Value date calculation logic during automatic payment process (APP)

Assumption: Reader is aware of basic "Automatic Payment Process" concepts.

Most of us are familiar with online banking transactions. There would be thousands of bank transactions happening 24/7. Did you ever think, how does payment reaches a bank/payee, if it is done on a bank holiday or on a Sunday (Global holiday in most of the countries)? Usually banks refer to value date while making  a payment to payee instead of transaction date. In case of real time transfers, value date and transaction date are same. In case of payments with say check, value date may be in future as well. Aligning this kind of requirement to SAP, usually payments are handled in SAP through automatic payment program (F110) or manual payments (F111). To understand the complete process in a better manner, first we need to understand few terminology used in payment process.

Payment media: This is the means of communicating the payment related information to bank. This would have information like payee details, bank account, amount to be paid etc.

EBS: configuration of search string, part 2

Here is the second document on configuration of search string functionality. The first document can be found under this link EBS: configuration of search string, part 1. In this document, I'll try to explain how we can use the search string functionality to override the default account assignment of cost elements.
     When you post bank commission or other similar expenses via automatic bank statement, you might want to change the automatic account assignment for these expenses depending on some conditions. For instance, if you’re configuring the EBS for several house banks you might want to post bank expenses using one cost element but different cost centers for different house banks. This requirement might be useful for the tracking of bank expenses of different house banks. Search string for EBS provides a nice functionality that enables you to meet this requirement.
     Let’s first discuss the possibilities of default account assignment for bank related expenses. The first option is to specify the default assignment directly in master record of cost element in transaction KA01. As you can see on the picture below, cost center 500 is specified as default cost center for cost element 479000 (“Bank charge costs”).

EBS: configuration of search string, part 1

Search string represents very useful functionality that is used to enhance the efficiency of standard EBS interpretation mechanisms. There are different instances when this functionality might be applicable e.g. for clearing purposes, for filling different fields with input values etc. I think that this functionality is especially useful for bank statement in MT940 format with unstructured field 86. However, content (both official documentation and user documents on SCN and similar resources) related to the configuration of this functionality is limited. Among those limited sources, I would like to recommend a great document on search string for Search String for EBS (Electronics bank statement). At the same time, I would like to share my own experience of search string configuration, which might be useful for some of you.

1) Change of posting rule depending on the fixed text in the line items
                    Standard functionality of EBS implies that you have performed mapping and assigned external Business Transaction Codes (hereinafter referred to as BTC codes) to internally defined posting rules. However, some banks cannot provide you with the list of BTC codes or use just one BTC code for all transactions. For instance, one of the Ukrainian banks uses BTC code 110 for all operations (however, they do not call it BTC code, they just say that this is some kind of constant without any business logic behind it:). Nonetheless, this constant can be used as BTC code. We can assign this BTC code to two internally defined posting rules with different signs for example:

Head Office and Branch concept demostrated for both Vendors & Customers

Head Office and Branch Accounts

In some industries,branches of a company sell their goods independently but the accounting for these sales is performed centrally (at the head office). You can represent this type of organizational structure in the R/3 System by using head office and branch accounts.

First you need to create head office and branch accounts. The sales orders are managed in the branchaccount. The sales and transaction figures, however, are not posted to this account but rather automatically to the head office account. Payments are cleared centrally by the head office, meaning that outgoing payments can be made for several branches in one step, using the head office account.

Change Reconciliation account during FI posting (Without using SGL indicator)

I was facing an issue regarding the necessity to edit the reconciliation account derived from the customer/vendor data without using a SGL indicator.

Many SCN discussion confirm that it’s not possible as in standard the GL account is derived from the customer/vendor master data, nevertheless, there is a “standard” way (no specific development) to edit and select the reconciliation account we need during posting  and without using the SGL indicator:
Here is the steps :

First, specify your GL accounts that you want to choose from, for example let say Recon. Accounts

• 41110010 (entered in customer master data)
• 41110011
• 41110012 

DMEE Configuration:Step By Step Part 2

This is the continuation of the document DMEE Configuration.
Please refer the below link for the DMEE Configuration:Step By Step Part 1.

Create/Assign Selection Variants (OBPM4)
A. Accounts Receivable and Accounts Payable ® Business Transactions ® Outgoing Payments ® Automatic Outgoing Payments ® Payment Media ® Make Settings for Payment Medium Formats from Payment Medium Workbench ® Create/Assign Selection Variants

DMEE Configuration:Step By Step Part 1

Introduction:
DME stands for Data Medium Exchange
A data medium exchange (DME) is a data exchange file which is used to send payment information of an enterprise to banks or tax authority. Basically these files contain financial data which can be in flat file or xml file format. Different File formats can be created for different countries and different banks based on their own norm which replaces conventional ABAP programs.

DMEE Configuration:Step By Step.

Create Payment Medium Formats (OBPM1) Accounts Receivable and Accounts Payable ® Business Transactions ® Outgoing Payments ® Automatic Outgoing Payments ® Payment Media ® Make Settings for Payment Medium Formats from Payment Medium Workbench ® Create Payment Medium Formats

Understanding - Revenue Recognition

What is Revenue Recognition?

To understand what is Revenue Recognition, we need to understand what are the basic accounting principles which guide all the accounting standards across the world. There are two basic accounting principles

1. Accrued System
2. Cash System

In Accrued system of accounting principle, as far as revenues are concerned, revenue is recognized with, when it is either realized or realizable no matter when the cash is received.

• Accrued system of accounting

1. The below points make it clear to understand the accrual system of accounting
2. The Accrual Method of Accounting matches revenues when they are earned against expenses associated with those revenues.

Automation of Actual Costing Run (CKMLCP) in Material Ledger

Introduction:
In Material ledger, Actual Cost calculation is an important part, which includes multiple steps that need to be executed by the business controllers. These steps include production/process order closing, overhead cost calculation, execution of assessment/distribution or indirect activity allocation cycles, actual cost split, actual activity price calculation and the most important CKMLCP execution in material ledger.
CKMLCP includes multiple steps that took many hours to get executed.  If we take an example of a MNC organization presence all over the world, then execution of period end closing took more than 10 to 15 hours. In this document, I will explain how we can atomize the execution of CKMLCP and reduce the execution of time.

Period End Closing CKMLCP Overview:

CKMLCP is executed to calculate Period Unit Price (PUP), which basically represent average actual cost for material or semi finished goods. Execution of CKMLCP includes the below steps:

Basics of Standard Costing - Understanding overhead cost flow-Part 4

This is in continuous of my other document of understanding Standard Costing and its flows.
Basics of Standard Costing - Understanding the Cost Component Structure-Part 3
Overhead costs are costs which can only indirectly be attributed to the product, such as electricity or general storage costs. We can allocate these overhead costs in various ways: Here I have discussed about overhead calculation through costing sheet. This is a beginner's guide to understand the costing Sheet.

Overhead application
In the conventional method, overhead is applied to the reference object as a percentage rate or a quantity-based rate. The overhead is applied by means of costing sheets. The very purpose of using a cost sheet is that we want to apply indirect costs to the final cost of the product or process. Costs that cannot be assigned to the product cost collector directly can be allocated by determining the overhead expenses and applying them to the cost collector. Overhead costing is the means by which we allocate indirect costs to the appropriate objects.
The costing sheet links all the functions of overhead calculation. The direct costs to which overhead is applied (calculation base),The conditions under which overhead is applied (dependency),Whether overhead is allocated on a percentage basis or on a quantity basis, The amount of the overhead percentage, or the amount of overhead for each unit of measure (overhead), The validity period for the overhead, Which object (cost center, process, or order) is credited, and under which cost element in the case of actual postings (credit key)

Basics of Standard Costing - Understanding the Cost Component Structure-Part 3

This document is in continuation of my second document Basics of SAP Standard Cost estimate- understanding costing variant-Part 2 and 3rd in the series

This document explains the Cost Component Structure (CCS) and components assigned to CCS.  Explaining various settings in background as previous part.

Cost Component Structure (CCS)
The cost component structure determines how the results of material costing are updated. The cost component structure groups the costs for each material according to cost component (such as material costs, internal activities, external activities, and overhead). If the material is used in the production of another material, the cost component split (which breaks down the costs according to material costs, internal activities, external activities, overhead, and so forth) remains in the system when the costs are rolled up.

Basics of SAP Standard Cost estimate- understanding costing variant-Part 2

This document is in continuation of my first document Basics of SAP Standard Cost estimate- Understanding the flow of cost settings-Part 1. This is basic and structural way of documenting the steps involved in defining Costing Variant.

This document explains the costing Variant configuration and components assigned to costing variant like Valuation variant, Qty structure Control, Transfer Control and Assignments. originally i thought of writing only 2 parts to complete it but it seems it will need few more parts to complete.This document is intended to explain the cost flows to a standard cost estimate. Explaining various settings in background as previous part.

• Costing Variant

T CODE OKKN- Define Costing variant and name it. For analysis purpose we are taking PPC1.

Basics of SAP Standard Cost estimate- Understanding the flow of cost settings-Part 1

This document is intended to explain the cost flows to a standard cost estimate. Explaining various settings in background.  I will try to explain this from backward from Cost estimate to configuration. This will answer some basic questions like Material Cost, Overhead Cost, Labor etc. in a standard cost.
When you take a look at a material cost estimate what you will understand the Quantity Structure, Valuation, Costing Dates etc.

• Standard cost of a material looks like in T-Code- CK13n (you can view this from costing-2 view in material master too T-Code-MM03.)
• I will try to walk through these 6 tabs below explaining basic configurations and data flows from different configuration to Standard Cost estimate.

Document Splitting in New General Ledger

Background
In SAP ERP the document splitting is the most powerful tool is widely and most commonly used. With this function the document splits the line items based on the “Characteristics” we define in system. Often this function is used to get the financial statements correctly for segment reporting.

Back to the Basics
Concept can be explained of document splitting with the help of one of the most basic business transaction as “Vendor Invoice”. Suppose we have vendor invoice as below which consists of two expense line items say 10,000 in total with 1,000 of tax component which sums to 11,000.

1. Expense Item 1 for 8,000 where it is assigned to PC  - X
2. Expense Item 2 for 2,000 where it is assigned to PC  - Y

Account	Amount	Profit Centre
Vendor A/C	-11,000
Expenses 1	8,000	PC – X
Expenses 2	2,000	PC – Y
Input Tax	1,000

Automation of Standard Cost Estimate (CK40N)

Introduction:
Calculation of standard cost is the annual event generally done at the beginning of financial year during Planning & Budgeting activities, which result into calculation and release of standard cost estimate.
CK40N is a powerful tool provided by SAP to calculate cost estimate with high level of accuracy for in-house produced material and material procured from outside. CK40N is executed in multiple steps from selection of material to release of cost estimate, which generally took of time to get executed. The purpose of this article is to specify how we can use the standard functionality of SAP to automate CK40N, for calculating cost estimates.

Automation of CK40N:
Product cost estimate through CK40N includes the below steps:

• Selection
• Structure Explosion for in-house produced materials
• Costing for all the materials at structure explosion
• Analysis for cost estimates
• Marking for cost estimate as future standard cost
• Release of future cost estimate as current standard cost estimates

CIN - TAXINN Procedure - An Overview

Many times I have seen people who just entered in SAP have a kind of fear of CIN (Country India Version), even I was one of them. To overcome this fear we just need to put some logic and understand how system does calculations. Once you know how it works, you will start getting interest in it.

Here I am writing this blog just for those who just entered in SAP FI. I am not going to write whole configuration steps here, just an overview on the TAXINN procedure and how the system calculates excise duty and taxes.

Here we go.
Transaction Code: OBYZ
Calculation Procedures contains necessary specifications for the calculation and base for calculating and posting of taxes on sales/purchases. Many tax calculation processes have already been defined in the standard SAP system for certain countries. For India its TAXINN and TAXINJ. TAXINN is a tax procedure which follows condition based record (not like percentage/formula base in TAXINJ).

Why Actual Activity Cost ZERO for Production Order

Purpose of writing this document is sometimes Actual Activity Cost does not get updated in KKBC_ORD against a production order. There are number reasons why activity cost not getting updated for production order as per SAP Note 380282 and the possible reason can be as below -

• The order must have a costing variant for actual costs (field CAUFVD-KLVARI).
• The confirmed operation must be relevant to costing (T430-KALKZ = "X"). This indicator is set in the operation control key.
• The order itself must have the "fully relevant to costing" attribute set (AFVGD-SELKZ = "X"). This indicator is copied from the routing and cannot be changed in the production order. For this, refer to SAP Note 378052, if necessary.
• The confirmed operation must have a work centre.
• The work centre must be assigned to a valid cost centre.
• In the work centre, a valid activity type as well as a formula must be defined for every activity whose costs you want to determine.
• These activity types also have to be specified accordingly in the order operation.
• For the activity types used in the work centre, the prices must be maintained for the cost centers of the work centre (transaction KP26).
• The confirmed operation must not be an external processing operation.
• During the confirmation, you must enter activities.

Material Ledger Overview

Introduction:
Material ledger (ML) is functionality in SAP, which helps to calculate Actual Cost for materials and also provide the facility of multiple parallel valuations in multiple currencies. ML has two major functionalities, first to calculate actual cost of materials, semi/finished goods, and second provide an opportunity to calculate actual cost on multiple valuation such as Legal, Group, & Profit center valuation. In this document we will see fundamental concept of material ledger, how the actual cost is calculated for different business scenarios.    

Actual Costing in SAP
Actual Costing has a purpose of calculating actual cost for goods manufactured in-house and materials procured from outside. Calculation of actual cost for finished goods, raw materials is very difficult as we don’t know many of actual costs when business transactions are performed. Business transactions are performed throughout the months and at that time we don’t know the actual cost of our production activities, expenses for full months, total activities performed in month, overhead cost etc., so it’s become difficult to calculate actual cost for finished goods, raw material purchased from outside. The situation becomes more difficult when we talk about a Multinational organization having manufacturing plants in different countries and transfer of goods is happening between groups.

Payment Order Configuration

Payment order is  a Standard SAP tools used in payment process .. its firstly assign a payment order number against the open item paid with no payment entry generated then when processing bank reconciliation if the payment order appear in bank statement the system generates the payment entry and close the open item.. assignment of payment order number is preventing from duplicate payment.

The configuration steps is:

T-code: OT84

          - ( Create account symbols) Y12 “Payment Order”

Configuring Terms Of Payment

Configuring Terms of Payment

Terms of payment is used in SAP to determine the due date and discount calculation. Terms of payment is maintained in vendor master and customer master to default at invoice level however this can be changed at invoice level as well.

• For FI invoices payment terms is defaulted from “Accounting View” for customer and vendor. FB60/FB70
• For Purchasing invoices payment term is defaulted from “Purchasing View” in Purchase Order / MIRO Invoices
• For Customer Invoices from SD side the payment is defaulted from “Sales Data” view.

Vendor Aging Analysis Through SAP Report Painter

Report Painter is a very flexible reporting tool which can help the Functional Consultants to develop various reports without the help of ABAP. The advantages of the Report Painter are that defining report is very easy and flexible and you have control over the layout. The Rows and Columns are display in the definition the way they are in the report itself.
Common reports that most of the clients require are:

• Statement of Financial Positions
• Income Statements
• Cash Flow Statements
• Segmented Financial Statements
• Aging Analysis Reports
• Ratio Analysis

Deactivate tax codes

We create a new tax codes with revised rates and the old tax codes no longer useful for posting. But these tax codes will display in the input help while invoice posting through MIRO,FB60,F-43,FB70 etc. Due to this the users will get confused and also might chance to select the wrong tax code for posting. To over come these type of errors SAP has provided 2 SAP Notes i.e.2074351 & 2095960.

As per note 2074351, first we have to implement the note 2095960. After done this, we have to execute the report NOTE_2095960 as mentioned in the note 2074351. The screen shot of the report execution attached here:

Configuring CFOP on SAP

Now that you know what does CFOP means and what is used for, it is time to know how to configure the CFOP on SAP in 5 steps:

1 – Define CFOP Version

The first activity necessary is “DEFINE CFOP VERSIONS” and you can do that either maintaining the table/view J_1BCFOPVERV or via IMG path “Cross-Application Components > General Application Functions > Nota fiscal > CFOP Codes > Define CFOP Versions”.

Now a days it is not necessary to maintain the old CFOP length version anymore, then, enter the following data:

Version: 1
Description for CFOP Version: NEW CFOP 4 DIGITS
Redeterm: Considering your SAP installation is new, you don’t have the old CFOP format (replaced in 2003), then, it is not necessary to activate this check.
CFOP Lngth: 4 CFOP Length
Ext. Lngth: 0 No Extention
Text ID: AA (or anything such as: A, 01, etc)

Cost Component Splits in Controlling area Currency (OKYW tcode)

This document is about how we can activate the cost component split in CO area Currency. Also we will see how it affect to Cost Component Split in CK11N.

If your controlling area currency is not the same as the company code currency, CCS is always updated in company code currency. If we would like to see CCS in CO area Currency, we should maintain it on OKYW tcode.

Before maintain OKYW,    CK11N screen is as follows.

Steps to configure Special Purpose Ledgers

Special Purpose Ledger

Special Purpose Ledgers are ledgers that you can define for your specific business and organizational requirements. The ledgers contain the dimensions you enter. You can create Special Purpose Ledgers in your FI-SL system.

Step 1) Define Table Directory

IMG Path: Financial Accounting (New) -> Special Purpose Ledger->Basic Settings->Tables->Execute Express Installation

In this activity, you can perform an express installation for a FI-SL system. The system performs the express installation for the respective functions using default settings and values.

How to resolve CK466 error during confirmation production order

This time I will share my experiance for resvoling CK466 error which puzzled me a lot once before. I was serach CK466 in this community and found quite often questions casued by missing activity price in KP26.  In this case, you can use COFC to postprocess the CO document when you update price without reverse previouse confirmation.

However still some CK466 casued by mistical reason behind.  The solution given by the blog is not only valid for CK466 also valid for other CK errors during confirmation process.

Manual JV for Reverse Tax / Reverse Charge Mechanism posting

To Correct Accounting in Wrong Tax posting below Scenarios will help to satisfy your Requirement.

Below procedure explain you how to rectify the tax Posting within Tax codes like Input to Output or Vice Versa.

Reverse Charge Mechanism also will work here as like below scenarios. ( Example Scenarios with Screen shot provided).

We will post such kind of posting using the JV solution Document Type SA and Transaction Code F-02

News for FICO Friends: ERP for Financials Customer Connection

I attended this SAP webcast this morning and was surprised at the low attendance.  There are many improvements in FI-CO and no, I am not talking "Simple Finance" but the core FI-CO modules.

See below: Customer Connection for Financials started last December

The usual Legal Disclaimer applies

Figure 1: Source: SAP

Financial Statement Analysis by using Report Painter

Report painter is an excellent reporting tool that is equipped with useful features which can help us in designing analytical reports quickly without ABAP help.Financial reporting requirement varies as per local accounting practices and GAAPS. In order to cope up with these requirements report painter let us design reports like

1. Profit & Loss Accounts
2. Balance Sheet
3. Cash Flow Statements
4. Ratio Analysis
5. Sources & Application of Working Capital
6. Consolidated Financial statements

In order to make the user familiar with this reporting tool i would restrict this blog to Ratio Analysis. While designing ratio analysis for ratios based on profit and loss figures and balance sheet , one thing has to kept in mind that profit and loss figures are period based and balance sheet figures are taken on To Date basis. Hence we need to handle this behavior while designing ratio analysis report in report painter. I will use start with designing the form and the setting necessary parameters for a classified report output.

Tax Number Duplicity Restriction (CNPJ, CPF, State Inscription)

Since the companies in Brazil must not have 2 partners to the same CNPJ and/or State Inscription (IE), or CPF, you can prevent that 2 customer master records or 2 vendors created to the same Tax ID using SAP Standard (Configuration). Some time ago, this was only possible with coding / user exit.

First, let me explain about the TAX IDs in Brazil:

-Tax Number 1 (STCD1) – CNPJ -- Only for legal entities (companies)

-Tax Number 2 (STCD2) – CPF -- Only for Natural Person

-Tax Number 3 (STCD3) – State Inscription -- Only for legal entities (companies)
If exempt, must contain word “ISENTO”

-Tax Number 4 (STCD4) – Municipal Inscription -- It can contain RG (ID) if vendor is Natural Person
If exempt, must contain word “ISENTO”

 -Sole Proprietr (STKZN) – Natural Person indicator -- Must be active when vendor is not a legal entity but a Natural Person