Around this time several Enterprises might be planning their time lines for a migration to S/4HANA. For the entities that are still on ‘Classic GL’ or ‘New G/L without document split’, the next logical question could be a debate on the choice between Business Area or Profit Center Accounting or utilize both; especially if they prefer a re-implementation or ‘green field approach’. This would be a good opportunity to revamp and re-engineer a few of their processes and trim down some extra fat around the master data and other objects.
We know there have been several Q&A around this topic in the past and mention is often made about the SAP note # 321190 which talks about the difference between BA and PCA and how SAP would focus on PCA in the new development functionalities. Hence, I thought a rehash on this subject might be helpful in the current context; especially for those who have not got an opportunity to work on Document split functionality in New GL. In S/4HANA there will only be ‘New GL functionalities’ and so it is only known as GL. Configuring document split in a new implementation should not be very complicated.
Given this background, let us look at how Profit Center Accounting could be advantageous in the road map to S/4HANA implementation / migration. I shall use the abbreviation PCA and BA for easy reading. I shall also briefly cover on some reporting options.
Profit Center and Segment:
In S/4HANA the definition and assignment of ‘Profit center’ and ‘Segment’ have been moved to the Financial side in the IMG. A sample PC master from S/4HANA is given below for ready reference. We could see the Segment is assigned to a PC. Segments can also be derived by other criteria using BADI’s, if we so desire.
One of the general concerns could be, how to assign Balance sheet accounts (not related to Recon accounts like Debtors, Creditors, Assets etc.) to Profit Centers? Examples like Equity, Cash and Bank Management related accounts. Earlier , let us say, these B/S related accounts would carry Business Area in the line items. These could have either been manually populated or derived through standard rules / substitutions / exits et al.
Currently in S/4HANA (like in New GL earlier) it is possible to assign a ‘Default Profit Center’ for Balance sheet accounts though T. Code -> FAGL3KEH. The assignment is at Company code level. As an example, say for some Balance Sheets accounts like Equity or Cash/Bank Accounts, a default PCA can be assigned wherever required. With Document split rules in place for Profit Center and Segments things happen in real-time.
Refer below Sample Screen Print from FAGL3KEH for Balance sheet accounts.
Once the Document split is in place, we know it takes care of all the B/S items as well. For example, when an incoming bank payment is received and assume the same is to be offset against multiple Customer Invoices (invoices of different PC’s) the Profit Center split happens automatically in real-time and thus the incoming bank clearing account gets split into multiple line items with appropriate Profit Centers. The screen print below is one such sample.
Sample Screen Print with Document split:
The active and passive rules help derive these. For those who are new to document split, the link here might be useful to catch up with the functionality. Link
Real-time document split is one of the greatest advantages which ensures a faster close.
Following Universal Journal, all the line item data now reside in ACDOCA. There are a few Fiori reports that can be used to get the trial balance at PC/ Segment level apart from standard reports like FAGLL03 and FAGLL03H. More Fiori based reports can be developed for business specific needs.
The summary table concept is obsolete in S/4HANA and hence creation of new reports with ‘Report Painter’ may not be fully feasible. As such, there will be limited utility of ‘Report Painter’ reports in S/4HANA. For many enthusiasts of these painter reports, it would probably be a ‘change management’ issue to get accustomed to CDS based reporting tools instead.
The below OSS notes would give a better idea about the way forward for FI/CO reports.
2349297 – S4TWL – Reporting/Analytics in Controlling
2579584 – Recommendations for Financial Reporting in SAP S/4HANA
In the above note sap mentions – Quote “Therefore going forward we recommend to create new reports using the CDS based reporting tools instead of using Report Painter or Report Writer”. Unquote.
We can see how PCA would be an effective way to get the balanced financial statements. Document split, zero balancing account etc., ensures real-time accurate data. Also, the PC Segment data gets balanced automatically. Thus, we can safely bet on PCA. However, for entities that have special reasons or other business benefits with BA, they can continue to do so. The document split functionality supports Business Area very much.
I would like to reemphasize that this is only a rehash and many materials are already available around topics like ‘New GL and Document Split’, BA, PCA and their comparison et al.
Hope this helps in getting a better clarity on PCA in the context of S/4HANA FIN Projects. I believe every some detail shared might be helpful in decision making.