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SAP Central Finance & Universal Allocations

In this blog, I will explain what universal allocations is, what is the need of the functionality and how it fits with SAP Central Finance implementation. Let us start with understanding of Universal Allocations.

Introduction to Universal Allocations

Before we move on to SAP solution lets understand what it means in business language. Each Organization is organised in a way of departments like sales & marketing, finance, HR, technology etc and each organization incur its own cost in terms of resources, expenses and other P&L lines (direct or indirect cost) as they run in their own way and execute business like an organizations within organization but at the end all the cost needs to be reporting in singular form in addition to the fact that several cost items needs to be allocated to other departments like facility cost being charged to the departments sitting & using physical office facilities. Example Below

This is Financial Accounting transaction where we book cost as it occurs and make payment to vendor when it due.

Now the same cost is allocated to the other departments as several departments use FACILITIES. This is done at the month end and based on some key like number of employees (basic example) using the facility.

This is just one transaction. No look from the angle of having several transactions happening and on top of that several systems so the multiplying factor exists for organizations. Read Assessment & Distribution for more learning.

Universal Allocation is a way to go in SAP S/4HANA with 1909 release as this functionality is introduced. In manage allocation app (fiori) the allocation & distribution of the cost can be done from one cost object to others. Some features of Universal Allocation are:

  • One architecture for accounting & controlling documents
  • Actual & plan are together
  • Currency breakdown available
  • End to end trace of actual posting
  • Simulation capability available before actual run
  • Process harmonization
  • Top-Down distribution (for actual data only)

What problem does it solve?

  • What cost is coming to my Cost Centre? (trace available)
  • How reliable are the tracking factors?
  • Simulation will help in what if scenarios like what will happen if we combine entities

and many more problems are answered if you see this from controllers view…

3 Apps for managing overall process:

  • Manage Allocations

                    (image credits – SAP SE)

  • Run allocations

(image credits – SAP SE)

  • Allocation Results
    • By Run
    • By cycle
    • Report – Sender, Receivers & details of Journals

(image credits – SAP SE)

What is available?

  • Actuals table- ACDOCA
  • Planned Table – ACDOCP

How it fits with SAP Central Finance?

Presently based on number of systems the allocations are executed in each system and the scenario may look like this:

With implementation of S/4HANA Central Finance, one of the organizational objective is to bring processes to SAP S/4HANA over a period (see this blog for more details) so the idea of having universal allocations is aligned with the same and future could look like this:

 

In summary this is one of the major and useful functionality available in SAP S/4HANA 1909 release and of course can be well used in Central Finance scenario giving value benefits to the organizations along with aligning with future strategy of managing ERPs in landscape.

Also Refer this for CFIN Architecture- BLOG

Happy Reading..

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