SAP Finance

Course summary
What is SAP S/4HANA
 Digital core solution of SAP for the HANA database

 Replacement of SAP ERP
 Can be adopted through a new implementation or conversion to SAP
S/4HANA
Key Innovations in SAP S/4HANA
 Change in business functionality

 Embedded analytics
 Fiori
 Simplified data model
 HANA database
Finance Business Process Improvement in SAP S/4HANA (Examples)
 Faster period end close for legal entities

 Reduction in planning cycle
 Single source of data for financial analysis
 Accurate and transparent data with reduced reconciliation between various
components
 Multi GAAP and multi currency accounting
SAP S/4HANA Enterprise Management

 SAP S/4HANA Enterprise Management On-Premise edition (OPE)
functionally caters to multiple lines of business
 Finance is divided into five streams which are called as level 1 (L1
Process) –
o Accounting and finance close
o Cost accounting & profitability analysis
o Treasury & risk management
o Financial planning and analysis
o Financial consolidation
 In this course, we can see the overview of Level 1 and Level 2 process
SAP S/4HANA Finance Overview &

Capabilities
Accounting & finance close
 Financial Accounting enables accounting and financial close for multiple standards.
All financial transactions are recorded in general ledgers and relevant sub-ledgers
Capabilities:
 Recording of all financial transactions in general ledgers and sub-ledgers

 Manage financial data for multiple accounting principles
 Financial data can be recorded in multiple currencies and includes reporting
dimension
 Key processes include general ledger accounting, receivables, payables, asset
accounting, bank accounting.

Capabilities
Cost accounting & profitability analysis
 Cost Management and Profitability Analysis enables cost controlling and profitability
monitoring
Capabilities
 Enables cost management and profitability tracking for entire organization

 Cost management comprises of overhead cost planning and controlling, product cost
planning and controlling including periodic cost allocations
 Profitability analysis comprises of contribution margin analysis at various levels such
as gross product margin, operating margin, EBIT

Capabilities
Treasury & Risk Management
 Treasury & Risk Management helps manage cash flow, liquidity, and financial risk
management within the organization
Capabilities
 Transaction Manager supports processing of all treasury transactions and

instruments in money market, foreign exchange, derivatives, securities and trade
finance
 Cash management and in-house cash supports management of liquidity and cash
centrally
 Management of hedging instruments and foreign exchange risks
 One exposure functionality enables to collect data from multiple sources
 Analysers for managing various risks

Capabilities
Financial Planning
 Financial Planning supports planning, budgeting, forecasting solution along with
analysis of plan and actual data
Capabilites
 Supports financial planning, budgeting and forecasting processes

 Support maintenance of data for multiple planning scenarios and comparisons
Capabilities
Financial Consolidation
 Financial Consolidation helps meet the regulatory and internal reporting requirement
of the group
Capbilities
 Financial consolidation solution supports legal and management consolidation of

plan and actual data
 All functions required for group consolidation and reporting are managed in financial
consolidation
Process Overview – Financial Accounting

and Close
 Financial accounting and close includes multiple processes as depicted
 Universal Journal is the record of all financial transactions and core of
financial accounting
 Sub-ledger transactions such as receivables, materials are recorded in
Universal Journal
 Certain SAP components are used to provide enhanced functionality for the
process
 All transactions in financial accounting can be categorized as master data,
day-to-day transactions, periodic transactions, and reporting
 Multiple ledgers support accounting for multiple GAAPs, multiple currencies,
multiple valuation approaches and multiple dimensions for reporting
 Country versions provides additional functionality for accounting as per local
GAAP
Process Overview – Cost Management and

Profitability Analysis
 Cost management and profitability analysis includes multiple processes as
depicted here
o Cost management comprises of overhead cost planning and
controlling, product cost planning and controlling including periodic cost
allocations
o Profitability analysis comprises of contribution margin analysis at
various levels such as gross product margin, operating margin,
earnings before interest and tax for market segments
 These processes are tightly integrated with financial accounting and close
 It is possible to perform cost accounting at standard cost or at actual cost
 All transactions can be categorized as master data, day-to-day transactions,
periodic transactions and reporting
Process Overview – Treasury & Risk

Management
 Treasury & risk management includes multiple processes as depicted
 Bank Account Management supports management of all bank accounts such
as bank master, opening and closing, overdraft limit, signatories
 Transaction Manager supports processing of all treasury transactions and
instruments in money market, foreign exchange, derivatives, securities and
trade finance. Same is integrated with financial accounting
 Cash management and in-house cash supports management of liquidity and
cash centrally
 Hedge management supports management of hedging instruments and
foreign exchange risks
 One exposure is a new functionality which enables to collect data from
multiple sources
 Analysers support managing various risks
Process Overview – Financial Planning

 Financial planning solution helps manage multiple planning scenarios such as
annual plan, long term strategic plan, monthly forecast and budgeting
 Support maintenance of data for multiple planning scenarios and comparisons
 There are multiple SAP components which integrate with each other to
provide a comprehensive planning solution
 Planning solution in S/4HANA enables real time reporting of actual vs plan
data.
Process Overview – Financial Consolidation
 Financial consolidation solution supports legal and management consolidation

of plan and actual data
 All functions required for group consolidation and reporting are managed in
financial consolidation
 There are multiple solutions for financial consolidation in SAP
o EC consolidation in S/4HANA (EC-CS)
o Optimized BPC for S/4HANA
o Business Financial Consolidation
 Based on the customer landscape and complexity of consolidation process,
most appropriate solution needs to be used for consolidation
Universal Journal/ GL Accounting
Process description
 Universal Journal is the system of records for all financial transactions in the
organization
 All components in SAP which generate financial postings integrate with
Universal Journal
S/4HANA Business Benefits
 Supports multi GAAP and multi currency reporting

 Provides insight into financial data with multiple reporting dimensions
 Integrates with SAP logistics components
Simplification in SAP S/4HANA
 New integrated Journal in SAP S/4HANA to record financial transactions

 FI, CO, acct based COPA, material ledger, asset accounting merged in single
ledger
 Merger of cost elements and GL accounts enables update of secondary costs
in Universal Journal
 Supports multiple accounting principles in parallel ledger OR parallel account
approach
 SAP S/4HANA has the feature to provide up to ten currencies – local
currency, group currency and eight user defined currencies. Currencies in non
leading ledger need not be subset of leading ledger currencies. User define
currency can be defined either for real-time currency conversion or periodic
translation.Maximum length of currency amount field has been increased from
22 to 23 which includes decimal places.
 Modified approach for multiple valuation approach and transfer pricing,
supports legal valuation, group valuation, profit centre valuation
 Provides COGS split per based on cost components of standard cost estimate
of materials
 Provides manufacturing variance split based on variance category
 Additional quantity fields which can be used for financial reporting after
conversion from base UoM to another UoM
 Extension ledger for management reporting with it’s own period close.
Extension ledger allows to post manual entries
 Archiving of finance documents is replaced with data aging
Profit Centre Accounting

Process description
 Profit Centre Accounting is used to record financial transactions for internal

responsibility areas within a legal entity or group of legal entities
 Profit centre can represent a location or a business unit within the company or
any other reporting dimension.
 Financial data of a profit centre always reconciles with General Ledger data
 Flexibility to use profit centres along with other reporting dimensions available
in Universal Journal such as Segment
 Integrated with Universal Journal

 No need to activate profit center scenarios as in newGL
 No need to activate profit centers in controlling area as done in classical GL
 Profit center planning is no longer supported in S/4HANA. BPC for S/4HANA
is the new application for financial planning
 Profit centre reorganization is not supported in Universal Journal, Landscape
transformation can be used for same
Accounts Receivables
Process description
 Accounts receivable records and manages accounting data for customers

 It integrates with sales component and other finance components for effective
receivables management
 Sub-ledger data for customer always reconciles with Universal Journal/

General Ledger data
 Flexibility to define multiple GL accounts for receivables as per reporting
requirement
 Integrated in Universal Journal/ General Ledger, no separate data set for

customer sub-ledger
 Aggregate and index tables for open and cleared items are converted into
views which calculates data from Universal Journal on-fly
 Simplification of receivables process with use of Fiori Apps
 Customer master is replaced with business partner
 In SAP S/4HANA, we can transfer statistical pricing condition of customer
invoices to extension ledger in financial accounting.
Credit Management
Process description
 Credit management supports credit data maintenance for business partners
and credit checks during sales transactions
 It also supports credit analysis, determination of credit score, processing of
external credit information
 FSCM can be deployed in decentralized environment such as sales is
performed in another system
 Reduction in financial risk with effective credit management

 Faster credit decision by using external and internal credit data of customers
 Classical functionality of credit management using FI-AR is obsolete

 FSCM credit management can be used to replace classical functionality of
credit check. This requires usage of business partner instead of customer
master
 FSCM credit management users continue to use same functions in S4 HANA
 Totals tables used for Credit check have been discontinued and real time
check is provided during Sales order or billing
Collections Management
Process description
 Collection management enables creation of collection worklist and

assignment to collection specialist using collection strategy
 Supports update of collection status for open invoices
 Valuate and prioritize customers from receivables perspective

 Availability of status and customer information enables timely analysis and
efficient management of receivables. It helps reduce the risk of financial
losses
 FSCM collection management process in SAP S/4HANA and SAP ECC is

same
Dispute Management
Process description
 Dispute Management supports processing of receivables related to dispute

cases
 It is integrated with accounts receivables, collection management, sales
 Reduce processing time for dispute cases for under payments or non-
payments
 FSCM dispute management process in SAP S/4HANA and SAP ECC is the
same
Accounts Payables
Process description
 Accounts payable records and manages accounting data for vendors

 It integrates with procurement component
 Sub-ledger data for vendor always reconciles with Universal Journal/ General
Ledger data
 Flexibility to define multiple GL accounts for payables as per reporting
requirement

 Integrated in Universal Journal/ General Ledger, no separate data set for
vendor sub-ledger
 Aggregate and index tables for open and cleared items are converted into
views which calculates data from Universal Journal on-fly
 Simplification of payables process with use of Fiori Apps
 Vendor master is replaced with business partner
BAM Lite & Bank Accounting
Process description
 Bank Account Management (BAM) Lite enables management of bank master

 Bank Accounting supports handling of all accounting transactions with bank
 Enables centralized management of bank accounts

 Reduced effort in managing bank transactions and bank reconciliation with
bank interfaces
 New application ‘BAM‘ for bank master with modified data model
 BAM has two solutions scope – BAM and BAM lite
 BAM lite with NWBC front end when ‘Cash management powered by HANA’
is not in scope
 BAM when used with Cash Management powered by HANA and have Fiori
front end and with additional features such as workflow during creation,
review, closure, BCM integration for signatories etc
Bank Communication Management
Process description
 Bank Communication Management (BCM) is used for managing multiple bank
communication interfaces
 BCM provides functionalities related to creation and approval of payment
batch, payment status monitor, bank statement monitor, alert management,
digital signature, etc
 Efficient management of inbound and outbound communication with banks

 Manage end-to-end bank processes with status monitors for tracking
transactions
 Integration of BCM and BAM provides additional features such as signatories

maintained in BAM can be used for payments approvals in BCM
new Asset Accounting

Process description
 Asset accounting is used to manage fixed assets along with financial

transactions related to fixed assets for multiple GAAPs and multiple
currencies
 It supports all transactions required during life cycle of an asset
 Integrated with Universal Journal/ General Ledger for financial reporting

 Ensures compliance of legal requirement for asset accounting
 Classical FI-AA is replaced with new asset accounting

 Asset postings are merged in Universal Journal
 New asset transactions with new field for accounting principle
 It offers multi GAAP asset accounting where each GAAP can be integrated
with ledgers in Universal Journal in real time
 Transaction for depreciation run is simplified and can be executed multiple
times
 Lease accounting is not compatible with new FI-AA, use RE-FX instead
 In SAP S/4HANA user can add new depreciation area even after Go live with
help of BADI.
Tax Accounting
Process description
 Tax accounting manages various types of taxes as per legal requirements of

the country
 It supports tax calculation during sales/ purchase transactions, posting, and
reporting
 Certain countries may require SAP country add-on or third party solutions to
fulfil all tax requirements of the country
 Integrated tax solution with sales, purchase, and finance

 Country specific solutions available in SAP
 Tax accounting process in SAP S/4HANA and SAP ECC is same
Inventory Accounting
Process description
 Inventory accounting supports valuation of inventories for day-to-day
accounting and also for month-end adjustment as per legal reporting
requirement
 The solution integrates with sales, procurement, production to provide
detailed information related to inventory quantity and valuation
 SAP provides integrated solution for inventory movements and valuation
 Activation of material ledger is mandatory for material valuation

 Material ledger related tables are merged in Universal Journal. Material
valuation is calculated based on Universal journal
 Possible to deactivate update of moving average price when price control is
‘Standard’
 Supports multiple valuation of inventories in Universal Journal
Revenue Accounting
Process description
 Revenue Accounting supports posting of billed revenue from sales to

Universal Journal/ General Ledger
 It also provides features related to revenue recognition as per legal
requirement of IFRS 15 and other accounting principles (GAAP), if applicable
 Flexible account determination for revenue posting from sales

 Supports multiple GAAP for revenue recognition
 Integrated with finance and sales
 Supports multiple GAAP including IFRS
 SAP sales and distribution (SD) revenue recognition is obsolete

 New application ‘Revenue Accounting and Reporting (RAR)’ is available for
revenue recognition as per IFRS 15 and other accounting principles
 RAR supports multiple methods of revenue recognition
 It is possible to maintain a price in Revenue Accounting and Reporting (RAR)
which is different from sales price
Joint Venture Accounting
Process description
 Joint Venture Accounting supports all accounting of expenses and billing

amongst joint venture partners in accordance with joint operating agreement
(JOA)

 Single source of data for joint ventures reporting and general ledgers with
Universal journal
 Facilitates smoother operations and capture of financial data as per the
requirement of joint ventures
 JVA attributes merged in Universal journal and in new asset accounting

 Central splitting on the basis of GL and JVA attributes
 New asset accounting with JVA does not support Estimated Book Cost (EBC)
and Current Replacement Prices (CRP), JV asset transfers. Standard
functionality of asset accounting is to be used
Contract Account Receivables & payables

(FI-CA)
Process description
 A subsidiary ledger that meets the requirement of industry sectors with high
volume of business partners and high number of documents related to
receivables and payables such as retail, bank, transportation, and others
 Integrated with Universal Journal for recording of summarized financial data

 Supports mass data processing
 Flexibility to integrate with non-SAP applications
 FI-CA processes in SAP S/4HANA and SAP ECC are same

 Any additional functionalities covered in the industry solutions such as IS
Telecom, IS Utilities are not covered here
Funds Management
Process description
 Funds management supports creation of budgets for revenues and

expenditures at the enterprise level and for the responsibility areas
 Budget is checked against the committed and actual cost and provides a
control mechanism if the budget is exceeded
 Control and track the funds requirement of the company against the available
funds
 Funds management processes in SAP S/4HANA and SAP ECC are same
Real Estate
Process description
 Real estate in SAP S/4HANA enables management of real estate related

transactions such as contract management, space management, lease-in,
asset management
 It integrates with finance and controlling
 A comprehensive solution to manage real estate businesses
 Classic real estate management is not supported in S/4HANA. Flexible real

estate (RE-FX) can be implemented in place of classical RE
Special Purpose Ledger

Process description
 Special purpose ledgers enables definition of new ledgers for reporting

purpose when data is to be recorded are different from General Ledger data
 Flexibility to define own ledgers for specific needs
 SAP S/4HANA is based on newGL concept and supports multiple ledgers

 Leading ledger for group reporting
 Non-leading ledger for local GAAP, tax accounting, others
 Extension ledger for management reporting
 Data for all ledgers are stored in Universal Journal
 With the concept of Universal Ledger, use of special purpose ledger is not
recommended. However, current functionality is supported
Biller Direct
Process description
 Dispute management is a component of Financial Supply Chain Management

which provides an online view of customer accounts which allows to process
customer payments or dispute customer due items
 It integrates with FI and with FI-CA
 Helps to reduce communication time with customers and vendors
 Biller direct is not on the target architecture of SAP S/4HANA

Travel Management
Process description
 Travel management supports management of all trips within the organization
 Integrated solution to manage trip approvals, settlements and cost posting to

General Ledger
 Travel management processes in SAP S/4HANA and SAP ECC are same
 However, Concur is the SAP cloud based application which is being used for
travel management and have more functionalities as compared to FI travel
management.
 Concur can be integrated with SAP S/4HANA for posting of expense postings
to Universal Journal
Country Localization
Process description
 SAP provides multiple country-specific solutions to meet the tax and financial
reporting requirement of country along with sales/ purchase information
 Supports legal compliance in the country where the business is run
 Certain country-specific transaction codes and programs in the application

area of Financials have been replaced with newer transactions
 There may be some limitation in SAP S/4HANA for specific process and
countries. Same should be checked via relevant OSS notes
Account based & Costing based Profitability

Analysis
Process description
 Profitability Analysis in SAP (CO-PA) is used to provide contribution margin

reports for internal reporting
 All revenue and costs are allocated to CO-PA to analyse revenue, costs,
operating margin and EBIT by market segments
 SAP supports two types of CO-PA – account based and costing based
 Account based CO-PA uses P&L accounts and costing based uses value
fields for reporting
 Enables faster decision making with insight to revenue, costs, margin analysis
for various dimensions
 Account based CO-PA data is merged in Universal Journal

 Activation of account based CO-PA is mandatory if CO-PA is being used
 Costing based CO-PA is available for use with same features as of SAP ECC
 To improve processes, costing based profitability analysis can be replaced
with account based after due diligence. However no migration tool is available
for same
 User can activate the derivation of profitability characteristics for G/L line
items that do not carry an account assignment to a profitability segment.
Activation is possible for cost or revenue line items with the following account
assignments:
o Cost center
o Internal order
o Project
o Sales order
o Production order
o Maintenance order
Financial Close and Closing Cockpit

Process description
 Financial close in SAP provides a set of transactions required for period end
financial adjustment and data entry
 SAP supports recording of financial transactions and closure of books for
multiple GAAPs, different fiscal years
 Financial close includes transactions from different process areas (FI, CO,
MM, SD,…) which are required to be executed in pre-defined sequence
 Comply with legal requirement of reporting financials for multiple GAAPs

 Get insight into real time data and improved accuracy with faster issue
resolution during period close.

 New transactions for closing transactions such as balance carry forward,
foreign currency valuation, WIP, result analysis, variance calculation,
settlement
 Improved performance with HANA DB, simplified data model, simplified
processing logic
 Functionality of standard closing cockpit is no longer supported. Functionality
is provided in Closing cockpit 2.0 add-on
Central Finance
Process description
 Central Finance is a new application and solution to replicate, transform and

post the harmonized the data from multiple SAP or non-SAP ERPs to single
S/4HANA system
 Central Finance component provides functionalities related to data
transformation, data validation before posting to Universal Journal
 Aggregate data in single system for corporate reporting and functions

 Simplify landscape and processes with use of central finance, optimized BPC
for S/4HANA for planning and consolidation, cash management in SAP
S/4HANA
 New application ‘Central Finance’ introduced

 Use of SAP Landscape Transformation Replication Server for data
replications from source systems which can be SAP systems or non-SAP
 Multiple new functionality for data transformation such as cost object mapping
framework, key mapping, value mapping
 Being a new application, features are evolving and more changes are
expected in future release
Cost Center Accounting

Process description
 Cost centre accounting supports recording, monitoring and controlling of

overhead costs for a cost centre
 A cost centre normally represents a department within the organization or an
internal responsibility area from overhead controlling perspective
 Supports all functions required for overhead controlling within the organization
 Merger of cost elements and GL accounts enable update of secondary costs

 Reconciliation ledger and real time FI-CO reconciliation are obsolete
 New function to allocate cost centre overheads via costing sheet in real time
 Possible to repost costs for a specific ledger
 Cost centre planning is not the target architecture however available for use.
BPC for S/4HANA can update required planning data in cost centres
Internal Order Accounting
Process description
 Internal order accounting supports recording, monitoring and controlling of

overhead costs for an internal order
 An internal order normally represents an internal job or task with a validity
period
 Supports tracking costs and overhead controlling for specific tasks within the
organization
 Provides flexibility to segregate overheads of special initiatives from regular
departmental overheads for the purpose of reporting

 Possible to repost costs for a specific ledger
 Internal order planning is not the target architecture however available for use.
BPC for S/4HANA can update required planning data in internal order
Product Cost Planning
Process description
 Product Cost Planning is used to estimate costs of materials and set standard
prices for materials
 Supports material cost estimate with and without quantity structure i.e. bill of
material and recipe/ routing
 Integrated solution for product cost estimation based on logistics master data
and prices from cost accounting
 Transparent product cost data in system and eliminates excel based manual
effort
 The creation of cost estimates with reference to base planning objects is no

longer supported in SAP S/4HANA
 Sales & Operation planning in PP is no longer supported and hence
calculation of activity quantities and business process quantity (KSPP and
KSOP) can not be used
 Product cost planning takes inputs from cost centre planning. Some changes
may be required in planning process with respect to integration points
between cost centre plan and product cost plan
Product Cost by Order and Period

Process description
 Product cost by order is used to calculate actual and plan cost of a

manufacturing activity (COGM) based on production order or process order
 Product cost by period is used to calculate actual and plan cost for repetitive
manufacturing done during the period based on product cost collector
 Supports calculation of cost of goods manufactured, manufacturing work-in-
process and manufacturing variances. The result is updated in Universal
Journal/ General Ledger
 Real time analysis of plan vs actual costs of manufacturing activities
 New HANA optimized transactions for WIP calculation, variance calculation

and settlement for performance improvement
 New function to allocate cost centre overheads to manufacturing orders via
costing sheet in real time
 Provides manufacturing variance split based on variance category in
Universal Journal with profit. Segments
 New transaction for summarization hierarchy with modified logic to calculate
summarized values on-fly
 Cost object hierarchies and general cost objects are obsolete
Product Cost by Sales Order
Process description
 Product cost by sales order is used to calculate actual and plan cost for sales
orders (COGS) based on sales orders
 COGS includes material cost, overhead costs for direct activities, overhead
for indirect activities, sales overheads
 Supports calculation of customer work-in-process, revenue recognition,
customer order related provisions via result analysis
 Possible to get real time COGS at standard cost including overheads

 Real time analysis of plan vs actual costs of material sold during the period
 New HANA optimized transactions for result analysis and settlement

 New function to allocate cost centre overheads to via costing sheet in real
time
 Provides COGS split based on cost components of standard cost estimate of
materials in Universal Journal
Project Costs & Revenue

Process description
 Project costs & revenues is used to calculate actual and plan cost/ revenues
of projects
 Supports all types of project i.e.. customer projects, overhead projects,
investment projects
 Supports calculation of revenue recognition, cost provisions, capital WIP,
customer WIP based on types of projects
 Track project costs and revenues

 Compliance with legal reporting requirement and management reporting
associated with complex projects
 New HANA optimized transactions for result analysis and settlement

 New function to allocate cost centre overheads to via costing sheet in real
time
 New application ‘Revenue Accounting and Reporting (RAR)’ for revenue
recognition for customer projects
Material Ledger - Actual Costing

Process description
 Material Ledger provides two key functionalities – inventory accounting and

actual costing
 Actual costing supports determination of actual cost of in-house manufactured
materials and externally procured materials after considering variances
 It also valuates the inventory with actual periodic price of the material
 Meet legal compliance of actual costing in some countries

 Accurate analysis of periodic costs and enables P&L reporting based on
actuals
 Activation of material ledger is mandatory for inventory valuation. However,

usage of actual costing is not mandatory
 Material ledger data is merged in Universal Journal
 New data model for material ledger/ actual costing
 Simplified costing cockpit for actual costing run with improved performance
 In costing runs, quantity structure explosion is now part of the selection step
rather than a separate, optional step in the process flow. Multilevel quantity
structure explosion is possible if the semi finished or raw material are part of
material to be costed
Activity Based Costing
Process description
 Activity Based Costing (ABC Costing) supports monitoring and controlling of

overhead costs for a Business Process
 A Business Process in ABC costing represents cross functional, cross
departmental activity for which overhead costs are calculated and tracked
 Enables accurate and logical way of allocating overheads costs

 Links activity quantity and costs associated with the activities performed
 Activity Based Costing (CO-OM-ABC) using delta versions is no longer

supported. Integrated ABC costing is still supported
 Business process order planning is not the target architecture however
available for use. BPC for S/4HANA can update required planning data in
business process
Project Financials for Commercial Projects

(CPM)
Process Description
 Commercial Project Management provides functionality for project centric

planning and forecasting functionality
 Provides planning and forecasting functionality for all project resources such
as people, material, expenses, third party planning
 Improves efficient, transparency and accuracy of planning and forecasting

process
 Improve decision making based on better prediction
 Integrated process with SAP S/4HANA

 New SAP Fiori Apps area available to create master project and financial
plans Embedded analytics can be used for reporting of financial planning data
from SAP CO and CPM
EC-Executive Information System
Process Description
 An executive information system (EIS) provides information about all the

factors that influence the business activities of a company
 It provides the user with important current data which can be analyzed quickly
 It reduces the optimal decision making time

 No changes in EC-Executive Information system.
 For real time analytics it is recommended to use embedded analytics through
CDS Views.
Bank Account Management (BAM)
Process Description
 Bank Account Management (BAM) enables management of bank master and

functions associated with bank accounts
 Enables centralized management of bank accounts

 Bank Account Management (BAM) is a component of Cash Management
powered by SAP HANA
 Data model for house bank and account is modified.
 Transactions for creation of house bank is discontinued
 BAM when used with Cash Management powered by HANA comes with Fiori
front end and with additional features such as workflow during creation,
review, closure, BCM integration for signatories etc
Transaction Manager
Process Description
 Transaction Manager helps to manage financial transactions and positions

related to borrowings, investments, commodity, foreign exchange/ interest
rate derivatives
 It is integrated with Cash Management , Bank Account Management and Risk
Analysers
 It uses Business Partner for dealings with counterparties like banks, brokers,
etc
 Standardized functions for management of financial transactions with Fiori

front end
 Enhanced hedge management features
 Some functionalities like simulations, offers, drawable bonds, drill down

reporting, master agreements are discontinued
 Exposure 1.0 will not be supported in S/4HANA, Exposure 2.0 to be used
 Old yield curve is replaced with flexible yield curve
 Old correspondence transactions is replaced with new framework
 Commodity risk management is planned for future release
 Central function for accruals is to replace current process
Hedge Management & Accounting

Process Description
 Hedge Management enables to gain an overview of the foreign exchange ,

interest rate, security and commodity price risks to a customer
 It helps to define hedge management policy for risk identification, hedging
process lifecycle, accounting and reporting
 It is integrated with Transaction Manager and accounting
 End to end process management from exposures to hedge accounting

 Complies with IFRS
 The Exposure Management 1.0 is no longer the target architecture and has
been disabled technically. Exposure Management 2.0 is the more flexible and
comprehensive successor application
Cash Operations
Process Description
 Cash Operation covers analysis of cash position i.e. cash available with banks
 Liquidity analysis and planning for short term liquidity forecasts
 Day-to-day management of working capital for efficient operations

 Minimizes the bank risk while initiating bank transactions with insight into
liquidity actual and forecast data
 Manage Liquidity as per internal compliance and reduce interest costs

 Cash Operation is a component of Cash Management powered by SAP
HANA
 Classical cash and liquidity management is replaced by new application ‘cash
management powered by SAP HANA’
 It has new user interface to display cash position and for bank transfers using
Fiori
 Liquidity planning is also managed in new application via optimized BPC for
S/4HANA and Cash Management
In-house Cash
Process Description
 In-house cash is used for processing internal and external payment

transactions within a group or a company
 Possible to process internal payment, central payments, local payments and
central incoming payments
 Improved use of working capital within the organization

 Helps to consolidate and minimize external bank transactions and use the
internal funding where possible
 No Changes in in-house cash management
Market Risk Analyser
Process Description
 Market risk analyser is used for financial trade positions evaluations i.e..
market valuations of financial positions, risk calculation and returns
 Valuations can be based on actual market data or simulated market data
 Control and evaluate risks in financial positions and transactions

 Better decision making to enter into new positions or close existing positions
or enter into hedging transactions to avoid future loss
 Some financial objects have been disabled for use in S/4HANA

o Security Order
o Positions
o Variable transactions
o Positions of fictitious/simulated Transactions
o Facilities
o Non-Interest Profit and Loss Items
Credit Risk Analyser

Process Description
 Analyser enables measuring, analysing and controlling counterparty default

risks
 Default risks is the risk of loss when companies are unable to make the
required payments/ debts
 Helps to monitor the credit risk exposure and minimize default risks
 Credit Risk Analyzer linked to Cash Management is not available
One Exposure
Process Description
 The One Exposure from Operations hub is a real-time collection point and
storage location for operational data that is relevant for managing cash and
liquidity
 The provision of the data in the One Exposure from Operations hub facilitates
funds planning and risk management across multiple companies
 Flexibility to get exposure related data within the system or from single/
multiple external systems
 Improved efficiency in financial risk management with real time data
 New application to manage exposure from multiple systems

 Used in Cash Management and in Treasury Management
Liquidity Management
Process Description
 Liquidity planning is used to forecast liquidity surpluses and deficits for the
planning periods
 Optimize the use of financial resources

 Enable long term liquidity planning with seamless integration and traceability
 Improve compliance and governance of liquidity management
 Improve liquidity and reduce interest costs in long term
 New application ‘cash management powered by SAP HANA’ and ‘BPC for
S/4HANA’ for liquidity planning
 Liquidity planning is based on embedded BI
 Classical liquidity planning is obsolete
Portfolio Analyser
Process Description
 Portfolio Analyzer is used to calculate and monitor the rate of return on

financial assets
 Profit from investments can be measured using different methods
 Optimize the financial portfolio with insights into returns
 No changes in portfolio analyzer
Accounting Analyser
Process Description
 Accounting analyser enables to evaluate positions and sub-positions of the

transaction manager
 It reads the position component value and stores in result database on
periodic basis
 The data is used for analysis
 Supports data evaluation for positions to manage financial risks
 No changes in accounting analyzer
Debt Recovery Management

Process Description
 Debt recovery management supports processes related to collection of

overdue receivables using internal collection departments for public sector
 This module is primarily used in banks and financial institutions with FSCM
and PSCD
 Integrated process for collection of receivables
 No changes in dept recovery management
Overhead Cost Planning and Budgeting

Process Description
 Overhead cost planning and forecasting processes consists of planning and

forecasting related transactions for cost centres, internal order and business
process including cost allocations
 Budget is updated based on plan data and used for availability control
 Real time availability of master data and actual data for the purpose of
planning and monitoring
 Fiori and MS office based front end for ease of working
 Improve planning process with workflow, work status, audit features
 A new application ‘optimized BPC for S/4HANA’ for planning

 CO planning transactions are not on roadmap, however still available for use
 Integration between BPC for S/4HANA and CO planning available for specific
scenarios
Profitability Planning by Market Segments
Process Description
 Profitability planning processes consists of planning and forecasting related

transactions for P&L accounts with market segment details including cost
allocations
planning
 MS office based front end for ease of working
 Supports scenario based planning and possible to do what-if-analysis

 CO-PA planning transactions are not on roadmap, however still available for
use
 Integration between BPC for S/4HANA and CO planning is available for
specific scenarios
Profit & Loss Planning
Process Description
 Profit & loss planning processes consists of planning and forecasting related
transactions for P&L accounts with required dimensions such as segment,
profit centre, functional area, etc

planning
 Supports integrated planning with multiple dimensions

 CO planning transactions are not on roadmap, however still available for use
scenarios
Balance Sheet Planning
Process Description
 Balance sheet planning processes consists of planning and forecasting
related transactions for balance sheet accounts with required dimensions
such as segment, profit centre
planning
 Reduce planning cycle time with embedded calculations

 GL planning transactions are not on roadmap
Investment Planning
Process Description
 Investment planning consists of planning, budgeting and approval process for

investments within the organization
 Investments in context of planning refers to investment programs associated
with fixed asset acquisition or building of an asset, overhead programs,
maintenance programs
 Investment Management (IM) is used for investment planning
 Integrated planning process enables roll-up of planned values from hierarchy

nodes till program level
 Integrated process to manage budget and plan cost of programs
 Investment Management related processes in SAP S/4HANA and SAP ECC

are same
 It should be possible to integrate BPC for S/4HANA and Investment
Management to optimize planning process
Liquidity Planning
Process Description
 Liquidity planning is used to forecast liquidity surpluses and deficits for the
planning periods
 Optimize the use of financial resources

 Enable long term liquidity planning with seamless integration and traceability
 Improve compliance and governance of liquidity management
 Improve liquidity and reduce interest costs in long term
 New application ‘cash management powered by SAP HANA’ and ‘BPC for
S/4HANA’ for liquidity planning
 Liquidity planning is based on embedded BI
 Classical liquidity planning is obsolete
Cash Flow Planning
Process Description
 Cash flow planning refers to planned cash flow statement based on balance
sheet plan
 In the context of cash flow planning, it is assumed that cash management is
not used in SAP S/4HANA
planning

Project Financial planning in CPM
Process Description
 Commercial Project Management provides functionality for project centric

planning and forecasting functionality
 Provides planning and forecasting functionality for all project resources such
as people, material, expenses, third party planning
 Improves efficient, transparency and accuracy of planning and forecasting

process
 Improve decision making based on better prediction
 Integrated process with SAP S/4HANA
 New SAP Fiori Apps area available to create master project and financial
plans
 Embedded analytics can be used for reporting of financial planning data from
SAP CO and CPM
Project Financial planning in BPC for

S/4HANA
Process Description
 Project financial planning process consists of planning, forecasting and

budgeting for WBS elements and associated activities
 Financial planning for projects is a complex process which continuously
evolves as project progresses. During early stage of a project , financial
planning is standalone based on assumptions. As project progresses,
planning is automatic based on materials and resources assigned to the
project
planning and monitoring
 Improve planning process with workflow, work status, audit features

 CO-PS planning transactions are not on roadmap, however still available for
use
scenarios
 Project cost and revenue planning via CPM or PPM add-on is another option
Inter/ Intra Company Matching

Process Description
 Inter and intra company matching refers to process to reconcile receivables

and payables within the internal responsibility areas of the organization
 Possible to reconcile inter-company and intra-company receivables/ payables

on periodic basis such as daily or weekly
 There is no change in SAP S/4HANA with respect to inter-company

reconciliation process
 Central finance component of SAP S/4HANA can support to aggregate the
data in real time or near real time if multiple ERP systems are used in the
organization. Aggregated data becomes the source data for inter-company
reconciliation
FX Translation
Process Description
 FX translation process is required during consolidation process to convert the

results of subsidiaries companies into the currency of holding company
 Availability of real time data

 Faster group close with no need to replicate data to another consolidation
system
 Reduction in data collection time for group close with use of Central Finance

 New application ‘BPC for S/4HANA’ available for consolidation for FX
translation
 FX translation can also be done in financial accounting in S/4HANA
Inter/ Intra Company Elimination
Process Description
 Inter/ intra company process refers to process of removal of transactions

between companies/ internal responsibility areas for the preparation of
consolidated statements
 Elimination process includes elimination of inventories, assets, sales,
purchase, receivables, payables and profits resulting from various financial
transactions

 Availability of real time data
system
 Reduction in data collection time for group close with use of Central Finance
 New application ‘BPC for S/4HANA’ available for inter/ intra company
reconciliation
 EC-CS provides the consolidation functionality. However, it is not on SAP
target architecture in long term
organization. Aggregated data becomes the source data for inter/ intra
company elimination and used for financial consolidation
Legal Consolidation & Management

Consolidation
Process Description
 solidation refers to consolidating financial data of holding and subsidiaries

companies as per the requirement of applicable GAAP
 Management consolidation may be used to consolidate financial data as per
the requirement of management reporting
 It includes multiple processes such as data collection, FX translation, inter-
company matching and eliminations, etc
 Availability of real time data for consolidation purpose

system
 New application ‘BPC for S/4HANA’ available for consolidation

 EC-CS provides the consolidation functionality. However, it is not on SAP
target architecture in long term
organization. Aggregated data becomes the source data for consolidation and
related transactions
EC-CS Consolidation
Process Description
 The application features integration functions with different SAP transaction

modules that provide data for consolidation
 This component is used for both External and Internal reporting.
 Consolidation can be done for user definable organizational units

 The EC-CS data model must be adjusted before the upgrade when material
number is used as the sub assignment to it.
 EC-CS is not on the target roadmap as the focus will be on BPC for SAP
S/4HANA.However EC-CS will continue to remain till 2025
SAP Application and Component Overview

for Finance
 SAP S/4HANA consists of four components: SAP Accounting powered by

SAP HANA, Cash Management powered by SAP HANA, Optimized BPC for
S/4HANA, and Central Finance.
 There are several other SAP applications that provide advanced functionality
or enhance the core finance processes. These applications can be integrated
with S/4HANA.
 It is also possible to integrate SAP and non-SAP applications to manage end-
to-end finance processes as per customer/industry requirements.
 It is not necessary that all SAP applications are used by an SAP customer.
SAP Application and Component Overview

for Finance
Module Description
Financial Accounting provides features for recording of all financial

Financial Accounting (FI)
transactions of an organization and for period close
Controlling module provides features related to cost accounting

Controlling (CO)
and profitability analysis
FCSM provides features for receivables management and for bank

Financial Supply Chain
operations such as credit management, dispute and collection
Management (FSCM)
management, bank communication management
Treasury & Risk Treasury & Risk Management helps manage cash flow, liquidity, and
Management (TRM) financial risk management within the organization
Cash management is a new application with three components

CASH MANAGEMENT
Bank Account Management, Cash operations, Liquidity
powered by HANA
management
Closing cockpit support planning, scheduling and tracking of closing

Financial Closing cockpit
tasks
Joint Venture Accounting Joint venture accounting is the module to capture the financial
(JVA) transactions related to venture partners
A new application for financial planning and consolidation. BPC is

BPC for S/4 HANA embedded in S/4HANA and have access to real time availability of
master data and actual financial data
A new application introduced in SAP S/4HANA for global, unified,

Central Finance ( cFIN)
real-time financial and management reporting
Module Description
Revenue Accounting & RAR is an application designed for revenue recognition for IFRS 15
Reporting (RAR) and other GAAPs
Business Planning & BPC is embedded in S/4HANA and have access to real time
Consolidation(BPC) availability of master data and actual financial data
BPC continues to remain as standalone product and is also being

Business Financial enhanced with BW/4HANA,With S/4HANA, there is an options to
Consolidation (BFC) implement BPC for S/4HANA as an add-on for planning and
consolidation
Financial Services FSN is a network solution which connects bank with their corporate
Network (FSN) customers
Integration of SAP Logistics Component with

Finance
 The logistic components in SAP S/4HANA Enterprise Management integrate
with Finance
 Financial transactions originated due to logistics processes are posted to the
Universal Journal and relevant sub-ledger as applicable
 Supply chain and operation planning also updates the financial plan data
 Examples of finance and logistics scenarios are impacted due to S/4HANA
are:
o Inventory management and valuation based on simplified data model
o New revenue recognition process as current process in Sales &
Distribution is obsolete
Data Model Simplification in SAP S/4HANA

for Finance
 The key changes for the finance data model are:
o New table ACDOCA for Universal Journal
o Merger of FI, CO, account-based COPA, ML, and AA in Universal
Journal (ACDOCA)
o Conversion of aggregate and index tables into compatibility views
related to GL/ AR/ AP/ CO/ AA/ ML to minimize the disruption in
custom objects
o New tables for statistical and plan values in asset accounting
o New tables for bank account management
o New tables for material ledger/ actual costing
o New planning table, ACDOCP
o Inventory valuation-related table fields (xBEW and xBEWH) are
converted into views
o Certain finance related view types have been changed or replaced with
ABAP code
 Custom objects need adjustment during S/4HANA conversion in accordance
to data model changes
Embedded Analytics in SAP S/4HANA
 Embedded analytics enable real-time operational reporting.

 Reporting can be done using any reporting frontend such as Fiori analytical
apps, business objects, and non-SAP reporting applications.
 Embedded analytics is based on CDS views.
 CDS views contain calculation logic. In HANA, data intensive calculations are
pushed in the database layer.
 SAP has provided several pre-defined CDS views that can be accessed
through the query browser in Fiori .
 Custom CDS views can be defined as per the requirement.
 CDS views for finance are available for various financial reports and analyses.
A few examples of CDS views for finance are:
o Days payables outstanding
o Profit and loss for financial transactions
o Fixed asset balance
User Experience in SAP S/4HANA
 Fiori apps for finance are available for various financial transactions such as
day-to-day GL transactions, management, periodic transactions, and
reporting
 Fiori apps can be viewed
at https://fioriappslibrary.hana.ondemand.com/sap/fix/externalViewer/ through
the selection line of business ‘finance’ and the required backend
product/version
 A few examples of Fiori apps for finance are:
o Journal entry
o Financial statement
o Plan / actual data for market segments
o Approval of vendor payments
o Schedule and manage automatic payments
o Analyse clearing locks and reasons in FI-CA
o Manage dispute cases for customers
o Approval of bank payments
o Event-based revenue recognition
User Experience in SAP S/4HANA

Please find below sample of standard fiori apps provided by SAP. Many of the
process simplification is provided via Fiori. The list provided here is indicative and
does not include all apps.
Analytical apps
 Accounting for Incoming Sales Orders - report of all incoming sales orders
for a given fiscal period.
 Cash Flow Comparison - Actual/Forecast – report to compare actual cash
flows with the forecasted cash flows on a specified value date. Also possible
to compare different versions of the forecasted cash flow.
Transactional apps
 Bank Correspondence - Email or PDF correspondence letters can be

automatically generated when bank accounts are set to closed and when
payment signatories are updated.
 Standard Cost Calculation – manage product costing runs via fiori app for
multiple plants and company codes
Machine learning embedded apps
 Lockbox - Integration of lockbox with the SAP Cash Application provides

matching proposals during the reprocessing of the lockbox items. SAP Cash
Application is based on Machine Learning
Finance Activities during SAP S/4HANA

Conversion
 MP, SUM and DMO tools of SAP is used for S/4HANA conversion
 Readiness check includes
o Pre-checks and manual checks against simplification list
o Custom code impact due to data model and process change
o Data consistency between various components of finance
 Impacted processes needs to be designed before conversion starts
 The pre-conversion activities for finance includes
o Data consistency checks between various ledgers/ components
o Downloading financial data for the purpose of post conversion
validation
o Execution of period close activities
 The post follow-upactivities for finance includes
o Executing the migration cockpit in IMG. In future, it is planned to be
automated via DMO
o Configuration for changes in scope
o Data reconciliation
o Functional testing including custom objects & interfaces
What is SAP S/4HANA
 Digital core solution of SAP for the HANA database

 Replacement of SAP ERP
 Can be adopted through a new implementation or conversion to SAP
S/4HANA
Key Innovations in SAP S/4HANA
 Change in business functionality

 Embedded analytics
 Fiori
 Simplified data model
 HANA database
Finance Business Process Improvement in SAP S/4HANA (Examples)
 Faster period end close for legal entities

 Reduction in planning cycle
 Single source of data for financial analysis
 Accurate and transparent data with reduced reconciliation between various
components
 Multi GAAP and multi currency accounting

SAP Finance

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Course summary

What is SAP S/4HANA

 Digital core solution of SAP for the HANA database

Key Innovations in SAP S/4HANA

 Change in business functionality

Finance Business Process Improvement in SAP S/4HANA (Examples)

 Faster period end close for legal entities

SAP S/4HANA Enterprise Management

SAP S/4HANA Finance Overview &

 Recording of all financial transactions in general ledgers and sub-ledgers

SAP S/4HANA Finance Overview &

 Enables cost management and profitability tracking for entire organization

SAP S/4HANA Finance Overview &

 Transaction Manager supports processing of all treasury transactions and

SAP S/4HANA Finance Overview &

 Supports financial planning, budgeting and forecasting processes

 Financial consolidation solution supports legal and management consolidation of

Process Overview – Financial Accounting

Process Overview – Cost Management and

Process Overview – Treasury & Risk

Process Overview – Financial Planning

Process Overview – Financial Consolidation

 Financial consolidation solution supports legal and management consolidation

Universal Journal/ GL Accounting

S/4HANA Business Benefits

 Supports multi GAAP and multi currency reporting

Simplification in SAP S/4HANA

 New integrated Journal in SAP S/4HANA to record financial transactions

Profit Centre Accounting

 Profit Centre Accounting is used to record financial transactions for internal

S/4HANA Business Benefits

Simplification in SAP S/4HANA

 Integrated with Universal Journal

 Accounts receivable records and manages accounting data for customers

S/4HANA Business Benefits

 Sub-ledger data for customer always reconciles with Universal Journal/

Simplification in SAP S/4HANA

 Integrated in Universal Journal/ General Ledger, no separate data set for

S/4HANA Business Benefits

 Reduction in financial risk with effective credit management

Simplification in SAP S/4HANA

 Classical functionality of credit management using FI-AR is obsolete

 Collection management enables creation of collection worklist and

S/4HANA Business Benefits

 Valuate and prioritize customers from receivables perspective

Simplification in SAP S/4HANA

 FSCM collection management process in SAP S/4HANA and SAP ECC is

 Dispute Management supports processing of receivables related to dispute

S/4HANA Business Benefits

Simplification in SAP S/4HANA

 Accounts payable records and manages accounting data for vendors

S/4HANA Business Benefits

Simplification in SAP S/4HANA

BAM Lite & Bank Accounting

 Bank Account Management (BAM) Lite enables management of bank master

S/4HANA Business Benefits

 Enables centralized management of bank accounts

Simplification in SAP S/4HANA

Bank Communication Management

S/4HANA Business Benefits

 Efficient management of inbound and outbound communication with banks

Simplification in SAP S/4HANA

 Integration of BCM and BAM provides additional features such as signatories

new Asset Accounting