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Finance in S/4HANA 1809, what you need to know
Finance in S/4HANA 1809, what you need to know
by Ugur Hasdemir
October 3, 2018
1 comment
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We are getting used to SAP’s new yearly release schedules for S/4HANA On-Premise. Last week the latest release 1809
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is released. Again, fully packed with new and enhanced functionalities. I especially like how SAP is increasing the
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integration of intelligence, machine learning and the Fiori UI to the existing business processes. In this post I will write
about the key changes in the Finance area.
Sit bag and enjoy the nice things you will see in the newest S/4HANA release.
List of the topics handled in this post:
Enhancements in Profitability Analysis (-> dedicated blog coming soon)
Predictive Accounting
Commitment Management
Universal Allocation
Global Accounting Hierarchies
Intelligent GR/IR with Machine Learning capabilities
Accrual Management (-> dedicated blog coming soon)
Enhancements in Profitability Analysis
In my first blog about “why S/4HANA” I had already explained that Account Based COPA is the way forward in
S/4HANA. In the 1610 and 1709 releases Account Based COPA was enhanced, but there are still some functional gaps
compared to Costing Based COPA. With this newest 1809 release SAP closes the gap between account and costing
based COPA further.
The following enhancements have been made:
Finally, we can track statistical sales conditions in account based COPA. SAP uses the extension ledger
functionality in order to do this
Reporting on incoming sales orders together with predictive reporting functionality is made available in account
based COPA. Also, with the use of extension ledger
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COGS
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available
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ledger for fixed and variable values.
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Activate Derivation for Items without Profitabilit Segment for the following account assignments:
Cost Center
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Internal Order
Project
Sales Order
Production Order
Maintenance Order
I will cover the statistical sales condition and the sales order functionality in more detail in a a future post.
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Predictive Accounting
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Predictive accounting in combination with margin reporting.
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Top-Down: Prediction uses a time series algorithm on historic data in order to predict future values considering
trend, cycles and fluctuations.
Bottom-Op: Prediction is performed based on predicted documents being part of an individual business process
and its document flow
Predictive accounting includes insights from expected revenue and expected expenditures.
Predictive Accounting for incoming sales orders
Financial line item details for incoming orders reporting
Review incoming sales order report
Provides a comprehensive overview of all orders and their values for the time period regardless of billing status
Predictive Accounting for commitment scenarios
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Include cost assignments to WBS, order, cost center and supplier
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Can be shown for derived characteristics such as profit center, segment and functional area.
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There are some limitations in predictive accounting today. Those are the following:
Only SD documents with category C, H, I, K and L are processed
Predicted costs are missing in the third-party direct shipment and intercompany sales scenarios. This is due to
missing goods issue.
Service Sales scenarios are not covered
For statistical sales condition no predictive journal entries are generated
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Commitment Management
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Finance in S/4HANA 1809, what you need to know – S/4HANA Blog
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The New commitment logic and Commitment by Cost Center App provides full transparency over plans and spending,
through embedded analytics solutions you get root cause analysis on the fly trough graphical and interactive user
interface.
Universal Allocation
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Universal Allocation is introduced to simplify and consolidate functionalities in the allocation, distributions and
assessments areas. With Universal Allocation SAP wants to:
Simplify the allocation process
Complex organization structures requiring multiple views
Legal and industry challenges
High number of cycle & segments
Local cycle runtime
Complex knowledge required
Dynamic organization boundaries
Answer allocation questions
How did the cost get allocated to my area?
How do amounts flow across the chain of cycles and segments?
Are the tracing factors reliable?
Why am I accountable for this?
Perform simulations
How would the result look like in case we merge two legal entities?
Customers want to understand and identify possible financial effect of changed allocation rules on their
financial data
Tools are bound by operational requirements
Offer advanced reporting capabilities
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ERP transactions only based on one cycle at a time
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Difficult to explore the allocation structure holistically
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Simplify process with guided procedures, reducing effort of knowledge transfer
Vision and future direction of Universal Allocation is to combine various capabilities under one umbrella:
Provides one architecture for FI and CO allocations
Combines actuals and plan
Provided simulation capabilities
Includes actual and predictive data ledgers
Presents data in a common structure
Provides all required reporting currencies
Shows currency breakdown
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Provides traceability of the value flow
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Simplifies the proves with guided producers and validations
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Prototype for Cost Object Analysis:
In the below screen shot you will see a lab preview of a prototype for cost object analysis in which you can easily answer
the following questions:
Who is allocating which costs to me
Which tracing factor is used
To whom do I sent which costs
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Prototype for Profitability Analysis:
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Whit this prototyped app the allocations to COPA can be analyzed on product level.
Who is allocating which costs to the product?
Which tracing factor is used?
Which cost elements are used?
How does the cost flow look like?
Where are the costs originally coming from?
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Global Accounting Hierarchies
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Today each master data record type has an own logic and app to maintain and create hierarchies. In many cases you
end up creating multiple cost elements hierarchies for different purposes like reporting or allocations.
SAP want to unify gradually all the group and hierarchy maintenance activities in one App.
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The Global Accounting Hierarchy has the following features:
Modern, consistent UI and persistency in one hierarchy. SET group, FSV, custom hierarchies, etc.
Time dependency, status control
Support custom extensibility, custom hierarchy, custom field and custom logic
Compatibility with existing hierarchies
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Intelligent GR/IR
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The GR/IR account reconciliation process is an exception handling process for all purchase order items with difference
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between goods receipt and invoice receipt. This is a highly manual process that delays the period-end-closing. Most
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common reasons why GR/IR items cannot be cleared automatically are:
Invoice goods receipt is missing
Amounts do not match
Purchase order item was created with an outdated price list
Delivery costs were posted on the wrong GR/IR account
The new Goods and Invoice Receipt reconciliation overview App improves the process by displaying all necessary data
on one screen so that the processing steps and statuses can easily be documented in the app. The proposal service with
machine learning automatically proposes next steps for items that could not be matched.
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Integrating Machine Learning capabilities into GR/IR clearing
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The goal of the machine learning service is to learn from decisions taken in the past to apply the learned knowledge to
the new business situation and to make recommendations for the next meaningful steps for each purchase order item.
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The machine learns from the decisions taken by humans and improves over time.
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Training works by analyzing historical records of reconciled GR/IR accounts, and specifically manual assignments of
purchase order items.
Accrual Management
There are a lot of changes in the new accrual engine compared to the old one in previeous releases. Also the customizing
is changed significantly. I will be briefly explain the reasons for the new accrual engine and the new logic/functionality. I
will do a deep dive into the new Accrual Engine in a future post.
Type and hit enter...
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With the new Accruals Management Engine in S/4HANA SAP want to offer a coherent automated process with reliable
outcome. To do this a unified UI, transparent reporting and auditability is delivered.
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When Migrating to S/4HANA 1809 all your data from manual accrual management must be migrated to the new accrual
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Next to the new accrual engine, in release 1809 the new application Purchase Order Accruals is introduced.
The S/4HANA Accrual Engine is optimized for S/4HANA:
Fully integrated into the General Ledger
All currencies of GL supported
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No limitation of the number of fields in reporting
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No separate balance carry forward run required
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Enables complex postings
Allows additional review/approval of periodic accruals at period end
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Old vs New posting Logic:
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ANALYSIS FOR OFFICE
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The purchase order accrual application
At the end of each fiscal period the application calculates the accrual amount for the purchase order items by evaluating
the pan data in the purchase order item.
The delivery schedule with its planned delivery dates determines the cumulated planned costs that ere planned to have
occurred from purchase order creation date up to the end of this period. At the end of each period the system assumes
that these cumulated planned costs reflect reality. If at the end of the period the cumulated actual costs are less than the
cumulated planned costs, the system proposes the difference as accrual amount.
There are different use cases in which the system reacts differently like purchase of consumables without GR or purchase
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I will explain the system behavior for each of these different use cases in a dedicated blog in future.
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Purchase order accrual architecture:
Hope you enjoyed this short preview of new and enhancement Finance functionality in S/4HANA 1809. Stay tuned for
specific detailed blog posts about these topics in future.
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UGUR HASDEMIR

With a financial background combined with his passion for Information Technology, Uğur is a trusted
advisor with experience in ERP implementation since 2010 in the area of Financial and Management
accounting. Driven by his passion for new technologies, Uğur has focused on SAP S/4HANA since the
introduction of Simple Finance in 2014. Read More: https://s4hanablog.com/about-me/

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1 COMMENT
DELPHI COMPUTECH
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REPLY
 October 9, 2018 - 12:49
Thanks for sharing such an informative post about S/4HANA. You have explained all the related technical
aspects in a very simple way. This article is helping us to learn new SAP skills. Keep it up!
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