Finance professionals and Controllers traditionally face increased workloads at the end of every period, and especially at year-end. Batch jobs need to be started and results monitored and analyzed. Reliable information showing the complete picture is only available after the period close process is completed. For companies with high work in process, this can mean that there are thousands of dollars sitting on projects awaiting settlement.
The problem with this way of working is that Controllers are meant to be predicting the state of future business but mid-period can’t even say where they stand today. In a volatile business environment, this will not work any longer. The Universal Journal was the first logical step in moving beyond these limitations toward a simplified, multi-dimensional, real-time Financials.
More innovations will follow to overcome this traditional way of working and the constraints and challenges controllers are facing.
We separate period end closing jobs in different categories:
- Jobs that are not needed any longer as data can already be provided with the initial postings.
An example for this category is the derivation of market segment attributes that is done online with every posting, the reporting attributes are part of the universal journal and settlements to CO-PA become obsolete because the posting to the order/project is immediately associated with the appropriate market segment attributes.
- Periodic postings that can be initiated event- or transactions based with each primary process.
Examples for these are overhead calculations and revenue recognition postings that can be posted together with the relevant process in S/4HANA. E.g. when you post a goods movement, the associated material overhead is immediately posted as a reference document.
- Jobs that stay periodic because of different reasons like e.g. data is only needed for periodic external reporting.
But even for this kind of periodic jobs we will provide improvements as S/4HANA makes these jobs much faster and enables finance organizations to start them more often.
For the first category, where periodic postings are not needed any longer, the universal journal entry is enriched with additional reporting characteristics. This works well if all reporting dimensions are known at the time of postings and if postings do not have to be split to several recipients. E.g. postings to sales orders can be assigned to sales order or customer dimensions at the time of the posting, no periodic settlement to CO-PA or any other reposting are needed. If not all reporting characteristics are known at the time of posting, we provide re-alignment functions that enable a subsequent derivation of characteristics once the sales order has been assigned to the project.
The second category, leads to more financial documents as the transaction-based calculations are not posted in additional journal entry lines but end up in separate additional documents.
Here is an example for event-based revenue recognition: a time confirmation posted to a consulting project will lead to 2 journal entries one for the cost posting to the project (consulting hours) and a second document that shows anticipated realized revenues
Beside a real-time margin reporting this new functionality also simplifies analysis and auditing as the values from revenue recognition are not just available for period totals but also for each single posting.
Birgit Oettinger is a featured speaker at Controlling 2017. Birgit is Product Owner for Management Accounting at SAP SE. In this role she is closely involved in key innovation topics for S/4HANA Finance. Birgit has 20 years of experience in the area of SAP Financials and got her start at SAP as an FI/CO consultant with focus on product costing and integration topics. She has been responsible for a wide range of products and areas in Financials and gained deep insights into various Cloud and On Premise solutions.