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4.3.

1Define G/L Accounts


Before you maintain a single general ledger (G/L) account, its worth
taking a moment to think about the posting logic in Central Finance.
In your local systems, you use MM account determination to determine
which accounts are updated as you post goods movements, SD
account determination to determine which accounts are updated as
you post invoices, and so on. Each of these business transactions will
trigger a journal entry in the local G/L under the selected accounts.
What happens as this journal entry is transferred to Central Finance is
that a new journal entry is prepared, either using the accounts from the
original journal entry or using new accounts that youll define in your
mapping rules in Central Finance. You will only be able to post if the
accounts in your journal entry exist in Central Finance. If not, the
journal entries will be parked in an error list.
If youre preparing for a proof of concept, draw up a list of the key
business processes that you want to investigate and identify the
accounts updated in these processes. To prepare a full list, use the trial
balance from the local system, which is simply an unstructured list of
all the accounts that have been posted in your G/L. Youll also need a
list of the cost elements you currently use.
Primary Cost Elements as Accounts
SAP Simple Finance brings Financial Accounting (structured by G/L
accounts) together with Controlling (structured by cost elements) by
merging the account and cost element entities.

Figure 21 shows a sample profit and loss account. Youll notice that
instead of only being able to choose between the account
types Balance Sheet Accounts and Profit and Loss Accounts as in
previous releases of the software, there are now settings for Primary
Costs and
Revenues and Secondary Costs as special types of profit and loss
accounts.

Figure 21SAP General Ledger Account Showing New Account Types


Lets start with the balance sheet accounts. These are used to store
assets, inventories, liabilities, and owners or stockholders equity. In a
normal balance sheet, additional subledgers provide full details of the
assets, the inventories, the accounts payable, and the accounts
receivable, together with the cash applications. In Central Finance,
there is less detail in Asset Accounting, because the item detail is only
in the local systems and we only transfer the reconciliation accounts to
the central system. As we discussed earlier, the open items for
Accounts Payable and Accounts Receivable are transferred but
technically cleared, so you cant run payment processes centrally as of
the time of writing. If you have SAP Cash Management running
centrally, then you can potentially have both on the central system. In
addition to the balance sheet entries that are triggered either locally or
by the cash applications, you will also find adjustment journal entries
that are made by accountants in Central Finance.
The profit and loss accounts cover revenues, cost of goods sold, and
operating expenses. A few of these are treated solely as accounts.
These might be for losses and gains on financial exchange markets or
other items that are outside of operational accounting. Most profit and

loss accounts, however, have a link with Controlling, so salary


expenses will be linked with cost centers, material expenses with
orders and projects, and so on. In the past, a sister primary cost
element was created for each of these profit and loss accounts, but
now the two master data records are merged into one. This means that
there is a separate record not for the cost element but only for the
account, as shown in Figure 21.
If you are new to account-based Profitability Analysis, bear in mind that
you will also need to define primary cost accounts for all your revenue
postings, sales deductions, and cost of goods sold in Central Finance.
It can be worth revisiting your account determination settings in Sales
and Distribution (SD) to be sure that you know which accounts you will
be collecting and to make sure that you are aware of any statistical
sales conditions. These wont automatically be reflected in Central
Finance, but they are included in the transfer structure; if they are
important, consider implementing a BAdI to change the posting logic.
To ensure that the account assignments in Controlling are activated
properly, you also need to activate the cost element settings on
theControl Data tab as shown in Figure 22.

Figure 22Account Control Data Showing the Link to the Cost Element
Category
The following are the main cost element categories for which you need
accounts in Central Finance:

01: Primary Costs/Cost-Reducing Revenues


Check your trial balance and the settings for your controlling
area to identify all accounts/cost elements for wages and
salaries, asset depreciation, material movements, and so on.
11: Revenues
Again, go back to the trial balance to identify all accounts/cost
elements for revenues both with external customers and
internal trading partners.
12: Sales Deductions
Here, it makes sense to compare your trial balance with the
sales conditions that will be used to invoice your customers.
22: External Settlement
Youll want to understand here where you have capital
expenses that are being settled to assets under construction,
or production orders and so on that are being settled to
finished goods inventory.
If you are using product costing, the goods delivery posting in your
local system will be made to a single cost of goods sold account
instead of being broken out into its cost components (raw materials,
internal activities, overhead, and so on) as it is in costing-based COPA. However, in SAP Simple Finance you can split this posting
according to the cost components in the standard cost estimate of the
material sold. What will happen is that the standard cost estimate itself
stays in the local system, where the bills of material and routings used
to calculate the standard costs are maintained, but the transfer
structure (seeFigure 12) includes table CFIN_ACCIT_CCS, in which
the cost component split (CCS) for the standard cost estimate in the
local system will be stored for transfer.
To receive this split in Central Finance, create the relevant
subaccounts for raw materials, internal activities, overhead, and so on,
and then define how these accounts will be updated by
choosing Financial Accounting (New) General Ledger Accounting
(New) Periodic Processing Integration Materials
Management Define Accounts for Splitting the Cost of Goods
Sold in the IMG. This will result in multiple COGS lines being created
as each cost of goods sold posting is transferred.
Secondary Cost Elements as Accounts

Because the whole idea of creating G/L accounts for secondary cost
elements will go against the grain for experienced SAP users, its
worth
walking through the various types of cost elements that you will need in
Central Finance.
Start by making a list of the cost elements you currently use (youll find
these using Transaction KA23Cost Elements: Master Data Report),
understanding the process by which each cost element is updated, and
then deciding whether you want to keep the same cost element
granularity for the process in Central Finance or need to map
differently.
Postings for the following cost element categories currently can be
transferred to Central Finance:
21: Internal Settlement
Review the settlement structures in your local system to
determine which cost elements are used to send costs from
orders and projects to other receivers in Controlling.
41: Overhead Rates
Review the costing sheets in your local system to determine
which cost elements are used to send costs from cost centers
to orders and to projects in Controlling.
42: Assessment
Review the assessment cycles in your local system to
determine which cost elements are used to send costs from
cost centers to other cost centers in Controlling.
43: Internal Activity Allocation
Youll need to prepare a list of activity types and business
processes used in your local system to determine which cost
elements are used to send costs from cost centers to orders
and to projects in Controlling.
4.3.2Define Profit Centers and Segments

Before you can perform any sort of Profit Center Accounting


Before you can perform any sort of Profit Center Accounting, youll
need to make sure that the appropriate profit centers and segments

exist in Central Finance. Remember as you do this that you dont


necessarily need to be running Profit Center Accounting in the local
system. If you are running classic Profit Center Accounting in a
separate ledger in the local system, be aware that manual documents
created using Transactions 1KEL und 9KE0 arent currently transferred
to Central Finance.
Remember that because profit center assignments are derived from
cost centers, internal orders, projects, and so on, you can transfer
journal entries that only contain these account assignments and derive
new profit centers on the fly using the entries in the sending account
assignments.
4.3.3Define Cost Centers

The cost center is the one piece of master data that you will almost
certainly transfer to Central Finance alongside the account. In some
organizations, the cost center is used strictly as a resource to
represent a machine, a building, or people working in a department. In
other organizations, the cost center is used more flexibly to represent
what many practitioners would consider profit centers, and statistical
revenues are posted to the cost centers alongside costs.
One challenge as you move to a single controlling area can be to
identify which cost centers belong to which company code for ease of
reporting, allocation, and so on, so consider putting an appropriate
numbering system into place. Its also important to understand whether
the same cost center key can exist in multiple systems to avoid
conflicts as different local systems come online. Because the attributes
in the cost center masters will also determine the assignment of your
cost centers to functional areas, profit centers, and business areas,
think carefully

about these assignments; they provide the basis for your management
reporting.
Caution
Be careful as you maintain the cost center attributes; its the profit
center or functional area derived from the cost center that will win over
any mapping of profit center A to profit center B or functional area A to
functional area B in the mapping tables.

4.3.4Define Material Masters

The idea of centralizing and harmonizing material masters can be a


daunting one. However, remember that youre only interested in a
subset of that master data in Central Finance. All the settings that
control MRP, production, procurement, warehouse management, and
so on in the local systems can stay exactly where they are. The main
items to consider are the following:
Naming/numbering conventions
This wont be a problem as you bring your first local system
online, but failure to act early can cause problems later, unless
youve already tidied your material masters. Remember that
you are potentially preparing the way for consistent inventory
reporting and a central material ledger, even if you dont bring
all this detail into Central Finance in the first wave.
Assignment to product hierarchies
Because the product hierarchies are one of the main ways of
looking at how families of similar products aggregate in COPA, its worth devoting some time to this topic. However,
deciding whether you are going to deliberately leave untidy
product hierarchies in the local system because they are
being used in sales conditions and so on and move to a
different structure in Central Finance, or whether you are
going to harmonize your product hierarchies, is not something
that can be determined by the finance department alone.
Assignment to material groups
The concerns for product hierarchies apply similarly to
material groups. You should also understand whether you
have other material attributes that you need for central
reporting in your material masters, such as spend categories.
4.3.5Define Vendors and Customers

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4.3.6Key Mapping for Master Data

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4.3.7Error Correction and Suspense Accounting

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4.3.8Perform the Initial Data Load

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