sap erp optimize financials

Shivesh Sharma

Optimize Your SAP ERP Financials Implementation

Bonn � Boston

ch00_FM_5012.indd 3 1/9/08 1:14:14 PM

Contents at a Glance

1 Implementing SAP ERP .................................................. 31

2 The SAP ERP Financials Solution ................................... 63

3 Choosing the Optimal Enterprise Structure .................. 81

4 Integrated Business Process View of SAP ERP Financials .............................................................. 157

5 Optimizing Financial Business Processes: Accounts Payable and Accounts Receivable ............... 217

6 Optimizing Financial Business Processes: Bank Accounting Implementation ............................... 313

7 Optimizing Financial Business Processes for Asset Accounting .................................................... 347

8 Financial Accounting Global Settings .......................... 437

9 Improving General Ledger Management ..................... 471

10 Achieving Faster Closes ............................................... 549

11 Special Purpose Ledger ................................................ 581

12 SAP Enterprise Consolidation ...................................... 613

13 Concluding Remarks .................................................... 653

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Contents

1 Implementing SAP ERP .........................................................29

1.1 Reasons for Implementing SAP ERP ....................................... 291.2 SAP ERP Implementation Roadmap ....................................... 30

1.2.1 Evolution of SAP ERP 2005 ...................................... 301.2.2 SAP ERP Roadmap Analysis Factors .......................... 331.2.3 SAP Value Engineering Roadmap Offering ................ 34

1.3 Types of SAP Implementations .............................................. 381.3.1 Production Support .................................................. 381.3.2 Enhancing an Existing SAP ERP Implementation ....... 391.3.3 Upgrading SAP ERP to a New Version ...................... 391.3.4 New Implementations .............................................. 41

1.4 SAP Implementation Methodologies ..................................... 421.4.1 Evolution from ASAP to ValueSAP to Solution

Manager .................................................................. 431.4.2 ASAP Methodology .................................................. 441.4.3 ASAP Phases of an SAP Implementation ................... 441.4.4 ValueSAP Implementation Approach ........................ 451.4.5 Solution Manager: Managing SAP Implementations . 46

1.5 SAP Implementation Team Structure ..................................... 481.5.1 Typical SAP Implementation Structure ...................... 481.5.2 Project Operating Rhythm ........................................ 49

1.6 Role of SAP ERP Financials Consultants in an SAP ERP Implementation .................................................................... 501.6.1 Integration Perspective ............................................. 501.6.2 Accounting and Audit Perspective ............................ 511.6.3 Management Reporting Perspective ......................... 51

1.7 Big Bang Versus Phased Implementation Approach ............... 521.7.1 Big Bang Approach ................................................... 531.7.2 Phased Implementation ............................................ 53

1.8 Managing Global Rollouts and Local Requirements ............... 561.8.1 Managing the Global Footprint ................................ 561.8.2 Key Challenges for Global Rollouts ........................... 581.8.3 Key Lessons from Global Rollouts ............................. 581.8.4 Managing Projects Across Time Zones and Countries 59

1.9 Summary ............................................................................... 59


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Contents

2 The SAP ERP Financials Solution ..........................................61

2.1 Key Requirements for the Financials ERP Solution ................. 612.1.1 Finance System Stakeholders .................................... 622.1.2 Chief Financial Offi cer: A New Role .......................... 63

2.2 SAP ERP Financials Direction: A Historical Perspective ........... 652.2.1 Financials Versus Controlling .................................... 652.2.2 Transaction Orientation Versus Business Analytics .... 662.2.3 Business Warehouse and Strategic Enterprise

Management ............................................................ 662.2.4 SAP ERP Financials Goals.......................................... 67

2.3 SAP ERP Financials: A Snapshot View .................................... 672.3.1 SAP ERP Financials Solution Stack ............................ 682.3.2 SAP ERP Financial Solution Release Strategy ............. 702.3.3 SAP Easy Access for SAP Financials ........................... 72

2.4 Financial Supply Chain Management ..................................... 742.4.1 FSCM Process Areas ................................................. 752.4.2 Business Benefi ts of SAP Financial Supply Chain

Management ............................................................ 762.5 Corporate Governance .......................................................... 76

2.5.1 Audit Information System ......................................... 762.5.2 Management of Internal Controls ............................. 772.5.3 Risk Management..................................................... 772.5.4 Whistleblower Complaints ....................................... 772.5.5 Segregation of Duties ............................................... 77

2.6 Summary ............................................................................... 78

3 Choosing the Optimal Enterprise Structure .........................79

3.1 Introduction to Organizational Entities .................................. 803.1.1 Organizational Structure Mapping Approach ............ 803.1.2 Purpose of Defi ning the SAP ERP Enterprise

Structure .................................................................. 803.1.3 Impact of the SAP Enterprise Structure ..................... 813.1.4 Evaluation Criteria for Mapping Your Organization

to SAP ERP Enterprise Structure ............................... 813.1.5 Confi guring the SAP ERP Enterprise Structure ........... 83

3.2 Financial Enterprise Structure Organizational Entities ............ 843.2.1 Company Code ......................................................... 853.2.2 Company .................................................................. 913.2.3 Business Area ........................................................... 92


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3.2.4 Consolidation Business Area ..................................... 923.2.5 Financial Management Area ..................................... 923.2.6 Functional Area ........................................................ 933.2.7 Segment ................................................................... 943.2.8 Profi t Center............................................................. 943.2.9 Chart of Accounts ..................................................... 953.2.10 Chart of Depreciation ............................................... 963.2.11 Credit Control Area .................................................. 96

3.3 Controlling Organizational Entities ........................................ 973.3.1 Operating Concern ................................................... 983.3.2 Controlling Area ....................................................... 983.3.3 Cost Center .............................................................. 99

3.4 Logistics Organizational Entities .......................................... 1003.4.1 Valuation Level ....................................................... 1003.4.2 Plant ...................................................................... 1013.4.3 Location ................................................................. 1033.4.4 Storage Location .................................................... 1043.4.5 Storage Bin ............................................................. 104

3.5 Relationship Between Financial and Logistics Entities .......... 1053.6 Purchasing Organizational Entities ....................................... 107

3.6.1 Purchasing Organization ......................................... 1073.6.2 Purchasing Group ................................................... 107

3.7 Sales and Distribution Organizational Entities ...................... 1083.7.1 Sales Organization .................................................. 1083.7.2 Division .................................................................. 1113.7.3 Distribution Channel .............................................. 1123.7.4 Sales Area .............................................................. 1133.7.5 Sales Offi ce ............................................................ 1133.7.6 Sales Group ............................................................ 1143.7.7 Credit Control Area ................................................ 115

3.8 Logistics Execution Organizational Entities .......................... 1153.8.1 Warehouse Number/Warehouse Complex .............. 1153.8.2 Shipping Point ........................................................ 1163.8.3 Loading Point ......................................................... 1173.8.4 Transportation Planning Point ................................. 118

3.9 Plant Maintenance Organizational Entities .......................... 1193.9.1 Maintenance Planning Plant ................................... 120

3.10 Human Resources Organizational Entities ............................ 1213.10.1 Personnel Area ....................................................... 1213.10.2 Personnel Subarea .................................................. 1223.10.3 Employee Groups ................................................... 123


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Contents

3.10.4 Employee Subgroup ............................................... 1243.11 Assignment of Organizational Entities ................................. 125

3.11.1 Company Code(s) to Company (N:1 or 1:1) ............. 1253.11.2 Company Code(s) to Credit Control Area

(N:1 or 1:1)............................................................. 1273.11.3 Business Area to Consolidation Business Area

(N:1 or 1:1)............................................................. 1283.11.4 Company Code to Financial Management Area

(N:1 or 1:1)............................................................. 1293.11.5 Profi t Center to Company Code (N:1 or N:N) .......... 1293.11.6 Company Code to Controlling Area (N:1 or 1:1) ...... 1303.11.7 Controlling Area to Operating Concern

(N:1 or 1:1)............................................................. 1313.11.8 Assign Plant(s) to Company Code (N:1 or 1:1)......... 1323.11.9 Assigning the Business Area to the Plant/

Valuation Area and Division (N:N) .......................... 1333.11.10 Assigning Sales Organization(s) to the Company

Code ...................................................................... 1353.11.11 Assigning the Distribution Channel to the Sales

Organization .......................................................... 1363.11.12 Assigning the Division to the Sales Organization ..... 1363.11.13 Setting Up the Sales Area ....................................... 1373.11.14 Assigning the Sales Offi ce to the Sales Area ............ 1383.11.15 Assigning the Sales Group to the Sales Offi ce ......... 1383.11.16 Assigning the Sales Organization and Distribution

Channel to the Plant .............................................. 1393.11.17 Assigning the Sales Area to the Credit

Control Area ........................................................... 1393.11.18 Business Area Account Assignment: Defi ne

Rules by Sales Area ................................................. 1403.11.19 Assigning the Business Area to the Sales Area ......... 1413.11.20 Assigning the Purchasing Organization to the

Company Code ....................................................... 1423.11.21 Assigning the Purchasing Organization to the

Plant ...................................................................... 1423.11.22 Assigning a Warehouse Number to the Plant and

Storage Location .................................................... 1433.11.23 Assigning Shipping Points to the Plant .................... 1433.11.24 Assigning the Maintenance Planning Plant to the

Maintenance Plant ................................................. 144


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3.11.25 Assigning the Personnel Area to the Company Code ...................................................................... 145

3.11.26 Assigning the Employee Subgroup to the Employee Group .................................................... 145

3.12 Key Financial Organizational Mapping Decisions and Best Practices .............................................................................. 1463.12.1 Company Codes per Country, per Legal Entity,

or per Organizational Business Unit ........................ 1463.12.2 Currency Decisions in the Company Code ............... 1473.12.3 Chart of Accounts: Global Versus By Country .......... 1483.12.4 One Controlling Area Versus Multiple

Controlling Areas by Region ................................... 1493.12.5 Currency of Controlling Area .................................. 1493.12.6 One Operating Concern Versus Multiple

Operating Concerns by Region ............................... 1503.12.7 Cost Centers Standard Hierarchy Defi nition:

By Department or By Division ................................ 1503.12.8 Profi t Center Hierarchy Defi nition ........................... 1513.12.9 Business Area Versus Profi t Center .......................... 1513.12.10 Functional Area and Cost of Sales Accounting ........ 152

3.13 Key Nonfi nancial Entity Decisions that Impact Financials ..... 1523.13.1 Plant: Physical Location Versus Logical Location ..... 1533.13.2 Purchasing Organization and Sales Organization

Structure ................................................................ 1533.13.3 Distinguishing the Plant and Storage

Location ................................................................. 1543.13.4 How Reporting Requirements Drive the Structure

of the Design.......................................................... 1543.14 Summary ............................................................................. 154

4 Integrated Business Process View of SAP ERP Financials ..155

4.1 Purchase Requisition to Check Writing: Procurement to Payment .......................................................................... 1564.1.1 Process Flow .......................................................... 1574.1.2 Standard Operating Processes for Purchasing

Processes ............................................................... 1584.1.3 Multiple Scenarios for Purchasing and

Representation in SAP ............................................ 1594.1.4 Procurement of Stock Material ............................... 1604.1.5 Procurement of Consumable Materials ................... 162


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Contents

4.1.6 Procurement of External Services ............................ 1654.1.7 Automated Procurement ........................................ 1664.1.8 SAP ERP Transactions for Procurement ................... 1674.1.9 SAP Organizational Entities part of

Procurement Process .............................................. 1674.1.10 Integrating Supplier Relationship Management

in the Procurement Process .................................... 1684.2 Sales Order to Cash Application Process .............................. 170

4.2.1 Process Flow of Order to Cash Cycle ....................... 1704.2.2 Standard Operating Procedures for Sales

Processes ............................................................... 1724.2.3 Multiple Scenarios for Sales and Distribution

in SAP ERP ............................................................. 1724.2.4 Transactions Codes for Sales and Distribution ......... 1744.2.5 SAP Organizational Entities and Master Data .......... 1754.2.6 Accounting Impact from SD Transactions ................ 176

4.3 Project Systems (PS-FI Integration) ...................................... 1764.3.1 Process Flow for Project Systems ............................ 1774.3.2 Key Integration Points for SAP ERP Finacials

and PS .................................................................... 1784.3.3 Standard Operating Processes for Project Systems .. 1794.3.4 Multiple Scenarios for Projects Implementation ...... 1794.3.5 Transactions for Project Systems ............................. 1814.3.6 Organizational Entities for Project Systems ............. 1824.3.7 Integration of Project Systems with other ERP

Modules ................................................................. 1844.4 Managing Plant Maintenance .............................................. 185

4.4.1 Process Flow .......................................................... 1864.4.2 Standard Operating Procedures for Plant

Maintenance Processes .......................................... 1874.4.3 Multiple Scenarios for Plant Maintenance .............. 1884.4.4 Plant Maintenance Organizational Entities ............. 1934.4.5 Integration of Plant Maintenance with Financials ... 194

4.5 Managing Quality Management Processes ........................... 1954.5.1 Quality Management Process Flow ......................... 1954.5.2 Standard Operating Procedures for Quality

Management Processes .......................................... 1974.5.3 Quality Management Organizational Entities .......... 1984.5.4 Integration with Financials and Controlling ............. 199

4.6 Managing Payroll Human Resources-Financials (HR-FI) Integration .......................................................................... 199


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Contents

4.6.1 Payroll Process Flow ............................................... 2004.6.2 Standard Operating Procedures for Human

Resources ............................................................... 2014.6.3 Organizational Entities for Human Resources

Management .......................................................... 2034.6.4 Integration of Human Resources with Financials ..... 205

4.7 Managing Transportation and Shipment Costs ..................... 2064.7.1 Process Flow for Transportation .............................. 2064.7.2 Standard Operating Procedures for Transportation .. 2084.7.3 Multiple Scenarios for Transportation ..................... 2094.7.4 Logistics Execution Organizational Entities ............. 2124.7.5 Integration of Transportation Planning with

Financials ............................................................... 2134.8 Summary ............................................................................. 213

5 Optimizing Financial Business Processes: Accounts Payable and Accounts Receivable ......................................215

5.1 Vendor Master .................................................................... 2165.2 Customer Master Data ........................................................ 218

5.2.1 Customer Master Views .......................................... 2185.2.2 Creating a New Customer ....................................... 219

5.3 Confi guring the Vendor Master and Customer Master ......... 2225.3.1 Defi ne Field Status Group by Company Code

and by Activity ....................................................... 2265.3.2 Defi ne Number Ranges .......................................... 2275.3.3 Assign Number Ranges ........................................... 2285.3.4 Defi ne Message Control ......................................... 2285.3.5 Defi ne Match Codes ............................................... 2295.3.6 Defi ne Accounting Clerk ........................................ 2295.3.7 Defi ne Industries ................................................... 2295.3.8 Authorizations for Changing Vendor/Customer

Master ................................................................... 2305.3.9 Defi ne Customer-Specifi c Enhancements ................ 2315.3.10 Defi ne Pledging Indicator ....................................... 232

5.4 Accounts Payable and Accounts Receivable Business Transactions: Key Concepts and Global Settings ................... 2335.4.1 Key Concepts ........................................................ 2335.4.2 Global Settings ....................................................... 234

5.5 Downpayments ................................................................... 2445.5.1 Downpayments Made—Accounts Payable .............. 245


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5.5.2 Downpayment Received: Accounts Receivable ....... 2465.5.3 Confi guring Downpayments ................................... 2465.5.4 Defi ning Tax Clearing Account for

Downpayments ...................................................... 2505.5.5 Integration of Downpayments with Logistics .......... 2505.5.6 Downpayment Chains ............................................ 2515.5.7 Confi guring Downpayment Chains ........................ 251

5.6 Processing Invoices in Accounts Payable and Accounts Receivable ........................................................................... 2555.6.1 Invoicing Transactions and Clearing in

Accounts Payable ................................................... 2555.6.2 Accounts Receivable Outgoing Invoices and

Clearing .................................................................. 2575.7 Processing Outgoing Payments ............................................ 258

5.7.1 Confi guring Outgoing Payments: Global Settings .................................................................. 260

5.7.2 Confi guring Outgoing Payments: Manual Payment ................................................................. 262

5.7.3 Confi guring Outgoing Payments: Automatic Payments ............................................................... 265

5.7.4 Bank Determination ............................................... 2705.8 Interest Calculation ............................................................. 273

5.8.1 Enhancements in Items Interest Calculation ............ 2745.8.2 Confi guring Accounts Receivable: Interest

Calculation ............................................................. 2755.9 Dunning .............................................................................. 292

5.9.1 Dunning Program Execution ................................... 2925.9.2 Confi guring Dunning .............................................. 293

5.10 Credit Management ............................................................ 3025.10.1 Confi guring Credit Management ............................ 3035.10.2 Business Transactions-Credit Monitoring ................ 305

5.11 Integration .......................................................................... 3065.11.1 Accounts Payable ................................................... 3075.11.2 Accounts Receivable.............................................. 307

5.12 Business Trends in Accounts Payable and Accounts Receivable ........................................................................... 308

5.13 Summary ............................................................................. 310


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Contents

6 Optimizing Financial Business Processes: Bank Accounting Implementation ......................................311

6.1 Bank Accounting: Introduction ............................................ 3126.2 Master Data ........................................................................ 313

6.2.1 Bank Directories ..................................................... 3136.2.2 House Banks .......................................................... 3136.2.3 Business Partner Banks ........................................... 3136.2.4 Checks for Bank Master Data .................................. 3146.2.5 Bank Chains ........................................................... 3146.2.6 Confi guring Bank Chains ......................................... 314

6.3 Check Deposit ..................................................................... 3166.3.1 Recording a Check Deposit ..................................... 3176.3.2 Confi guring Check Deposit ..................................... 319

6.4 Payment Transactions .......................................................... 3246.4.1 Manual Bank Statement ......................................... 3246.4.2 Confi guring the Manual Bank Statement ................ 3266.4.3 Create and Assign Business Transactions ................. 3276.4.4 Defi ne Posting Keys and Posting Rules for

the Manual Bank Statement ................................... 3286.4.5 Defi ne Variants for Manual Bank Statement ........... 3286.4.6 Electronic Bank Statement ...................................... 3286.4.7 Importing Data in Bank Accounting ........................ 3306.4.8 Confi guring the Electronic Bank Statement ............. 333

6.5 Cash Journal ........................................................................ 3376.5.1 Cash Journal Process .............................................. 3376.5.2 Confi guring the Cash Journal .................................. 339

6.6 Summary ............................................................................. 344

7 Optimizing Financial Business Processes for Asset Accounting ..........................................................................345

7.1 Asset Organization Elements and Structure.......................... 3457.1.1 Company Code Assignment .................................... 3467.1.2 Business Area Assignments ..................................... 3477.1.3 Plant and Location Assignments ............................. 3477.1.4 Cost Center and Profi t Center Assignments ............. 347

7.2 Asset Master ....................................................................... 3487.2.1 Creating an Asset Master ........................................ 3497.2.2 Confi guring Asset Master Data ............................... 350

7.3 Asset Class .......................................................................... 360


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Contents

7.4 Business Transactions .......................................................... 3617.4.1 Asset Acquisition .................................................... 3637.4.2 Transfer from Asset Under Construction (AuC)

to Asset .................................................................. 3667.4.3 Asset Transfers ........................................................ 3677.4.4 Postcapitalization ................................................... 3687.4.5 Manual Write Up or Write Down ........................... 3687.4.6 Unplanned Depreciation ........................................ 3697.4.7 Asset Retirement .................................................... 3697.4.8 Gain/Loss on Retiring an Asset with Revenue ......... 370

7.5 Periodic Processing in Asset Accounting .............................. 3717.5.1 Depreciation Run ................................................... 3717.5.2 Year-End Closing Transactions ................................. 375

7.6 Confi guring Business Transactions in Asset Accounting ........ 3777.7 Integrating Asset Accounting with the General Ledger......... 378

7.7.1 Defi ne How Depreciation Areas Post to the General Ledger ....................................................... 379

7.7.2 Assign GL Accounts ................................................ 3807.7.3 Specify the Posting Key for Asset Postings .............. 3817.7.4 Assign Input Tax Indicator for Nontaxable

Acquisitions ........................................................... 3827.7.5 Specify a Financial Statement Version for

Asset Reports ......................................................... 3827.7.6 Post Depreciation to General Ledger ...................... 3837.7.7 Additional Account Assignment Objects ................. 3857.7.8 Process Error Table ................................................. 3867.7.9 Display of Active Account Assignment Objects ....... 3877.7.10 Post APC Values Periodically to the General

Ledger .................................................................... 3877.7.11 Specify Document Type for Periodic Posting of

Asset Values ........................................................... 3887.8 Valuation ............................................................................ 388

7.8.1 Defi ne Depreciation Area ....................................... 3897.8.2 Specify Transfer of APC Values ................................ 3907.8.3 Specify Transfer of Depreciation Terms.................... 3917.8.4 Set Up Areas for Parallel Valuation ......................... 3917.8.5 Specify Low Value Asset Classes ............................. 3937.8.6 Specify the Maximum Amount for Low-Value

Assets..................................................................... 3947.8.7 Fiscal Year Variants ................................................. 3947.8.8 Shortened Fiscal Year ............................................. 395


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Contents

7.8.9 Use of Half Months in the Company Code .............. 3977.8.10 Defi ne Weighting of Periods ................................... 397

7.9 Depreciation ....................................................................... 3987.9.1 Defi ning Depreciation Areas ................................... 3997.9.2 Depreciation Calculation Methods ......................... 4017.9.3 Depreciation Key .................................................... 4057.9.4 Period Control ........................................................ 4077.9.5 Defi ning the Cutoff Value Key ................................ 4087.9.6 Defi ne Maximum Base Value ................................. 409

7.10 Confi guring Asset Accounting Business Transactions ............ 4107.10.1 Defi ne Transaction Type ......................................... 4107.10.2 Optimization Settings for Asset Acquisitions ........... 4157.10.3 Country-Specifi c Settings for Asset Retirement ....... 4177.10.4 Optimization Settings for Asset Transfers ................ 4187.10.5 Optimization Settings for Intercompany

Asset Transfers ........................................................ 4197.10.6 Optimization Settings for Capitalization of

Assets Under Construction ..................................... 4227.10.7 Optimization Setting for Integrating Asset

Accounting with Project Systems ............................ 4237.10.8 Optimization Setting for Defaults in Asset

Accounting Business Transactions ........................... 4237.11 Legacy Data Transfer ........................................................... 426

7.11.1 Manual Legacy Asset Data Transfer ......................... 4277.11.2 Legacy Data Transfer Using Microsoft Excel ............ 4287.11.3 Automatic Data Transfer ......................................... 4287.11.4 Confi guring Legacy Data Transfer: Asset

Accounting ............................................................. 4297.12 Summary ............................................................................. 433

8 Financial Accounting Global Settings .................................435

8.1 Financial Accounting Global Settings: Company Code ......... 4378.1.1 Enter Global Parameters ......................................... 4378.1.2 Defi ne Maximum Exchange Rate Difference

per Foreign Currency .............................................. 4418.1.3 Indicate Currency Differences for Partial

Payments ............................................................... 4428.1.4 Activate Extended Withholding Tax ........................ 442

8.2 Financial Accounting Global Settings: Ledger....................... 443


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Contents

8.2.1 Asset Accounting: Transaction Types for Consolidation and Assignment ............................... 444

8.2.2 Functional Area for Cost of Sales Accounting .......... 4468.2.3 Customer Fields...................................................... 4478.2.4 Field Status Variants and Field Status Groups .......... 4528.2.5 Confi guring Ledgers ............................................... 4548.2.6 Fiscal Year Variant and Posting Period Variant ......... 458

8.3 Summary ............................................................................. 467

9 Improving General Ledger Management ............................469

9.1 General Ledger Accounting: Introduction ............................ 4709.2 General Ledger Accounting: Master Data ............................ 472

9.2.1 General Ledger Account: By Chart of Accounts ....... 4739.2.2 General Ledger Account: By Company Code ........... 4759.2.3 Collective Processing of GL Accounts ...................... 4819.2.4 Compare Company Code ........................................ 482

9.3 Confi guration of General Ledger Master Data ...................... 4849.3.1 Account Group ....................................................... 4849.3.2 Retained Earnings Account ..................................... 4869.3.3 Defi ne Screen Layout ............................................. 4879.3.4 Defi ne Financial Statement Version ........................ 489

9.4 The New General Ledger ..................................................... 4919.4.1 Planning ................................................................. 4919.4.2 Representative Ledger ............................................ 4929.4.3 Tables in the New General Ledger .......................... 4929.4.4 New General Ledger User Interface ........................ 493

9.5 Business Transactions: General Ledger ................................. 4939.5.1 GL Posting .............................................................. 4939.5.2 Document Splitting ................................................ 4969.5.3 Adjustment Posting/Reversal .................................. 4979.5.4 Manual Accruals ..................................................... 4989.5.5 Cross-Company Code Transfers ............................... 5019.5.6 Bank Account Interest Calculation ......................... 5019.5.7 Open-Item Clearing ................................................ 503

9.6 Confi guring Business Transactions: General Ledger .............. 5069.6.1 Confi guring General Ledger Posting ........................ 5079.6.2 Confi guring Document Splitting ............................. 5079.6.3 Extended Document Splitting ................................. 5159.6.4 Confi guring Cross-Company Code Transactions ....... 5199.6.5 Confi guring Open-item Clearing ............................. 520


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Contents

9.6.6 Prepare Automatic Clearing .................................... 5219.6.7 Confi guring Accruals............................................... 5219.6.8 Transfer Prices and Parallel Valuation ...................... 524

9.7 Integration with General Ledger .......................................... 5299.7.1 Integration with Asset Accounting .......................... 5309.7.2 Integration with Materials Management ................. 5319.7.3 Integration with Payroll .......................................... 5349.7.4 Integration with Sales and Distribution ................... 5359.7.5 Integration with Local Ledgers ............................... 537

9.8 Preparation of Productive Start ............................................ 5389.8.1 New Installation ..................................................... 5389.8.2 Migrating the Old GL to the New GL ...................... 542

9.9 Summary ............................................................................. 546

10 Achieving Faster Closes ......................................................547

10.1 Month-End Closing Checklist .............................................. 54810.1.1 Daily Review and Audit .......................................... 54910.1.2 Month-End Processes ............................................. 550

10.2 The Closing Cockpit ............................................................. 55110.2.1 Confi guring Closing Cockpit ................................... 55110.2.2 Standard Templates and Closing Cockpit ................ 553

10.3 Closing Processes ............................................................... 55910.3.1 Planning Process .................................................... 55910.3.2 Statistical Key Figures ............................................. 56010.3.3 Allocation .............................................................. 56110.3.4 Financial Statements .............................................. 56210.3.5 Reclassify ............................................................... 56410.3.6 Check/Count .......................................................... 56710.3.7 Valuate ................................................................... 56810.3.8 Rollup .................................................................... 57410.3.9 Carryforward .......................................................... 576

10.4 Summary ............................................................................. 578

11 Special Purpose Ledger .......................................................579

11.1 Special Purpose Ledger: An Introduction ............................. 58111.2 Basic Settings ...................................................................... 582

11.2.1 Preparation for Special General Ledger Implementation ..................................................... 582


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Contents

11.2.2 Edit Coding Block ................................................... 58211.3 Installing the Special Purpose Ledger ................................... 583

11.3.1 Express Installation of FI-SL .................................... 58311.3.2 Defi ne Table group ................................................. 58411.3.3 Maintain Field Movements ..................................... 58711.3.4 Defi ne Ledger and Ledger Groups .......................... 58911.3.5 Ledger Groups ........................................................ 594

11.4 Business Transactions .......................................................... 59511.4.1 Planning ................................................................. 59511.4.2 Confi guring Actual Postings in FI-SL ....................... 59611.4.3 Defi ne Posting Period ............................................. 59711.4.4 Defi ne Document Type ........................................... 598

11.5 Periodic Processing .............................................................. 59911.5.1 Allocation .............................................................. 60011.5.2 Rollup .................................................................... 60011.5.3 Currency Translation ............................................... 60111.5.4 Balance Carryforward ............................................ 60611.5.5 Data Transfer .......................................................... 608

11.6 Summary ............................................................................. 609

12 SAP Enterprise Consolidation .............................................611

12.1 SAP Enterprise Consolidation: An Introduction .................... 61112.2 Master Data ........................................................................ 61312.3 Dimension........................................................................... 61412.4 Consolidation Versions ........................................................ 61612.5 Check Currencies and Defi ne Ledger ................................... 619

12.5.1 Check Currencies .................................................... 61912.5.2 Defi ne Ledger......................................................... 619

12.6 Defi ne Organization Units and Groups ................................ 62112.6.1 Defi ne Consolidation Group ................................... 62112.6.2 Defi ne Consolidation Units ..................................... 625

12.7 Defi ne Financial Statement Items ........................................ 62712.8 Defi ne Sets .......................................................................... 63012.9 Defi ne Characteristics .......................................................... 63112.10 Defi ne Characteristic Hierarchies ......................................... 63112.11 Data Collection ................................................................... 63212.12 Data Monitor and Consolidation Monitor ........................... 633

12.12.1 Defi ne Task Group .................................................. 63312.12.2 Assign Task Group to Dimension ............................ 635

12.13 Currency Translation ............................................................ 635


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Contents

12.13.1 Defi ne Translation Methods.................................... 63512.13.2 Defi ne Posting of Balance Sheet Translation

Differences ............................................................. 63912.13.3 Assign the Translation Method to the

Consolidation Unit ................................................. 64012.13.4 Defi ne Exchange Rate Indicators ............................ 64012.13.5 Specify Translation Ratios ....................................... 64112.13.6 Maintain Exchange Rates ........................................ 641

12.14 Balance Carryforward .......................................................... 64312.14.1 Specify FS Items to Be Carried Forward .................. 64312.14.2 Specify FS Items Not to Be Carried Forward ............ 644

12.15 Consolidation Business Transaction Postings ........................ 64512.15.1 Defi ne Document Types ......................................... 64612.15.2 Assign Tasks to Document Type .............................. 649

12.16 Summary ............................................................................. 649

13 Concluding Remarks ...........................................................651

13.1 What You Learned in This Book ........................................... 65213.2 Going Forward .................................................................... 653

Appendix ...................................................................................655

A Glossary ................................................................................. 655B Bibliography .......................................................................... 661C About the Author .................................................................. 663

Index .................................................................................................... 665


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What are the key organizational entities? How are they mapped in SAP? Defining organizational entities correctly can simplify the repor-ting requirement and can significantly affect the timelines of an SAP ERP implementation.

Choosing the Optimal 3 Enterprise Structure

From this chapter forward, we will discuss the details of implementing and optimizing SAP ERP Financials. The first step in implementing the SAP ERP solution is to understand the organizational structure and how it needs to be mapped in SAP ERP.

The SAP ERP enterprise structure is the fundamental data framework within the SAP ERP system. It sits above the master data and transaction data. Ty-pically, master data is created with reference to the SAP enterprise structure. Let’s say you want to create a material master. The material master should be created with reference to a plant. In this example, material is the master data, and plant is the logistics enterprise entity. Now an inventory transaction (goods receipt, goods issue, etc.) is done for a particular material and plant.

A common mistake organizations make is to map their current organizational structure into SAP ERP. That is not the best thing because the current struc-ture might not be meeting your current reporting and process requirements. So think about how your organization will look five years from now and then design your structure.

Tip

Changing the core organization structure is not easy in SAP ERP, so listen to the consultants who have done it before. This will help you design a flexible organiza-tional structure that will hold true even when you overhaul your organization.

If you define your organizational entities correctly the first time, you will be able to fully use the breadth and depth of the SAP ERP functionality. Otherwise, you’ll end up with costly workarounds. Understanding the SAP organizational entities available and how other companies have used them will help you design your optimal organizational structure.

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Choosing the Optimal Enterprise Structure 3

This chapter outlines the available organizational entities and how best to de-sign a structure that suits your organization. Next, you’ll learn about organi-zation entities and how best to approach the process of defining your own.

Introduction to Organizational Entities3.1

The decisions concerning organization entities set the tone for the overall pro-ject implementation, so it’s very important to finalize these after carefully con-sidering all the pros and cons of each option. This section covers the basic ob-jectives and some caveats for defining an organization’s enterprise structure.

Organizational Structure Mapping Approach3.1.1

To map organizational entities, the best approach is to conduct a workshop early in the blueprinting phase, which is conducted typically by a consulting partner. The agenda of the workshop is to first present an overview of the SAP enterprise structure and then discuss all available options by detailing the advantages and disadvantages of choosing the possible options. At the end of the workshop, the goal is to have a documented enterprise structure that will be the basis of the ongoing implementation.

The agenda of an enterprise-mapping workshop should be to finalize an op-timal enterprise structure that meets business requirements. The SAP ERP enterprise structure is initially outlined during the project preparation phase and then further detailed as part of the business blueprint.

Note

Review the project phases outlined in Chapter 1 as part of ASAP projects phases from Project Preparation, Business Blueprint, Realization, and Final Cutover, to Go Live and Support. It is very important to define your structure early and stick to it as this decides the overall complexity of the implementation.

As you learned earlier, the SAP ERP enterprise structure sits above the master data and transaction data. So let’s take a look at the purpose of defining the SAP ERP enterprise structure.

Purpose of Defining the SAP ERP Enterprise Structure3.1.2

The basic objectives of defining the enterprise structure are:

To fulfill your business needs.EE

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Introduction to Organizational Entities 3.1

To define and outline the internal and external reporting requirements. So EE

at the time of defining your enterprise structure, think of all the ways you might need reporting to be extracted out of the system.

To map the physical organizational entities to the SAP organization enti-EE

ties so that you can visualize how your organization will look and feel in SAP ERP.

Now that you understand the purpose of defining enterprise structure, let’s discuss the overall impact of the enterprise structure.

Impact of the SAP Enterprise Structure3.1.3

The SAP ERP enterprise structure design affects everything, including the fol-lowing:

ReportingEE

Master dataEE design

Inter-company processingEE

Ability to use standard reportingEE

Data complexityEE

Keep in mind that, once defined, it’s very difficult to change the core SAP ERP enterprise structure. So consider carefully before you implement an enter-prise structure because it is very difficult to change configuration midway in the project. Take your time and think of all the possibilities and considera-tions that can have an impact on your SAP ERP enterprise structure.

Evaluation Criteria for Mapping Your Organization 3.1.4 to SAP ERP Enterprise Structure

SAP ERP provides you with many options that you can interpret in multiple ways, so it’s very important that you follow some golden rules while map-ping your organization to SAP. Consider the following aspects when desi-gning your own organization structure:

Do not try to map your existing legacy system structure to the SAP enter-EE

prise structure. Think fresh. Think new.

List what you liked about your legacy structure.EE

List what you hate about your organization structure.EE

Think of EE what if scenarios. The real organizational structure is sometimes hidden. You might have a formal organizational structure and an informal

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organization structure that nobody wants to talk about. These imaginary scenarios help you come up with the real enterprise-wide structure that makes sense rather quickly. Some scenarios might include:

What happens if your organization gets taken over by a new EE

company? Think of a scenario where your organization gets taken over by a new company and then analyze how the new merged entity would look. This will help you identify the core organization structure.

What happens if your company takes over a related business?EE This scenario lets you identify your growth opportunities and the areas you think need more granular reporting than is currently needed.

What if you acquire a new plant in a different state?EE This scenario lets you think about your logistics organizational entities and how they relates to accounting in terms of fixed assets, banking, general ledger (GL), and accounts payable setup.

What if you decide to decommission or sell a plant?EE This scenario helps you simplify some of your complex reporting re-quirements.

Think from an outsider’s perspective first and then from an insider’s per-EE

spective.

Use the best practices applicable to your industry and provided by SAP or EE

a SAP consulting partner.

Traditionally the reporting structure was fragmented and there were no EE

standardized processes across organizations. It is very important that you start thinking about driving your organization toward common processes and best practices. You can achieve this by treating your company as one company, since that drives your reporting understanding and rationaliza-tion of organizational structure.

Some companies have multiple instances of SAP ERP and other legacy EE

systems, which complicates the enterprise structure. Ask simple questions such as what will be the enterprise structure if you had one global instance of SAP ERP. Will your enterprise structure change?

These simple questions and considerations help you solve the complex puzzle of identifying the business requirements of SAP ERP enterprise structure. In addi-tion, these need to be married against the following technical considerations:

Technical design complexityEE

Master data upkeep and maintenanceEE

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Introduction to Organizational Entities 3.1

Consolidation structure and inter-company processing-related activitiesEE

Statutory versus management reporting requirementsEE

Ability to use standard out-of-the-box reportingEE

First you should learn the meaning of individual organizational entities, and then the assignment options available. Finally you can map your organization to the SAP ERP enterprise structure.

Configuring the SAP ERP Enterprise Structure3.1.5

In this subsection, you’ll learn how to configure the SAP enterprise structure via the SAP Implementation Guide (IMG). The transaction code for the IMG is SPRO. After you execute SPRO, choose SAP Reference IMG to see the SAP Customizing Implementation Guide.

SAP Enterprise Structure Definition, Assignment, and Consistency CheckFigure 3.1

The SAP Customizing Implementation Guide for defining enterprise struc-ture is shown in Figure 3.1 for key organizational elements. You can use the

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Localize Sample Organizational Units to import the sample organization units by country. Release Notes identify specific information pertaining to new nodes that were added.

Tip

For each implementation, you can define your own IMG by identifying the com-ponents you need to implement.

As you can see in Figure 3.1, the configuration guide for enterprise structure is organized by SAP ERP components such as Financial Accounting, Con-trolling, Logistics-General, Sales and Distribution, Materials Manage-ment, Logistics Execution, Plant Maintenance, and Human Resources Management. In addition, you can also perform Consistency Check for checking sales and distribution settings.

You will learn about all these organizational elements in detail in this chapter. First, you’ll learn about the Financial Accounting organization structure.

Financial Enterprise Structure 3.2 Organizational Entities

Let’s first take a deeper look at financial organizational entities. Each organi-zational entity needs to be defined after carefully understanding the overall enterprise-wide requirements. However, the Finance department owns the Financial Accounting organizational units. Financial organization entities pri-marily define at what level you are defining your balance sheet and profit and loss (P&L) statements along with other statutory reporting requirements such as segment reporting, cost of sales reporting, and so on. In addition, you can also specify the structure of your consolidation requirements using financial enterprise structure entities. Figure 3.2 breaks down the previous figure in more detail to show the menu path.

SAP Financial Entities ConfigurationFigure 3.2

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Financial Enterprise Structure Organizational Entities 3.2

In Figure 3.2, you can see the key Financial Accounting entities. Next, you’ll learn about one of the most important enterprise entities for financials: the company code.

Company Code3.2.1

Company code is an independent accounting entity for which a complete self-contained set of accounts can be drawn up. It represents a legal entity and a balanced legal set of books. The salient points of a company code are as follows:

All the financial transactions are posted in a company code. This includes EE

the entry of all transactions that must be posted and the creation of all items for legal individual financial statements, such as the balance sheet and the P&L statement.

When posting any financial transaction, the company code assignment is EE

required. This can be either a manual assignment or be derived automati-cally from other data elements.

A company code has a unique alphanumeric four-character key.EE

Assignments required at this level include country, fiscal year, chart of EE

accounts, accounting currency, and base language.

Periods and currencies are driven by a company code.EE

Legal balance sheet and P&L statements are created at company code le-EE

vel.

This is the minimum mandatory structure required to use Financial Ac-EE

counting.

In SAP ERP, you can either configure using the menu path or by using the transaction code. Sometimes configuration objects do not have a transaction code available. In that case, you have to use the menu path. Also, at the start, we suggest that you use the menu path IMG • Enterprise structure • Definition • Financial Accounting • Edit, Copy, Delete, Check Company Code • Copy. Delete, Check Company Code because it allows you to become familiar with the system. However, using the Transaction OX02 or EC01 will get you to the screen shown in Figure 3.3.

After you click on the option Copy, delete, check company code, you reach the screen shown in Figure 3.4.

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SAP Company Code DefinitionFigure 3.3

Best Practice

It’s always best to copy an existing company code that best meets the characteri-stics of the new company code. SAP comes preconfigured with a set of company codes by country. So, you should always copy a company code of the same coun-try.

Here you can click on the Copy icon (the second icon from left that looks like two sheets of paper). This gives you a pop-up window where you can enter the source company code (in this case, US01) and your new company code (in this case, US00) as shown in Figure 3.4.

Copying a Company Code from an Existing One (Transaction Code EC01)Figure 3.4

You can then copy all the settings from US01 to US00. While this is being copied, the system asks for the currency needed for target company code. You can choose to change it at this point. As shown in Figure 3.5, you can change the company code currency to other than the source company code currency. In this case, you decided to keep the same currency. In addition, you might also get a message about copying the GL accounts where you can choose to either copy or not copy the GL accounts already created in the source company code.

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Option to Change the Company Code CurrencyFigure 3.5

This action leads to the next screen as shown in Figure 3.6 where you can enter the name and address of the new company code created.

Entering Company Code Name, City, Country, Currency, and LanguageFigure 3.6

You can maintain the address and other communication details by clicking on the Address icon (envelope with address details) in Figure 3.6. After you click on the Address icon, a pop-up window opens where you can maintain the address details as shown in Figure 3.7.

Address Details of Company CodeFigure 3.7

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The result is the copying of all other relevant configuration information that needs to happen for a company code. You will get a message that the com-pany code US00 was successfully copied from US01 as shown in Figure 3.8.

New Company Code Is CreatedFigure 3.8

If you want to see what this new company looks like, you have to go back and choose the other option: Edit Company Code Data as shown in Figure 3.9.

Edit an Existing Company CodeFigure 3.9

This allows you to return to this company code later as you saw in Figures 3.6 and 3.7, where you can make changes to the address details. Now that the company code has been created, let’s look at the details of the company code that has been created. The Company Code Global data definition is outlined in Figure 3.10.

The menu path is IMG • Financial Accounting (New) • Financial Accoun-ting Global Settings (New) • Global Parameters for Company Code • Enter Global Parameters, and the transaction code is OBY6.

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Company Code Global Data DefinitionFigure 3.10

The key parameters that are populated for a company code are as follows (these were populated in the previous step using Transaction EC01):

Country KeyEE This identifies the country where the company code is based.

CurrencyEE This identifies the company code currency.

Language KeyEE This denotes the language in which the company code would be managed.

In addition, various accounting organization assignments are also made for a company code as follows, based on the following source company code settings:

Chart of AccountsEE (Chart of Accts) This is the operative chart of accounts in which all the company code transactions are posted.

Country Chart of AccountsEE (Country Chart/Accts) These are the country-specific chart of accounts that need to be maintained only if required.

CompanyEE This is the legal consolidation unit that is tied to the company code.

Credit Control AreaEE This is the organization entity that controls how credit is managed for customers.

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FM AreaEE This is the financial management area that needs to be maintained only if you have implemented funds management.

Fiscal Year VariantEE This identifies the fiscal year applicable for the company code. For exa-mple, K4 symbolizes the calendar year as the fiscal year with four special periods.

We’ll cover the various organization entities and their assignment to the company code later in this chapter.

Notes

Remember this about the company code relationship:

Each client can have multiple company codes.EE

A company code can be assigned to only one chart of accounts, one chart of EE

depreciation, one Controlling area, and one company.

These settings can be changed if desired in the screen shown in Figure 3.10. We will discuss these objects in detail as well. Additional data related to ta-xes and other ID numbers can be maintained in the next screen (see Figure 3.11), which appears when you click on the Additional Data tab shown in Figure 3.10.

Company Code Additional InformationFigure 3.11

From SAP ERP 6.0 onwards, new settings related to Detail Tax Entry with MIRO, Plants Abroad Not Required, Tax Without Rounding Tolerance, and so on have also been added.

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Company3.2.2

Company is the organization entity that is defined for the consolidation mo-dule. Company is the smallest organizational unit for which individual finan-cial statements are created according to the relevant legal requirements. It represents a legal entity, which could be a subsidiary, joint venture, affiliate, or branch. A company does not require the legal books to exist in SAP ERP. Salient points regarding a company organizational unit are as follows:

Company can represent a legal entity or a group of legal entities.EE

Company can also be used to take into account non-SAP financial data EE

through import.

Company is used as an internal trading partner as well in intercompany EE

transactions.

Each intercompany transaction is tagged and automatically eliminated du-EE

ring the consolidation process.

Only a single-level roll up is possible in legal consolidation.EE

Multiple company codes can be assigned to one company for consolida-EE

tion.

A company can include one or more company codes.EE

The menu path you will need to use is IMG • Enterprise Structure • Defi-nition • Financial Accounting • Define Company.

Defining a New CompanyFigure 3.12

As you see in Figure 3.12, the only things that you enter here are the Com-pany name, address, and Currency-related information.

Note

In Figure 3.10, company US01 has been assigned the company code US00. You will learn more about assignments in Section 3.11.

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Business Area3.2.3

The business segment or division in which a group/conglomerate operates can be set up as a business area. This is typically used for SEC segment-level reporting. Financial statements can be created for business areas for internal purposes. The definition of the business area is optional, however.

You can use the menu path IMG • Enterprise structure • Definition • Fi-nancial Accounting • Define Business Area or the transaction code OX03. In the example shown in Figure 3.13, you have created business areas for each of your consulting divisions, assuming you work for a consulting com-pany.

Defining a New Business AreaFigure 3.13

Consolidation Business Area3.2.4

This is the business area that is defined for consolidation purposes across company codes for segment-level reporting. This accounting unit represents a central business area for which you can generate a balance sheet that can be included in the business area consolidation. You can use the menu path IMG • Enterprise structure • Definition • Financial Accounting • Maintain Consolidation Business Area. Figure 3.14 displays the screen where you can maintain consolidation business areas.

Defining a New Consolidation Business AreaFigure 3.14

Financial Management Area3.2.5

Financial Management or the FM area (see Figure 3.15) is used for financial budgeting and is used in SAP Funds Management. Each company code is

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assigned a financial management area, if you are using funds management functionality. The menu path is IMG • Enterprise structure • Definition • Financial Accounting • Maintain FM Area.

Defining a New Financial Management AreaFigure 3.15

Functional Area3.2.6

The functional area categorizes an organization into groups so that you can map the cost of goods sold to each of these groupings. This is used for cost of sales reporting. These historically represented different departments within an organization, such as Marketing, Production, Sales, Administration, and Research & Development. The menu path is IMG • Enterprise Structure • Definition • Financial Accounting • Define Functional Area.

Note

The menu path is not valid from ERP 5.0 onwards so you can use the transaction code FM_FUNCTION to create, change, or display a functional area.

Figure 3.16 shows you the screen for changing the parameters of a functional area. You can maintain the Description, the Validity Period (to and from dates), and the Authorization Group. Authorization Group helps you con-trol who can access the functional area.

Defining a New Functional AreaFigure 3.16

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Note

Typically, substitution rules were used for determining the functional area automa-tically when posting, but in the latest SAP ERP release, you can use a derivation strategy to determine the functional area.

Segment3.2.7

This new enterprise object was introduced with the new GL. Segment is used for segmental reporting as per the SEC and International Financial Reporting Standards (IFRS) guidelines of increased disclosure. The menu path is IMG • Enterprise Structure • Definition • Financial Accounting • Define Seg-ment.

Figure 3.17 shows you the screen where you have defined segments from a retail company’s perspective. The categorization for a retailer can be cash and carry customers, department stores, food retail, nonfood specialty stores, and others.

Defining SegmentsFigure 3.17

Profit Center3.2.8

A profit center is an entity that resides in Controlling and represents an area of responsibility within your company; that is, it provides an internal view of your organization. Profit center is typically a unit that manages both costs and revenues and behaves as an independent operating unit for which a separate operating statement and balance sheet can be calculated. Following are some of the salient points concerning profit centers:

Each profit center must be assigned to a standard hierarchy.EE

Profit centers can be created as regions, functions, products, or a combi-EE

nation of these attributes.

Some of the organizations create a one-to-one assignment with cost cen-EE

ter.

Each profit center can be assigned to one Controlling area.EE

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Profit centers are statistical cost objects and must be derived from a real EE

cost object.

You can use the menu path IMG • Enterprise structure • Definition • Fi-nancial Accounting • Define Profit Center • EC-PCA: Create Profit Center or the transaction code KE51. Profit centers were part of Enterprise Control-ling but with the advent of the new GL, these have also been included in Financial Accounting.

Chart of Accounts3.2.9

This is a listing of all GL accounts that are required to record Financial Ac-counting transactions. Some things to remember about chart of accounts are that:

Multiple charts of account can be defined in a client.EE

Chart of accounts can be used in multiple company codes.EE

Chart of accounts controls account classification and classifies all accoun-EE

ting entries.

An operating chart of accounts, a country chart of accounts, and a group EE

chart of accounts can be used in parallel.

A country chart of accounts is used to satisfy specific account numbering EE

requirements, particularly in some European and South American coun-tries.

A group chart of accounts is used for legal consolidation.EE

An operative chart of accounts is defined at a company-code level and de-EE

termines the structure of the balance sheet within a company code.

Tip

A company code can be assigned to only one operative chart of accounts.

Some caveats related to the structuring of chart of accounts are:

Typically, one of the operative chart of accounts is also made the group EE

chart of accounts.

If group and operative chart of accounts are different, then these need to EE

be mapped account by account.

It’s always best to have one common chart of accounts.EE

Multiple charts of account increase the amount of maintenance.EE

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Chart of Depreciation3.2.10

This is a main organizational unit for fixed assets, and it houses the possible methods of depreciation for the company code. Typically one chart of depre-ciation is usually set by country. Each depreciation area is used to calculate a type of depreciation (book, income tax, federal, etc.). The depreciation calcu-lation keys determine the formula used for depreciation.

The chart of depreciation relationship to other financial enterprise entities is enumerated as follows:

A chart of depreciation can only be assigned to one chart of accounts.EE

A chart of depreciation may cover one or multiple company codes.EE

A company code can only be assigned to one chart of depreciation.EE

Credit Control Area3.2.11

Credit processing in SAP ERP Financials is governed via the credit control area. The credit control area controls the way credit is managed in accounting and sales and distribution. You can use this menu path: IMG • Enterprise struc-ture • Definition • Financial Accounting • Define Credit Control Area.

Defining Credit Control AreaFigure 3.18

Figure 3.18 shows you the screen for defining the credit control area and some of the important settings for the same. The credit control area requires the definition of the following fields:

CurrencyEE This is the currency in which the credit limits are monitored.

UpdateEE Update is the most important field from the credit control area perspective

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Controlling Organizational Entities 3.3

because it lays the rules for managing the customer credit. The following update rules can be defined as applicable for a credit control area:

BlankEE : No update from sales and distribution documents. This means that credit control limits will not be affected from sales and distribution and is only used when sales and distribution is not implemented.

000012: EE Open order value on time axis, delivery and billing document value. This means that the system will include the open order value along with the delivery and billing document value to determine the credit used by the customer.

000015EE : Open delivery and billing document value. This means that the system will only consider the delivery documents and the billing document value.

000018:EE Open delivery value for sales order, open billing document value. This means that the system will consider only the open delivery value and open billing document value.

F Y VariantEE This is the applicable fiscal year variant. K4 stands for the calendar year as fiscal year with 4 special periods.

Risk Category,EE Credit Limit, and Rep. Group These fields can be used to enter the default value for creating customers.

All co. codesEE If you set this indicator, then your credit control area can be entered for all the company codes.

This completes our discussion of the Financial Accounting entities. Let’s now take a brief look at the Controlling entities.

Controlling Organizational Entities3.3

Controlling entities are used to manage the management reporting struc-ture of an organization. The owner of Controlling organizational entities is typically the cost controller who manages the entities in consultation with operational department heads. Unlike financial organization entities that can be solely defined by the Finance department, Controlling organization en-tities (especially cost center) need to be defined in conjunction with opera-tional process teams. In addition, you need to involve your HR department to incorporate the organizational structure when defining your Controlling entities. Overall, the guiding principles should be the strategy and vision of the organization going forward.

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With that said, let’s take a look at the Controlling organization entities (ope-rating concern, Controlling area, and cost centers) in detail.

Operating Concern3.3.1

This is the organizational entity that tracks the profitability of an organiza-tion and structures the enterprise from a profitability perspective. Operating concern is the highest organizational unit in Controlling, and is activated for Controlling-Profitability Analysis (CO-PA). When you create an operating con-cern, then only the operating concern object is created. All the other details get created when you create the master data and characteristic for operating concern. The menu path is: IMG • Enterprise structure • Definition • Controlling • Create Operating Concern.

Controlling Area3.3.2

This is the umbrella organizational entity for Controlling that is used for managerial reporting and cost accounting purposes. All the cost activities can happen in only one Controlling area, not across Controlling areas. All the costing activities require a Controlling area.

The Controlling area represents a common unit of cost structure for which costs and revenue are managed, allocated, and distributed. For example, if you want to transfer primary costs, allocate them or perform any costing planning, all these activities happen within a Controlling area.

After following the menu path IMG • Enterprise structure • Definition • Controlling • Maintain Controlling Area • Copy, Delete, Check Control-ling Area or using the transaction code EC16 you click on Maintain Con-trolling area, and then choose Copy, Delete, Check Controlling Area to get to the screen shown in Figure 3.19.

Copying an Existing Controlling AreaFigure 3.19

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Controlling Organizational Entities 3.3

To copy a Controlling area, select the template Controlling area, co. code after clicking on Templates.

Entering a Target Company Code and Controlling AreaFigure 3.20

In Figure 3.20, you have to enter the target company code and Controlling area. The system asks you whether you want to copy all the GL accounts and which currency you want for your Controlling area. In this case, assume that the currency was specified as USD. This creates a new Controlling area and company code, along with the assignments. In the preceding example, you created US00 as the Controlling area that tied to company code US00 as well.

Cost Center3.3.3

The cost center is the smallest entity in Controlling that represents an area of responsibility at which the costs are managed in your company. You can also implement budgeting at a cost center level in your company. The salient points for a cost center are listed here:

Cost centers typically represent departments within an organization.EE

Each cost center can be assigned to only one Controlling area, one profit EE

center, and one company code.

Each cost center must be assigned to a standard hierarchy structure.EE

Cost centers are used to analyze planned and actual costs at the cost center EE

level.

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The menu path is IMG • Enterprise Structure • Definition • Financial Accounting • Define Profit Center • EC-PCA: Create Profit Center, and the Transaction is KS01.

Next you’ll learn more about the logistics organizational entities.

Logistics Organizational Entities3.4

In this section, you’ll learn more about the logistics organizational entities. They support the logistics modules of SAP ERP, which need to be created so that you can map your business processes to the SAP ERP system. For example, you manufacture and process your goods in a physical location. That physical location is typically created in SAP ERP as a plant. This helps you understand that your plant in St Louis is number 1000 versus the plant in Chicago, which is 2000. So all your material masters and other transaction data is then recorded in these two plants as they occur.

Valuation Level3.4.1

The valuation level defines level at which you will valuate your inventory or stockable materials. The valuation level can be either plant or company code. Plant is the recommended valuation level in most situations. This is manda-tory if you plan to implement production planning, costing, or the SAP Retail Information System solution. Figure 3.21 shows the two toggle boxes availa-ble for you. In this example, you have chosen Valuation area is a plant.

Use the menu path IMG • Enterprise Structure • Definition • Logistics—General • Define Valuation Level or the transaction code OX14.

Definition of Valuation Level: Plant or Company CodeFigure 3.21

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Logistics Organizational Entities 3.4

The choice of valuation level affects the following:

Maintenance of material master recordsEE

GL accounts in which the material stocks are managedEE

GL accounts to which material transactions are postedEE

Valuation area is most commonly set at the plant level to allow for the material valuation at a plant level. If you set the valuation area at the company code level, then the material data will be valuated at the company code level.

Note

It is very difficult to switch between valuation levels after you have production data. Making a clear choice early is important because any change requires a data conversion effort and consulting help.

Plant3.4.2

A plant is an organizational logistics unit relevant for production, procure-ment, plant maintenance, and materials planning. This corresponds to a phy-sical location where materials are managed and is an operational unit within a company code. Examples of a plant include a production facility, branch of-fice, distribution center, warehouse, or anywhere where stock is kept. Some salient features of plant are as follows:

A plant is not a financial entity even though the valuation happens at a EE

plant level.

A plant has bigger implications in other logistics modules such as Materi-EE

als Management (MM), Sales and Distribution (SD), Production Planning (PP), and Logistics Execution (LE), which includes shipping and trans-portation.

Materials Requirement PlanningEE (MRP) is run at the plant level and availa-ble to promise functionality resides at the plant level.

Valuation prices (standard priceEE and moving average price) is defined by the plant.

You can use this menu path: IMG • Enterprise Structure • Definition • Logistics—General • Define, Copy, Delete, Check Plant • Copy, Delete, Check Plant and this transaction code: EC02 (Copying).

5012_BOOK.indb 101 1/10/08 11:44:25 AM

102


Logistics Enterprise Structure: Defining PlantFigure 3.22

As shown in Figure 3.22, to create a plant, you choose Define Plant. You can also copy an existing plant by choosing Copy, delete, check plant. This opens up an interface that is similar to what you saw earlier when copying a company code or Controlling area. If you clicked on Define Plant, then the next screen would appear as shown in Figure 3.23, where you can enter the name and address details of the plant that you want to create.

Defining a New Plant: BasicsFigure 3.23

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103

Logistics Organizational Entities 3.4

Note

Address details are grayed out in the screen shown in Figure 3.23, so you need to choose the Address icon (envelope icon) to enter the address details as shown in Figure 3.24.

After entering the details and saving the data, your plant has been created. Now you need to make sure that it is properly assigned to the right hierarchy elements.

Defining a New Plant: Adding Address DetailsFigure 3.24

Location3.4.3

A location allows a plant to be classified according to spatial or situation cri-teria. You can assign an asset, functional location, equipment, or work center to a location. This is primarily used for reporting and is for informative as-signment only. The menu path is IMG • Enterprise Structure • Definition • Logistics—General • Define Location. Note that location is inherently defined in conjunction with a plant.

Figure 3.25 Defining a New LocationFigure 3.25

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104


Figure 3.25 shows the two locations that have been defined 0101 and 0102 for Work Area 1 and Work Area 2, respectively.

Storage Location3.4.4

The storage location is where materials are physically stored in a plant. It allows the distinction of materials stocks within a plant. Some of the salient points of a storage location are as follows:

Stock is managed only on a quantity basis at a storage location. As we EE

discussed, the value is maintained only at a plant level, if the valuation level is plant.

Physical inventory can be carried out at the storage location level.EE

A separate material master view needs to be created for each storage lo-EE

cation.

Each goods movement (issue or receipt) needs a storage location.EE

Movements across storage locations within the same plant do not have EE

any financial impact.

The menu path is IMG • Enterprise Structure • Definition • Materials Ma-nagement • Maintain Storage Location and the transaction code: OX09.

Define Storage LocationFigure 3.26

As shown in Figure 3.26, storage location is also inherently tied to a plant. After you define the storage location 9000 as Unrestricted, you can also maintain the address of the storage location by clicking on Addresses of storage locations in the left pane.

Storage Bin3.4.5

This is the bin within a storage location where materials are stored. To im-plement inventory tracking at the storage bin level, you should implement SAP Warehouse Management (WM). SAP WM is implemented typically in

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105

Relationship Between Financial and Logistics Entities 3.5

manufacturing and engineering companies (such as automobile manufactu-rers) where you have too many materials masters that need to be tracked and managed separately by bin.

Relationship Between Financial 3.5 and Logistics Entities

In earlier sections, you learned the definitions of financial and logistics orga-nization entities. However, SAP ERP is an integrated system in which both of these come together (in addition to a host of other organization entities) to allow you to map your processes end-to-end. So let’s consider the broad relationship between general logistics units and their link to accounting at this point. This is illustrated in Figures 3.27 and 3.28.

Note

I wanted to come up with a universally applicable entity-relationship diagram (ERD) across the SAP ERP landscape. But as with any system, there are too many ifs and buts that are unique to each organization and that make it really difficult to come up with a universal ERD. However, it’s very important for you to understand what is technically possible. Then you need to apply your business common sense to come up with your own custom ERD.

As shown in Figure 3.27, the storage bin (Bin 1) is tied to the storage location (Storage Location 1), which is assigned to a plant (Plant 1) that is assigned to a company code (Company Code 1). Hopefully, this gives you an under-standing of how you can map your organizational entities to SAP ERP and understand the bigger picture.

$ $

ORGANISATIONAL LEVELS IN INVENTORY MANAGEMENT

Schematic for Organizational Levels in Inventory ManagementFigure 3.27

5012_BOOK.indb 105 1/10/08 11:44:26 AM

665

Index

A

ABAP, 272Accelerated SAP Implementation (ASAP),

43Access sequence, 535Account Assignment, 448Account assignment object, 162Account assignment process, 324Account assignment type, 387Account balance, 283Account control, 217Account determination, 380, 546

Automatic settings, 480Account determination of translation of

balances, 573Account determination overview,

380Account group, 473

Name, 224Account groups, 223Account ID, 323Accounting, 51

Cost center, 27Cost element, 27Entries, 513Guidelines, 51

Accounting books, 589Accounting clerk, 218Accounting impact from SD transactions,

176Accounting principles, 469Accounting reporting, 40Account management, 221Account reconciliation

FI-AA versus FI-GL, 375Accounts payable, 215

Business transactions, 233Preconfigured payment terms, 239 Predefined downpayments, 247

Accounts Payable, 74Accounts payable/expense, 309Accounts receivable, 215

Customer master data, 218

Integration with logistics, 307Ledger, 225New functionality, 280Transaction, 221

Accounts Receivable, 74Account statement, 330, 336

Via EDI, 336Account typeAccrual, 498

Engine, 498Manual, 498Manual configuration, 521New functionality, 498Posting, 506

Accrual procedure, 500Accumulated depreciation, 432Achieving faster closes in SAP, 551Acquisition value, 432Activate Document Splitting tab, 514Activities, 183

Internal, 183Actual costing , 652Actuals table, 586Additional Functions , 74Adobe Acrobat, 291Advance

Payment or receipt, 244Advantages of company code as a legal

entity, 147Advantages of country-specific chart of

accounts, 148Advantages of one global chart of

accounts, 148Advantages of one global operating

concern, 150Advantages of regional operating concern,

150ALE, 478Allocation, 561Approval levels, 159ArrearsArrears interest calculation, 274ASAP methodology

Phases, 48

5012_BOOK.indb 665 1/10/08 11:54:50 AM

666

Index

AssetBook value, 368Physical movement, 367Sale value, 370

Asset accounting, 344Asset Accounting, 388

Assign GL accounts, 531Assignment object, 385Business process, 414Business transaction, 423Company code, 346Configuration, 345Configuring business transactions, 410Configuring transactions, 377Field, 359Integration, 530Legacy data transfer, 426Organization, 345Settings, 395Transaction type, 362

Asset Accounting , 428Input from MM, 345

Asset acquisition, 362Transaction type, 366Type, 364

Asset acquisition phase, 364Asset acquisition type, 364Asset balance sheet value, 388Asset class, 348

Function, 361Wizard, 361

Asset data transfer, 431Asset depreciation, 353Asset history sheet, 363Asset master, 348

Configuration, 361Creating, 349Data, 350Data configuration, 351New, 359Record, 391

Asset receipt, 365Asset related structure, 348Asset report, 382Asset retirement, 369

Country-specific setting, 417Assets

Implementation, 348Assets

Transfer from legacy systems, 348

Assets accounting, 26Assets posting, 381Assignments

Plant and location, 347Attributes of a dimension, 616

B

Bad debt, 257, 302Balance carryforward, 606, 607

In EC-CS, 642Transfers, 606

Balance interest calculation, 274Balance sheet, 535

Financial statement, 643Reporting, 394Translation differences, 639

Balance sheet level, 348Bank account, 478Bank account and payment method, 271Bank Accounting, 344

Configuration, 311Data import, 330Payment transaction, 324

Bank Administration Institute, 328Bank applications, 73Bank bill liability, 261Bank clearing transaction, 332Bank determination

External and internal, 318Internal, 325

Bank directoryDefinition, 313

Bank file formatBAI, 328SWIFT, 328

BankingFormats, 311

Banking integration, 652Banking relationship management, 344Bank posting, 261Bank Relationship Management, 71Bank statement

Electronic, 324, 328Electronic processing, 328Importing, 328Manual, 324

Big Bang approachBenefits, 53

Bill of exchange posting, 261

5012_BOOK.indb 666 1/10/08 11:54:51 AM

667

Index

Breakdown category definition, 630Budget

Creation, 595Budgeting process, 180Business area, 92, 128, 133

Assignment, 133Configuration, 134Consolidation, 92

Business area versus profit center, 151Business blueprint, 80Business Intelligence, 66Business process

Harmonization, 41Procurement to payment, 24

C

Call up individual check, 412Cannot be used manually, 412Capitalization date, 349Capitalized asset, 367Capital project, 37Carryforward, 576Cash discount, 416

Expense account, 513Cash discounts, 366Cash journal, 311

Business transactions, 342Document, 339General ledger account, 340New setup, 341Print parameter, 343Receipt, 344Receipt of checks, 337Saved locally, 338Transasction, 337

Cash receipt, 338Change an existing consolidation ledger,

621Change document, 475Change key words in evaluation group, 356Changing an existing set, 630Characteristics, 631

Definition, 631Hierarchy, 631

Chart of accounts, 89Country , 89Deletion, 539

Chart of depreciation, 96, 346Check/count, 567

Check currency, 619Check deposit, 317

Configuration, 326List, 320Manual, 324Variant, 323

Check GR/IR account, 549Check GR/IR account and other clearing

accounts for items that have not yet been cleared, 549

Classification level, 348Clearing

Automatic and manual, 504Clearing currency, 505Clearing GL account, 510Clearing procedure, 264Clearing transaction, 260Closing cockpit, 550Closing processes

General ledger, 559Closing tasks at period end, 555Cockpit

Closing, 559Coding block, 448

Edit, 582Types, 583

Commitment items, 185Company, 125Company code, 127

Assignment, 135Global parameters, 439Multiple, 130Payment data, 217Target, 483

Company code , 85Definition, 130Key parameters, 89

Company code currency, 476Company code data, 220Company-specific purchasing, 168Comparable arm‘s length price method,

525Compare company code, 482Compensation management, 202Condition tables, 525Condition types

Definition, 527Configuring closing cockpit, 551Configuring GL posting, 507Configuring ledgers, 455

5012_BOOK.indb 667 1/10/08 11:54:51 AM

668

Index

Configuring manual accruals, 522Consolidation

Business transaction, 645Legal, 613Managerial, 613Process, 612Requirements, 613Type, 445

Consolidation areasSegregation, 616

Consolidation groupAssigning, 625Define, 621

Consolidation module, 91Consolidation Monitor, 633Consolidation process, 649Consolidation transaction type, 412Consolidation transaction types, 445Consolidation unit, 625, 640

Sets, 630Contract accounts receivable, 478Control Data tab, 475Corporate governance, 68

Model, 76Corporate Governance, 69Corporate groupwide purchasing,

167Corporate structure, 613Correspondence, 221Cost accounting, 383

Depreciation area, 385Cost allocation, 121Cost center, 359Cost center , 99Cost center planning, 491Cost management , 121Cost of sales accounting, 470Cost planning, 180Create account symbol, 320Credit and Collections, 71Credit balance, 243Credit control account, 303Credit control area, 89Credit control area , 127

Field definition, 96Credit Control Area , 115Credit group, 304Credit management, 71

Setting, 303Currency translation, 635

D

Daily review and audit, 549Data

Condense, 600Deletion from ledgers, 541Integrated plan, 593Mass deletion, 541Rollup, 593Substitution, 600

Data collection, 612, 632Data conversion , 101Data import

Bank Accounting, 330Data load, 538Data Monitor, 614, 633Data processing, 612Data transfer, 624

Legacy, 388Data warehousing , 64Date of last interest run, 480Debit and credit, 234Debit balance, 243, 256Debits and credits, 233Declining balance method, 402Define automatic postings for exchange

rate differences, 574Define available amounts for house banks,

271Define condition table, 525Define cross-system depreciation area, 419Define cutoff value key, 408Define depreciation area, 389Define evaluation groups 4 characters, 356Define exchange rate translation ratio, 642Define ledger, 589, 619Define ledger group, 458Define Posting Keys and Posting Rules for

Check Deposits, 320Define screen layout, 487Define valuation area, 572Define versions, 617Delete company code data, 540Delete GL account, 538Dependencies, 553Depreciation, 398

Calculation method, 401Full, 397Key, 371Key identifier, 405

5012_BOOK.indb 668 1/10/08 11:54:51 AM

669

Index

Ordinary or special, 398Planned or unplanned, 372Run, 372

Depreciation area, 379Depreciation areas, 353

Paths and codes, 399Depreciation calculation program, 373Depreciation key, 396Depreciation key

Maintain, 396Depreciation post, 379Depreciation program, 373Depreciation run, 371Depreciation terms, 391Depreciation type, 398Detailed information, 553Difference, 260Dimension, 614

Preconfigured, 614Disclosure requirements, 469Discount, 260Display field movement, 588Dispute Management, 71Distributed management environment,

329Distributed purchasing, 168Distribution channel , 136Distribution channels, 113Distribution channels , 112Division, 111Document, 255, 510

Parking, 255Post, 242Posted in SAP ERP Financials, 493Posting for general ledger, 497Posting in the GL, 581Reversal, 244Type, 510Types, 171

Document change rule, 239Document date, 609Document External , 383Document items, 509Document number, 501Document origin, 609Document principle, 233Document setting, 234Document splitting, 496

Activation, 514Basic, 508

Characteristics, 511Custom method, 517Deactivate, 515Define rules, 515Extended, 511Functionality, 514Lean version, 508Method, 515Posting, 516Rule, 516Task list, 544

Document splitting Enhanced, 508

Document type, 233, 646, 648, 649Define, 646Standard, 383

Document type detail, 646Document types, 598

Default, 242Financial, 235Valid, 598

Downpayment, 244Approval, 245Chain, 251Made, 245Received, 246Recorded, 245Request, 245Tax clearing account, 250

E

EDI communication, 268Edit coding block, 448Electronic account statements, 335Electronic Billing Enhancements, 71Electronic Data Interchange, 336Employee groups, 123Employee groups

Standard, 123Employee subgroups , 124End-to-end business scenario, 546Enhancement packages, 40Enter global parameters, 437Enterprise controlling, 611Enterprise Resource Planning , 23Enterprise roadmap, 38Enterprise Service Repository (ES

Repository), 31Enterprise structure, 203Enterprise structure , 115

5012_BOOK.indb 669 1/10/08 11:54:51 AM

670

Index

Enterrprise mashups, 25Entity-relationship diagram, 105Environmental protection indicator, 357Equipment management, 358Error message configuration, 229Evaluated receipt settlement (ERS), 166Exchange rate difference, 441Exchange rate gain and loss, 477Exchange rate indicators, 640Exchange rates

Maintain, 642, 641Exchange rate type, 593

F

F-03, F.13, or F.13E, 503F.05, 568Fast Close, 72Fast entry screens, 243Faster closes, 547Field group rules definition, 352Field movement, 587

Type, 588Field movement definition, 592Field status group, 238Field status group definition, 453Field status variant, 369Field status variant and field status group,

443Field status variant definition, 453Finance, 60

Information users, 63Financial Accounting, 68, 650

Components, 27Data transfer, 609Ledger, 443

Financial Accounting , 69Entities, 85

Financial Analytics, 69Financial books, 548Financial data

Reported, 645Financial data

Consolidation, 611Financial document reversal, 497Financial function, 310Financial integration , 186Financial Management, 129Financial management area , 185Financial modeling, 38Financial operations , 63Financial Reporting, 72

Financials consultants , 50Financial Shared Services, 40, 72Financial statement, 382

Defining, 490Item, 627

Financial statements, 307Consolidated, 616

Financial statements , 472Customized, 546

Financial statement version, 489Sample, 489

Financial strategy, 310Financial subledger, 435Financial Supply Chain Management, 68

Module components, 74Process areas, 75

Financial transactions , 549Fiscal year, 396

Shortened, 389Variant, 394

Fiscal year change, 375Fiscal year variant, 462

Define periods, 461Shortened, 462Variation, 459

Fiscal year variant and posting period variant, 444

Fixed assetsTranslation, 635

G

GAAP, 345GAAP standard, 345General accounting, 309General activity, 183General ledger, 433

Account, 380Accounting, 469, 472, 479, 481Accounts for payroll, 534Business transactions, 493Configuring business transactions, 506Customization‘, 484Direct automatic posting, 310Document, 608Integration, 529Management, 469Master record, 472Old table, 450Planning process, 560Posting, 493Totals table structure, 449

5012_BOOK.indb 670 1/10/08 11:54:51 AM

671

Index

General ledger account, 250By chart of accounts, 473

General ledger accounting, 394, 589Introduction, 470

General ledger accounting ledger, 51General ledger accounts

Clearing, 503General Ledger Group

Assignment of accounting principles, 466

General ledger structure, 484Geographic footprint, 56GL

Closing processes, 559GL account, 477GL Account

Deletion, 539GL account interest scale, 502GL Master

Create, 488Global design, 56Global footprint, 57Global parameters, 438Global parameters in Data Monitor,

614Global retained earnings, 607Global rollout, 56

H

Half month, 397Hierarchy, 552House bank, 259

Creation, 259Details, 221Setup, 259

I

IBM WebSphere, 31Implementation, 582

Big Bang, 53Phased, 53Stream of activities, 48Team structure, 48

Inbound shipments, 209Income statement, 643Income statement account, 534Incoming payments

Repetitive, 337Information tab, 475Input tax indicator, 382

Insurance, 221Integrate postings

Non-SAP systems, 537Integration, 471

Accounts payable, 306Other modules, 529Touch-points, 307

Integration Manager, 581Integration of Human Resources with

Financials, 205Integration of legal and management

reporting, 470Intercompany posting, 501Interest

Posting, 277Interest calculation, 273

Arrears, 282Balance, 289Configuring, 275Indicator, 284Numerator, 275On account balance, 283Option, 274Setting, 284Type, 275

Interest form, 291Internal Accounting Standards, 617Internal activity, 183Internal asset transaction, 424Internal transfer posting, 256International Financial Reporting

Standards, 94Interplant movement, 206Interplant shipments, 211Interpretation algorithm, 335Interpretation algorithms

List, 335Interunit elimination, 649Interunit profit elimination, 612Inventory Mgmt) interact with other

technical teams (technical team, Inventory posting, 533Invoice

Creation, 255Grouping, 258Parking, 255

K

Key administrative issue, 548Key decision perspective, 48Key performance indicators, 66

5012_BOOK.indb 671 1/10/08 11:54:52 AM

672

Index

L

Leading ledger, 456Ledger, 443

Configuring, 454Global and local, 582, 596Movement, 593Multiple, 466Nonleading, 580Representative, 458Special purpose, 245, 579, 643Special Purpose, 74Update, 587

Ledger group, 457Ledger view, 495Legacy data, 45Legacy data transfer, 426

Using Microsoft Excel, 428Legacy system

Interface, 549Non-ERP, 51

Legacy systemsDisparate, 66

Legal consolidation, 147Legal entity, 91Legal view, 525Level of Detail tab, 514Life of accrual, 500Logistics invoice verification, 255

M

Maintain consolidation unit, 626Maintain fiscal year variant, 460Maintenance planning, 120

Activities, 120Plant, 120

Management Accounting, 68Management reporting, 469Manual payment, 258Master data, 470, 649

Check, 449Cleansing, 41Key aspects, 613Maintenance, 222Setup, 612

Master record, 230Match code, 229Material, 183Materials Management, 529

Document, 255

MethodologyASAP, 44

Module integration Requirements, 470Monitor, 552Month-end activities, 547Month-end close, 470Month-end closing checklist, 547Month-end process, 550Month-end process , 548Month End process, 51Month-end processes, 547

N

Negative postings, 243Net book value, 432Network, 182New document type

Defining, 340New General Ledger, 491

Implementation, 542Migration, 542SAP ERP project plan, 542Tables, 492User interface, 493

New posting period, 463Non-SAP ERP systems, 632

O

Off-balance sheet item, 245Offshore consulting, 59Open and close posting, 464Open-item clearing, 520, 503Operating concern, 98Operating concern , 131Operating legal structure , 611Optimization initiatives, 651Optimization settings for asset transfer,

418Orders assigned to a project, 185Orders settled to objects at period end,

185Ordinary depreciation, 371Organizational entities, 80Organizational units, 621Outbound shipments , 210Outgoing payment, 258, 259Outgoing payments

Manual, 262Output tax indicator, 382

5012_BOOK.indb 672 1/10/08 11:54:52 AM

673

Index

P

Parallel accounting, 594Parallel currency, 504Parallel reporting, 470Parallel valuation, 389

Multiple, 524Payment block, 261

Reason, 261Payment company code, 268Payment form, 272Payment media, 272, 273, 269Payment method, 217

Configure, 269Payment run, 258

Execution, 307Steps, 258

Payment termNew, 240

Payroll, 202Integration, 534

Payroll accounting area and organization structure, 204

PDF form, 268Period control, 407Periodic processing, 371, 599Personnel area , 122Personnel cost, 309Phased implementation

Focus, 56Planned processes, 196Planning level, 480Planning process, 491Planning report, 595Plant Maintenance, 359

Departmental view, 187Plant Maintenance , 119Pledge indicator, 232Portfolio assessment, 35Post capitalization, 368Posting

Actuals, 596Posting detail, 497Posting key, 233Posting keys

Define, 243Posting period, 597Posting period variant, 458Posting period variant , 463Posting run

Reason, 372Posting version, 597Preparation for productive start, 471Preparatory closing tasks, 555Preparing Automatic Clearing, 520Pricing, 69, 112

Structure, 535Pricing procedure, 173

Defining , 528Definition, 528

Print parameter, 343Cash journal receipts, 343Maintaining, 344

Process error table, 386Process flow, 157Process flow for transportation, 206Procurement cycle, 345Procurement of consumable material,

160Procurement of external services,

160Procurement of stock material, 160Procurement to payment business process,

157Procure to Pay, 40Procure to pay cycle, 215Product costing , 652Production

Data import, 426Production data, 101Production support, 38

Ongoing, 39Productive start, 538Profit and loss account, 417Profit center, 359

Multiple , 129Profit center , 94Profit center accounting, 472, 589Profit Center Accounting, 524Profit centers

Multiple, 524Profit center view, 525

Q

Quality Management, 195Organizational entities, 198

Quality management processes, 195Quality of reporting, 24Quarterly report card, 547

5012_BOOK.indb 673 1/10/08 11:54:52 AM

674

Index

R

Range of accounts, 509Rate for calculation, 284Raw material account, 478Reason code

Setting, 263Recalculation, 432Receiver module , 632Receiver table, 587Reclass, 616Reclassify, 564Reconciliation account, 217Reconciliation indicator, 388Reference interest rate, 285Refurbishment of spare parts , 192Relationships, 127Release task list, 558Relevant to cash flow, 480Reporting, 81, 612

For consolidation, 72Legal, 470Management, 97Requirements, 578Segment, 469Segmental, 94Segment-level, 92Standard, 81Statutory requirements, 84

Reporting structure, 611Report painter, 492Report writer, 492Retirement/transfer/current year

acquisition, 411Roadmap

Enterprise, 36Rollup, 574

S

Sales accounting, 446Sales and Distribution, 529

Customer master, 219Integration with accounts receivable,

307Sales and Distribution price determination

procedure, 525Organizational entitities, 108

Sales area, 113Sales area , 113Sales cycle, 171

Sales document , 113Sales document type, 172Sales of assets, 418Sales order, 221Sales organizations , 135Sample divisions , 111SAP Banking, 311SAP BI accelerator, 31SAP Business Information Warehouse, 66SAP Controlling-Profitability Analysis , 98SAP CRM (Customer Relationship

Management), 31SAP Easy Access

Groups, 72Interface , 72

SAP ECC Core Enterprise Controlling, 611SAP Enjoy, 451

Transaction, 234SAP Enterprise Consolidation (EC-CS), 611SAP ERP, 61

Architecture, 26Business transactions posting, 233Core organization structure, 79Enterprise structure, 26Go-live, 240Implementation rationale, 29Implementation roadmap, 30Map organizational structure, 79Master data structure, 218Organizational entities , 79Organizational structure, 79Portalization, 43Solution landscape, 31Standardizing systems, 64System architecture, 31Tools, 74Tools, 24

SAP ERP 5.0 , 472SAP ERP 6.0, 23, 652SAP ERP 2005, 373SAP ERP component, 415SAP ERP Easy Access, 72SAP ERP ECC 5.0, 469SAP ERP Financial Accounting, SAP ERP

Management Accounting, SAP ERP Corporate Governance, or SAP ERP Financial Supply Chain Management, 32

SAP ERP FinancialsHistory, 64

5012_BOOK.indb 674 1/10/08 11:54:52 AM

675

Index

Implementation sponsors, 63 Optimization, 24Reasons for implementation, 61Solution stack, 68

SAP ERP Financials implementation Drivers, 64Enhancement packages, 70Funcionality, 651Key value driver, 470Perspective, 546Toolkit, 651

SAP ERP implementationCost and timeline, 52Judging, 61Landscape , 39Roadmap , 30Roadmap analysis, 34Roadmap factors, 33Subtypes, 42Types, 38

SAP ERP systemPerformance enhancement, 41

SAP ERP upgrade, 40SAP Executive Search, 31SAP Financial Supply Chain Management

Business benefits, 76SAP Funds Management , 129SAP landscape , 38SAP module, 595SAP PLM (Product Lifecycle Management),

31SAP R/3

Financials system, 65Reporting stack, 32

SAP R/3 4.6C, 242SAP R/3 4.7 , 339SAP Retail Information System , 100SAPscript, 268SAP Solution Manager, 43SAP Strategic Enterprise Management , 69SAP support agreement, 39Sarbanes-Oxley Act, 77

Section 404, 77Schedule line category, 173Screen layout, 351Segment, 94Segment, Business Area, and Profit Center,

511Sender table, 587Set, 630

Set changeover year, 412Setting global parameters, 614Settlement process, 255Shared service, 310Shared services extension set , 652Shipment execution, 208Six Sigma, 195Smart Form, 272Solution Manager

Components, 46SOPs, 158Source lists , 166Special closing process, 551Special depreciation, 371Special general ledger

Implementation, 582Special purpose ledger, 578

Express installation, 583Installation, 583

Standard ledgers, 579Standard price , 101Statistical key figure (SKF), 560

T

Table groupDefinition, 584Definition process, 584

Task definition, 634Task group

Assign, 635Task level assignment for WBS element,

184Task list, 552Task list template, 552Task types and processing status, 557Tax, 309Tax account, 478Tax clearing account, 250Tax codes

By country, 242Multiple, 242

Template/task list, 557Terms of payment, 239Time management, 121Tolerance group, 221Tools available for cost planning, 185Total cash payments, 338Total cash receipts, 338Total check receipts, 338Total Quality Management (TQM), 195

5012_BOOK.indb 675 1/10/08 11:54:52 AM

676

Index

Totals table, 449Trading partner, 474Transaction

F-48, 245Key BNG, 564

Transactional Orientation, 61Transaction codes for SD, 174Transaction key

GNB, 564Transactions for PS, 181Transfer pricing

Methodology, 525Translation method, 635, 640

Selection, 637Translation ratio

Specify, 641

U

Unit of production depreciation, 371Unplanned depreciation, 369, 371Upgrade project, 542User experience, 31US GAAP, 617

V

Valuate, 568Valuation, 388

Fixed asset, 388Parameters, 377

Valuation configuration, 570Valuation level , 100

Plant, 100Valuation method

Define , 570Valuation procedure, 571Value analysis, 36ValueSAP, 43

VendorAccounting, 218Evaluation, 229Tolerance, 262

Vendor account groupDefine, 224

Vendor group, 223Vendor invoice, 268Vendor master, 216

Changing fields, 230Configuration best practice, 222Creation, 227Data screen, 232Enhancement, 232Field segregation, 230Optimization, 222Populating, 232Terms of payment, 239Transaction, 226

Vendor master data, 223Vendor master display, 216

W

Warehouse Management System, 115Warehouse structure, 115WBS element, 182Withholding tax

Activate extended, 442

Y

Year-end closing, 375Execution, 376Undo, 376

Z

Zero balance, 512

5012_BOOK.indb 676 1/10/08 11:54:52 AM

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