What is the SAP FI Module Introduction
Introduction
The SAP FI Module has the capability of meeting all the accounting and financial needs of an organization. It is within this module that Financial Managers as well as other Managers within your business can review the financial position of the company in real time as compared to legacy systems which often times require overnight updates before financial statements can be generated and run for management review.
The real-time functionality of the SAP modules allows for better decision making and strategic planning. The FI (Financial Accounting) Module integrates with other SAP Modules such as MM (Materials Management), PP (Production Planning), SD(Sales and Distribution), PM (Plant Maintenance),and PS (Project Systems).
The FI Module also integrates with HR(Human Resources) which includes PM(Personnel Management), Time Management, Travel Management, Payroll.Document transactions occurring within the specific modules generate account postings via account determination tables.
The FI (Financial Accounting) Module components.
The FI Module comprises several sub-modules as follows:
- Accounts Receivables
- Accounts Payable
- Asset Accounting
- Bank Accounting
- Consolidation
- Funds Management
- General Ledger
- Special Purpose Ledger
- Travel Management
Accounts Receivables records all account postings generated as a result of Customer sales activity.
These postings are automatically updated in the General Ledger . It is within the Accounts
Receivables Module that you can monitor aging of the receivables and generate customer analysis. The Accounts Receivable Module also integrates with the General ledger, Sales and Distribution, and Cash Management Modules.
Accounts Payable records account postings generated as a result of Vendor purchasing activity. Automatic postings are generated in the General Ledger as well. Payment programs within SAP enables the payment of payable documents by check, EDI, or transfers.
Asset Accounting is utilized for managing your company’s Fixed Assets. SAP allows you to categorize assets and to set values for depreciation calculations in each asset class.
Bank Accounting allows for management of bank transactions in the system including cash management.
Consolidation enables the combining of financial statements for multiple entities within an organization. These statements provide an overview of the financial position of the company as a whole.
Funds Management allows management to set budgets for revenues and expenses within your company as well as track these to the area of responsibility.
General Ledger is fully integrated with the other SAP Modules. It is within the General Ledger that all accounting postings are recorded. These postings are displayed in real-time providing up-to-date visibility of the financial accounts.
Special Purpose Ledger is used to define ledgers for reporting purposes. Data can be gathered from internal and external applications.
Travel Management provides management of all travel activities including booking trips and handling of expenses associated with travel.
Primary configuration considerations:
Client, company and company code
Once a business has decided to use the SAP FI(Financial Accounting) Module, there are several Configurations prerequisite steps that must be completed.Determining the organizational structure is one of the first steps in setting up the business functions in SAP as well as your reporting requirements.
The Organizational structure is created by defining the organizational units consisting of the following:
- Client
- Company
- Company Code
- Business Area
A Client is the highest unit within an SAP system and contains Master records and Tables. Data entered at this level are valid for all company code data and organizational structures allowing for data consistency. User access and authorizations are assigned to each client created. Users must specify which client they are working in at the point of logon to the SAP system.
A Company is the unit to which your financial statements are created and can have one to many company codes assigned to it. A company is equivalent to your legal business organization. Consolidated financial statements are based on the company’s financial statements. Companies are defined in configuration and assigned to company codes. Each company code must use the same COA( Chart of Accounts) and Fiscal Year. Also note that local currency for the company can be different.
Company Codes are the smallest unit within your organizational structure and is used for internal and external reporting purposes. Company Codes are not optional within SAP and are required to be defined. Financial transactions are viewed at the company code level. Company Codes can be created for any business organization whether national or international. It is recommended that once a Company Code has been defined in Configuration with all the required settings then other company codes later created should be copied from the existing company code. You can then make changes as needed. This reduces repetitive input of information that does not change from company code to company code as well as eliminate the possibility of missed data input.
When defining company codes, the following key areas must be updated:
- Company Code Key- identifies the company code and consists of four alpha-numeric characters. Master data and business transactions are created by this key.
- Company Code Name- identifies the name of the business organization within your organizational structure.
- Address- identifies the street address, city, state, zip code for the company code created. This information is also used on correspondence and reports.
- Country- identifies the country to which your business is based. Country codes within SAP are based on ISO Standards.
- Country currency- identifies the local currency for the company code that you have defined.
- Language- identifies the language to be used for you company code and is also used for text in your documents. SAP unlike other applications, offers over thirty languages including EN( English) , ES (Spanish), FR (French), DE (German), EL (Greek), IT(Italian), AR( Arabic), ZH (Chinese) , SV (Swedish) , and JA (Japanese) to name a few.
More FI configuration considerations:
Business Area, COA, GL, Fiscal year and Currencies
Business Area is optional and is equivalent to a specific area of responsibility within your company or business segment. BA (Business Area) also allows for internal and external reporting.
Another configuration requirement for set-up in SAP are the Basic settings consisting of the following:
- Chart of Accounts(COA)
- Fiscal Year Variants.
- Currencies
The COA(Chart of Accounts) lists all General Ledger accounts that are used by the organization. It is assigned in configuration to each company code and allows for daily General Ledger postings.
The General Ledger accounts are made up of such data as account number, company code, a description of the account , classification of whether the account is a P & L Statement Account or a Balance Sheet Account.
- Control data of the GL Account is where currency is specified, Tax category (posting without tax allowed) , marking the account as a reconciliation account ( e.g. Customer, Asset, Vendors, Accounts Receivable) or not.
- Marking the G/L Account as a “reconciliation” account allows for postings to an Asset Account ( for example) as well as automatic update to the G/L Account.
- Configuration prevents direct postings to reconciliation accounts thereby assisting in maintaining integrity of the data.
- This allows reconciliation between the sub-ledger and general ledger to always be guaranteed.
- Within the General Ledger control data , you can also designate whether line item display is possible in the account. The system then stores an entry per line in an index table which links back to the account. (Display of line item details are then available for reporting purposes ,etc.)
- Open Item Indicators can be set on the G/L Account allowing for better management of open items. Examples include: Bank Clearing Accounts, GR/IR Clearing Accounts, Payroll, etc.
Fiscal Year configuration is a must and can be defined to meet your company’s reporting periods whether Fiscal (any period combination that is not calendar) or Calendar( Jan-Dec).
- Posting Periods are defined and assigned to the Fiscal Year.
- Within the periods you specify start dates and finished dates.
- SAP allows for 12 posting periods along with specially defined periods that can be used for year-end financial closing.
Currencies are another basic configuration setting requirement which defines your company’s legal means of payment by country.
- It is recommended that all Currency set-ups in SAP follow the ISO Standards.
- The ISO Standards ensure Global conformity across businesses worldwide utilizing SAP.
n the past when people were discussing SAP, the conversation very quickly boiled down to modules, for example:
· SAP’s courses were structured along module lines so that you would attend MM 101, 102 and 103. While at the course you would learn many things about MM, but not much about the rest of the SAP system and how MM fits into it.
· A conversation with a SAP recruiter might go something like this:
Recruiter … “which modules do you work with?”
Candidate … “well, I have a lot of purchasing process experience”
Recruiter … “yes, but which modules do you work with?”
Candidate … “well, it’s purchasing functionality … so that would be, umm, MM, FI and CO mainly”
Recruiter … “great I have just the job for you”
Candidate … “fantastic, is it purchasing?”
Recruiter … “well it says here that they want an MM, FI and CO person and that’s you, right?”
Not necessarily! A MM, FI, CO role might include Inventory Management (MM), Accounts Receivable (FI) and Profitability Analysis (CO) – none of which a purchasing person is guaranteed to have
· Many programme teams were organised along module lines, so that you would have a FI/CO, an MM and a HR team, for example. Training courses were (therefore) often prepared and delivered along module lines too. The result of this was that solutions were frequently optimised along module lines, and less often well integratred, and as for users, well, they were pretty much trained up in a module and left to get on with it post go-live. Fortunately those days are mostly passed, and more and more programmes (from design to build to training) are being organised along process lines such as:
Order to Cash (including parts of SD, FI-AR and probably TY as well)
Purchase to Pay (including MM-Purchasing and FI-AP)
Record to Report (FI-GL etc)
SAP now are moving away from describing their system as a set of modules, and now are using the term ‘solutions’, which is much better. If you visit SAP’s website (as we urge you to do) you will find that they have structured their Solutions tab as follows:
· Financials
· Human Resources
· Customer Relationship Management
· Supplier Relationship Management
· Product Lifecycle Management
· Supply Chain Management
· Business Intelligence
If you’re still looking for that list of modules, here they are:
FI Financial Accounting (Tutorial) – essentially your regulatory ‘books of record’, including
· General ledger
· Book close
· Tax
· Accounts receivable
· Accounts payable
· Consolidation
· Special ledgers
CO Controlling (Tutorial) – basically your internal cost/management accounting, including
· Cost elements
· Cost centres
· Profit centres
· Internal orders
· Activity based costing
· Product costing
AM Asset Management – track, value and depreciate your assets, including
· Purchase
· Sale
· Depreciation
· Tracking
PS Project Systems – manage your projects, large and small, including
· Make to order
· Plant shut downs (as a project)
· Third party billing (on the back of a project)
HR Human Resources – ah yes, people, including
· Employment history
· Payroll
· Training
· Career management
· Succession planning
PM Plant Maintenance – maintain your equipment (e.g. a machine, an oil rig, an aircraft etc), including
· Labour
· Material
· Down time and outages
MM Materials Management – underpins the supply chain, including
· Requisitions
· Purchase orders
· Goods receipts
· Accounts payable
· Inventory management
· BOM’s
· Master raw materials, finished goods etc
QM Quality Management – improve the quality of your goods, including
· Planning
· Execution
· Inspections
· Certificates
PP Production Planning – manages your production process, including
· Capacity planning
· Master production scheduling
· Material requirements planning
· Shop floor
SD Sales and Distribution – from order to delivery, including
· RFQ
· Sales orders
· Pricing
· Picking (and other warehouse processes)
· Packing
· Shipping
CA Cross Application – these lie on top of the individual modules, and include
· WF – workflow
· BW – business information warehouse
· Office – for email
· Workplace
· Industry solutions
· New Dimension products such as CRM, PLM, SRM, APO etc
