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Author's profile photo Dick Westman

Allocations & Universal Allocation



This blog post will include a series of Controlling related topics, which circle around  showcasing new functionalities in S/4HANA Cloud, comparing functionalities between SAP S/4HANA Cloud and SAP S/4HANA (on premise), as well as general topics to be considered from Management reporting/Controlling point of view when implement SAP S/4HANA.


Allocation & Universal Allocation

An Allocation is a process of  distributing Cost, Revenue or Balance sheet values from specific sender account(s) and object(s) (e.g. Cost Center, Profit Center) to specific receiver account(s) and object(s) (e.g. Cost Center, Profit Center). An example of a cost allocation can be rental expense, which are first booked to a general cost center, and should then distributed to cost centers of the departments that use those facilities and should bear part of the cost.


Universal Allocation are the Applications (Apps) that we use to create, run and view allocations in SAP S/4HANA, instead of the multiple transactions we had in SAP ECC. With the manage Allocations app, we define and create segments, which include the rules for the senders and receivers (e.g. which accounts to be used for sender values, should the allocation be posted using the original account or a separate account (Overhead Allocation), which cost objects should be senders and receivers and so on).

This allocation tool is continuously being improved and below are some of the useful functionalities it provides.

  • Allocation in multiple currencies (with balancing values in all currencies), something which was not possible in SAP ECC
  • Postings updated in the Universal Journal
  • Simple user interface
  • Planned and Actual values in one environment



Figure 1. Comparison of transaction in SAP ECC compared to the 3 Fiori Apps in SAP S/4HANA (Manage Allocations, Run Allocations, Allocation Results (Allocation Flows))



Flexible Ledgers functionality in Universal Allocation

In SAP ECC it was not possible to select the ledger to be used in an allocation. In SAP S/4HANA, when you create an allocation cycle, you select a ledger for the allocation. Which will be the ledger that is being read for values that should be allocated and is the ledger where you post your allocated results. Earlier if you wanted to allocate in multiple ledgers, you had to maintain multiple cycles, with flexible ledger you can maintain the cycle once, and execute it in any other parallel ledger.

Flexible Ledgers is available in SAP S/4HANA Cloud (Version 2102).

  • This enables maintaining an allocation cycle once, and executing it in any other parallel ledger
      • By doing this you can keep a main ledger “clean” from certain allocations (e.g. if you do not wish for everyone to see some allocations or you want less postings in one of the ledgers).Although, it requires that the second ledger is  full ledger (same values as the leading), in the case of an allocation using the sender rule  “posted amounts”.
      • It also reduces time to maintain allocation cycles, as you need to maintain it only once (instead of once per ledger)
  • Technically you tick box the cycle header the “flexible ledger” field , and when running the allocation, you select which ledger you want to post to
        • It is also worth noting that once a cycle is on executed as a flexible ledger cycle, then it cannot be deselected anymore


Figure 2. Screen shot from Manage Allocation App. Showing header of the cycle, as well as tabs with different information for the allocation (General Information, Field Groups, Processing indicators, Derivation rules, Segments.)



Figure 3. Screenshot from Manage Allocation App – Showing the Processing Indicator tab, where it is now possible to select the Flex. Ledger.


Running the flexible ledger allocation cycle

  • When running the allocation cycle, using the flexible ledger cycle functionality, you can select to which ledger you allocate in (in below example ledger 2L)


Figure 4. Screenshot showing Run Allocations App, here you select the periods for the allocation, as well as ledger to be read and posted to (2L in this example).


Figure 5. Screenshot from Run Allocations App, from which you can navigate to Display completed runs (alternatively you can open the Allocation Results App)


Viewing the Allocation Results

At this point, the allocation has been created using the Manage Allocation App (where we have defined sender & receiver objects). The allocation has been run (using the Run Allocations App) and now we move to the last stage of viewing our allocated costs, using the Allocations Results App.

  • The network graph (Allocation results App) gives a visual overview of what has been allocated
    • The group functionality can be used to view from different dimensions (E.g. View from functional area point of view, instead of cost center).


Figure 6. Screenshot of Allocation Results, showing a visual network graph of the allocation results.


  • When an allocation is executed for only one ledger (using the flexible ledger functionality), it will only be posted to that ledger (e.g. In the below case to 2L)


Figure 7. Screenshot of Allocation Results, showing the journal entries from the allocation.


Possibility of adding Notes:

  • Adding notes to cycles is easy and can be a good tool to document changes on cycles.
    • Notes can be added on cycle header or to segments
    • This functionality is currently available in SAP S/4HANA Cloud , and has not been available in SAP ECC


Figure 8. Screenshot of Manage Allocations, adding a note on the segment.

  • When viewing the cycle, you can easily see the what has been written to different segment notes:


Figure 9. Screenshot of Manage Allocations, showing posted notes.


Possibility of Upload through Excel

You can create and update allocation cycles either through the Manage Allocations app, but there is also possibility of uploading them through excel, which can make the process quicker. Both of these approaches are completely new compared to SAP ECC, where only manual updates where possible.

  • You can create cycles (header and segments) through simple excel upload, both in SAP S/4HANA Cloud and SAP S/4HANA (on premise) (Version 2020)
  • You can also upload percentages within the cycle receivers


Figure 10. Screenshot of Manage Allocations, showing possibility of uploading receiver basis percentage values.



This blog post focused on explaining and showing the functionalities of adding notes to allocation cycles, as well as utilizing the flexible ledger option to create an allocation cycle once and then running it to specific a separate ledger.


Personally, I believe the flexible ledger functionality, is a good improvement that enables more options for how to setup allocations for a company, and the possibility of adding notes will add value for documenting changes to allocations cycles.


What do you think? How would you utilize these functionalities in your project or organization? Let me know what you think!

EDIT: Update regarding flexible ledger functionality.

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      Author's profile photo Erno Nykanen
      Erno Nykanen

      This is quite useful collection of new functionalities in S/4HANA and especially liked the end-user use cases of these features. Looking forward to more blogs!

      Author's profile photo Rodrigo Ferradas
      Rodrigo Ferradas

      Dear Dick,

      Many thanks for this quite interesting post, we are looking for this flexible ledger option but on premise solution. Is it planned to be released for S4 OP as well?

      Many thanks,


      Author's profile photo Dick Westman
      Dick Westman
      Blog Post Author

      Thank you for the comments! Notes and flexible ledger is planned to be released with SAP S/4HANA (on premise) Version 2021.

      Author's profile photo Yvonne Maboyi
      Yvonne Maboyi

      Hi Dick.

      Thanks for this very useful blog. My questions are:

      1. Is it possible to apply workflow for an approval process to approve the segments/cycles?
      2. Is it possible to attach supporting documentation to cycles/segments as part of a compliance/audit requirement?
      3. Can documentation be uploaded to the journals in the Allocations Results again for audit requirements?


      Thanks again.



      Author's profile photo Dick Westman
      Dick Westman
      Blog Post Author

      Hi Yvonne,

      Thank you for the comments and questions.

      1.  This would need to be a custom build, eg. with BTP and workflow management.

      2. Not to my understanding  in standard, but you could e.g. have add a link to the supporting documentation (e.g. To an document archive)

      3. The journal entries created are like any other journal, but adding attachment directly in allocation results is not there.

      Author's profile photo Irina Hansen
      Irina Hansen

      Thank you for sharing article. It gives a good picture on the process around actuals and allocations.

      We are currently trying to understand, how allocation process would look like when we have S/4 Hana on premise, and will be using SAP Analytics Cloud tool for planning/budget purposes.

      It would be an advantage if it was possible to 'upload' allocation distribution logic, already defined by business into SAP Analytics cloud, and use it for forecasting or budget.

      Can you tell how you see the allocation process/approach when it comes for budget/forecast?

      Author's profile photo Dick Westman
      Dick Westman
      Blog Post Author

      Hi Irina,

      This depends a bit on your customers processes and application landscape, but if you use SAP Analytics cloud for planning, then I would suggest that you write directly back to S/4HANA to planning ACDOCP for the planning data.

      You can also upload receiving tracing factors from excel to S/4HANA - but the process will be more streamlined with writing directly to ACDOCP from SAC.



      Author's profile photo Pankaj Adhikari
      Pankaj Adhikari

      Hi Dick

      This is nice information to use universal allocation and flexible ledger. I will try this in coming months.

      A question- Do we need to use profit center allocation (4KE5/FAGLGA35) separately or universal allocation will take care of both cost center & profit center allocation together like KSV5.



      Author's profile photo Dick Westman
      Dick Westman
      Blog Post Author

      Thank you Pankaj! The idea is that universal allocation is used instead of the ECC transactions for allocations.

      Author's profile photo Pankaj Adhikari
      Pankaj Adhikari

      Hi Dick

      I started configuration of universal allocation in S/4 Hana 2020 & have one more question.

      In GUI we have a Tcode-KCAV which controls the fields we need for configuration in KSV1.

      Do we have similar app to control fields in universal allocation? I see KCAV doesn't controls universal allocation.

      Thanks again for the wonderful blog.



      Author's profile photo Dick Westman
      Dick Westman
      Blog Post Author

      When you create the cycle segment you can select in the receiver tab e.g. if you want cost centers or wbs as receivers, but no further configuration is possible (similarly with accounts and cost centers on sending side). In margin analysis allocation you can adjust the receiving dimensions, and in top-down distribution you can affect it through the template configuration.