INTRODUCTION TO SAP SAP ERP is enterprise resource planning software developed by the German company SAP SE. SAP ERP incorporates the key business functions of an organization. The latest version (SAP ERP 6.0) was made available in 2006. The most recent Enhancement Package (EHP8) for SAP ERP 6.0 was released in 2016. Business Processes included in SAP ERP include Operations (Sales & Distribution, Materials Management, Production Planning, Logistics Execution, and Quality Management), Financials (Financial Accounting, Management Accounting, and Financial Supply Chain Management) and Human Capital Management (Payroll, e-Recruiting). SAP was founded in 1972 in Walldorf, Germany. It stands for Systems, Applications and Products in Data Processing. Over the years, it has grown and evolved to become the world premier provider of client/server business solutions for which it is so well known today. The SAP R/3 enterprise application suite for open client/server systems has established a new standard for providing business information management solutions. Definition: A German software company whose products allow businesses to track customer and business interactions. SAP is especially well-known for its Enterprise Resource Planning (ERP) and data management programs. SAP is an acronym for Systems, Applications and Products. UNDERSTANDING OF SAP MODULE 1. BASIC SETTINGS The few things that comes under sap fi basic settings are as follows: Define Company Define Company Code Assign Company Code to Company Define Business Area Define Fiscal Year Variant Assign Fiscal Year Variant to Company Code Define Posting Period Variant Assign Posting Period Variant to Company Code Define Open and Close Posting Period Define Document Type and Number Ranges Define Field Status Variants Assign Field Status Variant to Company Code Define Chart of Accounts Assign Chart of Accounts to Company Code Define Accounts Group Define Retained Earning Account Define Tolerance Groups Define Tolerance Groups for Employees 2. MASTER DATA In SAP FICO, Master data refer to those records based on which the various transactions takesplace. These Master data contains various information, details and controls by which the transaction has to behave. FI consist of Master data like GL, Vendor, Customer, Asset, Bank and CO has Cost Element, Cost Centre, Profit Centre, Activity Type etc. 3. DOCUMENT CONTROL A document is saved for every posting. Every Document is uniquely identified by the document number, company code and fiscal year. Document contains the following items., Document Header: It is that part of a document that contains information valid for the whole document, for example, document date and number. It also contains controlling information such as the document type. Line items: The part of a document that contains information about an item. This includes an amount, an account number, the credit or debit assignment, and additional details specific to the transaction being posted. 4. POSTING CONTROL There are special check routines for the fields in the document header and the individual line items. Pure information fields, such as the text field in the document header are excluded. In addition, the system carries out checks on the entire document during posting. You cannot post the document until all the checks have been carried out successfully. The following control functions are available: The checks that the system carries out automatically when you enter and post a document The control totals check that you select from the Financial Accounting menus. 5. CLEARING: Clearing’ in SAP refers to squaring-off open debit entries with that of open credit entries. Clearing is allowed in GL accounts maintained on an ‘open item’ basis and in all customer/vendor accounts. The clearing can either be manual or automatic. In the case of manual clearing, you will view the open items and select the matching items for clearing. In the case of automatic clearing, a program determines what items need to be cleared based on certain pre-determined open item selection criteria and proposes assignments before clearing these assigned items. Whatever the type of clearing, the system creates a clearing document with the details and enters the ‘clearing number’ against each of the cleared open items. The clearing number is derived from the document number of the clearing document. You will also be able to do a ‘partial clearing’ when you are unable to match open items exactly; in this case, the balance amount not cleared is posted as a new open item. You may also configure clearing tolerance and also define rules on how to tackle the situation where the net amount after clearing is not zero (such as, writing off, posting the difference to a separate ‘clearing difference’ account, etc.). In the case of customers who are also vendors, you will be able to clear between these two provided it is duly configured in the relevant master data (by entering the customer number in the vendor master record and the vendor number in the customer master record). 6. PARKING DOCUMENT: An Accountant has an authority to post documents to a maximum amount $2000. Now he has to feed a document with an amount of $5000 for which he does not have the authority. SAP FI provides a Park Facility for the document which allows the user to save the document but the amount is not posted in the G/L accounts. 7. AUTOMATIC PAYMENT: The Automatic Payment Program calculates which line items are due for payment and then processes the payment by one of the various methods that are defined in the Automatic Payment Program configuration. The Automatic Payment Program also allows netting of line items i.e. in case payments have to be made as well received from the same business partner, and then SAP determines the net value of the payment to be made or received and accordingly processes the business transaction. 8. DUNNING: Financial Accounting comprises many organizational units. The legal requirements to which your company is subject must be configured in Customizing. To ensure compliance with all applicable requirements, the first thing you need to do is make the requisite basic settings for new General Ledger Accounting. General Ledger Accounting (new) enables the use of parallel valuation approaches/parallel accounting through the use of different ledgers. 9. CORRESPONDENCE: Correspondence is required in many areas of external accounting. Many companies strive to automate their correspondence activities. Periodic correspondence is triggered by specifications made in the master record, such as invoices and account statements. The interval (weekly, monthly, and so on) is specified in the customer/vendor master record. The correspondence creation process comprises the following steps: Step 1: Request the required correspondence. Here, the system initially only notes internally which correspondence types are to be created. Step 2: The requested correspondence types are printed. Typically, correspondence is printed automatically with a particular frequency, for example, dunning letters, account statements, and so on. In certain cases, it is possible to print certain correspondence types individually and on demand. The print request is sent to the spool system. 10. NEW GL ACCOUNTING: Financial Accounting comprises many organizational units. The legal requirements to which your company is subject must be configured in Customizing. To ensure compliance with all applicable requirements, the first thing you need to do is make the requisite basic settings for new General Ledger Accounting. General Ledger Accounting (new) enables the use of parallel valuation approaches/parallel accounting through the use of different ledgers. 11. RECEIVABLES & PAYABLES: The Accounts Payable application component records and administers accounting data for all vendors. It is also an integral part of the purchasing system, where deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning. The Accounts Receivable application component records and administers accounting data of all customers. It is also an integral part of sales management. 12. ACCRUALS & DEFERRALS: The Accounting area includes accrual/deferral functions that you can use to assign incomings and outgoings to the period in which they arose. You use the accrual/deferral function to calculate the expenses (outgoings) and revenues (incomings) for a period on a certain key date/period-end closing (for example, at the end of a fiscal year). 13. ORGANISATIONAL STRUCTURE: Client -> Operating Concern -> Controlling Area -> Financial Area -> Credit Control Area -> Company -> Company Code -> Business Area 14. ASSET TRANSACTIONS: Transaction types in FI-AA identify the nature of asset transaction (acquisition or transfer or retirement) so as to specify what is updated, among (a) depreciation area, (b) Value field and (c) Asset accounts (in B/S) 15. PERIODIC PROCESSING AND VALUATION: Periodic processing comprises the tasks that must be performed at periodic intervals. Since only the values from one depreciation area can be automatically posted online in Financial Accounting, the changes to asset values (transactions) from other areas with automatic postings have to be posted periodically to the appropriate reconciliation accounts. Cross-chart of accounts specification that contains the valuation approach to be used for performing a foreign currency valuation as part of the closing operations, for example, according to the lowest value principle. 16. SPECIAL GL TRANSACTIONS: Special G/L transactions are special transactions in accounts receivable and accounts payable that are displayed separately in the general ledger and the sub ledger. This may be necessary for reporting or for internal reasons. For example, down payments must not be balanced with receivables and payables for goods and services. Consequently, they are treated as special G/L transactions in the General Ledger (FI-GL) Accounts Payable (FI-AP) and Accounts Receivable (FI-AR) application components. 17. DOCUMENT SPLITTING: The Document splitting functionality in New G/L is an appropriate tool for determining missing account assignments according to cause in common processes (invoices, payments or clearing). There are two types of document spitting in New G/L: Document creation Accounting Interface DOCUMENT CONTROL The SAP system works according to the document principle. A document is saved for every posting. Every document is uniquely identified by the following fields: Document number Company code Fiscal year Documents in my SAP ERP Financials include the following A document header (Information that applies to the entire document) Document item (Information that applies to the line items). SAP IMPLIMENTATION PROCESS The implementation of SAP software, such as SAP R/3 is almost always a massive operation that brings a lot of changes in the organization. The whole process can take up to several years. Virtually every person in the organization is involved, whether they are part of the SAP technical support organization (TSO) or the actual end-users of the SAP software. The resulting changes that the implementation of SAP generates are intended to reach high level goals, such as improved communication and increased return on information. It is therefore very important that the implementation process is planned and executed with the usage of a solid method. There are various SAP implementation methods. An example of how one company, Robert Bosch GmbH, implemented SAP R/3 over 10 years is available. This study shows that designing IT architecture is very critical in SAP implementation practices. IMPLIMENTATION PROCESSES ARE :Phase 1: Project Preparation - The purpose of this phase is to provide initial planning and preparation for your SAP project. Phase 2: Business Blueprint - The purpose of this phase is to achieve a common understanding of how the company intends to run its business within the SAP System. The result is the Business Blueprint, a detailed documentation of the results gathered during requirements workshops. The Business Blueprint document represents the business process requirements of the company. It is the agreed statement of how the company intends to run its business within the SAP System. Phase 3: Realization - The purpose of this phase is to implement all the business process requirements based on the Business Blueprint. The system configuration methodology is provided in two work packages: Baseline (major scope); and Final configuration. Phase 4: FinalPreparation - The purpose of this phase is to complete the final preparation (including testing, end user training, system management and cutover activities) to finalize your readiness to go live. The Final Preparation phase also serves to resolve all critical open issues. On successful completion of this phase, you are ready to run your business in your live SAP System. Phase 5: Go Live & Support - The purpose of this phase is to move from a project-oriented, pre-production environment to live production operation.
