This comprehensive overview of SAP FICO.

Understanding
the SAP Finance
Module: A
Comprehensive
Overview

Introduction
Welcome to the
presentation. This comprehensive overview will
provide a deep dive into the functionalities and
benefits of SAP Finance. We will explore key
features, processes, and best practices.

Overview of SAP
An to SAP and its significance in
the business world.
SAP, or Systems, Applications, and Products in
Data Processing, is a prominent enterprise
software company founded in Germany in 1972.
SAP specializes in providing ERP (Enterprise
Resource Planning) solutions to help
organizations manage various business
processes such as finance, supply chain, and
human resources. The core ERP suite, SAP ECC,
has evolved into SAP S/4HANA, a next-
generation platform with improved
performance and analytics. SAP also offers
cloud solutions, industry-specific applications,
and tools for integration, analytics, and business
intelligence. The company is known for its
commitment to helping organizations become
intelligent enterprises through
innovative technologies.

The Finacial Accounting (FI) & Controlling (CO)
Financial Accounting (FI) module is dealt with External Reporting: Drawing the Financial Reports as per
NAM (National Municipal Accounts Manual).
Controlling (CO) module is dealt with Internal Reporting: MIS Reporting- Ward/Department/Function wise
Expenses Report.

SAP Finance Module Structure
Exploring the and of the SAP
Finance Module. Understanding the
and its impact on financial processes.
The SAP Finance Module is an essential component of
the SAP system, used for managing financial
transactions and operations. It encompasses various sub-
modules like accounts payable, accounts receivable,
general ledger accounting, asset accounting, and more.
Understanding the architecture and components of the
SAP Finance Module is crucial to ensure smooth financial
operations.

Financial Accounting in SAP
Financial accounting in SAP (Systems,
Applications, and Products) is a comprehensive
module designed to manage and record
financial transactions within an organization.
SAP’s Financial Accounting (FI) module is a key
component of the SAP ERP system, providing a
robust solution for financial reporting and
compliance.
Financial Accounting in SAP is a comprehensive
solution that enables organizations to effectively
manage their financial processes, ensuring
accuracy, compliance, and real-time visibility
into financial performance.

Controlling in SAP
Controlling (CO) in SAP complements Financial
Accounting (FI) by providing organizations with
tools for internal reporting, cost management,
and analysis. The Controlling module enables
businesses to monitor and control their internal
processes, ensuring effective decision-making
and strategic planning
By incorporating the Controlling module, SAP
offers organizations a comprehensive solution for
managing and optimizing their internal
processes, enhancing cost transparency, and
supporting informed decision-making to achieve
strategic objectives.

Financial Accouting (FI) Sub module
Business Scenarios and Processes Financial Accounting (FI) Management
Accounting (CO) and Funds Management module will cover the following business
processes:
 Master Data Maintenance in Accounting
 New General Ledger Accounting
 Accounts Payable
 Accounts Receivable / Collection Management
 Bank Accounting / Cash Management
 Asset Accounting
 Closing Procedures
 Cost Center Accounting
 Fund Management - Budget Control System

Asset Accounting
Asset Accounting in SAP designed to manage
an organization’s fixed assets throughout their
lifecycle. It enables businesses to track,
document, and analyze their assets, ensuring
accurate financial reporting and compliance
with accounting standards
.
In summary, Asset Accounting in SAP
streamlines the management of fixed assets,
from acquisition to disposal, ensuring accurate
financial reporting, compliance with
regulations, and effective decision-making
regarding asset management and
optimization.

Advantage of Asset Accounting
 Cash Flow will become more transparent when you run fixed asset accounting in SAP.
 Performing fixed asset accounting in SAP enables more efficient reporting, makes better use and
requires less support.
 Master data is available which is authentic, So estimation is much easier.
 An asset master represents the master record and information about a particular asset. According to
the screen layout of the asset master, it controls the following for sub assets:
■ Sub assets master number assignment ■ Assignment of the depreciation key
■Determination of life of assets ■ Determination of assignment of group asset
 Preparing and defending rate cases will be easier when you bring fixed asset accounting into SAP.
 Extended Asset Accounting delivers more accurate depreciation and a faster depreciation.

Rules in Asset Accounting
 Sub Assets is to be created in Main Asset.
 Main Asset Master is to be created under Asset Class.
 Asset Class is Assigned Account Determination, Screen Layout, and Number Range.
 In Account Determination we Assign Accounts based upon the Transaction like
Purchase, Profit, Sales, Scrap, Lose, Deprecation, and Accumulated Depreciation
Creation of Asset Classes
TR Code OAOA
Path: - IMG→Financial Accounting→Asset Accounting→Organizational Structure→Asset Classes→
Define Asset Classes

Depreciation Areas in the Asset Class
TR Code OAYZ
Path: - IMG→ Financial Accounting (New) →Asset Accounting→Valuation→Determine
Depreciation Area in the Asset Class
Methods of Depreciation :
■ Base method . ■ Decline value method . ■ Maximum method—In this method, you defi ne
your maximum depreciation amount for a particular fi scal year. ■ Multilevel method—This
method helps to determine the validity of a particular depreciation rate. For example, an
appropriate depreciation for assets is 5% for the fi rst fi ve years, and after that the
depreciation rate will be 7.5% for the rest of the periods■ Period control method—This
determines the depreciation start date and end date of asset transactions. In this method, you
determine the effective start date and end of depreciation calculation for (1) acquisition, (2)
subsequent acquisitions/ postcapitalization, (3) intracompany transfers, and (4) retirements.

Depreciation Run – T code - AFAB
Depreciation a/c Dr.
TO Accumulated Depreciation a/c
WRITE-UP OF AN ASSET
Accumulated depreciation a/c
TO Depreciation

Sale of Asset T. code F-92
(01)Customer A/c Dr
(70)Acc. Dep. On AssetA/c Dr
(40)Asset SaleA/c Dr
To (50) To Asset Sale A/c
To (75) To Asset A/c
To (50) To Profit on Asset Sale A/c or
(40)Loss on Asset Sale debit

Accounts Payable
Accounts payable process explains the
Procurement to Payments Procure to
Pay, also known as P2P, is the
process of obtaining the raw materials
needed for manufacturing a product
or providing a service, and making
payment for these. Every
manufacturing concern or service
provider needs to run this cycle
efficiently if they are to continuously
manage their cash flow, build goodwill
with suppliers and make profits.

Steps of the Procure to Pay (P2P) Cycle
 The process begins with planning what materials are required, when they are required, and the
price that the company can afford to pay for them
 Then the company prepares a list of vendors that they think can provide the materials for
them.
 The company asks each of the vendors to submit a quotation, which includes the price, terms
of delivery, quality of materials, and any other information that they need for making their
decision. This stage could also involve negotiating with the vendors for the best deal
 Once a vendor has been chosen, the buyers create a purchase requisition form that includes
information such as the description of goods and services, department account number,
signatures of the authorized managers, delivery instructions and quotation from the authorized
vendor
 A formal purchase order is sent to the vendor to supply the goods along with instructions as to
the conditions under which they have to be supplied.
 Once the company receives the goods from the supplier, the purchase department prepares a
Goods Receipt. This is an important document which can later be used for reconciling if what
the seller delivered was indeed what they asked for.

 The Goods Receipt is compared with the Purchase Order to validate if the two match. If there are any discrepancies, the
buyer can contact the seller and post a complaint. Checks are made if the goods are suitable for use or not, if the
correct quantity has been delivered, if all the goods meet the ordered specifications, and they are priced according to
the terms of the purchase order. If any goods are damaged then the buyers will have to contact the sellers and ask
either for a replacement or a refund
 Once the verification of the goods is done, the payment invoice is created and the necessary approvals from the project
managers are obtained
 When the company makes the final payments to the vendor, the cycle comes to close.

VENDOR INVOICE PROCESSING
Below is the Procurement to Payment Cycle :
 Material requirement planning
 Vendor Selection
 Request for quotation
 Purchase requisition
 Purchase Order
 Goods Receipts ( MIGO )
 Invoice Verification (MIRO)
 Payment to Vendor ( APP F110)
 Open item clearing against down payment, if any
CREATION OF VENDOR MASTER
There is change process in S/4 HANA (S4H) for Vendor Master Creation, Vendor
master will be created using T-Code BP. Vendor, Customer and Employee Master
Terminology will be changed in S/4 HANA, it will be Business Partner (BP)

Invoice Verification
Vendor Invoice Verification will have to be done at the concerned location. This
will be based on the Goods Receipt processing done by the purchase
Department and PO Raised by the purchase Department the following entry will
be as shown as below
Dr. GR/IR
Dr. Price Difference (If any)
Cr Vendor (Business Partner)
Cr. Cash Discount (If any)
Cr. Price Difference (If any)
Cr. Customs/Freight/Clearance (In case of foreign trade)

PAYMENT PROGRAM
This scenario deals with posting accounting data
for vendors in Accounts Payable. From there, the
data is sorted by vendor and made available to
other areas such as the purchasing system.
When you post data in Accounts Payable, the
system creates a document and passes the data
entered to the general ledger. General ledger
accounts and vendor accounts are then updated
according to the transaction concerned (payable,
down payment, credit memo, and so on) vendor
payment activities. All business transactions are
posted to and managed by means of accounts
and for this a vendor master records are created.
In case of outgoing payment with automatic
payment program, system is determined
parameter in payment program and payment
document is generated.

Accounts receivable component records and
manage accounting data of all customers. It is
also integral part of sales management. All
postings in account receivable are also recorded
directly in general ledger.
Accounts receivable process explains the Process
of order to cash, which also known as O2C. The
account receivable sub module has tones of
report and forecasting features to track
customers/vendors outstanding and payment. It
monitors and manages overdue receivables
through dispute management, and collection
management. It also set up rules to determine
credit score and credit limits for your customers.
Account Receivable

New General Ledger Accounting
G/L accounting provides a comprehensive
picture for external accounting and accounts.
Essentially, the general ledger serves as a
complete record of all business transactions
entered into the SAP system. It is the
centralized, up-to-date reference for the
rendering of accounts. Actual individual
transactions can be checked at any time in
real-time processing by displaying the
original documents, line items and monthly
debits and credits at various levels.

Bank Accounting
This component is used to handle
accounting transactions that you
process with your bank.
It includes the management of bank
master data, cash balance
management (check and bill of
exchange management), and the
creation and processing of incoming
and outgoing payments. It is possible
to freely define all country-specific
characteristics, such as the
specifications for manual and electronic
payment procedures, payment forms,
or data media.

Cash Management
Cash Flow Management in SAP designed to help
organizations monitor, analyze, and manage
their cash ﬂows effectively. It provides real-time
insights into cash movements, enabling
businesses to make informed financial decisions.
Cash Flow in SAP is a powerful tool for
organizations to manage their cash positions,
plan for future liquidity needs, and make
informed financial decisions, ultimately
contributing to effective financial management
and strategic planning

Financial Planning and Analysis
Financial Planning and Analysis (FP&A) in SAP is a
module that empowers organizations to create
comprehensive financial plans, perform budgeting,
and conduct in-depth analysis to support strategic
decision-making. This module integrates seamlessly
with other SAP modules, providing a holistic view of
an organization’s financial performance.
SAP’s Financial Planning and Analysis module
empowers organizations to develop comprehensive
financial plans, conduct detailed analyses, and make
informed decisions. By providing a unified platform
for financial data and planning activities, SAP FP&A
supports organizations in achieving their financial
goals and maintaining agility in a dynamic business
environment.

Financial Reporting
Financial Reporting in SAP is a critical component of the
software’s Financial Accounting (FI) module, providing
organizations with robust tools to generate accurate
and comprehensive financial statements.
In summary, SAP’s financial reporting capabilities
provide organizations with a powerful and ﬂexible
platform to generate accurate and timely financial
statements. The integration with various SAP modules,
real-time data access, and compliance features
contribute to an efficient and reliable financial reporting
process, supporting organizations in their decision-
making and regulatory compliance efforts.

Integration with Other Modules
In SAP (Systems, Applications, and Products in Data
Processing), integration refers to the seamless
collaboration of various modules within the system to
ensure a unified and efficient business process. SAP is
renowned for its modular structure, with each module
catering to specific business functions. The integration
of these modules is crucial for organizations to achieve
comprehensive data ﬂow, streamlined operations, and
real-time decision-making.
The integration of other modules in SAP is
fundamental to achieving a harmonious and efficient
business environment. It ensures that data ﬂows
seamlessly across various functions, enabling
organizations to make informed decisions and
respond dynamically to market changes.

Compliance and Governance
Compliance and governance play pivotal roles in the
effective and responsible use of SAP (Systems,
Applications, and Products in Data Processing)
solutions within an organization. These concepts are
crucial for ensuring that business processes adhere to
legal, regulatory, and internal standards.
In conclusion, compliance and governance in SAP are
integral components of responsible and efficient
business operations. By leveraging SAP’s features and
adopting best practices, organizations can ensure that
their use of SAP aligns with legal requirements,
industry standards, and internal policies, thereby
mitigating risks and enhancing overall business
performance.

Best Practices in SAP
Finance
Implementing best practices in SAP Finance is
essential for organizations to maximize the efficiency
and effectiveness of financial processes. Here’s a brief
overview of some key best practices in SAP Finance:
1. Chart of Accounts Standardization:
2. Integration of Modules:
3. Real-Time Reporting:
4. Automation of Processes:
5. Cash Flow Management:
6. Financial Planning and Budgeting:
7. Compliance and Governance:
8. Vendor and Customer Relationship Management:
9. Internal Controls:
10. User Training and Documentation:
11. Periodic Reviews and Audits:
12. Customization with Care:
By incorporating these best practices, organizations
can optimize their use of SAP Finance, streamline
financial processes, enhance data accuracy, and
ultimately support better decision-making in the

User Roles and Security
User roles and security in SAP are critical
components of the system’s overall
governance framework, ensuring that users
have appropriate access to data and
functionalities while maintaining the
confidentiality and integrity of sensitive
information.
By implementing a robust user roles and
security model in SAP, organizations can
mitigate risks associated with unauthorized
access, adhere to compliance requirements,
and safeguard sensitive data. Regular reviews
and updates to user roles ensure that access
remains aligned with business needs and
security policies.

Training and Support
Training and support are integral
components of a successful SAP (Systems,
Applications, and Products in Data
Processing) implementation and ongoing
usage. Effective training ensures that users
are equipped with the necessary skills to
leverage SAP functionalities, while robust
support mechanisms help address issues,
troubleshoot problems, and optimize system
performance.
By prioritizing training and support,
organizations can empower users to
maximize the benefits of SAP, minimize
errors, and contribute to the overall success
of the SAP implementation. Continuous
learning and a responsive support structure
are key elements in maintaining a proficient
and confident user community.

Implementation Considerations
Understanding the
considerations for SAP Finance. Exploring the
and
aspects,Implementing SAP (Systems,
Applications, and Products in Data Processing)
is a complex process that requires careful
planning, coordination, and consideration of
various factors.
By carefully considering these factors,
organizations can enhance the likelihood of a
successful SAP implementation, ensuring that
the system meets business objectives, is
embraced by users, and contributes to overall
organizational efficiency.

Future Trends in SAP Finance
Here are some potential future trends in SAP Finance:
1. SAP S/4HANA Adoption:
2. Intelligent Automation and AI:
3. Advanced Analytics and Reporting:
4. Blockchain for Financial Transactions:
5. Central Finance for Global Operations:
6. Continuous Close and Real-Time Accounting:
7. Regulatory Compliance and Risk Management:
8. Focus on User Experience:
9. E-invoicing and Digital Payments:
10. Environmental, Social, and Governance (ESG) Reporting:
11. Subscription-Based Models:
It’s essential for organizations to stay informed about these
trends and assess their relevance to their specific business
requirements. Regular updates from SAP, industry
conferences, and collaboration with SAP experts can help
organizations navigate the evolving landscape of SAP
Finance.

Fund Management
The functions in this component support you in
creating budgets. The tasks of Funds
Management are to budget all revenues and
expenditures for individual responsibility areas,
monitor future funds movements in light of the
budget available, and prevent budget overruns.
You can adapt the budget to changes in
conditions by entering release, supplements,
returns, and transfers.
Funds Management is fully integrated with
other components in the R/3 system. Which
component is used in each case depends on the
specific requirements of your organization. A
basic requirement for use of funds Management
is integration with the General ledger
accounting component.

Funds Managemnet – Budget Control System
Public Sector Funds Managment System:
The functions in this component support you in creating and executing budgets. The purpose of
Funds Management is to budget all revenues and expenditures for individual areas of
responsibility, to control future funds transactions in accordance with the distributed budget, and
to stop the budget being exceeded. You can adapt the budget to changes in conditions by
entering releases, supplements, returns, and transfers.
Features Funds Management enables you to:
Control revenues and expenditures and thus control the funding of business transactions of an
organization. Closely control your budget, with the following questions in mind:
* What funds will the areas of responsibility receive?
* Where do these funds come from (source of funds)?
* What are the funds used for? (use of funds)
* Control the finances of your organization by comparing commitment and actual values with
current budget values.

Conclusion
In conclusion, this comprehensive overview has provided
valuable insights into the SAP Finance Module. Embracing
the and is essential
for successful financial management.

This comprehensive overview of SAP FICO.

Recommended

Recommended

More Related Content

Similar to This comprehensive overview of SAP FICO.

Similar to This comprehensive overview of SAP FICO. (20)

Recently uploaded

Recently uploaded (20)

This comprehensive overview of SAP FICO.