a unified data model. This unified data model is the core foundation on which the new solution (which I am going to demonstrate in this article) is built.

(Note: After selecting the Account-based option, you must choose the required characteristics for your operating concern and then generate the operating concern. The steps to complete this process are not part of the scope of this article.)

Step 2. Activate the derivation of profitability characteristics for items not assigned to the profitablity segment. Activate the node Derivation for Items without Profitability Segment. To complete this step, execute transaction code SPRO and follow menu path > Controlling > Profitability Analysis > Master Data. Expand the Master Data node and click the execute icon beside the Activate Derivation for Items without Profitability Segment node. This action displays the screen in Figure 2.


Figure 2
Various cost objects for which the feature can be activated

This is an optional customizing activity to be carried out if you want to derive the profitability characteristics in the line items that are not assigned to a profitability segment. The only prerequisites are:

  • Account-based CO-PA must be active
  • The line items must be a G/L account of the account type Primary Costs/Revenues or Secondary Costs (i.e., the Primary Cost Element and Secondary Cost Element as of ECC 6.0 )

As you can see in Figure 2, the new feature can be activated for five different cost objects: cost centers, internal orders, projects, sales orders, and production orders.

After you activate the feature for any of the cost objects, such as the internal orders, the feature is not a must for all internal orders. You can further control it as shown in Table 1.

The new derivation for

Can be restricted to

Cost Centers

Cost Center Categories

Internal Orders

Order Types

Projects

Project Profiles

Sales Orders

Item Categories

Production Orders

Order Types

Table 1
The real-time derivation of profitability characteristics for various cost objects and the further control

As you can see in Table 1, for cost centers, this feature can be restricted to the desired cost center categories. For internal orders and production orders, you can restrict this feature to the desired order types. For projects, you can restrict this feature to desired project profiles, and for the sales orders, it can be restricted to the desired item categories.

For my example, let’s focus on the internal orders. In the Dialog Structure section of Figure 2, click the Items Assigned to Internal Orders folder. For my example, you need to restrict the real-time derivation of profitability characteristics for the line items posted to internal orders of the order Type 0400.

To complete this step, click the New Entries button in Figure 3 and then in the Items Assigned to Internal Orders section, enter 0400 in the field under the Type column (this value is for the order type). Select the check box under the P&L Accnts (P&L accounts) column, as shown in the highlighted red circle in Figure 3.


Figure 3
Real-time derivation of profitability characteristics activated for order Type 0400

In Figure 3, you can see a Default entry with a blank order type, which is not allowed to be removed. You can use this default entry in case you wish to activate this feature universally for all internal order types. Otherwise, you can maintain the desired order type here. (I have maintained order type 0400 in my example.)

Demonstration of the New Feature

Now that you have done the system setup, it is time to see how the new feature works.

Step 1. Create an internal order using Order type 0400. To complete this step, execute transaction code KO01. This action displays the screen in Figure 4. In my example, I created order 400000 by populating the Order, Order type, and Description fields as shown in Figure 4.


Figure 4
Internal order created with order type 0400

Step 2. Maintain a settlement rule. Assign a settlement rule to the internal order with the settlement receiver as profitability segment (PSG). To assign a settlement rule, click the Settlement Rule button in Figure 4. For my example, I created the settlement rule with PSG as the receiver (not shown). The profitability segment in the settlement rule is composed of the characteristics Customer and Product, as shown in Figure 5.


Figure 5
Settlement rule details for internal order 400000

Execute transaction code KO03, and in the initial screen that the system displays (not shown), click the Settlement Rule button. Press the F2 key to access the screen in Figure 5. This screen shows you the details of the settlement rule (i.e., it shows the settlement receiver).

Step 3. Create a financial posting. To complete this step, execute transaction code F-02 or FB50 to create a posting (not shown here) and assign the internal order 400000 as the cost object in the related expense line item. It results in the posting shown in Figure 6.


Figure 6
Financial posting to internal order 400000

Use transaction code FB03 to access the document created out of the financial posting from F-02 or FB50.

Double-clicking the line item 1 in the Figure 6 takes you to the screen in Figure 7. You can see that only the internal order is assigned as the cost object. No profitability segment is assigned.


Figure 7
Cost objects assigned to the expense line item

Step 4. Display the posting in table ACDOCA. I now explain the document in table ACDOCA.

(Note; The new reports in SAP S/4HANA Finance where these details can be seen are Fiori-based reports. I don’t have access to Fiori in my system, so I executed transaction code SE16 to demonstrate the results.)

Execute transaction code SE16 to access table ACDOCA using the document number 100000050. This action displays the screen shown in Figure 8.


Figure 8
Display the posting in table ACDOCA

As you can see in Figure 8, the posting you made using the Document Number 100000050 is enriched with additional information. Even though the line item was assigned only to the internal order 400000, the Customer 19 and Product RAW100 are also updated to the line item, together with the Profitability Segment Number 6.

Analysis

How did this happen? It’s very simple.

You created an internal order, assigned a settlement rule to PSG, and posted a document. The posting read the settlement rule in real time. You updated the additional information in table ACDOCA along with the internal order.

(Note: This functionality is only shown in reports based on table ACDOCA.)

Benefits to the Business

There are several benefits accruing to the business, on account of this new feature:

1. Business can now have the data relevant for CO-PA in real time.

2. They don’t have to wait until the time the relevant cost objects are settled to CO-PA.

3. This saves you one task at period end. Instead of settling such internal orders at period end, you can settle them at a different time, thereby relieving system resources for other critical activities at period end.

4. You can also contemplate not settling such orders at all. You can assign them a settlement profile that is not relevant for settlement. This would further save you disk space, as the line items generated upon settlement of some internal orders can be completely avoided.

Execute transaction code OKO7 to access the settlement profile. This action displays the screen shown in Figure 9. Choose the option Not for Settlement, as shown in Figure 9.


Figure 9
Settlement profile not for settlement

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Ajay Maheshwari

Ajay Maheshwari (ajaycwa1981@gmail.com) is an SAP Finance and Controlling (FI/CO) and SAP S4/HANA solution architect with more than 13 years of experience. He is well known for his contributions to the SAP Community Network (SCN) Forum. He is among the all-time top 20 contributors to the SCN Forum, across all SAP modules and one of the top contributors in his own space, SAP FI/CO. He is one of the official SAP mentors and has been recognized as the topic leader in the SCN Forum each year since 2011. He has experience with SAP implementations and rollouts in several industries and thoroughly enjoys designing complex business processes and delivering SAP training in the areas of FI/CO and SAP S/4HANA. Currently, he works as associate director at itelligence, an SAP Platinum Partner.



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