Integrate FI with Other SAP Modules

Most, if not all, transactions in the SAP system in other modules have financial implications and trigger postings in the FI module. As a result, some form of assignment of other modules to GL accounts in FI is mandatory. The following modules are available for integration with FI in the system. (Figure 13-1 depicts the integration of FI with other modules).

The concept of assigning other modules to FI module is to allow the system to automatically post transactions posted in other modules to FI. As a result, you need to perform some assignments between these modules and FI in order to allow the system to form automatic posting between them. For example, when you integrate the payroll module to the FI module, postings made in the payroll module will automatically post to G/L accounts in FI in real time based on defined criteria.

In Figure 13-1, the Material Management (MM), Asset Accounting (FI-AA), Sales & Distribution (SD), Payroll, and Local General Ledgers are integrated into FI. Therefore, postings of these modules are automatically posted to FI based on the integration procedures defined.

In this chapter, we will be looking at how to integrate Material Management (MM) and Sales & Distribution (SD) only. We will not be covering Payroll and Asset Accounting (FI-AA) as these are outside the scope of this book. For more details on how to integrate Asst Accounting (FI-AA) to FI, please refer to our book “Asset Accounting Configuration in SAP ERP: A Step-by-Step Guide” by the same author.

Material Management (MM)

Movements of material from one stage to another takes place in MM which need to be posted in FI, for example, Goods Issues and Goods receipts. To represent the movement of these items in FI, they have to be assigned to GL accounts in valuation class.

In order for the system to automatically post Transactions posted in MM module with financial Implication to the FI module, some specifications need to be conducted in valuation class in the system that will allow the integration of one module to another.

Because of various movement of material within the SAP system, there is a need for valuation class in the SAP system. For proper classification of materials, you have to define the valuation class for every material in the valuation class field. SAP supplied standard valuation classes in the system that you can use.

Configuring Automatic Postings

Automatic postings customization makes automatic postings to GL accounts for every material movement possible in the SAP R/3 system. Therefore, having to manually input material movement in FI will not be necessary because the system will do the postings automatically.

Let’s use an example to illustrate how the customization of MM integration with G/L accounts in FI works in principle.

Assume Goods receipt (GR) of £200K posting is made to Purchase Order.

Figure 13-3 shows Accounting Double Entry of Goods Receipt (GR).

To make this work in SAP, you assign BSX Transaction Key – Inventory Posting to GL Account for Inventory Account.

The Configuration Accounting Maintain: Automatic Posts – Procedures screen is displayed. This screen contains a list of procedures you can choose from. Choose inventory Posting-BSX from the procedures list by clicking on it, and click choose at the top left of the screen.

The Enter Chart of Accounts dialog box pops up. Enter your chart of accounts key in the Chart of Accounts field. In this activity, we used CA10, which is our chat of accounts key. Click Continue at the bottom right of the screen. The Configuration Accounting Maintain: Automatic Posts – Rules screen is displayed. You will notice that the system has automatically defaulted your chart of accounts – CA10 and the transaction code – BSX for inventory posting. This is the screen where you determine the valuation class for your accounts assignment.

In the Accounts are determined based on section of the screen, specify the basis on which you want your material valuation accounts to be determined. Since you want to customize Valuation Modification, valuation class and G/L accounts. Activate Valuation modif and Valuation class checkboxes by ticking them, as in Figure 13-4.

Click the Save button at the bottom right of the screen. The Configuration Accounting Maintain: Automatic Posts – Accounts screen is displayed (Figure 13-5). This is where you will maintain the settings for automatic postings of MM transaction to FI.

Save your customizing.

Inventory Account and GR/IR Account

In the double entry example earlier in Figure 13-3, you have two accounts (i.e., Inventory Account and GR/IR Account). Since you have created the Inventory Account using BSX Transaction Key, the next step is to also create a corresponding Credit Account for the GR/IR Clearing Account. To do this, you should use GR/IR Clearing Account – WRX Transaction Key.

Hit back at the top left of the screen button to return to the previous page or follow this menu path: IMG – Financial Accounting ➤ General Ledger Accounting ➤ Periodic Processing ➤ Integration ➤ Material Management ➤ Define Accounts for Material Management to return to the Configuration Accounting Maintain: Automatic Posts – Procedure. From the list of procedures displayed on the screen using the scroll bar at the right side of the screen, search for GR/IR clearing account – WRX. Click on it to select it and click Choose at the right side of the screen. The Enter Chart of Accounts dialog box pops up. Enter your chart of accounts key in the Chart of Accounts field, click Continue at the bottom right of the screen. The Configuration Accounting Maintain: Automatic Posts – Rules screen is displayed. You will notice that the system has automatically defaulted your chart of accounts – CA10 and the transaction code – WRX-GR/IR clearing account. You do not need any specifications on this screen. Click the Save button at the bottom right of the screen. The Configuration Accounting Maintain: Automatic Posts – Accounts is displayed (Figure 13-6).

Enter the GR/IR clearing account G/L account 191100 in the Account field and save your account assignment.

In automatic posting procedure, there are several transactions and transaction keys that you may want to explore on your own. The following transaction keys are important:

In this activity, you will only be looking at Offsetting entry for inventory posting (GBB). Basically, the procedure for assigning other transaction keys are the same.

GBB has several account groupings that you can choose from based on the relevant movement types. The following accounting groupings can be assigned to the relevant movement types in GBB:

Let’s look at when Goods or materials are issued to production or Cost Center

Offsetting Entry for Inventory Posting

In this activity, you will be updating the general modification VBR (a predefined transaction key supplied by SAP in the system for internal inventory posting to G/L accounts) with Material Consumption. After you configure the GBB-offsetting entry for inventory posting, the system will automatically post materials or goods issued to production or cost center to offsetting accounts in FI by debiting the Material Consumption account and crediting the inventory account for materials.

Inventory Account for Material is credited and Material Consumption is debited.

Ok let’s see how this is done. Follow this menu path: IMG: Financial Accounting➤ General Ledger Accounting ➤ Periodic Processing ➤ Integration ➤ Material Management ➤ Define Accounts for Material Management.

The Configuration Accounting Maintain: Automatic Posts - Procedures screen is displayed. Using the scroll bar at the right side of the screen search for Offsetting entry for inventory – GBB in the procedure list. Select it and click Choose at the top left of the screen. The Enter Chart of Accounts dialog pops up. Enter your Chart of Accounts in the Chart of Accounts field and click Continue at the bottom right of the screen. The Configuration Accounting Maintain: Automatic Posts – Rules screen is displayed (Figure 13-7).

Save your work.

The final step in this activity is to customize the integration of Sales & Distribution (SD) with FI to allow the system to automatically post transactions in SD to FI.

Integration with Sales & Distribution (SD).

Sales and Distribution (SAP) is a part of SAP modules. Business processes from Sales order to delivery are executed in SD. This module handles activities ranging from Customer Sales Order, Shipping, Billing of Products, Services, Risk Management, etc.

Billing is a part of SD function and all billing transactions that took place in SD module also form part of FI transactions, which results in FI – General Ledger posting.

Let’s look at an example of SD billing transaction in accounting. Assume that a bill is raised in SD for £200k, the accounting transaction will look like the double entry accounting transaction below:

Prepare Revenue Account Determination

Account determination is an important integration process in SAP R/3 that enables the system to post transactions in SD (e.g., sales, sales deductions, and freights) to appropriate G/L accounts in FI via Account Keys.

Available Account keys in SAP ERP system that you can use

Access sequence allows us to specify different GL accounts for different Sales organizations. Based on your settings, the system will go through the settings in your configuration to find out if a GL account is assigned to an account key. For example, the system will check the first item Cust GrpMaterialGrpAccKey. If a G/L Account is assigned, then the system will use the G/L account for revenue posting. If no G/L account is assigned, the system will go to the next item on the table in a sequence, and so on. Until the system finds an account key that a G/L account is assigned to. It will use it for posting SD transactions to the G/L accounts in FI.

Now let’s go through the steps involved customizing the integration of SD to FI.

Problem: Using Account Key (Acct Key), assign GL Account to Sales Revenue (ERL) and Sales Deductions (ERS).

The Assign G/L Accounts screen is displayed. On the Assigned G/L Account Table, select item 5-Account Key (circled in Figure 13-11) by clicking on it to select it and click Choose at the top left of the screen to go to the next screen.

The Change View Acct Key Overview screen comes-up. Choose New Entries at the top left of the screen. The New Entries: Overview of Added Entries screen (Figure 13-12) comes up.

Update the following fields:

Application: Enter application key V. This is the standard key for SD.

CndTy.: Enter condition type KOFI. This condition type is used for account

determination without posting CO (Controlling). If you want to be able to post to FI and CO, use the condition type KOFK.

ChAc: Enter the chart of accounts you defined in Chapter 2. This will allow you to use the G/L accounts in your chart of accounts.

SOrg: Enter sales organization 0001. We used 0001 for illustration purposes.

ActKy: Enter account key ERL (Sales revenue) and ERS (Sales deductions). The account key will allow the system to distinguish between transactions.

G/L Account: Enter the G/L account you want sales revenue to be posted to in the FI. This activity uses 800000 as the G/L account for illustration purposes.

Provision Acc.: Enter the G/L account you want to post sales deductions to in this field.

Summary

This chapter explained the processes involved in integrating FI with other modules in SAP ERP. It briefly discussed material movements that take place in the Material Management (MM) module that need to be posted to FI. This included material issues and receipts. It went on to explore the steps involved in customizing the integration of MM with FI. In customizing MM, we defined the Valuation class for Raw Material, Semi-Finished Products, and Finished Products using the standard valuation keys supplied by SAP and assigned them to appropriate G/L accounts. You also looked at the relationship between Sales & Distribution (SD) and FI. You learned about this through a flow diagram, which explained the concepts involved in configuring SD with FI.

Finally, you also learned how to customize SD in order for the system to determine the appropriate G/L accounts that SD transactions are posted to. In doing so, you specified various condition types and assigned them to G/L accounts. This is necessary so that the system can determine the G/L accounts that SD transactions are posted to.

The next chapter explains how to customize the Accounts Payable (AP) and Accounts Receivable (AR) modules. It explains how to create number ranges for customers/vendors and covers the problems associated with creating number ranges. It defines account groups with screen layouts, explains the use of payment terms and various instalment plans, and covers how to configure manual and automatic outgoing payments in SAP ERP. It also looks at how to define adjustment accounts for receivables and payables by maturity, and adjustment posting/reversal of documents using negative postings methods.