Executing the Steps of Record to Report on Transactions and Identify which SAP Solutions are Applicable

An organization's finance and accounting professionals record all financial transactions. The recording process involves documenting revenues, purchases, and expenditures for business units throughout the organization. The data required for creating financial statements and management reports, including journal entries, general accounting activities or procure-to-pay cycles, etc. is also recorded. 

• Transaction Recording: Daily transactions, such as customer sales, supplier payments, and operating expenses, are recorded in the General Ledger. This includes automated entries from integrated systems like sales invoicing and inventory management.
• Journal Entries: Accountants process manual journal entries for items needing specific accounting treatment, such as accruals or reclassifications, ensuring that financial data is accurate and up-to-date.

After the recording and processing of financial data, the general ledger must be closed at the end of an accounting period. This period depends on the organization's reporting needs, such as monthly, quarterly or annually. During the closing process, the balances are transferred from temporary accounts to permanent accounts. Temporary accounts look at a specific period and may include revenues, expenses and dividends.

• Sub-Ledger Reconciliation: The accounting team reconciles sub-ledgers such as the accounts payable and receivable against the General Ledger daily. This ensures that discrepancies are addressed early.
• Expense Allocation: Costs like utility bills or shared office expenses are allocated to the correct departments or projects daily, ensuring accurate reporting at the entity level.

After the closing, the consolidation portion of the record to report process can begin. Sometimes called the reconciliation and validation stage, this step involves reviewing the recorded transactions and sorting them into appropriate categories. This step organizes similar information together and verifies that everything is correct in order to develop reports for stakeholders.

• Inter-entity Transactions: Transactions between different subsidiaries or divisions are identified and recorded, preparing them for future elimination during the consolidation process. Daily reconciliation of intercompany accounts helps avoid month-end bottlenecks.
• Currency Translation: For multinational entities, daily currency rate updates ensure that the necessary conversions are accurate for consolidated reporting.

A group accountant can leverage Intercompany Matching and Reconciliation (ICMR) to match documents continuously between consolidation units, monitor the reconciliation status, make adjustments from group's perspective before the data is ready for consolidation, submit reconciliation results for approval, close period reconciliation, and run elimination.

• Data Verification: The finance team performs daily checks on collected data to identify and resolve errors, ensuring that the numbers align with expectations and standards.
• Pre-close Trial Balances: Trial balances might be generated daily or weekly to detect anomalies early before the formal corporate close period begins.

In the final step, the financial reports are created. After reviewing the data for completion and accuracy, various reports can be generated.

• Daily Financial Reports: Summary reports, such as cash flow summaries or sales performance, are prepared and distributed to management. These help monitor financial health and business performance.
• KPI Dashboards: Key performance indicators (KPIs) are updated daily, providing management with insights into operational and financial metrics, aiding in quick decision-making.

The Regulatory Reporting or Submissions application area is used to produce volumetric reports based on production data. These reports are used to meet the requirements of many state and federal agencies.

• Compliance Monitoring: Daily tracking of compliance data ensures the company stays within regulatory parameters, such as tracking tax obligations or ensuring data privacy.
• Preemptive Reviews: The compliance team reviews transactions for regulatory or internal policy compliance, preparing necessary documentation ahead of formal regulatory submissions.

SAP S/4HANA is an intelligent ERP system of the new generation, which uses exclusively the HANA in-memory database developed by SAP. SAP S/4HANA has embedded in it the latest technologies in our processes so that companies do not have to integrate multiple AI solution providers.

Central Finance is an add-on of a S/4HANA system. Central Finance receives real time financial accounting transactions from multiple SAP or non-SAP ERP systems. With Central Finance, you can transition to a centralized SAP S/4HANA on-premise edition without disruption to your current system landscape, which can be made up of a combination of SAP systems of different releases and accounting approaches and non-SAP systems.

Group reporting supports the computation, creation, and disclosure of consolidated reports that provide information on the performance of a corporate group.

GR/IR Clearing (goods receipt/invoice receipt) is a function that you execute in order to clear the Purchases in Transit and Unbilled Payables accounts when both the goods received and the associated invoices have been recorded in the system.

SAP Cash Application is a bundle of cloud micro services to automate and simplify the order-to-cash process in accounts receivable accounting with machine-learning-based technology, for use in SAP S/4HANA Cloud and On-Premise editions.

The Financial Closing Cockpit helps you with the planning, execution, and analysis of closing operations for the organizational units of your corporate group. The solution provides a structured user interface for recurring periodical tasks in the closing process in which several people responsible are involved.