Are you a financial manager, consultant, or decision-maker considering SAP? Or are you new to SAP and need to understand how it works? If so, this very detailed, reader-friendly reference, will give you an in-depth overview of the key components of SAP ERP Financials. You'll learn how each component works, the advantages they offer, and how this fully integrated package addresses the challenges facing today's companies. Along the way, you'll also learn how to improve your efficiency in key financial areas, including profitability analysis, financial supply chain management, cost-accounting, and more.

Discover what SAP ERP Financials is all about
Read the concise topic overviews, definitions of terminology, and clear explanations of business processes

Gain In-Depth Decision-Making Knowledge
Find out what each powerful component provides, how it's used, and how it can help you improve your financial processes

Learn how SAP ERP Financials Works in the Real World
Explore the in-depth case studies and find out how companies have improved business processes and enhanced efficiency

Find the tools you need
Investigate how various aspects of your business, such as payroll, consolidation, travel accounting, capital investments, treasury management, and more are handled.

Navigate as You Like
Go directly to the chapter that interests you, or read from cover to cover. And make use of the glossary and list of additional resources.

Highlights

• Account Receivables and Payables
• Investment Management
• Travel Management
• Payroll
• Consolidation
• Overhead Cost Management
• Project Accounting
• Product Costing
• Profitability Analysis
• Credit, Collections, and Dispute Management
• Treasury and Risk Management

About the Author(s)

Manish Patel is a senior SAP professional with almost 15 years of experience in the IT industry. After graduating from Bombay University, Manish worked at an Indian software company on various financials projects in Asia Pacific. During his tenure at this company, he gained experience as a finance lead responsible for implementing the company’s indigenously developed ERP system. After building a solid foundation in the various areas of software development and project management, he started his career as an SAP consultant. Over the last ten years, he has worked on a variety of SAP projects in a number of different industries. He has also conducted several successful SAP trainings at SAP America locations. This breadth of assignments has honed his abilities to successfully perform different roles in an SAP project ranging from system configuration to project management. He is currently working as a Senior SAP Solutions Consultant in Northern California. He is also the author of the best-selling book SAP Account Determination published by SAP PRESS. The book explores vital design elements that carry out automatic determinations of GL accounts from business transactions in various SAP components.

Manish enjoys working through the challenges and complexities that are inherent in an implementation of such an enterprise wide system. He under- stands that experiences and aftereffects of such implementations can range from justifiably thrilling to maddeningly frustrating. So, he thrives in contributing to help ease the transition of SAP users into the new, integrated world of SAP. This book is an attempt to ease such transitions.

Table of Contents

1 Overview ... 27
... What Does SAP ERP Financials Offer You? ... 29
... Where Can You Use SAP ERP Financials? ... 32

2 General Ledger ... 39
... Overview ... 39
... Functions in Detail ... 40
... Corporate Structure ... 41
... Basic Settings ... 43
... The New GL ... 47
... Accounting Transactions ... 53
... Integration of the New GL ... 58
... Financial Closing ... 59
... Financial Reporting ... 64
... Summary ... 65

3 Receivables and Payables ... 67
... Overview ... 67
... Functions in Detail ... 69
... Master Data ... 69
... Customer Billing ... 72
... Incoming Payments and Cash Application ... 77
... Vendor Invoice Verification ... 79
... Payment Program ... 83
... Document Clearing Process ... 86
... Dunning Process ... 88
... Other Processes ... 92
... Reporting and Communication ... 95
... Summary ... 96

4 Taxation ... 99
... Overview ... 100
... Functions in Detail ... 101
... Setting Up Taxes ... 101
... Tax Calculation and Posting ... 106
... Tax Exemption ... 109
... Tax Reporting ... 110
... Withholding Tax ... 112
... The European Union and VAT Processing ... 116
... Other Tax Scenarios ... 119
... Case Study ... 124
... Summary ... 129

5 Bank Accounting ... 131
... Overview ... 132
... Bank Accounting Functions ... 132
... Banks and Bank Accounts ... 133
... Payment Methods ... 137
... Payment Media ... 140
... Payment Program ... 143
... Payment Aids ... 146
... Bank Statement Reconciliation ... 150
... Processing Electronic Bank Statements ... 153
... Other Bank Transactions ... 157
... Case Study ... 162
... Summary ... 164

6 Capitalization of Investments ... 165
... Overview ... 166
... Functions in Detail ... 167
... Investment Programs ... 167
... Appropriation Requests ... 169
... Investment Measures ... 173
... Planning and Budgeting ... 176
... Structuring Fixed Assets ... 180
... Asset Transactions ... 184
... Additional Functionality ... 188
... Reporting ... 191
... Case Study ... 194
... Summary ... 199

7 Travel Management ... 201
... Overview ... 202
... Functions in Detail ... 204
... Employee Mini Master ... 204
... Travel Requests and Approvals ... 207
... Travel Booking ... 208
... Travel Expenses ... 211
... Expense Accounting and Reimbursement ... 214
... Compliance and Reporting ... 218
... Case Study ... 220
... Summary ... 223

8 Payroll Accounting ... 225
... Overview ... 226
... Functions in Detail ... 228
... Process Overview ... 228
... Earnings Calculation ... 230
... Benefi ts and Deductions ... 233
... Tax Calculations ... 240
... Payroll Processing ... 243
... Posting and Payments ... 246
... Payroll Reporting ... 249
... Outsourcing ... 251
... Case Study ... 252
... Summary ... 256

9 Consolidation ... 259
... Overview ... 260
... Functions in Detail ... 261
... Consolidation Setup ... 261
... Data Collection and Postings ... 266
... Currency Translation ... 270
... Elimination Entries ... 274
... Elimination of IPI ... 276
... Consolidation of Investments ... 279
... Validations and Reclassifi cations ... 282
... Execution of Consolidation ... 284
... Case Study ... 285
... Summary ... 289

10 Overhead Cost Controlling ... 291
... Overview ... 292
... Functions in Detail ... 294
... Overview of Controlling ... 294
... Cost Elements in SAP ... 296
... Cost Center Accounting ... 299
... Internal Order Accounting ... 302
... Activity-Based Costing ... 304
... Period-End Closing ... 309
... Reporting ... 314
... Case Study ... 315
... Summary ... 318

11 Project Accounting ... 321
... Overview ... 321
... Functions in Detail ... 323
... Project Structures in SAP ... 323
... Project Costs ... 327
... Project Revenues ... 332
... Payments and Cash Management ... 335
... Claims Management ... 338
... Integration with Procurement and Production ... 340
... Other Functionality ... 342
... Case Study ... 346
... Summary ... 349

12 Product Costing ... 351
... Overview ... 351
... Functions in Detail ... 353
... General Concepts ... 355
... Product Costing Overview ... 358
... Product Cost Planning (CO-PC) ... 362
... Planning Aids for Costing ... 366
... Cost-Controlling Activities ... 370
... Actual Costing ... 376
... Product Costing Reports ... 380
... Case Study ... 382
... Summary ... 384

13 Profitability Analysis ... 387
... Overview ... 387
... Functions in Detail ... 389
... Profi t Center Accounting (PCA) ... 389
... Overview of Profi tability Analysis ... 392
... Gathering Actual Data ... 402
... Planning ... 408
... Information System ... 413
... Case Study ... 414
... Summary ... 418

14 Financial Planning ... 419
... Overview ... 420
... Functions in Detail ... 421
... Common Planning Functionalities ... 422
... Costs Planning ... 426
... Revenue Planning ... 431
... Other Planning Elements ... 436
... Case Study ... 440
... Summary ... 443

15 Collections, Dispute, and Credit Management ... 445
... Overview ... 446
... Functions in Detail ... 448
... Credit Management Requirements ... 448
... Credit Check and Monitoring ... 451
... Comparison with SAP R/3 Credit Management ... 453
... Dispute Management Overview ... 455
... Processing a Dispute Case ... 457
... Integration of Dispute Management ... 459
... Collections Management Overview ... 461
... Collections Worklists ... 463
... Collections Management Integration ... 465
... Case Study ... 466
... Summary ... 470

16 Cash and Liquidity Management ... 471
... Overview ... 472
... Functions in Detail ... 473
... Planning Process ... 474
... Cash Concentration ... 478
... Tools and Reports ... 480
... Liquidity Planner ... 485
... Case Study ... 490
... Summary ... 493

17 Treasury and Risk Management ... 495
... Overview ... 496
... Functions in Detail ... 497
... Concepts and Terminology ... 497
... Transaction Management ... 501
... Accounting and Back Office ... 505
... Portfolio Analyzer ... 509
... Market Risk Analyzer ... 512
... Credit Risk Analyzer ... 514
... Data Maintenance and Reporting ... 518
... Summary ... 522

A Glossary ... 523
Index ... 543