Configure SAP Finance Organization Structure in 5 Minutes

Configure SAP Finance Organization Structure in 5 Minutes

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In this post we will Configure SAP S4 HANA Finance Organization Structure in 5 Minutes. Do not worry if you do not know Finance. The financial setting require to run your own company on SAP is very easy and we will help you through out this journey


1. Business of our Company


Our company manufactures cars in USA. Until now our company manufactured only diesel & petrol Cars, but to change with time, our company has commissioned a new plant under a new company code which manufactures electric cars.

Time needed: 5 minutes.

How to Configure Basic FI Organization Structure in SAP S4 HANA in 5 Minutes in 6 easy steps

  1. Define Company

    Defined our both car companies in this step – “Pankaj Private IC Car INC” & “Pankaj Private Elect Car INC”

  2. Define Company Code

    “PA10” for “Pankaj Private IC Car INC” & “PP10” for “Pankaj Private Elect Car INC”

  3. Assign Company Code to Company

    PA10″ for “Pankaj Private IC Car INC” & “PP10” for “Pankaj Private Elect Car INC”

  4. Define Variant for Opening Posting Period

    PA10 Variant for PA10 Company Code & PP10 Variant for PP10 Company Code

  5. Configure Chart of Accounts (COA)

    COA PPIN – Pankaj Private Inc . Both PA10 & PP10 will use same Chart of Accounts

  6. Enter Global Parameters for our Company Codes

    Enter Global parameters for both PA10 & PP10 Company codes as shown in the respective section below

2. Structure of the company

We will configure SAP S4 HANA SD organization structure for our car business as per the picture below

Picture : FI Organization Structure in Pictorial Form

3. Company 1 – This Company Manufactures Cars with IC Engines


Co.CodePA10Description-Pankaj Private IC Car INCAddress- Deerfield , Chicago
      
Plant-1PA10 Description-PPIC Chicago Plant Address-Lake cook Road, Illinois, 60089
Plant-2PA20 Description-PPIC Boston Part Address-Cambridge, Boston, MA, 02139
Picture : Our IC Car Business at a glance


4. Company 2 – This Company Manufactures Electric Cars


Co.CodePP10Description-Pankaj Private Elect Car INCAddress-Deer Creek , Palo Alto
PlantPP10Description-PPELC Fremont PlantAddress-Fremont Boulevard
Picture : Our Electric Car Business at a glance


4.1 Configuration of 1st Company in SAP S4 HANA


In this step we will create our own car business companies companies.

By Definition “A company is an organization unit in Accounting which represents a business organization the requirements of commercial law in a particular country”

Picture : Path to Define Company in S4 HANA

Picture : Configuration of PA10 Company

4.2 Configuration of 2nd Company in SAP S4 HANA

Picture : Configuration of PP10 Company

5. Company Code Configuration for both the companies


In this activity we create our company codes. The company code organizational unit used in accounting. It is used to structure business organization from a financial accounting perspective.

Picture : Company Code Configuration Part

Picture : Configuration of PA10 Company Code

Picture : Configuration of PP10 Company Code

6. Assign the company code to company

Each company code is assigned to a company to enable consolidation. Here we will assign the company codes that will be included in the group accounting to a company.

Picture : Path to assign Company Code to Company

Picture : Path to assign Company Code PA10 to Company PA10

Picture : Path to assign Company Code PP10 to Company PP10

7. Define Functional Area

Functional area in SAP, is an organizational unit that classifies the operating expenses of company according to functions administration, sales and distribution, marketing, production and research & development.

Picture : Path to configure Functional Area

Functional AreaName
YP10PPL-Sales Revenue
YP15PPL-Sales Discount and allow
YP20PPL-Production
YP25PPL-Consulting/Services
YP30PPL-Sales and Distribution
YP35PPL-Marketing
YP40PPL-Administration
YP50PPL-Research & Development
YP70PPL-Other gains
YP75PPL-Other Expenses
YP77PPL-Gain from investments
YP79PPL-Gain from shares & loans
YP81PPL-Interest & similar gains
YP83PPL-Amort.curr.Fin.Assets;Sec.
YP85PPL-Interest & similar costs
YP87PPL-Extraordinary gain
YP89PPL-Extraordinary expense
YP90PPL-Taxes from income and revenue
YP98PPL-Other Taxes
YP99PPL-Dummy functional area
Picture : Functional Area to be Configued

8. Configured functional area in SAP S4 HANA

Picture : Path to Configure functional Area

9. Define Variants for Open Posting Periods

In this step, we maintain the variants for open posting periods. A posting period variant must be assigned to each company code since the opening and closing of posting periods takes place for each posting period variant.

Picture : Define Variants for Open Posting Periods


Two variant defined each for our both company codes

Picture : Define Variants for PA10 & PP10 to Open Posting period.

10. Open and Close Posting Periods

In this activity, you can specify which periods are open for posting for each variant.

we are opening period from 2021 01 to 12 2030 for all type of GL accounts

Picture : Path to open & Close Posting Period

10.1 FI Period Open for IC Car Company PA10

Picture : FI Period Open for IC Car Company PA10

10.2 FI Period Open for Electric Car Company PP10

Picture : FI Period Open for IC Car Company PP10

11. Configure Chart Of Accounts

First step is to give your chart of account a name. If you have more than one company code and all the company codes are using different operating chart of accounts (COA) then cross company code controlling will not be possible so we will use same COA for our both company codes

COA Name – PPIN – Pankaj Private Inc

Picture : Path to configure Chart of Accounts

Picture : Configuration of PPIN Chart of Accounts


12. Enter Global Parameters for Company Code

Now enter all the global parameters for both of our company codes as shown below

Picture : Path to configure Global Parameter

13. Configuring Global Parameter for PA10 Company Code

Picture : Configuring Global Parameter for PA10 Company Code

14. Configuring Global Parameter for PP10 Company Code

Configuring Global Parameter for PP10 Company Code


Please see below the details of Global Parameters entered in the above screens for both of our group companies.

Accounting organizationConfigDetail
Chart of acctsPPINCreated in earlier steps
Fiscal Year VariantK4General Value
Processing parameters  
Field status variant0010General Value – “Field Status GL Accounts”
Pstng period variantPA10 or PP10Created in earlier steps
Max. Exchange rate deviation10%max 10% allowed
CoCd->CO Area2Cross Co.Code. 
Negative postingsDeselectedNegative Postings Not allowed
Enable amount splitNA 
Tax base is net valueSelectedtax is calculating net of invoice value and discount. ($100 – $3 discount = $97.00 and on that tax will be calculated)
Discount base is net valueSelectedWe cannot tick only the “Tax base is net value” without “Cash discount base is net value”
Tax Reporting Date ActiveSelected 
Picture : Global Parameters for our car business companies

15. Create Controlling Area

Picture : Path to Create Controlling Area


Create controlling area “PPIN” as per screenshot below. Please note that to avoid errors in material ledger related to currency in S4HANA, Group currency given here in controlling area and Group currency given in SCC4 should be aligned. Please read more about activation of Material Ledger through the post How to activate Material Ledger in S4HANA in 5 Easy Steps

Picture : Create Controlling Area

16. Assign Controlling area to our companies

Picture : Assign Controlling area to our companies


In the next post we will create GL accounts for our group companies through mass uploading of data on S4 HANA

17. Mandatory & Optional Finance Organization Structure


Below is the list of mandatory & optional elements of finance Organization structure

Courtesy : SAP Help. Click Here to read more

Picture : Mandatory & Optional Elements of FI Organization Structure


Please note that if you are making Business area as optional then in the configuration of global parameter of company code , Select the value of “Cost of Sales Accounting Active” as blank as shown in below screenshot

Picture : Cost of Sales Accounting Active as blank for Business Area Optional


Note

You can read 5 Minutes guide for SD Organization Structure HERE

You can read 5 Minutes guide for MM organization structure HERE

None. This is the starting post of our journey to configure our own SAP S4 HANA working system in the minimum possible configuration efforts.

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In the next post we will configure minimum possible SD organization structure required to run our business scenarios. Click on the above link to read in detail

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