In this blog post I will cover the overview of Predictive Accounting and for configuration I have mentioned the relevant blog posts already published on this forum .
In the traditional accounting approach, the account team had to perform a series of closing activities before the stakeholders could view how the company is performing. Also, the business won’t be having the data readily available for making the business decisions on the fly. This led to various innovations and changes in SAP system for faster closing processes and reduction in number of closing activities(ex. FCC, Real time integration etc.) which reduced the overall closing cycle, this we can term as “continuous Accounting “as we can have most of data in real time and need not wait for closing cycle to be completed. With the fast-changing business and industry process need was felt to have the predicted accounting data for future periods as well in single source of truth table i.e. universal ledger, thus making the shift from “continuous accounting” to predictive accounting.
How Predictive Accounting works:
Incoming sales orders translate into predicted revenue
It Provides a comprehensive overview of all sales orders and their values for the time period regardless of billing status. Predictive goods issue and billing documents are posted in prediction ledger.
Commitments translate into expected expenditures
This includes cost assignments to WBS, order, cost center and supplier as well as we can view commitments for derived characteristics such as profit center, segment and functional area.
The above features of predictive accounting are available in SAP S/4 HANA 1809 and after. We need to activate prediction ledger first for our company code and then we can perform predictive ledger configuration. Any entries posted to prediction ledgers will not be reflected in the Actuals reports.
You can view the below blog post related to predictive accounting configuration:
Advantages of predictive accounting:
1: Forecast upcoming revenue based on sales order predicted receivables and profit margin accurately
2: Based on the predicted revenue and expected expenditures, we can have reports for working capital at a future date.
3: Identify exception and opportunities.
4: Overview of future cash flow and other similar reports based on predictive data for future periods.
Future Scope and current limitation for predictive accounting:
1-All the Sales document categories can’t be configured for predictive accounting. Currently only Sales documents category for order, credit memo request , debit memo request, return , and order without charge .
2-Service based sales scenarios cannot be reported using predictive accounting
3- Statistical sales conditions cannot be updated with predictive accounting, as predictive accounting simulates the actual PGI and billing in a different ledger i.e. Prediction ledger hence the line items will be same as it would be in the real PGI and billing document .
These are based on my personal experience , feel free to share your own experience using the comments sections