In the previous post, we focused on the key features in SAP S/4HANA Finance. This time around we will be focusing on the essential changes in the financial accounting area from a functional and technical perspective.
This post will cover the overall changes related to financial accounting that should be expected or considered during a system conversion from SAP ECC to SAP S/4HANA. A separate post will be done for a high-level overview on the actual system conversion as well as project management, architecture related impact, readiness check, etc.
Here is the itemized overview:
- New Financial Architecture – Universal Journal / ACDOCA
- Credit Management, SAP Cash Management, Trade Finance
- Real Estate, Revenue Accounting, Business Partners
- Asset Accounting, New G/L, Accrual Engine
- Machine Learning, Accelerated Close, Predictive Accounting
- Helpful Links – You will need a SAP ONE Support Launchpad Account
New Financial Architecture – Universal Journal / ACDOCA
As discussed in the previous post, there is a new financial architecture in SAP S/4HANA that impacts system conversion (ACDOCA). Let us recall the visual we had where ACDOCA is treated as the single source of truth.
If we were to slightly expand the Universal Journal components, it would have some of the details below.
From SAP ECC, we would associate some of those details to the following:
Putting them together, we now see the high level changes on a “data structure” perspective:
For the expected changes (following the Universal Journal), refer to the details below. Take note of the special case if you have used Append Structure in ERP (highlighted in red). You can use the rest of the colors to match the components shown in the image above.
- FI: Though several new G/L functions have been incorporated to SAP S/4HANA, it should be understood that new G/L is not a prerequisite for converting to SAP S/4HANA. It is just fine to migrate to S/4HANA even if you currently have classic G/L. For those who extended the Coding Block, the fields in structure CI_COBL should automatically be considered during data migration and be included in the universal journal.
- CO: Secondary cost elements are created in SAP S/4HANA as GL Accounts. That means that any posting to a secondary cost element would be updated in the universal journal.
- AA: For Asset Accounting, New Asset Accounting is now mandatory in S/4HANA. Actual data from tables ANEK, ANLP, etc. are also migrated in into the universal journal.
- COPA: For those utilizing account-based profitability analysis, the COPA characteristics are integrated and migrated into the universal journal for detailed reporting.
- INV: As discussed in a previous post, stock valuation data is transferred from material ledger tables to the universal journal.
- Customer Fields: If you have customer fields that have been added to table BSEG or COEP through append structure, remember to consider SAP Note 2160045.
IMPORTANT: During conversion, do not implement document split or additional ledgers. It is also not advisable to make a “quick” switch from account-based approach to ledger-based approach.
There is now multi-currency for up to 10 parallel currencies per ledger in universal journal. Comparison provided below with diagram.
|SAP ERP||SAP S/4HANA Finance|
|3 Local Currencies in FI (including New GL)||Local Currency ACDOCA Field Name HSL, Currency Type 10|
|2 Currencies in CO||Global Currency ACDOCA Field Name KSL, Currency Type of Controlling Area|
|3 Currencies in Material Ledger||Freely defined currencies 1 – 8 You can configure any Currency Type No dependency on Currency Type of Leading Ledger Refer to SAP Note 2344012|
Introduction to new currencies in the universal journal is possible after conversion to SAP S/4HANA 1809 or higher. Read more on “Introduction of New Currencies in SAP S/4HANA” SAP Note 2334583.
IMPORTANT: There will still be 3 parallel currencies in Table BSEG and this table will NOT be extended. All customer namespace currencies are only allowed in the universal journal.
Credit Management, SAP Cash Management, Trade Finance
Let us now consider the following notable changes for Credit Management, SAP Cash Management, and Trade Finance.
- SAP Credit Management (FSCM)
Recall that SAP had both Credit Management in FI-AR and Credit Management based on FSCM. This time in S/4HANA, Credit Management FI-AR is no longer available.
As such, you might need to consider migrating from FI-AR to at least a basic edition of SAP Credit Management (FSCM). The migration can be done during the conversion and you can additionally refer to SAP Note 2270544.
- SAP Cash Management
For those using the classic Cash and Liquidity Management, it should be noted that this is no longer available in S/4HANA. There is an option to activate the new SAP S/4HANA Cash Management during the conversion to SAP S/4HANA.
There is a basic version of the new SAP Cash management is available and it is required for bank account management in S/4HANA. If you have heard of BAM Lite or Bank Account Management Lite, it is a condensed version of Bank Account Management that is provided for those without SAP Cash Management license.
IMPORTANT: During system conversion, migration of house banks into the new Bank Account Management needs to be done. This is because moving forward, House bank accounts can only be maintained through the SAP NetWeaver business client or SAP Fiori.
You can additionally refer to SAP Note 2270400 for an explanation of BAM Lite in comparison to the full-fledged Cash Management version.
- Trade Finance
For those utilizing the letter of credit processing, it is now replaced by Trade Finance in SAP Treasury and Risk Management (TRM) and is integrated with SAP S/4HANA Sales.
One thing to take note of is that the migration needs to be done during the accounting conversion. You may additionally refer to SAP Note 2520879.
Real Estate, Revenue Accounting, Business Partners
Let us now consider the following notable changes for Real Estate, Revenue Accounting, and Business Partners.
- Real Estate Flexible (RE-FX)
Classic Real Estate will no longer be available in S/4HANA. That means that migration to Real Estate Flexible (RE-FX) needs to be considered. It might be a complicated approach, but it is necessary to do the migration prior to the conversion to S/4HANA.
Think of this as a prerequisite that needs a lot of time and effort as this will not be a simple technical conversion. It may might as well be treated as a separate project. You may additionally refer to SAP Note 2270550.
- Revenue Accounting and Reporting
The Revenue Recognition solution in SD can no longer be used for the new accounting standard IFRS15 and it will no longer be work in S/4HANA. There is a new solution called SAP Revenue Accounting and Reporting. As such, migration needs to this new solution needs to be done prior to the system upgrade to SAP S/4HANA.
It is important to note that migration of revenue and existing revenue regression to a new area cannot be done. Take note to migrate all related sales orders and contracts that are still in process. You can additionally refer to SAP Note 2225170.
- Business Partners
I will be covering more on Business Partners in a separate post, but it should be noted that there is now a single transaction code that takes care of all customer and vendor creation.
In SAP S/4HANA, Business Partner is now the leading object. All existing customer and vendors need to be migrated to business partners. That means that business partners and customer vendor integration is now mandatory. You can additionally refer to SAP Note 2695353.
Asset Accounting, New G/L, Accrual Engine
Let us now consider the following notable changes for Asset Accounting, New G/L, Accrual Engine.
- New Asset Accounting
As of SAP ERP 6.0 EHP 7, New Asset Accounting was available with business functions FIN_AA_PARALLEL_VAL. This is utilized for parallel valuation based on the new G/L ledger approach.
You can migrate from SAP EC new G/L or even Classic G/L to SAP S/4HANA universal journal but keep in mind that it is not possible to introduce new ledgers (even new currencies) during the migration. You can additionally refer to SAP Note 2270388.
- New General Ledger
Conversion from classic G/L is technically converted to New G/L as part of conversion to SAP S/4HANA.
- SAP S/4HANA Accrual Engine
From S/4HANA Release 1809, the new accrual engine was available. This supports all currencies of the general ledger. Moreover, the number of database tables have been reduced. As such, you will be able to find the original document of the accrual posting in the universal journal.
This also implies that you need to migrate the content of the old accrual engine into the table of the S/4HANA accrual engine. For additional information, you can refer to SAP Note 2582884.
Machine Learning, Accelerated Close, Predictive Accounting
Let us now consider the following notable features for Machine Learning, Accelerated Close, and Predictive Accounting.
- Machine Learning Applications
In the previous post, I mentioned that SAP S/4HANA gives us an option to utilize machine learning for finance operations such as Accounts Payable, Allocations, and Tax Solutioning. This machine learning uses Cloud Platform to enable the computational power and in turn helps free up the analyst to focus on decision making.
A simple example would involve GR/IR reconciliation where machine learning algorithms are integrated into Goods Receipt / Invoice Receipt (GR/IR) matching. The same goes for tax compliance smart automation and universal allocation processes.
- Accelerated Close
S/4HANA is able to accelerate period-end and year-end closing where we consider that everything is stored in the universal journal (one source of truth). This comes with the notion that there is reconciliation effort is no longer needed and you are able get real-time insight. There is no longer the need to wait for settlement processes to complete during month or period end close to get an analysis.
There is also SAP S/4HANA Financial Closing cockpit which enables planning, automation, and monitoring. For additional information, you can refer to SAP Note 2332547.
- Predictive Accounting
This is available from SAP S/4HANA 1809. I have seen several articles online that have been introduced predictive accounting as a strong shift given its ability to forecast future results (like potential revenue) based on the current / recent data.
Consider the creation of a sales order where predictive accounting in S/4HANA is able to create the goods issue and invoice as a “simulation” and these “simulation results” are stored as journal entries in an extension ledger. This is separate from your main ledger.
Let us now consider the following notable features for Consolidation.
The changes for consolidation no longer limits itself to preparation of financial statements according to statutory regulations. It now has the capability to cover managerial consolidation and analytics. Here are some of the features of Group Reporting:
- Local and group close within the same tool
- Flexible rules for data validation
- Consolidation of Investments
- Release from Universal Journal
- Flexible upload of reported financial data
- Published APIs from other SAP or customer applications (allows you get / load data aside from S/4HANA applications)
As additional information, please refer to the table below for the comparison of Group Reporting and SAP BPC.
|SAP S/4HANA (Cloud) for Group Reporting||SAP BPC|
|Consolidation app is embedded within SAP S/4HANA for public / private cloud and on-premise||SAP BPC version for SAP BW/4HANA is recommended for standalone on-premise deployment|
|Available since May 2017||Will no longer be enhanced|
|Can be used independently from operational accounting or other ERP Functions in SAP S/4HANA||There will be continued support in accordance to underlying SAP S/4HANA release|
|Customer Fields (Append Structure)||SAP Note 2160045|
|New Currencies||SAP Note 2334583|
|SAP Credit Management FSCM||SAP Note 2270544|
|BAM Lite vs full-fledged Cash Management||SAP Note 2270400|
|Trade Finance||SAP Note 2520879|
|Real Estate Flexible||SAP Note 2270550|
|Revenue Accounting and Reporting||SAP Note 2225170|
|Business Partners||SAP Note 2695353|
|New Asset Accounting||SAP Note 2270388|
|New Accrual Engine||SAP Note 2582884|
|Accelerated Close||SAP Note 2332547|
I hope this helps. Goodluck! 😊
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