Analyzing the Integration with Sales Order Management

The interface with sales order management plays a central role in Profitability Analysis (CO-PA). Note the value differences when data is transferred to costing-based CO-PA and Margin Analysis.

The main purpose of costing-based CO-PA is to provide sales order management with a tool for analyzing the expected results generated by sales transactions. The main feature of costing-based CO-PA is the use of value fields, and the automatic calculation of anticipated or accrued data (valuation). The advantage of costing-based CO-PA is that in addition to the actual posting in sales order processes, the order income can be taken over from SD (Sales Distribution). Furthermore, you can calculate additional data for sales management purposes.

With regard to the parallel valuation, costing-based CO-PA provides six parallel valuations for calculating the cost of goods sold (COGS). This enables you to compare the standard cost for sales processes with different production opportunities in different plants, as well as the actual cost and group cost.

Margin Analysis enables you to reconcile cost and Financial Accounting (FI) at any time at the account level. In contrast to the costing-based CO-PA, for the Margin Analysis, the system stores values in cost and revenue elements in a shared ACDOCA table. All the costs and revenues are posted to Margin Analysis simultaneously, using the same valuation approach as for FI.

The main difference to costing-based CO-PA is that the cost of sales is transferred at the point of goods issue in costing-based CO-PA, and not with the revenues.

Predictive accounting includes insights from expected revenue and expected expenditures.

Accounting for incoming sales orders includes:

• New concept for handling of predictive data

• Financial line item details for incoming orders reporting

• Review incoming sales order report

• A comprehensive overview of all orders and their values for the time period regardless of billing status

The next step of continuous accounting is predictive accounting, and it makes sense to see the future to plan the business operations and make strategies. For example, how much revenue organization will make based on incoming sales order data even if no goods receipt or invoice is booked.

Predictive accounting enables you to look at and analyze data using a forecast of future results based on the most up-to-date data. It enables you to have a better understanding of what your results at the end of the current period or quarter might look like, and why. Predictive accounting also utilizes logistical information that is turned into posting in accounting.

When a sales order is created, predictive accounting creates simulates the corresponding goods issue and invoice. The results of the simulation are stored as journal entries in an extension ledger. The postings in the extension ledger, along with the current data from the underlying base ledger, enable you to see a forecast, for example, of the revenue for one product. It is also possible for you to see a report on all line items of one product. You can display and analyze the data in detail but also at a higher level, for example, in a financial statement.

Data in predictive accounting is processed as follows:

• When a sales order is created, predictive accounting checks if delivery and/or invoicing is possible.

• The system simulates follow-on processes and creates the journal entries in financial accounting accordingly.

• Subsequent financial processes such as revenue recognition and the splitting of costs of goods sold are also triggered. All corresponding documents are displayed in the system as if they were real data. The documents can be identified by a prefix.

• The simulated data is now available in reports and you can see and analyze it in your financial statements.

In this Customizing activity, you edit the currency types and currency conversion settings that you use in Accounting. Furthermore, you define the corresponding ledger settings and assign accounting principles for ledgers and company codes.

For predictive accounting, a new Ledger Type is used which is Prediction and Commitments.

There are two types of ledger:

• Standard Ledger

• Extension Ledger

A standard ledger contains a full set of journal entries for all business transactions. An extension ledger is assigned to a standard ledger and inherits all journal entries of the standard ledger for reporting. The underlying ledger must be a standard ledger. Posting made explicitly to an extension ledger are visible in that extension ledger but not in the underlying standard ledger. This concept can be used to avoid duplication of journal entries if many business transactions are valid for both ledgers and only a few adjustments are required in the extension ledger.

Use transaction SE11 to enter the prediction ledgers in table FINSV_PRED_RLDNR.

In this Customizing activity, you enable the creation of Predictive Accounting journal entries. This allows for management analyses based on accounting-specific characteristics, such as G/L accounts or posting periods.

The Predictive Accounting journal entries are based on simulated customer invoices for predefined sales scenarios. For each controlling area, you can specify the fiscal year from which the Predictive Accounting functionality will be active. For each standard ledger, the system records the Predictive Accounting journal entries in a given Prediction and Commitments extension ledger.

Since SAP S/4HANA 1809, you can now transfer statistical pricing conditions of customer invoices to Financial Accounting (FI) by using the regular interface between Sales Billing (SD-BIL) and Financial Accounting. In the control data for a pricing procedure, select the Relevant for Account Determination indicator for a statistical price condition. This statistical price condition is then posted as a journal entry to an extension ledger of Financial Accounting. Any analytical app using journal entries can use data from the extension ledger. This new capability is based on a similar functionality in costing-based Profitability Analysis (CO-PA). It has been implemented through a new indicator in the pricing scheme that flags a statistical condition as relevant for account determination. You will need to maintain the configuration in pricing and billing in order for your data to be sent to Finance.

You must specify the Sales Order Type and the Billing Type in the table FINSV_PRED_FKART (Assignment of billing type for Pred. Acc.). Use transaction SM30 to select the table and enter the corresponding sales order type — ID’s and billing type — IDs in the table.

In table FINSV_PRED_FKREL (Assignment order-related billing relevance for Pred. Acc.), you must enter the Sales Order Item Category which is relevant to post in the prediction ledger.

To activate the transfer of statistical condition types, you use transaction SM30 and select the table FCOV_STAT_ACT (Change View "Activating of Estimated Costs by Assignment to Ledger Group"). You enter the ledger group, to which the ledger for statistical conditions has been assigned.

Transfer of Statistical Conditions to Margin Analysis

Statistical Conditions

In the Customizing Sales and Distribution, you enter a condition type to the pricing procedure. The condition type contains the warranty costs and the parameters for Statistical and Relevant for Account Determination has been set. An Accounting Key is assigned to the condition type. The Accounting Key has the assignment to the G/L accounts.

The figure above gives an example about warranty costs transfer to the prediction ledger and therefore to Margin Analysis.

The sales order management application component consists of functions for handling quotations, orders, deliveries, and billing. Each of these areas has its own sales documents, which contain the relevant data for that activity.

The central document in sales order management is the sales order. The sales order is based on existing inquiries and customer quotations. When you create a sales order, the information about the customer and the products or services sold is stored in the document.

The following information is passed on to all the subsequent documents created for business transactions, such as delivery and billing:

• The delivery is created when the product is shipped to the customer, which means delivery is categorized as goods issue.
• A billing document is created to bill the customer for the goods or services provided to them.

The posting of goods issue and billing leads to an update in the ACDOCA Financial Accounting table. The posting to Margin Analysis are not updated in the COSS table as in the SAP ERP system, but are updated in the ACDOCA. The COSS table in SAP S/4HANA is only a view (structure), which enables customer programs using COSS to be usable as before.

You can valuate incoming sales orders as expected revenues. To obtain an early analysis of anticipated profits, you can transfer them from sales order management to costing-based CO-PA. As a result, the reports that reflect the course of actual profits and contribution margins based on billing documents could also be used to analyze these developments based on incoming orders.

To analyze incoming orders, indicate record type A in the report. To analyze billing data, indicate record type F.

The options available to activate transfer of incoming orders are as follows:

• Activate the entry date:

  This option updates the orders to the same period that they were created in the system.

• Transfer with the delivery date or the planned settlement date:

  This option displays the order in CO-PA in the period of planned delivery or planned settlement date. It represents a billing-related update of the incoming sales orders.

If you activate CO-PA after the sales order management is productive, you can subsequently post the existing sales orders for the current or past periods to CO-PA. Another function allows you to identify the sales orders that are already assigned to a profitability segment with only active account-based CO-PA. When you activate costing-based CO-PA afterwards, you can transfer those sales orders to costing-based CO-PA.

The goods issue is triggered by a delivery in sales order management. The goods issue affects the values in Materials Management (MM) and FI. Balance sheet and stock change posting are made in FI when the goods issue is posted.

Sales from Stock

A business transaction is normally concluded in sales order management with the billing document. The billing data is automatically transferred to FI, where the revenue and receivable posting are made at the same time. When a billing document is created, sales order management uses pricing procedures to calculate all sales revenues, sales deductions, and other values, such as the standard price based on the material cost estimate. It stores these values in condition types. By assigning these condition types to the value fields in CO-PA, the system automatically transfers their values to costing-based CO-PA. However, it is necessary that those SD condition types are also assigned to a general ledger account. This supports the reconciliation between FI, Margin Analysis and costing-based CO-PA.

By valuating the billing data from sales order management using a material or sales order cost estimate, you can assign further anticipated costs and sales deductions to this transaction (parallel valuation). A maximum six parallel valuation can be assigned to value fields in costing-based CO-PA, which could be exclusive (for example, standard-cost-estimate or sales-order cost estimate) or additional.

In addition, you can transfer the quantities from the quantity fields of sales order management, such as the sales quantity or gross weight, by assigning them to the corresponding quantity fields in CO-PA.

Transfer Billing Documents to CO-PA: In Detail

During billing, the system checks whether the data can be updated in FI and CO-PA. If one of the two posting cannot be executed due to an error, the other posting is not executed. This process ensures that the data is updated in parallel and that CO-PA is reconciled with FI. If you choose Release to Accounting (VFX3), you can post the invoice in FI and CO-PA after resolving the error.

A pricing procedure defines the conditions that are permitted for a particular document and the sequence in which the system considers these conditions during pricing.

In addition, you can assign the pricing procedures to the transactions by defining the following dependencies:

• Customer
• Controlling area
• Profit center
• Sales organization

In the pricing procedure, you can define the condition types that are to be taken into account, as well as their sequence. During pricing, the SAP system automatically determines the pricing procedure for a business transaction and it considers the condition types contained in the pricing procedure.

Condition Types

A condition type is a representation of some aspect of your daily pricing activities in the system. For example, you can define a different condition type for each type of price, discount, or surcharge that occurs in your business transactions.

A condition table defines the combination of fields that identify an individual condition record. The system stores the specific condition data that you enter in the system as condition records. For example, when you enter the price for a product or a special discount for a good customer, you create individual condition records.

An access sequence is a search strategy that the system uses to find valid data for a particular condition type. The access sequence determines the sequence in which the system searches for data. It consists of one or more accesses. The access sequence establishes which condition records have priority. The access sequence tells the system where to look first, second, and so on, until the system finds a valid condition record. Specify an access sequence for each condition type for which you create condition records.

You can transfer the material value at the time of goods issue through the SD-condition for the internal price, for example PCIP (Product Costing Internal Price).

The PCIP condition type transfers the cost of sales, which was posted at the time of goods issue, to FI and Margin Analysis. If the standard price changes between the time of the goods issue and the billing date, PCIP saves the material value at the time of goods issue. This guarantees that the cost of sales can be reconciled with FI.

With valuation using material cost estimates, you can determine the cost of goods manufactured for the product sold whenever a sales document is transferred to CO-PA. For example, you can find the variable and fixed cost components for the product sold, and compare them with the revenues and sales deductions transferred from the billing document for the sales transaction. You can valuate your billing items using the date of goods issue. Customizing is performed in the costing key.

In the activity, Simulating the Transfer of Documents from Billing, you can simulate the transfer of billing document data to CO-PA. Simulation occurs based on the Customizing settings that are valid at the time the simulation is executed. You can view the characteristics and value fields of the line item that is written to CO-PA.

Valuation analysis allows you to perform an analysis of the valuation strategy, which is used for valuating the billing document data.

You can also restart the simulation of document transfers for the billing documents that have been transferred. Performing this simulation does not post data to CO-PA or other modules.

Reconciliation Report FI or SD and CO-PA

In sales order management, invoice values are assigned to condition types. In accounting, these values are posted to accounts, and in costing-based CO-PA, they are positioned in value fields. The CO-PA reconciliation report contains a list of corresponding balances for condition types, profit-and-loss accounts, and value fields.

The reconciliation report provides the following fundamental functions:

• Using posted data, you can use post analysis to check the assignments of the sales order management conditions in Customizing to the FI accounts and to the CO-PA value fields.

  You can also check the flow of values resulting from the assignments.

• You can analyze the differences between CO-PA and Sales and Distribution (SD), and between CO-PA and FI. This allows you to locate their origin, and is useful for the reconciliation of FI with CO-PA.

  This report can also be used to check the flow of values from the order or the project settlement. As shown in the figure, Reconciliation Report FI or SD and CO-PA, the delta CO-PA/SD is caused by the fact that accrued freight is calculated in CO-PA through valuation and, therefore, has no SD counterpart.

During market-segment planning and sales-and-profit planning, you can create budgets for sales support measures. These include sales promotions and related special-offer discounts. These budgets are then used in sales order management when conditions, such as special-offer discounts, are maintained for the customer agreement.

You can monitor the budgeting process from the assignments in the customer agreement to the billing document in CO-PA. This is because the budget assignments are transferred to CO-PA when you maintain the conditions.

You can monitor the budget assignments by performing variance analyses of the planned budget and the available budget. These analyses allow you to monitor sales promotions from the early stages of CO-PA.

The condition passes on the following information to CO-PA:

• When the condition record is created as part of the sales agreement
• When the sales order is created
• When the billing document is created

This passing of information allows for accurate reporting through all stages of the process.

• Margin Analysis reconciles cost and Financial Accounting at account level.

• Billing document creation transfers sales revenues and deductions to CO-PA.

• Predictive accounting includes insights from expected revenue and expenditures.

• Statistical pricing conditions can be transferred to Financial Accounting.