Re-Invigorating Your Work Life – Manufacturing Your Own Excitement

Think about your first few days or weeks at a new job. You’re surrounded by challenges at virtually every turn: there are new internal systems to learn, new people to interact with, and new tasks to conquer. Everything seems like a novelty, and the work is initially enjoyable.

Putting a new spin on an old routine can be re-invigorating

Putting a new spin on an old routine can be re-invigorating

Then, time starts passing. You find yourself doing the same tasks over and over again. You find ways to cut corners, your productivity starts to slide, and eventually, you find yourself in a rut. There are only a few times that you really find yourself coming alive – when a new project gets handed down that you actually enjoy, or when a crisis hits and necessity dictates that you must come alive or perish. Generally, though, 80% of your job is made up of mundane tasks that you do over and over again, that have become boring from over-use.

How do you recapture that initial feeling of excitement? It’s the same kind of feeling many people used to have as children on the first day of school: the feeling of possibilities, of a fresh start, of new challenges to tackle. Unfortunately, it can be hard to find again unless you’re staring down the barrel of a catastrophe.

Rather than succumbing to boredom, top-notch IT people find a way to manufacture their own excitement. The field is full of bright, intelligent people – it is inevitable that they are going to face bouts of boredom. But the difference between an exceptional IT professional and an average one is in their ability to make their careers work for them.

Instead of focusing on how boring your job is and how under-challenged you are at work, why not look at one of the mundane tasks you’re constantly performing and ask yourself: is it possible that I could do this a better way? If you’re troubleshooting a function for your logistics department in your SAP system, fixing a problem that you’ve encountered a dozen times before, are you able to find a way to fix it more efficiently? Is there a way for you to customize the function or process so that the problem doesn’t happen again?

If you are not sincerely motivated, you may be facing other issues entirely. But if you conduct a self-evaluation and find that your primary problem is that you are not challenged enough, then approaching your job with fresh eyes is one solution that might work. Too often, we as employees become complacent, figuring that our job functions are already operating at optimum levels, and even if they aren’t, what concern is that of ours? But, if you are able to find a better way to do something, should you? What kinds of new and exciting challenges might you face if you simply decided to perfect your current functions and processes?

Looking at your work in this manner relieves boredom on a couple of levels. First of all, it forces you to exercise your creative muscles. Mundane tasks often feel stifling, but doing them in a creative way can relieve that feeling. Second of all, the challenge puts an intelligent mind to work rather than lulling it into a dull stupor.

If you are still having trouble spicing up your work life, you might also want to engage your fellow co-workers by bringing in the friendly spirit of competition. Who can complete their boring day-to-day tasks faster? Who can develop a useful application using ABAP for your company’s accounting team to help it run more efficiently? Adding this component not only helps you relieve boredom and keep you going between crises and special projects, but it boosts your department’s productivity as a whole, allowing everyone in the company to benefit.

*Image courtesy of Jason Ilagan via Creative Commons

Living in the Moment – Your Ambition Right Now

Clocks and Watches

Are you living in the moment or stuck in “planning” mode?

It’s important to be ambitious. As a society, we are driven – in our jobs, we are constantly seeking new opportunities, new ways to increase our earning potential, and more challenging careers. Without this drive and ambition, we would stagnate. Economies would stop growing, wealth would dwindle, and we would lose our sense of purpose.

If “ambitious” is not the word you would use to describe your current trajectory in your IT career, now is a good time to re-evaluate where you are and where you want to be. Is it that you lack ambition for your current field? Have you lost interest or succumbed to the idea that you can never have a challenging career because your current job is so boring and mundane? Is it your work environment?

After pinpointing the reason for your lack of ambition, it is important for your career and your future prospects to address it. If you want a more dynamic career, you might consider switching to working with a system like SAP, which allows you to work not only in IT but also to explore different aspects of the business world. If it’s your current business environment, consider ways that you can fix it or find a better place to work. But if you’re one of the millions of workers who simply finds your job “boring,” there may be a different solution:

Do your job better.

Before you storm off in a huff, hear me out a little. One of the things common among people who work in the IT field is intelligence. It takes intelligence to grasp some of the more abstract concepts involved in programming, as well as to understand the many working parts of a piece of server. It takes intelligence to develop the depth of knowledge needed to administer a network or system of computers, and to keep a company’s IT processes functioning at optimal levels. Therefore, it is not unusual that, often times, IT professionals get just plain bored. And it happens quickly.

Unfortunately, in the world of business, promotions are not always fast and furious. You could be stuck working at the same entry-level or menial-feeling job for longer than you would like. Sadly, your upward trajectory is not always controlled entirely by you. Fortunately, though, you do not have to leave it entirely in the hands of other people, either.

Are you focused entirely on what is going wrong at your company? Do you have a litany of complaints about the mistakes your manager makes? Do you avoid tasks that you feel are “beneath” you? These behaviors are symptomatic of someone who is dissatisfied with their career. You need new challenges and new things to learn to keep yourself stimulated and engaged. And you are probably focused on the idea of obtaining a promotion in order to get those new challenges.

A promotion will probably help, at least for a little while. You will find new challenges, but you may be surprised at how quickly they become routine yet again, landing you right back where you started: frustrated and wanting something new. Furthermore, how do you intend to obtain a promotion when you are so frustrated with your current job that you aren’t performing it correctly?

Really think about your job performance in recent weeks, months, or even the last year. Have you been cutting corners? Have you started dropping the ball or letting other people take over responsibilities you know you should be fulfilling? If this describes you, then consider how what you are doing may hurt your chances for further advancement.

Rather than focusing on what the next promotion might hold, why not find ways right now to improve how you are performing your current job? How can you be more productive, streamline tasks you don’t want to do without sacrificing quality, and make yourself an attractive candidate for future promotions? It’s all about living in the moment and focusing on those problems confronting you right now. By returning your efforts towards your current position, you can both demonstrate your commitment to your company and reinvigorate your ambition with a renewed sense of purpose.

* Image courtesy of Ofer Deshe via Creative Commons

Respecting Authority

Anyone who works has a boss.

You might consider yourself “your own boss.” But, chances are, you know your customers are your real bosses. Or, you may actually have a manager in your company who is responsible for being your boss. Generally, even if you work for yourself, you are always working for someone else. And those relationships are often a blessing and a curse – sometimes at the same time.

The good side of the coin is when you and the people you work for are headed in the same direction. Your goals are aligned and you have the same general vision of the future. The down side is when you reach a bump in the road – you disagree about how to do a project or how to implement a solution, and eventually, someone has to make an unpopular decision. You may be requested to do work you disagree with – perhaps not from a moral standpoint, but something you think would be better done another way. You may be forced to work with someone you don’t like or to take on tasks you dislike. Whatever the cause, sometimes dissension between you and your employer arises, and the question is no longer how good you are at your job, it’s how you handle that conflict.


How do you handle conflict and authority?

One thing you should try to remember is that, in reality, you are all on the same team. You work for the same company – or else, your client has hired your company for a particular reason – and you are in the same business. If you don’t understand that business, that is a problem in and of itself that you should actively try to remediate. But in general, remember: you are all working towards the success of your business so that you can achieve success for yourself as well.

This concept is often hard for entry-level workers to grasp. Typically, they are embroiled in so many layers between themselves and the general purpose of the company that it is almost impossible for them to see how what they do makes any kind of impact. That is why respect for a manager is so important. It may not seem possible to see how one individual can make a difference on a large company’s bottom line, but it is possible to grasp how several people working together can make a difference. The manager of your department heads such a team; you are part of it, and you can either butt heads with the people in charge or understand their goals and find a way to support them.

With SAP, it is often a bit easier to see how you impact a business in a very real way. You are often directly affecting operations by implementing and maintaining processes responsible for making that company successful – whether it’s client management resources for the sales and customer service teams, or fulfilling orders for products and services. You have the inherent understanding that each of these functions is responsible for making a business run; if something goes wrong within SAP to prevent that, then business doesn’t progress and your company loses time and money.

With that understanding in place, you can then see how important it is to view yourself as part of a company of employees working towards a common goal – productivity and, yes, profit. Your work and the work of your department can be part of that, or you can work against it. While you should be proud of your own individual accomplishments, you should also be aware of how you can contribute to your manager’s success – rather than viewing them as a competitor who might take credit for your work, recall that if your team and leader thrive, so will you. It’s therefore important to move past those times when conflict arises and respect your manager, team, and company as a whole.

Image courtesy of Crystian V. via creative commons

Everyday Victories For SAP Professionals

We are what we repeatedly do. Excellence, then, is not an act, but a habit.

With this quote, Aristotle describes something that many workers tend to forget. While natural talent accounts for some amount of success, “excellence” more often comes from hard work and discipline. When discussing success, we often think of long-term goals and accomplishments. However, it’s important to remember that it is the little things done every single day that create success – those long-term goals and accomplishments are therefore really a collection of short-term tasks that are tackled on a daily basis.

Winged Victory

Celebrate your everyday victories

If you are looking to build a successful career, then, it is important to think in terms of your daily to-do list. If you already have one completed, look it over. If you haven’t made one, now is a good time to start. When formulating it or reviewing it, look at what you are planning to do regarding your long-term goals.

Is it something that is built into your daily schedule? Or are you putting it off until “someday,” when you will magically have more time? Without making your long-term success a daily habit, will that big project that is supposed to propel you there just turn into something sloppily put together at the last minute once you hit some inevitable deadline?

As you can see, long-term success also tends to coincide with time management skills and not procrastinating. Are you able to spend just twenty minutes a day this week on a component for a bigger project you’ve just been “meaning to get to?” Remember, the longer you put off big, important projects, the bigger they start to seem until they appear insurmountable.

Suppose that you don’t have any “big” projects looming, though. How else can you make success a daily habit beyond just fulfilling your standard job functions to a satisfactory level? Have you been listening to your company recently? Conversations with fellow employees who are having a hard time with certain functions in their jobs can turn into a goldmine of potential opportunities for you to provide solutions and contribute to the success of your company, as well as your own individual success as a byproduct.

At the next cross-departmental meeting you have, listen closely. If you feel like most of the conversation is over your head, chances are you first need to start learning more generally about your business. However, as you become more familiar with its internal workings, you will also start identifying problems you can solve, that you can then begin tackling on a daily basis.

You could even start with your own day to day functions – how can you make yourself more efficient? What problems does your department face each day that you can tackle in a real way? In SAP, this could mean something as simple as automating a routine process for the accounting department to simplify some of their regular functions, or making use of a code generator to produce code that you use frequently in ABAP.

Building your success day-by-day and making excellence a daily habit does more than just make you a good worker; it also provides you with the momentum you need to carry you forward and maintain a good attitude. If a daily victory seems too ambitious at the moment, try a technique used by many sales people: sandwich your weeks with success. Successful salespeople always schedule a sales call they are almost 100% certain they will close on a Monday or a Friday. That way, they begin their week with a victory that can carry them through to the rest of the week, and they end on a positive note.

Try scheduling time to work on your long-term goals for success on Monday and Friday each week for a while and see how the positive impact affects your productivity and your attitude.

Image courtesy of jay8085 via Creative Commons

SAP Financials and Controlling – Financial Accounting Overview

SAP Finacial Accounting and controlling

SAP Finacial Accounting and controlling


Hello and welcome to this SAP Financials and Controlling (FICO) monster article.

This article has been created for anyone who wants to understand Financials and Controlling. Specifically, this article targets the following audience:

  • Graduates who have basic understanding of finance and financial terminology and want to learn FICO.
  • SAP Consultants with technical knowledge of how SAP works.
  • Consultants who need to learn the fundamentals in order to work with the SAP finance modules.

The article is divided into five major sections:

  •  Section 1: Consists of two parts and gives an overview of the general financial accounting terms.
  •  Section 2: Consists of two parts in which you will understand the basics of SAP financial accounting.
  •  Section 3: You will learn about the important features of a general ledger.
  •  Section 4: You will be introduced to sub-ledgers, accounts receivable, accounts payable, and asset accounting.
  •  Section 5: Consists of two parts in which you will learn how financial accounting integrates with other SAP modules.


After reading this article, you will be able to:

  1. Recognize the organizational elements of R/3.
  2. Describe the basic settings.
  3. Classify and reconcile R/3 documents with the original documents.
  4. Open and close posting periods.
  5. Assign posting authorizations to users.

Apart from the before-mentioned objectives, you will also be able to identify important general ledger features and identify the characteristics of sub-ledgers like accounts receivable, accounts payable, and asset accounting. You will also be able to identify the organizational structures of cost accounting, such as controlling areas, country-specific charts of accounts, and controlling objects, and recognize how financial accounting is integrated with other SAP modules such as Materials Management and Sales and Distribution.


General Financial Accounting Terms Part I

The first part of the General Financial Accounting Terms section is focused on organization units of R/3:

  1. Client.
  2. Company code.
  3. Country templates.

In SAP applications, organizational units form the basis of an enterprise structure. An organizational unit handles a specific business function. The “Client” is regarded as the highest level element for all organizational units. A client may represent an enterprise with several subsidiaries.


The next level down shows the smallest organizational element for which a complete self-contained set of accounts can be drawn up in R/3 – the “company code.” The third level of the hierarchy shows the business segments or branches in which a group operates can be set up in the R/3 System as “Business Areas.” Setting up of a business area in the application is, however, optional.

Organizational Elements of R/3


Specifications or data that is valid for all organizational units in SAP ERP applications are entered at the client level. This data need not be entered at any other level again. Each client acts as an independent unit with separate master records and a complete set of tables and data.

The system has a table that holds the client-specific data. When the client data is first created, you have to specify a client key that identifies a specific client. Each client is identified by a three-character code. Example: client 000, client 001, client 066 and so on. From a commercial point of view, the client is a corporate group. You must specify a client key and have a user master record in the client in order to log on to the system.

Company Code

The “company code” is a financial accounting unit. It represents an independent balancing or legal accounting entity. An example would be a company with independent accounts within a corporate group.

Financial statements required by law can be created at the company code level. Every organization for which a financial statement and profit and loss statement is to be created must be stored as a company code in the SAP system. Thus the company code is the organizational unit that helps to structure an enterprise from a financial accounting perspective.

Financial statements required by law can be created at company code level. As discussed before, a company code is the minimum structure necessary in mySAP ERP Financials. “mySAP ERP” is part of the SAP Business Suite software, the name for the modules comprising the former SAP R/3. These include:

  • Accounts Payable
  • Accounts Receivable
  • Accounting
  • Financial Reporting.

For international businesses, where operations are scattered across countries, a separate company code is created per country. A company code has a unique four-character key.

Business Areas

Business areas are set up for separate areas of operation within an organization. They can be used across company codes. They are balancing entities that can create their own set of financial statements for internal purposes. It is possible to save and evaluate transaction figures for each business area.

So, how is a company code created?

The easiest way to create a company code is to copy an existing company code using the organization copy function. This copies the definition, global parameters, customizing tables (approximately 315 tables), general ledger accounts, and account determination.

In this way, one can copy the existing company code-specific parameters and then edit the required data in the new company code.


Select a four-character alpha-numeric key as the company code key. This key identifies the company code and must be entered later when posting business transactions or creating company code-specific data.

Note: You can also define the company code and fill the customizing tables from scratch. This can be done by only copying the clients from client 000 after all the required languages have been imported into client 000.

Country Templates

In the R/3 standard system, company code 0001 is a template for a general company code with chart of accounts INT and no special country-specifications.

If company code is needed in a country for which a country template exists, the country version program can be used. It copies the country-specific customizing tables from the specific country template into company code 0001. Once the copying is completed, company code 0001 will be customized for the selected country. This company code can then be copied into the new desired company code. The country version program will have to be started again to create a template for another country and so on.

Note: The country version program not only creates a country-specific company code template but also a country-specific template for controlling areas, plants, purchasing organizations, sales organizations, credit control areas, financial management areas, etc.

The Implementation Guide or the IMG suggests the following order for creating a company code:

  • Copy, delete, check company code; and then
  • Edit company code data.

Attention: Do not forget to copy the template before you proceed further. Do not use company code 0001 as your productive company code because the country version program always uses this company code as the target company code. Furthermore, you should run the country version program only in a new installation of R/3 and not in an upgrade installation because the structure of the country-specific customizing may have changed from one R/3 release to another.

Editing a Company Code

Once a company code is created it can be edited in order to customize it for the selected country. The following information is required while editing a Company Code:


  1. The four digit company code key.
  2. The address data for correspondence which is also recorded on evaluation reports.
  3. The currency for the specific company code. Accounts are managed in the company code currency and all other currencies are indicated as foreign. The system converts the amounts posted in a foreign currency into this currency. The currency defined in the company code is known as the local currency within R/3.
  4. The country key, specifying the home country. The system interprets all other countries as foreign. This is important for business or payment transactions, since different forms are needed for foreign payment transactions, and the system supports different formats for addresses for foreign correspondence.
  5. The city key specifying the city and the language key specifying the language of the home country also needs to be specified. This ensures that the system can create texts automatically in the correct language, for example, during issuing of checks.

Apart from these, the global parameters that need to be taken into account while editing a company code are:

  1. Chart of accounts.
  2. Fiscal year.
  3. Company code defaults.

General Financial Accounting Terms Part II

In this part of the General Financial Accounting Terms section, you will learn about:

  1. The variant principle.
  2. Fiscal year.
  3. The year-independent and the year dependent variant.

Variant Principle [T3]

You can use the 3-step method variant principle to assign special properties to one or more R/3 objects. Variants are used mainly because it is easier to maintain properties which are common among several business objects. Once a variant is defined in SAP, the same variant can be assigned to various or several business objects.

In SAP, the variant principle is used for field status, posting periods, and fiscal years.

While creating a fiscal year variant, the following steps should be performed:

  • Step 1: Define the variant: K4 is the fiscal year variant.
  • Step 2: Populate the variant with values: define the properties of fiscal year K4.
  • Step 3: Assign the variant to R/3 objects: Assign K4 to various company codes that use this fiscal year.

Fiscal Year

The fiscal year is defined as a variant which is assigned to the company code. The company’s fiscal year corresponds to the calendar year. Accounting management requires at least four special periods for posting year-end closings.

The fiscal year variant contains the definition of posting periods and special periods.

Special periods are used for postings which are not assigned to time periods, but to the process of year-end closing. In total 16 periods can be used. The system derives the posting period from the posting date.

When the posting date falls within the last normal posting period, the transaction may be posted into one of the special periods. In order to ensure that you can compare the closing months with the other periods of the fiscal year, you should make closing postings in special periods.

SAP allows a maximum of 16 posting periods each fiscal year – normally 12 regular posting periods and four special posting periods. The four special periods could be comprised as follows:

  • Period 13 as accrual/deferral postings.
  • Period 14 as audit postings.
  • Period 15 as general meeting of shareholders.
  • Period 16 as adjustment postings.


In the example shown above, the fiscal year has 12 posting periods and 4 special periods. If the posting date falls in the12th period, the transaction can instead be posted in one of the four special periods.

Note: Information regarding whether a period is open or closed is not included in the fiscal year variant; this is maintained in another table. The fiscal year variant only defines the amount of periods and their start and finish dates.

Year-Independent and Year-Dependent Variant

If each fiscal year of a fiscal year variant uses the same number of periods, and the posting periods always start and end at the same day of the year, the variant is called year-independent.

A fiscal year variant has to be defined as year-dependent if the start and the end date of the posting periods of some fiscal years will be different from the dates of other fiscal years, and/or if some fiscal years shall use a different number of posting periods.

Year-Independent Variant

A year independent fiscal year variant can be defined as the calendar year and a non-calendar year.

If the fiscal year is defined as the calendar year, the posting periods are equal to the months of the year. Therefore, a calendar year variant must have 12 posting periods.

If the fiscal year is defined as a non-calendar year, the posting periods need to be defined by assigning ending dates to each period. A non-calendar year can have between 1 and 16 posting periods. If the non-calendar year does not start at January 1st the periods of the year which belong to the former or the coming fiscal year must get an annual displacement indicator, -1 or +1.

In a non-calendar year with 6 posting periods, which go from April to March; the months January to March, still belong to the old fiscal year and need to have the annual displacement indicator “-1.”

If the fiscal year differs from the calendar year, but the posting periods correspond to calendar months, the day limit for February should be 29 to be prepared for leap years.

Fiscal years are normally year-independent.

Year-Dependent Variant

A year-dependent indicator has to be set if the fiscal year is changing from year to year.

If all of the years of a year-dependent fiscal year variant have the same number of periods, only the different period dates for the different years have to be defined.

If one year of a fiscal year variant has less posting periods than the others, it is called a “shortened fiscal year”. This could be required if closing has to be made before the end of the normal fiscal year; for example, if the beginning of the fiscal year should be changed or if the company was sold.

The shortened fiscal year and its number of posting periods have to be specified before providing definition of the period dates. For this year only, a lesser number of posting periods can be assigned.


SAP Financial Accounting Basics Part I

In this first part of the SAP Financial Accounting Basics section, you will learn about:

  1. The Document Principle.
  2. R/3 Documents.
  3. Field Status.
  4. Control Keys.
  5. Document Types.
  6. Document Number Range.

Here, you will understand document control and the principles that are needed to be followed while posting a document. This is known as document principle in SAP.

Document Principle

Any posting in SAP R/3 is always stored in a document form. This is called the document principle in R/3. In the system, a document remains as a complete unit in the system until it is archived.

A document is identified by the combination of the document number, the company code, and the fiscal year.

The FI document consists of a document header. The information in the document header applies to the entire document.

The FI document also consists of 2 to 999 line items. Here the information is specific to that line item. The header and the line items can also be shown in detail.

Note: The system limitation does not allow you to have more than 999 line items per financial accounting document.


Every business transaction is recorded in the R/3 system as a document. More than one document can be created for a single business event. For example, when goods are received from a vendor, a material document is created to keep track of details important to inventory tracking. An accounting document is created to track financially relevant information, such as general ledger accounts and amounts.

In some cases, a document may be created in R/3 for a business event, but no corresponding
accounting document is produced because there is no financial impact. One such example would
be purchase orders.

Each of these documents receives a unique document number.

Document numbers can be assigned either by the R/3 system or by the user at document entry time. When the R/3 system assigns the number, it is an internal assignment. When the user assigns the number, it is an external assignment.

R/3 links the related documents together to provide a comprehensive picture of any business transaction within the system.

Field Status

Different fields are displayed when making a document entry. This depends on the transaction and the accounts used. These different fields display during document processing and are controlled by field status. For example, when posting expenses, cost center and tax information are usually required. When posting cash, however, the information is not necessary.

As a general rule, one needs to customize the account-dependent field status on general ledger accounts. For customer and vendor processing, field status on the posting key has to be customized as necessary.

Just as in the field status definition general ledger accounts, the field status with the higher priority applies.

However, there are some exceptions to this rule. If business areas are used, the field “business area” has to be ready for input. It is switched on by enabling business area balance sheets for the company code. With the field status, it has to be decided whether it should be a required or is an optional entry field.

Tax fields are only ready for entry if the general ledger account is set up as tax-relevant.

The field status definitions “suppress” and “required entry” cannot be combined. This combination causes an error.

Field Status Groups


It is essential to determine the status of every document entry field under each general ledger account category like, cash accounts, and expense accounts. For example, will the text be required, suppressed, or is it optional for document entry when using the general ledger accounts? Will cost center be required, suppressed, or is it?

These “rules” are grouped into field status groups for each category of general ledger accounts. Field status groups are assigned to the respective general ledger master records.

The field status groups are collected under one field status variant. The field status variant is assigned to the company code(s). No posting can be made until this is complete. Typically, the same field status variant is assigned to all the company codes so that the same “rules” apply across all company codes.

The R/3 structure has a standard set of field status groups. It is recommended to copy the standard delivered field status groups and modify as necessary. If a document is posted to a sub ledger account, the field status group of the reconciliation account will apply.

Control Keys

The two most important control keys are (1) Document Type for the header and (2) the posting key for the line items.

Document Type

Document type controls the document header. It is used to differentiate the business transactions to be posted, for example, customer invoice, vendor payments, etc.

Document types are defined at the client level and are valid for all company codes.

A standard system is delivered with document types which can be used, modified, or copied. Major controls of document types are the number range of document numbers, and the account types allowed for posting.

Document type further controls the field status of the header fields “Text” and “Reference Number”, and if invoices are posted with the net method.

In the SAP recommended procedure for filing original documents, the document type controls document filing.

Remember to always store original documents under the number of the data processing document. If the original document has an external number, enter the external number of the original document into the reference number field in the header of the data processing document, and then record the data processing document number in the original document.

Standard Document Types

Some of the important standard document types are AB for general documents, DR for customer invoices, DZ for customer payments, and so on.

Note that only the document type AB (which includes general documents) allows postings to all account types. All other document types limit the types of accounts that can be posted to. For example, document type DG (that deals with Customer Credit Memos) allows posting to D (customer) and S (general ledger accounts) only.

To transfer billing documents from the R/3 billing system, the standard system uses two document types; RV and RE. RV indicates billing document transfer, and is the default document type for SD billing documents (i.e. customer invoices). RE indicates invoice receipt, and is the default document type for MM billing documents (i.e. vendor invoices).

When internal number assignment is used, the system assigns a new number to each document in the Financial Accounting component. In external number assignment, the system transfers the billing document number to the FI document as long as this number has not already been assigned. The payment program uses the document type ZP, which stands for payment postings, for its automatic postings.

Document Number Ranges

The document number range defines the allowable range in which a document number must be positioned and cannot overlap.

In internal numbering, the system stores the last used document number from the number range in the field “current number” and takes the subsequent number for the next document (examples 00 and 01).

In external numbering the user enters the original document number, or the number is transferred automatically from a pre-invoicing system. The numbers usually are not used in sequence and therefore the system cannot store a “current number”. The numbers may be alphanumeric.

The document number range has to be defined for the year in which it is used. Document number ranges can be either defined until a fiscal year in the future or for each fiscal year.

In the first case, at the beginning of each fiscal year the system continues to take the next number after the “current number”. It does not restart at the lower limit.

In the second case, when the document number ranges are defined per fiscal year the document numbering starts again at the lower limit. This helps to avoid reaching the upper limit of a range.

Note that a single number range can be assigned to several document types.

SAP Financial Accounting Basics Part II

In this second part of the SAP Financial Accounting Basics section, you will learn about the second important control key:

  1. Posting Key.
  2. Standard Posting Keys.
  3. Posting Periods; and its relationships.
  4. Document Header and Line Items.
  5. Authorization Groups.
  6. Tolerance Groups.

Posting Key

A posting key in SAP is a two-digit key that controls the entry of line items. Just like document types, posting keys are also defined at the client level. The posting key indicates whether the line item deals with a payment transaction or not. This information is required while analyzing payment history and creating payment notices.

imagePosting key also indicates whether the sales figures of the account should be updated by the transaction, for example, when posting a customer invoice.

In the standard transactions, posting keys are labelled “debit” and “credit.” In customizing, R/3 delivers the following default values:

  • For GL Transactions: “debit” is posting key 40, “credit” is posting key 50.
  • For Customer Invoices: “debit” is posting key 01, “credit” is posting key 50.
  • For Vendor Invoices: “credit” is posting key 31, “debit” is posting key 40.

Standard Posting Keys


Take a look at the image. It shows the standard posting keys in SAP.

It is advisable to use these standard delivered posting keys. If required to change them or define new posting keys, all tables containing a reference to these keys must also be maintained. If posting keys are to be deleted, it should be ensured that these are not already used in the system.

Posting keys for assets and materials may only be used if the corresponding SAP components are implemented. By influencing the field status definitions of posting keys and the field status group, the field status can be made transaction-dependent and account-dependent.

Sub ledger accounts do not have a field status groups. Differentiation in the sub ledger postings is mainly made by different posting keys. Therefore, there are a lot of posting keys for sub ledger postings.

In general ledger postings, differentiation is mainly made by different field status groups. Therefore, only two posting keys (40 and 50) are needed for general ledger postings.

Posting Periods

Posting periods are defined in the fiscal year variant. The posting date in the document header determines the posting period in which postings are to take place.

Posting periods which are not in use can be closed. This prevents documents from being posted to a wrong posting period.

Usually the current posting period is open and all other periods are closed.

At the end of a period, it is usually closed and the next period is opened. A period is opened by entering a range into the posting period variant which encompasses this period. It is possible to have as many periods open as desired.

During financial closing, some special periods may also be open for closing postings.

During the closing procedure, two period ranges should be open at the same time. Therefore, two period ranges can be entered in the posting period table.

For technical reasons, for each posting period variant an entry “+” is required that is valid for all account types such as customer, vendor, asset etc.

Posting Periods and Document Header

You can use the same posting period variant for several company codes. The closing and opening of periods is then done at the same time for all assigned company codes, thus making period maintenance easier.

At the document header level, R/3 checks the periods that are allocated to the account type “+”. Since this is the first check, the account type “+” must be open for all periods which are supposed to be open for any other account type. The account type “+” is the minimum entry in the posting period variant.[T4]

Posting periods can be managed differently for different account types, that is, for a certain period postings on customer accounts may be possible while postings on vendor accounts may not.

Posting Periods and Line Items

At the line item level, R/3 checks the account type of the posting key to verify that the period is open for the assigned account type.

The account range always contains general ledger accounts. By entering certain reconciliation accounts behind sub-ledger account types, these sub-ledger accounts can be treated differently than accounts which have a different reconciliation account.

Authorization Groups

During the time of the closing procedure, two period ranges have to be opened at the same time. Therefore, two period ranges can be entered in the posting period table.

An authorization group may be assigned to the first range. Then, only users belonging to this authorization group have the permission to post into the first period range. It makes sense to use the first range for the special periods and authorize only the accountants involved in closing to post into the special periods.

Using the standard authorization object F_BKPF_BUK, the user can determine which company codes documents can be processed. The user must have the authorization for the standard authorization object F_BKPF_BUP with the same value in the field “authorization group” as in the posting period table.

Tolerance Groups

Processing of payment differences are controlled through tolerance groups. Tolerance groups ensure that employees do not exceed their defined authority in financial transactions.

The maximum amounts are defined per company code in tolerance groups. It defines the upper limits for posting procedures, such as, total amount per document, amount per open account item, the cash discount percentage a user with this tolerance group is able to grant.

Assigning Posting Authorizations[T5]

You can create as many tolerance groups as required. A user can be assigned explicitly to a tolerance group.

In case a user is not assigned to any specific tolerance group, then entries in the default tolerance group are valid for them. A blank space within quotes in the Tolerance Groups table symbolizes the default tolerance group.

Usually the default tolerance group contains values which are to be valid for the largest number of employees.

For any employees who have especially high or low limits, a special tolerance group should be created and assigned to their user logon IDs.

General Ledger Features

In this chapter, you will learn some important general ledger features such as:

  1. Chart of Accounts.
  2. Company Code-Specific Settings.
  3. Account Groups.
  4. Reconciliation Accounts.
  5. Transaction Figures.

Chart of Accounts

The chart of accounts is the list of all the general ledger accounts that can be used by one or more company codes. It is one of the first organizational elements that should be finalized in a company implementing SAP. The chart of accounts is the foundation for its reporting and posting activities.

If you have access to a standard SAP IDES (SAP-internal demonstration systems) Demo system you will see the following chart of accounts in use in. The IDES company codes use the following charts of accounts: INT is used by company codes 1000, 2000, 2100, 2300, and 6000. CAUS is used by company codes 3000 and 4000. CAFR is used by company code 2200. CAJP is used by company code 5000.

Company Code-Specific Settings

First, the account definition at the chart of accounts level has to be maintained before one can use an account in a company code. Then the company code-specific settings have to be created. These settings are only valid in the company code. For example, the account currency defined for a company code.

Most of the accounts in company code 1000 use the UNI currency, whereas company code 3000 uses USD for most of its accounts.

Account Groups

General ledger accounts are organized into account groups. The account group is a summary of accounts based on criteria that affects how master records are created. The account group determines the number interval from which the account number is selected when a general ledger account is created. It also establishes the screen layout for creating general ledger accounts in the company code-specific area.

These account groups help in managing a large number of general ledger accounts. The accounts of an account group normally have similar business functions. For example, there can be an account group for cash accounts, one for expense accounts, one for revenue accounts, and one for other balance sheet accounts.

Reconciliation Accounts

Reconciliation accounts are general ledger accounts that receive postings from subsidiary ledger accounts in real-time. This means that a posting to a subsidiary ledger also posts to the corresponding reconciliation account in the general ledger at the same time. The subsidiary ledgers which are connected to the general ledger via reconciliation accounts are the accounts payable (A/P), accounts receivables (A/R), and asset ledgers.

Transaction Figures

Another important feature of general ledger accounts is the transaction figure. A transaction figure is the total of all debit or credit postings. In general, the R/3 System keeps one transaction figure for debits and one transaction figure for credits per account. The financial statements for the company code are calculated using these transaction figures.

While using business areas, transaction figures are also kept per business. If financial statement for the business area is created, the transaction figures for that specific business area are used to supply the information for the financial statements.


In this section, you will learn about the sub-ledgers:

  1. Accounts Payable.
  2. Accounts Receivable.
  3. Credit Management Master Record.
  4. Asset Master Data.
  5. Account Determination.
  6. Group Assets and Sub-Numbers.

Accounts Payable

Accounting data for all vendors are recorded and managed in the “Accounts Payable” application component. Postings made in accounts payable are simultaneously recorded in the general ledger. Accounts payable is a vital part of the purchasing system. Deliveries and invoices are managed according to vendors.

The vendor master record stores all the data required to carry out business with the vendors. As with general ledger accounts, vendor accounts are made up of two areas: a vendor account and account groups for vendors.

A vendor account is defined for all company codes at the client level. General data, such as the vendor’s address, tax numbers, and bank details are stored in it. Note that postings cannot be made to the account in a company code until company code-specific settings have been made, such as the agreed terms of payment.

Account Groups for Vendors

Similar to general ledger accounts, vendor accounts can also be combined in various account groups. The account group is a summary of accounts based on criteria that affects how master records are created. The account group determines the number interval from which the account number is selected when a vendor account is created. It also establishes the screen layout for creating vendor accounts in the company code-specific area. This way, they can be organized and managed more easily.

The accounts in an account group usually have similar characteristics. For example, one can have one account group for domestic vendors, one for vendors abroad, one for affiliated vendors, and one for one-time accounts.

Accounts Receivable

Accounting data for all customers are recorded and managed in the “Accounts Receivable” application component. All postings made in accounts receivable are also simultaneously recorded in the general ledger.

As with general ledger accounts and vendor accounts, customer accounts are also made up of two areas: a customer account and account groups for customers.

A customer account is defined for all company codes at the client level. General data, such as the customer’s address, is also stored here. Postings cannot be made to the account in a company code until company code-specific settings have been made, such as the agreed terms of payment.

Account Groups for Customers

Customer accounts can be combined in various account groups. The account group is a summary of accounts based on criteria that affects how master records are created. The account group determines the number interval from which the account number is selected when a customer account is created. It also establishes the screen layout for creating customer accounts in the company code-specific area. This way, the accounts can be organized and managed more easily.

The accounts in an account group usually have similar characteristics. For example, one can have one account group for domestic customers, one for customers abroad, one for affiliated customers, and one for one-time accounts.

Credit Management Master Record

The credit department sets up a separate credit management master record. This is an extension of the customer master record. Data applicable to credit management is maintained and monitored through this master record.

The credit management master record is made up of three sections: general data, credit control, and overview.

  • General data is relevant for all credit control areas. This could be the customer’s address and communication data, or the maximum total limit that can be permitted for the sum of all granted credit limits.
  • Credit control is a data which is only relevant for a specific credit control area. This could be the credit limit at credit control area level, or a customer’s risk category.
  • The credit management master record also provides an overview, which contains the most important data from all sections.

Asset Master Data

All accounting data related to assets are maintained in the asset sub-ledger account. Asset sub-ledger accounts are created when an asset master record is created and are associated with a reconciliation account in the general ledger.

Each asset belongs to a company code and business area. All postings made for the asset, for example, acquisitions, retirements, depreciation, etc., are applied in the assigned company code and business area. Additionally, they can be assigned to various CO objects; for example, cost center, internal order, activity type, and logistic organizational units.

Two important aspects of asset master data are asset class and depreciation area. You will now learn more about each of these. Let’s first take a look at asset class.

Asset Class

Asset class is the main criterion for classifying assets in financial accounting. It is used to assign the assets to the correct general ledger accounts.

In the asset class, it is possible to define certain control parameters and default values for depreciation and other master data.

Assets such as buildings and equipment that do not appear in the same line item of the balance sheet are assigned to different asset classes. Additionally, there is at least one special asset class for assets under construction and one for low-value assets.

Asset classes can be created for intangible assets and leased assets. There are functions available for processing leases.

The application component PM or Plant Maintenance is used for the technical management of assets. The application component TR which stands for Treasury is used for managing financial assets.

Depreciation Areas

A depreciation area shows the valuation of assets for a particular purpose.

Various valuation methods can be used for financial statements based on regional requirements, financial statements for tax purposes (if a different deprecation method is allowed), controlling (costing), parallel accounting methods for group financial statements as per International Accounting Standard (IAS), United States Generally Accepted Accounting Principle (US-GAAP), etc.

Depreciation areas are kept in the R/3 System in order to store more than one valuation basis. Separate transaction figures are kept per asset and depreciation area and for individual value components such as balances, depreciation, remaining book value, etc.

The depreciation areas in asset accounting do not exist in the general ledger. These values need to be posted to various general ledger accounts in the general ledger.

Account Determination

The general ledger accounts into which the values are posted are then used in various financial statement versions such as, financial statements per GAAP, financial statements for tax authorities, group financial statements, and so on.

These general ledger accounts are balance sheet accounts, which record the adjustments to the asset’s value and depreciation accounts for depreciation and appreciation.

The assignment of the general ledger accounts to various valuation areas is saved in a single account assignment key. This is entered in the asset master record. Assets of the same asset class have the same account assignment key. Their values are all posted to the same reconciliation accounts.

Group Assets and Sub-Numbers

Parts of an asset can be kept under asset sub-numbers. Asset sub-numbers are numbers, which in combination with the main asset number uniquely identifies an asset in the system. Using the asset sub-number it is possible to represent complex fixed assets in the system.

This is usually done for reporting purposes. Assets can be combined in group assets.
The main asset is assigned the sub-number 0000, allowing the asset sub-numbers to be assigned as desired.

A group asset has its own master data. Several main assets can be assigned to a group. This is important in the USA.

Overview of Integration with Other SAP Modules Part I

The first part of the Overview of Integration with Other SAP Modules section, will give you an outline of the organizational structures of cost accounting, such as:

  1. Controlling Areas.
  2. Country-specific Chart of Accounts.
  3. Controlling Objects.
  4. Integration of Financial Accounting with Materials Management.

Controlling Area

A controlling area is a self-contained organizational structure for which costs and revenues can be managed and allocated. It represents a separate unit of cost accounting.

A controlling area can be assigned to one or more company codes. If the assigned company codes and the controlling area all utilize the same operating chart of accounts, it is possible to carry out cross-company code cost accounting between the assigned company codes.

Country-Specific Chart of Accounts (COA)

As a great deal of activity takes place between the four European company codes—Germany, the United Kingdom, Portugal, and Spain — it is significantly important for the “Internet Demonstration and Evaluation System” or IDES board of directors that all these four company codes belong to the same controlling area. As a result they had to adopt the operating chart of accounts International (INT) of the controlling area.

However, in order for it to be possible for external reports to contain the account numbers usually used in the individual countries, a country-specific chart of accounts was created for the company codes Germany, the United Kingdom, and Spain. These country-specific charts of accounts are structured in accordance with the legal requirements of each of these countries.

Group Chart of Accounts

The two companies in North America were originally independent firms, but were later purchased by the IDES group. Both companies were already live with R/3. They were using the chart of accounts CAUS as the operating chart of accounts.

Management determined that since cost accounting for Europe and the USA together was not necessary, it retained the operating chart of accounts CAUS for the two U.S. company codes and assigned them to a separate controlling area.

For consolidation purposes, a group chart of accounts was set up for the two operating charts of accounts.

Controlling Objects

A controlling area contains controlling objects. These objects take on various functions within controlling, such as internal orders, cost objects, networks, projects, cost centers, and make-to-order sales orders.

Controlling objects are again classified into true and statistical controlling objects. True controlling objects can allocate their costs to other controlling objects. Statistical controlling objects cannot reallocate their costs and only bear their costs for information purposes.

Integration with Materials Management (MM)

Materials Management (MM) uses the company code from Financial Accounting (FI), the plant from Logistics – General, and the purchasing organization and storage location from Materials Management to define its enterprise structure. Purchasing organizations are required to enter data specific to purchasing in the vendor master record. Procurement transactions are posted in Financial Accounting through the three-stage verification procedure.


Plant is the central organizational object in Logistics. Many plants can be contained in a company code. This means that many plants can be assigned to the same company code.

Let’s consider the example of IDES company code 1000 (Germany). The plants in this company code are 1000 (Hamburg), 1100 (Berlin), 1200 (Dresden), 1300 (Frankfurt), and 1400 (Stuttgart).

All company-code relevant transactions from these plants are posted in company code 1000.

Purchasing Organizations

The purchasing organization purchases for the plants. It’s legally responsible for completing purchasing contracts. Each country, in which IDES plants operate, has one purchasing organization. They purchase for all plants in the country and post the purchases in the company code of that country.

Let’s again consider the example of company code 1000 (Germany). The purchasing organization 1000 takes care of purchasing for all German plants (Hamburg, Berlin, Dresden, Frankfurt, and Stuttgart). Postings are made in Germany company code 1000.

Materials Management View of the Vendor Master Record

As depicted in the image above, vendor master creation includes three settings: general data, company code settings, and purchasing organization settings.

The purchasing organizations purchase goods and services from suppliers, who are paid by accounts payable. The various purchasing organizations of the group have to enter data specific to purchasing in the vendor master record before the supplier’s master record can be used.

Posting Procurement Transactions in FI

The standard procedure for posting procurement transactions in Financial Accounting (FI) comprises a three-step verification procedure.

Step one involves creating a purchase order. This transaction is completed in Materials Management. No postings are made in Financial Accounting.

Step two involves the creation of the goods receipt. To update the inventory, a material document is created in Materials Management. Simultaneously, a document is created in Financial Accounting, with which the value of the goods is posted to the materials account (debit) and the goods receipt/invoice receipt account (credit) in the general ledger.

The third and the final step, in the three-step verification procedure involve the creation of the invoice receipt. The vendor invoice is posted in Materials Management, which automatically creates a document in Financial Accounting. The Financial Accounting document contains the invoice amount that is posted to the goods receipt/invoice receipt account (debit) and the vendor account (credit).

The last two steps can be interchanged depending on the order the goods and the invoices are received.

The goods receipt/invoice receipt account ensures that goods were received for each invoice and vice versa.

Overview of Integration with Other SAP Modules Part II

The second part to the Overview of Integration with Other SAP Modules section, you will get an overview of the integration of financial accounting with Sales and Distribution.

Integration with Sales and Distribution (SD)

Now you will take a look at the components of Sales and Distribution module such as sales organizations, distribution channels, and divisions. Then, you will explore how Sales and Distribution interacts with the Financial Accounting module in SAP.

Sales Organizations

The sales organizations are legally responsible for sales in R/3. One company code may contain several sales organizations. Let’s again consider the example of IDES company code 1000 (Germany). The IDES company code 1000 includes the sales organizations 1000 (Frankfurt) and 1020 (Berlin). This means that any accounting-relevant transactions in either of these sales organizations are posted in company code 1000.

Distribution Channels

A sales organization may sell materials through different distribution channels. In principle, a distribution channel can also be used by two different sales organizations. The distribution channel represents the channel through which saleable materials or services reach customers. Typical distribution channels include wholesale, retail, and direct sales.


The image above shows the IDES distribution channels in Germany. These are customer sales, resellers, service, factory sales, store chains, industrial customers, and pharmaceutical customers.

The combination of a sales organization and a distribution channel is called a distribution chain. Distribution chains sell goods from the plants. For example, both of the IDES distribution chains, 1000-10 and 1000-12 sell goods from the IDES plant in Hamburg and post the sales in IDES company code, 1000, which is also assigned to the plant.


Materials are divided into divisions in the R/3 System. This helps in the easy management of a large volume of different materials. For example, the IDES group uses the divisions’ motorcycles, paints, and foods as depicted in the image below.

The divisions are assigned to the distribution chain from which they can be sold. The combination of distribution chain and division is a sales area. Customer-specific arrangements, like partial deliveries or terms of payment, can be made for each sales area. Statistics can be created and separate marketing activities can be carried out within a sales area.

Sales Area Data in the Customer Master Record

Customer master creation includes three settings: general data, company code settings and sales area specific settings.

A sales area, which is a combination of sales organization, distribution channel, and division, must define sales area-specific settings for a customer before it can start doing business with that customer. These could be special conditions and terms of payments that the customer has arranged with the specific sales area.

Sales Process and FI

The sales order forms the basis of the sales process. Once a customer has placed an order, a sales order must be created at the start of the process. The sales order is generated at the distribution chain level. The ordered items can be from different divisions. The sales order is a document in SD and does not cause any postings in Financial Accounting.

When the sales order has been entered, the system carries out an availability check for the required delivery date. On the day of shipping, an outbound delivery document is created. Billing for the delivery can only take place when the goods have been taken from the warehouse stock and posted as a goods issue. The warehouse management function is used for picking. A transfer order has to be created, which generates the pick order. The requested goods are taken from the warehouse and prepared for delivery.

The goods to be delivered are posted as a goods issue. A goods issue document is created in Materials Management, and an accounting document is created in Financial Accounting so that the goods issue is posted to the correct general ledger accounts.

The last stage in the sales process is billing. A billing document is created in Sales and Distribution, and a printed invoice is sent to the customer. At the same time, a document is created in Financial Accounting so that the receivables and revenues can be posted to the correct accounts.


Here is a quick recap of what was covered in this article.

You learnt about general financial accounting terms, organizational elements of R/3, and its basic settings as well as the basics of SAP financial accounting. You also learnt about the fields of document header and line items and discussed how to open and close posting periods, and assign posting authorizations to users.

This book also covered the important general ledger features and the characteristics of sub-ledgers — accounts receivable, accounts payable, and asset accounting.

Lastly, you learned the organizational structures of cost accounting, such as controlling areas, country-specific charts of accounts, and controlling objects. You also learnt how financial accounting (FI) integrates with other SAP modules such as Materials Management (MM) and Sales and Distribution (SD).