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Author's profile photo Liling Jia

How to simplify my Chart of Accounts via reducing the G/L Accounts for Bank Accounts? How to set up ‘One set of G/L accounts for multiple bank accounts’?

  • Have you ever got lost in the enormous chart of accounts due to thousands bank accounts?
  • Have you ever struggled for weeks for treasury operation only because there are so many g/l accounts to be set up ?
  • Have you ever lost in the complex setting/configurations for bank payment?

Since CE2008, you might take a relief from all the tedious task, and be more focus on what’s important. But how to do that? Let’s get started with general introduction and public documentations you could refer to so far.

  • Help portal: Assigning G/L Accounts to House Bank Accounts
  • Help portal:Automatic Determination of Bank Sub Accounts
  • SAP Best Practice scope item Basic Bank Account Management (BFA) -> section 4.1.3 GL Account Reduction and Migration (Optional)

In this blog, I plan to use one example to helps you better understand the logic behind and how to set up G/L Account as well as house bank accounts in a more simplified way.

Instead of using G/L Accounts (bank), the principle is treating ‘House Bank Account’ as a bank account in all payment and posting processes.

—————————– WHY? —————————————————————-

  • ONLY one time configuration –> Set up a set of G/L accounts
  • Multi-times usage –> Link one bank reconciliation account to multi new house bank connections
  • ALL payment transaction/apps work out of the box –> with ZERO configuration
  • * provided that the set of accounts with its settings matches the requirements of the connected house bank

One extreme case is that, you might need 9000 G/L Accounts in the past for 1000 bank accounts. But now, you only need several bank sub account to reflect each of your payment methods.

reduction.jpg

—————————– WHAT? —————————————————————-

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Create a bank reconciliation account and the required number of clearing accounts for your payment methods. With this approach, you can reuse this set of accounts as many times as necessary for a new house bank connection (provided that the set of accounts with its settings matches the requirements of the connected house bank).

Example:

Now let’s do a very simple counting game to make it more real to you.

You have 3 bank accounts (M=3), each with 4 different payment methods (N=4). Your chart of accounts looks like this.

Until CE2005 – an operational chart of Accounts looks like this….

How many accounts must you create while using balance sheet account for bank account?

M *(N+1) = 3 * (1 +4 ) = 15 G/L accounts

the more house bank accounts we have, (N+1) times the more G/L Accounts we need to created.

Up to now, each time you created a new house bank account, you also had to create a new G/L account to enable payment processes for the new house bank account. Depending on the number of house bank accounts that you needed to create. Over time this could lead to a high number of G/L accounts.

 
Chart of Accounts G/L Acct External ID Short Text G/L Account Type
YCOA 11001000 Bank1 Main Account Balance Sheet Account
YCOA 11001010 Bank1 Cash Payment Balance Sheet Account
YCOA 11001020 Bank1 Bank Transfer Balance Sheet Account
YCOA 11001050 Bank1 Check Out Balance Sheet Account
YCOA 11001060 Bank1 Check In Balance Sheet Account
YCOA 11002000 Bank2 Main Account Balance Sheet Account
YCOA 11002010 Bank2 Cash Payment Balance Sheet Account
YCOA 11002020 Bank2 Bank Transfer Balance Sheet Account
YCOA 11002050 Bank2 Check Out Balance Sheet Account
YCOA 11002060 Bank2 Check In Balance Sheet Account
YCOA 11003000 Bank3 Main Account Balance Sheet Account
YCOA 11003010 Bank3 Cash Payment Balance Sheet Account
YCOA 11003020 Bank3 Bank Transfer Balance Sheet Account
YCOA 11003050 Bank3 Check Out Balance Sheet Account
YCOA 11003060 Bank3 Check In Balance Sheet Account

Starting from CE2008, How many accounts must you create while using bank reconciliation account for bank account?

a Simplified Chart of Accounts with only (1+M) G/L Accounts
1 + M Payment methods = 1 + 5 = 6 G/L Accounts. (instead of 15!!)

With the new procedure, you can create bank reconciliation accounts that can be assigned to multiple house bank accounts. For this bank reconciliation account, you can create and assign bank clearing accounts for each of your payment methods. When this set of G/L accounts is set up according to your requirements, you can assign this to all relevant new house bank accounts that you create.With this approach, you can reuse this set of accounts as many times as necessary for a new house bank connection (provided that the set of accounts with its settings matches the requirements of the connected house bank).

Chart of Accounts G/L Acct External ID Short Text G/L Account Type G/L Sub Account Type
YCOA 11501000 Bank Main Account Cash Account Bank Reconciliation Account
YCOA 11501010 Bank Cash Payment Cash Account Bank Sub Account
YCOA 11501020 Bank Bank Transfer Cash Account Bank Sub Account
YCOA 11501050 Bank Check Out Cash Account Bank Sub Account
YCOA 11501060 Bank Check In Cash Account Bank Sub Account

—————————HOW ———————————————————————————————-

You can reuse a bank reconciliation account and assign it to multiple house bank accounts. This helps you reduce the number of G/L accounts significantly and reduce the effort required to update your chart of accounts. To this bank reconciliation account, you can assign a bank sub account, also known as a bank clearing account, to each of your payment methods.

one time Configuration: Set up a set of G/L accounts

1. Create a bank reconciliation account

Fiori app: Manage G/L Account Master data (either SSCUI 150001)

Task: created the G/L account with the type Cash Account and subtype Bank Reconciliation Account, i.e. YCOA/11501000。

2. Create a(N) bank sub account(s) for above bank reconciliation account, each as clearing accounts for your payment methods

in this case, you could create 11501010 for cash payment. , then 11501020 for Bank Transfer, 11501050 for Check Out, and 11501060 for Bank Check In.

3. Enable payment method for automatic payment processing using the bank reconciliation account

3.1 Assign a bank sub account to an account symbol
SSCUI 101024: Make Global Settings for Electronic Bank Statement

  1. Create an account symbol. Select the SIP Relev. (Self-Initiated Payment) checkbox for the account symbol to enable it for use in automatic payment programs.
  • Assign a G/L account to the account symbol.

3.2 Assign the account symbol to the payment method.

 

Multi-times usage for a new house bank connection
When using Bank Main Recon Account for multiple Bank Accounts, can they still see the Bank Balance per Bank Accounting S/4HANA Cloud?
cash management reports can show the balances and flows per differentbankaccount, even if they are booked into the same G/L set.Accounting reports are not changed, still as before.

 

Zero additional configuration for relevant transaction – payment works out of the box
Q-From CE2008, we allows different bank accounts to use the same G/L account. Will this impacts the usage of MBC?
I do not see a problem for the MBC integration based on this change. Of course the prerequisite is that the lockbox import itself works after with this change. MBC just calls the import, so only triggers the process.

————————— Things to consider ————————————————————-

As you know this is a brand new solution (Bank Account Ledger:), I have to be honest with you for scope bundles.
  1. Do you have any local/global financial accounting principles to show the bank balance under different items?
  • If so, you would need to create separate bank reconciliation account(s) as for now.

2. Is the company with Japan version?

-> if so, currently this is not supported.

3.Do you have any requirement for FI-CA Payment? Bill of Exchange? Interest Calculation?

4.  The following functions are not available for G/L accounts of type “Cash Account”:

  • Foreign Currency Valuation job template
  • Perform Foreign Currency Valuation app

5. If you migrate to use the Advanced Valuation you can valuate G/L accounts of type “Cash Account”.

6. It is highly recommended to first migrate to the Advanced Valuation before start using the new Bank Account Ledger in S/4HANA Cloud.

7. You must use foreign currency valuation of the bank accounts at month end.

——-  Related Resource ——

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      11 Comments
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      Author's profile photo Yang Wang
      Yang Wang

      It is very helpful. Thanks for sharing!

      Author's profile photo Liling Jia
      Liling Jia
      Blog Post Author

      you are welcomed to share the news to customers~

      Author's profile photo Grace Zou
      Grace Zou

      explained well, thanks!

      Author's profile photo Katharina Anna Lehr
      Katharina Anna Lehr

      Thank you for the comprehensive overview!

      Author's profile photo Adrian Di Nanno
      Adrian Di Nanno

      Hi Liling, Thanks for sharing this post. But I do have a question ... Is there any specific config that needs to be done for this to work with Electronic Bank Statement ? Within the setup of the Accounts symbols ? or similar ?

      I am trying to make it work with EBS and it is not able to derive the GLs properly based on the usage of the masking within the accounts symbols (Ex. +++++01, +++++02). I made them SIP relevant too and they are not working.

       

      Author's profile photo Adrian Di Nanno
      Adrian Di Nanno

      I can confirm that the masking approach does not work. It has to be configured by using the whole GL account number and not by using the traditional masking approach.

      Author's profile photo Cora Phelan
      Cora Phelan

      See kba 3059653 - Bank determination for Payments using G/L account reduction concept

      Author's profile photo Jens Steiniger
      Jens Steiniger

      Hi, one question regarding the closing of such reconciliation accounts and their subaccounts:
      How do you handle the FX revaluation of bank accounts in foreign currency?

      If it is still a GL functionality, then separate reconciliation accounts by currency are required, with correction accounts for the FX revaluation.

      So, the calculation of accounts required should be revised... In many cases there are bank accounts in foreign currencies which should be revalued at period end.

      Author's profile photo sunil rajashekarb
      sunil rajashekarb

      Hi Liliang, this is helpful. We are doing a similar set up in test system (i.e. using a single GL account to all house banks) for a S4H2020 solution. The GL accounts were initially set up as type 'balance sheet'. Some entries were posted initially e.g. payment runs and loaded a few bank statements. We now changed the GL master type to 'cash'. While importing a bank file after the GL master change - the system is giving error FINS_ACDOC_POST 098: "Account <clearing acct>, house bank <HseBnk/Acct>, company code <co code> is not a valid combination. When we tried doing this in sandbox with a new GL account created as type 'cash' we did not get this error. Do you know if changing a GL master type from 'balance sheet' to type 'cash' can cause this error? There is a OSS note 3133442 for this error message but it is for FICA. Not sure if it is related. Could this be related to changing the GL master type after entries were posted?

      Author's profile photo sunil rajashekarb
      sunil rajashekarb

      FYI - The issue was resolved. the bank account field in field status group was optional. So the house bank values were flowing in the line item for bank charges GL account which causes inconsistency with the house bank configuration. After making the bank account field suppressed in field status group the system allowed the FF_5 posting.

      Author's profile photo Liling Jia
      Liling Jia
      Blog Post Author

      Hi sunil rajashekarb , Thank you very much for sharing with this bigger broader community. Wish your project a success! best regards, Liling