Financials Reporting and Analysis

• External accounting is directed "outwards" and is regulated strictly by tradition and law to ensure comparability.
• Principles of double entry bookkeeping
• Profit and loss system
• Period based accounting
• Internal accounting is purely for internal use and serves to control and manage the organization. It is constructed along the lines set by management and must be flexible.

The Audit Trail

• Every transaction in the system is represented by a document
• A document records a business transaction
• Documents are accessible in real time and are stored centrally
• Data resulting from transactions posted to the system can be viewed at every level of detail from the original document to the final report.
• The system provides an audit trail of the reporting information through the drill down capabilities

General Ledger and its Subledgers

• Transactions that affect financials update the General Ledger via subledgers that are directly integrated.
• Subledgers reduce the number of General Ledger accounts shown on the Financial Statement.
• The balances of subledger accounts are automatically updated in the General Ledger through a Reconciliation Account.

Credit Management

Open order value

The open order value is the value of all order items which have not yet been delivered.

The open order value is based on confirmed quantifies (Confirmed quantities x Credit price = Open order value of an order). An order which has been blocked due to a credit check does not contain confirmed quantities. The open order value does not increase as long as the block remains in place.

·Open delivery value

The open delivery value is the value of all delivery items which have not yet been billed.

Open billing value

The open billing value is the value of all billing items which have not yet been transferred to 

Accounting.

· Receivables from sales are included in total commitments as long as they have not been indicated as disputed items. For more information, see the chapter on processing incoming payments and commitments.

· Receivables from special G/L transactions are transferred from special commitments to total commitments if they are relevant to credit limit, for example payments. For more information, see the chapter on processing incoming payments and commitments.

The system updates values based on the payer.

• Use the system settings to specify when you would like to carry out a credit control check. You could require that checks be carried out only during sales order processing.
• Subsequent function in Sales and Shipping cannot be carried out as long as the relevant document is blocked by a credit check.
• A check carried out at goods issue can no longer block the transaction as goods issue is the final function in Shipping. If a credit check is carried during goods issue and the transaction exceeds the credit limit, it is not posted for delivery. The system issues an error message

The credit control area, the risk category of the customer and the business transaction all influence the type and scope of automatic credit checking.

Credit groups combine different business processes that are to be treated in the same way with regards to the credit check. These credit groups are assigned to the sales document types and the delivery document types for which a credit limit check is to be carried out.

You determine for each item category, whether an item of that item category is included in the credit functions. The credit management field must be activated for item categories that are to be taken into account during the credit check

• The customer credit exposure can be divided into a static part (open items, open billing values and delivery values) and a dynamic part (open order value).

• The open order value comprises all partially delivered or undelivered orders. It is accumulated for the material availability date within an information structure in freely definable units of time or periods, ( day, week, month).
• When defining the credit check, you specify a certain number of the corresponding periods from which the date will be determined in the future.
• This makes sure that sales orders planned in the future are not taken into account when determining credit exposure.

• The 'actual date' in this example is the initial date for determining the open order value on the credit horizon. The 'actual date' is the current date for each check. In an order, it is the date that the order is created or changed. In a delivery, it is the date that the delivery is created or changed.

• The sales order or delivery value may not exceed the specific value defined in the credit check. This value is stored in the currency of the credit control area. It is particularly applicable if a credit limit has not yet been defined for a new customer. You can initiate this check using a risk category defined for a new customer
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• When carrying out a check of this type, a credit check is triggered by changes made in the document to values of any of the credit-sensitive fields. These fields are proposed from the customer master record, and include, for example, terms of payment and fixed value dates.

Posting Accounts Receivable

Documents, Headers and Posting Keys

One of the most basic components of SAP is the document. Whenever data is entered into the system a document is created. Documents have a definite structure to them. This structure varies depending on the purpose of the transaction. Each document has a unique number and also contains a complete trace of the transaction entered and who entered it.


The next screen shows the structure of a document. Each document has a header and at least two items. The document header contains general data about the entire document such as:, the posting data, document type and the user that entered the document. Each item must contain a posting key, an account number and an amount. There must be at least two items and the items must balance out to zero, thus assuring that debits equal credits and the books remain balanced. Selection of the document type in the header will determine what is requested to comlete the document. All of this is controlled by the IMG which sets up the transactions

Posting keys may seem mysterious to non-accountants. The term is only a reference to a standardized way that transactions will be entered. In most business the majority of transactions adding amounts to accounts receivable will occur automatically as goods are shipped and are not entered by persons manually. Likewise when customer payments are processed the depositing of cash will automatically generate documents that will post to the customer account. Shipments of goods are simpler in that most of these shipments will result in the creation of a new item in the customer's account. Payment receipts must be processed to assure that the payments made by the customers are applied against the open items designated by the customer. This last task results in a lot of human intervention.
Payment terms: The assignment of a customer to an account group will automatically. This information is part of customer master data and is originally assigned by SD.