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Cash based Ledger

This blog is intended for project members responsible for setting up the Cash Based Ledger functionality in S4 Hana Finance. It explains the Standard options for Cash Based Ledger Configuration and Transaction Posting.

In cash Ledger we have Green Field Implementation and Subsequent Implementation .I tried to cover the Green Field Implementation part only and also covered some Frequently used Scenarios .

What Is Cash Based Ledger:

we have generally two types of Accounting one is Accrual based accounting and other is Cash-Basis Accounting. Cash Based ledger comprises a complete, balanced set of accounts required by and maintained for Cash based Accounting. Cash based Ledger realizes expenses and revenue only at the time cash is paid or received. We must create separate ledger in the new General Ledger for cash-based Accounting.

It also covers inventory, Fixed assets (Deprecation), other liabilities, cash in hand, Short term Deposits on top of Expenses and Revenue.

Prerequisites:

  • New GL Accounting must be active in the system with document splitting.
  • Business function EA_PS and PSM_FA_CASH must be activated.

Cash-Basis Ledger Configuration

1-Creation of Separate Ledger for Cash basis Accounting in Define Settings for Ledgers and Currency Types.

2- Define Ledger Group

3- Define Document Splitting Characteristics for General Ledger Accounting

4- Classify Payment-Relevant G/L Accounts

you can enter all the accounts that the system should interpret as cash relevant. Only enter G/L accounts that are relevant for cash flow.

Public Sector Management- Fund Accounting- General Ledger Accounting (New)- Cash-Basis Accounting and Cash Flow Reporting- Cash-Basis Accounting

5- Define Assignment Between Balance Sheet Accts and Profit and Loss Accounts

Only expense or revenue-related financial transactions can be updated in cash ledgers. To guarantee this, cash ledger documents are only updated to expense and revenue accounts

Cash-Basis Ledger Transaction Posting:

In this Blog I covered 4 Major Frequently used Scenarios

  • Vendor payment with Invoice Reference
  • Vendor Payment w/o Invoice Reference (Payment on Account)
  • Customer payment with Invoice Reference
  • Customer Payment w/o Invoice Reference (Payment on Account)

Vendor payment with Invoice Reference

  Accrual based Cash based
Vendor Invoice

Exp. A/C                  DR

Vendor AC              CR

NO Accounting entries
Vendor Payment

Vendor AC              DR

Bank outgoing AC   CR

NO Accounting entries
Bank Reconciliation

Bank outgoing AC    DR

Main Bank AC         CR

Exp.A/C                  DR

Main Bank AC         CR

Vendor Invoice

Vendor Payment

Bank Reconciliation (Accrual Based)

Cash Ledger View Accounting document

Vendor Payment w/o Invoice Reference (Payment on Account)

  Accrual based Cash based
Bank Reconciliation (Through DMEE)

Bank outgoing AC    DR

Main Bank AC         CR

Cash Ledger PACC              DR

Main Bank AC                      CR

Vendor Invoice

Exp. A/C                  DR

Vendor AC              CR

NO Accounting entries
Vendor Payment

Vendor AC              DR

Bank outgoing AC   CR

NO Accounting entries
Bank Outgoing GL Clearing

Bank outgoing AC   DR

Bank outgoing AC   CR

Expenses AC                      DR

Cash Ledger PACC            CR

Main Bank                           DR

Main Bank                           DR

Bank Reconciliation

Cash ledger view

Vendor Invoice:

Post Payment:

GL Clearing:

Cash Ledger:

 

Same Process will applicable for AR process

Special Instruction

Cost Center will not flow to cash based Ledger Documents .

 

Important Notes for Cash Based ledger

2457643 – Cash ledger and PSCD
2001953 – Check for cash ledger activation
1672033 – Update RE_ACCOUNT for adv. return for tax on sales/purchases

Conclusion:

This blog is very useful for all the customers and Consultants who are planning to implement Cash Based Ledger in the S4 system .it Covers the Consideration of Understand the supported various business scenarios in activation cash ledger .

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