Increase the Speed and Transparency of Your Month-End ...wpc.0b0c.edgecastcdn.net/000B0C/Presentations/FIN2016_Cebula... · SAP Intercompany Reconciliation ... Drop Ship Customer

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Increase the Speed and Transparency of Your Month-End Close by Leveraging SAP Intercompany Reconciliation

Richard Cebula PwC

1

In This Session

• Learn how Intercompany Reconciliation (ICR) functionality enables faster Corporate

Group close

• Learn options available for reconciliation and select them based on applicable

business processes

• Learn key configuration and step-by-step processes for setting up and implementing

Intercompany Reconciliation functionality

• Learn how to augment the Intercompany Reconciliation process through additional

custom enhancements

• Learn how the Intercompany Reconciliation process can be optimized using a

HANA database

2

What We’ll Cover

• Reviewing challenges during Corporate close and how ICR can enable a faster close

• Discussing available options for reconciliation

• Exploring the step-by-step process of ICR

• Augmenting the ICR process with custom enhancements

• Discussing how the ICR process is optimized by HANA

• Wrap-up

3

What Are Intercompany Transactions?

Finance Transactions Movements of cost, revenue, and money across Company Codes

Drop Ship Customer order placed with Company Code A. Manufacturer,

Company Code B, directly ships to customer

Stock Transfer Order Transfer of material from Company Code A to B

Intercompany Processes

4

PwC Finance Benchmark Data

Business days to close and report to

executive management

Percentage of time spent on data gathering

versus analysis

0 3 6 9 12 15

FTSE250

FTSE100

Top quartile

Median

[VALUE]% [VALUE]% [VALUE]%

[VALUE]% [VALUE]%

[VALUE]%

[VALUE]% [VALUE]% [VALUE]%

[VALUE]% [VALUE]%

[VALUE]%

0%

20%

40%

60%

80%

100%

Median Top Quartile Median Top Quartile Median Top Quartile

Data gathering Analysis

2012 - 13 2013 - 14 2014 - 15

5

Intercompany Transactions Challenges?

BPM International notes that 72% of all companies surveyed spend

significant time clearing intercompany differences

72%

31%

31% of survey participants identified the process

as a significant barrier to their close

6

Traditional

Corporate Close: Current State

Close books Intercompany

reconciliation Consolidation

Day -5 Day +0 Day +5 Day +10

Phone, fax,

email, regular mail

Reporting unit

A

Reporting unit

B

HQ

Lack of time for Intercompany

correction

• IC differences are identified during close

process

Data Volume

• Download of data into Excel and

manual correction and reconciliation

Audit Trail

• Approach to perform manual reconciliations

outside the system leads to questions on

accuracy and consistency by auditors

CHALLENGES:

Source: SAP Thought Leadership

7

How Intercompany Reconciliation Tool Helps

Applying Technology to Reconciliation Problem

Reducing Reliance on Manual Methods

Peer-to-peer reconciliation process

Communicate and resolve differences directly with one another, thereby moving the responsibility

for getting things right from the central finance function to the reporting units themselves

8

Corporate Close: Future State

Peer-to-Peer

Intercompany

reconciliation Consolidation

Close

books

Day -5 Day +0 Day +5

Intercompany matching

Reporting

unit A

Reporting

unit B

HQ

Expedited Close Process:

• Reconciliation through the tool can be

performed during the month, leading to

centralized and faster reconciliation

Focused Reconciliation:

• System automatically reconciles items

based on reconciliation rules,

highlighting only unreconciled

documents

Audit Trail:

• All data is available in the system leading to

acceptable tool and evidence

BENEFITS:

Uses for

saved time

Agree or

disagree

Agree or

disagree

Reconciled

intercompany

balances 62%

7%

13%

10%

8%

Day +10 No value

Cost reduction

Work fewer

hours

Meet deadlines

Redeploy staff

and resources

Source: SAP Thought Leadership

9

What We’ll Cover






• Wrap-up

10

Reconciliation Options

Business Process Reconciliation Option

Balance Sheet GL Account:

This process is intended for reconciliation of open items. You

should choose this process if most of your intercompany

receivables and payables are posted to GL accounts.

Process 001 – GL Open Items

Profit & Loss GL Account:

This process is intended for reconciliation of documents which

are posted to accounts that do not have open item management.

This process is mostly used for reconciliation of profit and

loss accounts.

Process 002 – GL Accounts

Vendor/Customer:

This process is intended for reconciliation of open items. You

should choose this process if most of your intercompany

receivables and payables are posted to customer and

vendor accounts.

Process 003 – Customer/Vendor Open Items

11

Activate Reconciliation Options

• SAP menu Financial Accounting Accounts Receivable and Accounts Payable

Business Transactions Closing Count Cross-System Intercompany

Reconciliation Preparations in the Reconciliation System General Settings

Activate Processes: (FBIC031)

Table Name Description Inactive

FBICRC001A ICRA: Open Items GL: Documents

FBICRC002A ICRA: GL Accounts: Documents

FBICRC003A ICRA: Open Items

12

What We’ll Cover






• Wrap-up

13

How the Process Works

Intercompany Reconciliation Process

Data Selection

Communications

Manual

Corrections

Data Storage

Data Presentation

& Analysis

14


Data Selection

Communications

Manual

Corrections

Data Storage

Data Presentation

& Analysis

15

Data Selection: Non-SAP System

• Pull principle

Data selection program calls customer-specific data selection logic (BAdI)

Data selection program stores data in ICR database

Example: Read from legacy system

• Push principle

Non-SAP application calls SAP function module

SAP function module stores data in ICR database

Example: Customer creates Web transaction for supplying data

16

Data Selection: SAP System

• Landscape coverage

Data selection across SAP systems

Access via RFC (Remote Function Call) across different client within same

SAP system

• Components for data selection

FI – Documents

FI – Open Items on GL accounts

FI – Open Items from sub-ledgers

• Automatic derivation of:

Company from company code

Group account from operative account

17

Process 001: GL Open Items

• SAP menu Accounting Financial Accounting General Ledger Periodic

Processing Closing Check/Count Intercompany Reconciliation: Open

Items (FBICS1)

Fiscal year and

period will determine

key date

18

Data Selection: Each Company Code

• SAP menu Financial Accounting General Ledger Business Transaction

Periodic Processing Count Cross-System Intercompany Reconciliation

Preparation in the Reconciliation System Data Selection and Storage Open Item

Reconciliation Companies to be Reconciled: FBIC008

Select if data to be read

from local system

Enter field to which

specified company

posts reference number

Enter RFC if companies

are set up in different

systems/clients

Enter company code

19

Process 002: GL Accounts


Processing Closing Check/Count Intercompany Reconciliation:

Accounts (FBICS2)

Select if data needs to

be transferred again

20




Preparation in the Reconciliation System Data Selection and Storage G/L account

Reconciliation Companies to be Reconciled: FBIC009

Special Purpose Ledger

needs to be created and

assigned

21

Special Purpose Ledger

T-code: GCVO

T-code: GCL1

Activate Global Ledgers before posting any data

Define ledger and assign it to Company codes

22

Activate Transaction Data Tables



Preparation in the Reconciliation System General Settings Activate Transaction

Data Tables: FBIC004

• Activate transaction data tables and

generate posting modules

• Necessary to enable intercompany

reconciliation programs to post data

• Execute this function while no postings are being made in any client of

the system

23

Process 003: Customer/Vendor

• SAP menu Accounting Financial Accounting Vendors Periodic Processing

Closing Check/Count Cross-System Intercompany Reconciliation (FBICS3)

Fiscal year and period

will determine key date

24


• SAP menu Financial Accounting Accounts Receivable and Accounts Payable

Business Transaction Closing Count Cross-System Intercompany Reconciliation

Preparation in the Reconciliation System Data Selection and Storage Companies

to be Reconciled: FBIC032

Select if data to be read

from local system

Enter company code

Enter RFC if companies

are set up in different

systems/clients

Enter field to which

specified company

posts the reference

number

25


Data Selection

Communications

Manual

Corrections

Data Storage

Data Presentation

& Analysis

26

Reconciliation and Open Items

Control Tables:

• RFC Destinations

• Last Selection

BKPF BSEG

SL Ledger in Table

Group FBICRC00x

BKPF

Open Items

BSEG

BAdI BKPF

Open Items

BSEG

BAdI

Documents

SAP System A SAP System B Non-SAP System 1

BAdI

BAdI

Reconciliation System

Data Selection Process

Open Items

BAdI

27

General Ledger Accounts

SL Ledger A in Table

Group FBICRC002

SL Ledger in Table Group

FBICRC002 BAdI Documents

Non-SAP System 1

BAdI

BAdI BAdI

FI Posting

SL Ledger in Table Group

FBICRC002 BAdI

SAP System B

Data Selection Process

SL Ledger B in Table Group

GBICRC002

SAP System A

Reconciliation System

Control Tables:

• RFC Destinations

• Last Selection

28


Data Selection

Communications

Manual

Corrections

Data Storage

Data Presentation

& Analysis

29

Data Presentation

• Assign documents/delete assignments

• Set status (e.g., communication and processing status)

• Find matching documents using customizable rules

Correct transaction currency and amount

Correct amount, wrong transaction currency

• Communication support

Template-based messages

Contact person database

• Customer-specific functions through BAdI

• Standard functions can be deactivated

30

Process 001: GL Open Items


Processing Closing Check/Count Intercompany Reconciliation: Open Items

Cross-System Intercompany Reconciliation Assign Documents

Automatically (FBICA1)

Fiscal year and period

will determine key date

31

Process 002: GL Accounts


Processing Closing Check/Count Intercompany Reconciliation:

Accounts (FBICA2)

Enter Posting date

interval

32

Process 003: Customer/Vendor

• SAP menu Accounting Financial Accounting Accounts Payable Periodic

Processing Closing Check/Count Cross-System Intercompany Reconciliation

Assign Documents Automatically (FBICA3)

Fiscal year and period will

determine key date

33

Data Presentation

Default, system only shows

unreconciled documents

Icons Meaning

Differences exist

No difference exist, but some documents have not been assigned yet. Theoretically this could be caused by several incomplete business transactions which are not

balanced within themselves, but the overall balance is zero by coincidence.

No differences exist and all documents have been assigned

No data records are available for this business relationship

34

Rules for Automatic Assignment

• SAP menu Financial Accounting General Ledger Accounting Periodic

Processing Check/Count Cross-System Intercompany Reconciliation

Preparation in Reconciliation system Data Assignment Define rules for Document

Assignment: (FBRC005)

Use rule REFNR = REFNR for automatic assignment,

SAP Note:1164059

35


Data Selection

Communications

Manual

Corrections

Data Storage

Data Presentation

& Analysis

36

Data Presentation: User Interface Function

Select “Create Mail

using Template”

• The Communication button will start a dialog which can be used to send template-based

messages to accountants in the partner company

• As a first step, the user has to select a template and the language of the message

37

Communication Template

Select appropriate

template

38

Communication to Receiver

Once sent to recipient,

example of how information

will be shared

39

Maintain Template

• SAP menu Financial Accounting Accounts Receivable & Payable Business

Transaction Closing Count Cross-System Intercompany Reconciliation

Preparation in Reconciliation system General Settings Communication Support

Maintain Message Templates (FBRC001)

Select appropriate template

40


Data Selection

Communications

Manual

Corrections

Data Storage

Data Presentation

& Analysis

41

Reconcile Documents Manually


Processing Closing Check/Count Intercompany Reconciliation: Open Items

Cross-System Intercompany Reconciliation Reconcile Documents Manually (FBICR1)

Unassigned

Documents

Assigned

Documents

42

Manual Assignment

Select line item from both company codes

and then click “Assign”

43

Delete Manual Assignment

Select line item, then click “Unassign Items”

44

What We’ll Cover






• Wrap-up

45

Augment ICR: Additional Custom Enhancement

ICR Process Method Use Available in BAdI

Data Selection &

Storage

ADD_FIELDS_TO_BE_SELECTED Add additional fields to be selected

from FI document table

FB_ICRC_001, FB_ICRC_003

ADD_INFORMATION_TO_DATA_RECORD Change field contents of a data record

to be reconciled

FB_ICRC_001, FB_ICRC_002,

FB_ICRC_003

CHANGE_DATA_TABLE Add or delete data records to be

reconciled


FB_ICRC_003

CHANGE_DATA_TABLE_SENDER_SYS Add or delete data records to be

reconciled in the sender system


FB_ICRC_003

SUPPLY_OTHER_DATA Add data from external sources using

self-defined logic


FB_ICRC_003

Data Assignment PROCESS_AFTER_ASSIGN_ALL Executed after all rules have been

processed

FB_RC_ASSIGNMENT

PROCESS_AFTER_ASSIGN_SINGLE Executed after each rule has been

processed

FB_RC_ASSIGNMENT

46

Augment ICR: Additional Custom Enhancement (cont.)

ICR Process Use Method Available in BAdI

Data Presentation ADD_CUSTOMER_UI_FUNCTIONS Add Functions to Main Toolbar FB_RC_PRESENTATION

CHECK_ASSIGN_OK Check Whether Assignment Is OK FB_RC_PRESENTATION

CHECK_UNASSIGN_OK Check Whether Assignment May Be

Deleted

FB_RC_PRESENTATION

CONTACT_PERSON_CHANGE_AUTH Check Whether User Has Authority to

Change Contact Person

FB_RC_PRESENTATION

DISABLE_STANDARD_UI_FUNCTIONS Disable Standard Functions of User

Interface

FB_RC_PRESENTATION

PROCESS_CUSTOMER_UI_FUNCTIONS Processing for Added Functions FB_RC_PRESENTATION

NAVIGATION_TREE_ADD_ITEMS Add Items to Navigation Tree (e.g.,

Additional Columns)

FB_RC_PRESENTATION

47

What We’ll Cover






• Wrap-up

48

Optimization on HANA Database

Reconciliation Process Optimized by HANA

Process 001 – GL Open Items ×

Process 002 – GL Accounts ×

Process 003 – Customer/Vendor Open Items

49

Faster Reconciliation Process

• Real-time intercompany reconciliation is an important step to continuous intra-period

soft closes

• SAP HANA reconciles on the fly without storing reconciliation data in separate tables,

increasing efficiency and process speed

SAP HANA SAP without HANA

Manual

Corrections

Communications

Data

Presentation

& Analysis

Data

Selection

Data

Storage Manual

Corrections

Communications Data Presentation

& Analysis

50


• SAP menu Financial Accounting Accounts Receivable and Accounts Payable Business Transaction

Closing Count Cross-System Intercompany Reconciliation Preparation in the Reconciliation

System Data Selection and Storage Companies to be Reconciled: FBIC032

Applicable only if

performed in HANA

Please note that currently this is only supported for companies where no RFC destination is defined

and only for the AR/AP reconciliation process

51

PwC Comparison Study

PwC Comparison Study — SAP Business Suite powered by HANA for Financials

Intercompany Reconciliation

End result: In the PwC lab environment, SAP Business Suite powered by HANA for

Financials runs the intercompany reconciliation process 2,000 times faster than SAP ERP

Financials — actual results may vary

2000

1 0

500

1000

1500

2000

2500

SAP ERP SAP SoH

Tim

e (in

sec

onds

)

Intercompany reconciliation

52

What We’ll Cover






• Wrap-up

53

Where to Find More Information

• SAP Business Planning and Consolidation – SAP Thought Leadership on ICR

http://go.sap.com/product/financial-mgmt/bpc.html

• “Consolidation Preparation: Intercompany Reconciliation (B30) – Building Block Configuration Guide”

(SAP, March 2011).

https://help.sap.com/bp_sioc604/BBLibrary/Documentation/B30_BB_ConfigGuide_EN_DE.doc

• “Finance – Find Out How SAP Business Suite powered by SAP HANA Delivers Business Value in Real

Time” (SAP Business Suite powered by SAP HANA Fact Book, 2013).

http://hana.sap.com/content/dam/website/saphana/en_us/PDFs/suiteonhanafactbooks/1_28517_1_SoH_

Finance_Factbook_en.pdf

• Cliff Eng, “Transform Your Finance Organization into a Business Value Driver” (SAPinsider, 2014).

www.pwc.com/us/en/sap-implementation/articles/assets/transform-your-finance-organization.pdf

• “Why SAP Finance Teams Need to Adapt to a New Dynamic” (insiderProfiles, 2014).

www.pwc.com/us/en/sap-implementation/articles/assets/why-sap-finance-teams-need-to-adapt-to-a-

new-dynamic.pdf




https://help.sap.com/bp_sioc604/BBLibrary/Documentation/B30_BB_ConfigGuide_EN_DE.doc

http://hana.sap.com/content/dam/website/saphana/en_us/PDFs/suiteonhanafactbooks/1_28517_1_SoH_Finance_Factbook_en.pdf

http://hana.sap.com/content/dam/website/saphana/en_us/PDFs/suiteonhanafactbooks/1_28517_1_SoH_Finance_Factbook_en.pdf

http://www.pwc.com/us/en/sap-implementation/articles/assets/transform-your-finance-organization.pdf









http://www.pwc.com/us/en/sap-implementation/articles/assets/why-sap-finance-teams-need-to-adapt-to-a-new-dynamic.pdf























54

Where to Find More Information (cont.)

• Andrew Hwang and Sharabh Ivaturi, “Demystifying Transfer Pricing Execution and Intercompany Accounting”

(insiderProfiles, 2015).

www.pwc.com/us/en/sap-implementation/articles/assets/demystifying-transfer-pricing-execution.pdf

• Rich Sernyak and Rakesh Mehta, “How Finance Can Become a True Strategic Partner to the Business with SAP Simple

Finance” (SAPinsider, 2015).

www.pwc.com/us/en/sap-implementation/articles/assets/finance-can-become-a-true-strategic-partner.pdf

• Lucy Swedberg, “Live from the SAPinsider Studio: PwC’s Cliff Eng Talks Finance Transformation” (Financials 2014,

Orlando).

http://sapinsider.wispubs.com/Assets/Videos/2014/May/Financials-2014-Cliff-Eng-on-Finance-Transformation

• PwC and SAP Transfer Pricing Webcast Series – Archive Files

Effectively manage Intercompany price setting in your global supply chain

How to streamline the overall HQ cost allocation process

Effectively manage profit level indicators (PLI) and transfer pricing testing using PCM

https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=740048&sessioni

d=1&key=28D6D8DD56FD07B7CD90D6C69589635A&sourcepage=register

http://www.pwc.com/us/en/sap-implementation/articles/assets/demystifying-transfer-pricing-execution.pdf









http://www.pwc.com/us/en/sap-implementation/articles/assets/finance-can-become-a-true-strategic-partner.pdf




























https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=740048&sessionid=1&key=28D6D8DD56FD07B7CD90D6C69589635A&sourcepage=register

https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=740048&sessionid=1&key=28D6D8DD56FD07B7CD90D6C69589635A&sourcepage=register

55

7 Key Points to Take Home

• Intercompany reconciliation functionality does not require licensing

• Audit trail and focused reconciliation help corporate groups to perform month-end

close faster

• Reconciliation monitor will only display unreconciled documents

• Ensure that documents are not posted while activating intercompany tables

(T-code: FBIC004)

• Set up unique reference numbers for automatic account assignments. Complex

assignment rule will significantly slow down the process.

• The ICR process only performs assignment and not the clearing of documents

• SAP HANA is optimized only for the Vendor/Customer reconciliation process

56

Your Turn!

How to contact me:

Richard Cebula

Email: [email protected]

Please remember to complete your session evaluation

57

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