Introduction
Financial Hierarchies is a financial reporting scenario with item-based accounting that was introduced in SAP S/4HANA Private Cloud release 2023 FPS2. What is special about this scenario, is that there is only event-based revenue recognition (EBRR) on the service contract, and the structure manages and controls costs and revenue across multiple levels of related documents, such as service contracts, service orders, and maintenance orders.
This approach has some implications. The individual business objects contained in the financial hierarchy must follow specific logic. For example: you cannot set a service contract with a financial hierarchy item to Business Completed status until all follow-up service orders are business completed.
In releases before 2025 FPS1, the process of archiving a financial hierarchy was not supported. With SAP S/4HANA Private Cloud release 2025 FPS1, this feature became available.
Feature

Apart from enabling the archiving of service orders with a financial hierarchy-relevant service contract item, it is important to note a general rule: the follow-up service transaction or maintenance order is not allowed to have a more advanced status. The table in the figure explains this in more detail.

A service order is shown with status Business Completed with an execution order item. The predecessor service contract below is also Business Completed, as indicated by the available menu option for setting the status Reopen Business.
After a failed attempt to set status Reopen Business, a warning message is displayed explaining why the status is not allowed to be set.
See the following references for more information:
- https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/c9b5e9de6e674fb99fff88d72c352291/cd63e0856e1d458499e5a99de6b0378b.html?version=2025.001
- https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/f5d3e1005efd4e86acf9a65abf428082/2b6e71cc4ecc41978ae205c527715acd.html?version=2025.001
- https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/c9b5e9de6e674fb99fff88d72c352291/d4e21639e6004709aec52bf213a35209.html?state=DRAFT&version=2025.001&q=archiving+service+contracts
- https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/f5d3e1005efd4e86acf9a65abf428082/2b6e71cc4ecc41978ae205c527715acd.html?version=2025.001
- https://community.sap.com/t5/enterprise-resource-planning-blog-posts-by-sap/financial-accounting-for-hierarchical-setup-in-item-based-services/ba-p/14017897
Summary
- Financial Hierarchies is a financial reporting scenario with item-based accounting that was introduced in SAP S/4HANA Private Cloud release 2023 FPS2.
- With SAP S/4HANA Private Cloud release 2025 FPS1, the process of archiving a financial hierarchy became supported.
- The follow-up service transaction or maintenance order is not allowed to have a more advanced status.