Matching, Reconciliation & Elimination
This blog is a continuation of the blog “The Next Generation Intercompany Solution: Intercompany Matching & Reconciliation” for some new ICMR features in SAP S/4HANA Cloud 2008 and OP 2020, among which, my favorite one is the Reconciliation to Elimination. With this feature, ICMR now supports the continuous process from daily matching, to month-end reconciliation close, and finally to generate intercompany elimination entries in Group Reporting.
The intercompany AR and AP need to be eliminated to form the group view. However, in reality, the AR and AP from 2 companies may not offset to each other. Thus, elimination difference could be occurred. Traditionally, consolidation system can only split the difference into currency translation difference and other difference. Because the “other difference” is unknown to the consolidation system. Now, ICMR can break down the other difference into more detail granularity.
During matching, AR and AP items get matched on transaction level. In case a discrepancy is figured out, a corresponding reason code is attached to give the possible reason on why the discrepancy happened. If the discrepancy cannot be resolved before consolidation, the reason code will be carried to consolidation. Thus the elimination difference can be broken down by reason code. And one can further drill through to the detail AR and AP items.
To teach the system how to post elimination entries, a new Fiori App “Define Posting Rules” is delivered. Elimination entries are categorized into 4 item groups. In each group, you can set values to the available fields. Values can be fixed values, or can be converted by various functions. For example, The function “DERIVE_FROM_TARGET_ATTR(‘S-ELIMINATION-TARGET’)” returns the FS Item from the original FS Item’s attribute ‘S-ELIMINATION-TARGET’.
If you want to know how the 4 item groups work, please check the online help, where examples are also given.
Posting rules are not only for elimination posting, but can also be used for adjustment posting. By resolving the discrepancies with automatic adjustment postings in Accounting, you can avoid elimination difference in consolidation. Below, you can see a different variant of posting rule. It has 2 item groups, but with more control options. With that, you can define flexible posting rules to clear the variance.
In the previous release, Posting Document Template was used for variance adjustment. Now, we recommend to use Posting Rule as it is more powerful and flexible. You can check the online help for more detail.
The End-2-End Process
Now, let’s string the existing functions together. First, the local accountants use the ICMR Apps to run daily transaction matching. Occasionally, they check the reconciliation status and balance to get a high level view. Then, at the period end, they decide to close the reconciliation status and maybe get approved from the supervisor. After that, they release the reconciled data to the group accountants, who can then run currency translation and elimination in the consolidation system. Finally, the reconciliation details are reflected in the group reporting and can be traced back to the original postings.
The App Manage Reconciliation Close is newly introduced as a connection point between reconciliation and elimination. The App lists the pairs of leading unit and partner unit with intercompany differences and difference breakdown by reason code. The information is clear enough for the decision of reconciliation close. And it can also be used for the auditing purposes. The information is then transferred to Group Reporting for elimination. With that, the daily operations, the month-end close, and the consolidation activities can be streamlined.
More information on Mange Reconciliation Close can be found in online help. And watch the video below to get a more intuitive feeling.
The story of intercompany accounting continues in SAP S4HANA. We have already done some work from reconciliation to elimination. However, there is more work to do in intercompany data preparation and recording. With the planned features in Parallel Accounting(like Group Valuation), intercompany process will be more streamlined.
The list keeps on update.
- The main documentation:
- SAP S/4HANA Cloud: https://help.sap.com/s4_ce_icmr
- SAP S/4HANA: https://help.sap.com/s4_op_icmr
- Introduction Video:
- FAQ: SAP Note for Cloud(2815332) and OP(2815304).
- Configuration Guide: https://launchpad.support.sap.com/#/notes/2916087
- The Next Generation Intercompany Solution: Intercompany Matching & Reconciliation
Thanks for sharing on IC Matching , Recon and Eliminations
thanks for sharing, quite useful
Very nice read. One question, Is it a prerequisite for ICMR that Group reporting is actively used in S/4 or can it be used without?
Thanks in advance.
ICMR complements Group Reporting by adding the intercompany reconciliation features. The Recon2Elim streamlines the process. However, ICMR is a standalone component, which can be used apart from Group Reporting. For example, if you just want to run intercompany reconciliation, not for the purpose of consolidation, then you can use the Accounting model which doesn't requires any configuration in Group Reporting.
Besides intercompany reconciliation, ICMR can be used for all kinds of matching and reconciliation. It's flexible data source definition allows you run matching and reconciliation on other data as well, like, GR/IR, Bank Statement, and so on.
Thanks for the quick reply.
One last question, any known considerations we should have in mind for System conversion OP to S/4 in regards to migration activities?
This is a big question. I cannot give an concrete answer. It is case by case.
But focusing on ICMR, please refer the FAQ Notes: 2815304,
Thank you Vincent.
Just to understand the "deployment" of ICMR, can customers convert to S/4 with ICR solution and then consider the implementation of ICMR as a subsequent enhancement? And will ICR work as in SAP ECC also in S/4?
You can still use ICR in S/4. ICMR is a separate component. You can use ICMR and ICR in parallel.
Are you able to confirm if the matching process works on subledgers please? In particular, if you had a customer account with lots of unmatched invoices and payments on it, it would make more sense to match that data in that account before comparing it with it's intercompany supplier account for an interco rec. Since flexible matching rules are available, I assume a higher match rate could be achievable than auto-clearing directly in the ledger itself?
The matching process support the subledgers as well. You can define your data sources for intro-company matching. Check the Help Portal page: https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/4ebf1502064b406c964b0911adfb3f01/e44f0ad0da5e4cbc81dc6afcc8e135ca.html
Where it says:
Hi Vincent, thanks for your reply.
So can it be used just to match invoices and payments on a customers account that is not an intercompany customer as well?
I have the 2 questions about the task " 1.1 optionnally upload external entities data"
Question 1 : This concerns
Question 2 : when you upload the external data , the table that is updated
Question 1: both.
Question 2: ICADOCM
Thanks for your answer
In my understanding, I thought that the table ICADOCM is only used to matching post
That's means that the table ICADOCM is also used to post the data records with partner for ECC companies.?
But, I'm lost, according to another blog "Using remote data source in ICMR", you said " With SDA, ICMR can read the data from remote systems directly. and it reduces the cost in copying data, and allows real-time matching and reconciliation in a distributed landscape"
Question : is t correct ?
Question3 : Can you confirm that for the S/4 hana companies, the data records with partner are not replicated in table ICADOCM but only read in table ACDOCA?
Question 4 : how to manage the data records with partner for external companies data? ACDOCA?
ICADOCM stores a copy of the relevant items from the source(ACDOCA, BSEG, ACDOCU), plus additional information for matching, like assignment number, matching status, communicaiton status and so on. Please read the architecture of matching engine in the Help Portal.
When you run report on the matching method or recon case, the system read data from both ICADOCM and the data source. To avoid duplication, it reads data from ICADOCM which is already roll-in, and reads data from the data source which is not roll-in. In this way, no mater you run match or not, the report reads the whole set of the data in a real-time fashion.
With SDA, you can achieve real-time matching and reconciliation in a distribute landscape. Without SDA, you have to upload data into ICADOCM, which blocks you run matching and reconciliation at any time.
Please read the help portal and it will answer all of your doubts.