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SAP Financial Accounting (FI) delivers
the standard Accounts Receivable (FI-
AR) module to track accounts receivable
transactions. This module is tightly inte-
grated with the Sales and Distribution
(SD) module to enter and process cus-
tomer master data, shipping, billing, and
receivables.
As requirements became more complex
and the data volume increased substan-
tially over the last couple of years, SAP
developed a module in FI for tracking A/R
data. This application component is
known as Contract Accounts Receivable
and Payable (FI-CA). SAP promotes FI-
CA as a subledger application alternative
for the FI-AR module and Accounts
Payables module (FI-AP). I will focus on
the FI-AR capabilities of contract
accounting, since SAP developed more
new functionality related to A/R than A/P.
I will show you the strengths of both func-
tionalities so that you can determine
which one best matches your needs.
FI-CA was developed to deal with a large
number of different customers and differ-
ent types of receivables. FI-CA is mainly
used in industry-specific SAP compo-
nents, which by nature have many
customers and many different receivable
types. Examples industries are the public
sector, utilities, insurance, and telecommu-
nications. Even if you do not fall into one
of these industry groups, you can still use
contract accounting. The industry solu-
tions for FI-CA have been available since
1999. An industry-neutral version was
introduced in 2002.
FI-CA is not only tightly integrated with
the core SAP components like FI,
Controlling (CO), Customer Relationship
Management (CRM), and SD, it also has
the capability to deal with customers and
payments over the Internet by using SAP
Biller Direct, which allows your company
to use electronic bill presentment and
payment (EBPP).
Tracking Multiple
Receivables Types
Assume that following business scenario
exists in your company: You are required
to track the receivables by customer/
service in different receivable balance
sheet accounts. In the FI-AR module, a
customer can only be linked to one single
receivable account (reconciliation
account). Although you could use the
workaround of the special G/L indicators
Although both Accounts Receivable (FI-AR) and Contract Accounts Receivable and Payable (FI-
CA) track accounts receivable transactions, there are important differences between the two
modules. The author compares your options and presents the benefits and drawbacks of each.
FI-CA or FI-AR: Which Module
Best Fits Your Needs?
by Martin Ullmann, Manager, Ariston Consulting
A business partner is a customer
within FI-CA. The business partner
contains central data such as name,
address, and bank details.
All invoices and payments are
posted to a contract account, which
is assigned to a business partner.
The contract account contains
control information like payment
methods, payment conditions, or
dunning procedures.
A contract object is an optional
master data object that can be
assigned to a contract account and
business partner. The contract
object allows for the segregation of
receivables below the contract
account.
Glossary >>
SAP delivers FI-CA in a couple of
different flavors to deal with
industry-specific requirements.
FI-CA is the preferred A/R solu-
tion in following industry
solutions
IS-T: Industry Solution for
Telecommunications
IS-U: Industry Solution for the
Utilities Industry
IS-M: Industry Solution for Media
FS-CD: Industry Solution for
Insurance
IS-PS-CA: Industry Solution for the
Public Sector. This component is
also known as PSCD (Public
Sector Collections and
Disbursement).
Note >>
Master data concept within FI-CA Figure 1
Master data examples within industry solutions Table 1
Component Industry Contract account Contract Explanation
IS-U Utility Water service location Service type One contract account is created for each service location, but each service
location can have multiple services, i.e., water, sewer, or irrigation.
FS-CD Insurance Car insurance Vehicle One car insurance contract account is created for each customer, but one
customer can have multiple vehicles, which FI-CA classifies as different
objects.
IS-PS-CA Public sector Property tax Property Within a local public sector organization, a property taxpayer can have
multiple properties, which are created as contracts.
8 2004 FI/CO EXPERT Reproduction prohibited. All rights reserved.
to track receivables in different reconciliation accounts, SAP
intended the special G/L indictor to be used for special transac-
tions like bad debt or security deposits rather than as a tool to
track receivables for different services.
This design that links a single receivable account to one customer
makes it impossible to track different receivables for one cus-
tomer in different accounts. The only solution to the above
scenario is to create multiple customers with different receivable
accounts, which has the disadvantage that the receivables cannot
be tracked in one customer account.
In comparison to FI-ARs singular model, FI-CA has a multi-
level master data concept. The highest level is the business
partner. A business partner in FI-CA is equivalent to a customer
in the FI-AR module. The second level is called a contract
account. For each type of receivable, a contract account is
created for a single business partner and one business partner can
be assigned to multiple contract accounts. Similarly, one contract
account can have more than one business partner. In FI-CA, the
reconciliation account is determined on the contract account
level, not on the customer level like in the FI-AR module.
If you build a master data structure in FI-CA based on the above
business scenario, then one business partner would have multiple
contract accounts with separate receivable accounts linked to the
individual contract accounts. This makes it possible to track dif-
ferent receivable types for one customer in multiple receivable
accounts, a task that is impossible using FI-AR.
Master Data Management in FI-CA
As previously described, a single business partner can have mul-
tiple contract accounts in FI-CA. In addition, SAP offers a third
master data layer within FI-CA. This third object is called con-
tract or contract object. The purpose of this object is to further
distinguish the receivables within a contract account. The is nec-
essary if you need to group receivables from multiple contracts
into one contract account and still want to separate the receiv-
ables (Figure 1). The purpose and the functionality of the
contracts vary within the different industry solutions; however,
the concept is always the same. See Table 1 for a list of exam-
ples of contract accounts and contract combinations within the
different industry solutions.
One interesting feature within master data management is the
ability to create user-defined fields or new tabs and combine
screens using the Business Data Toolset (BDT) without any mod-
ifications. BDT maintains and supports transaction data and
master data.
Functional Features of FI-CA
Lets compare FI-CAs functions with what is currently available
in FI-AR. Table 2 compares many aspects of the two modules
functionality. This table may help you decide whether FI-CA
could be an alternative for your organization. In the next section,
I will describe the features with the most functional differences
in greater detail.
Security Deposits
FI-CAs security deposit funtionality can be used to manage cash
and non-cash security deposits, for example payment guarantees
or letter of credits. Security deposits have a status of requested,
received, or paid. These statuses allow the deposits to be
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managed. Each security deposit is created with a valid from
and valid to date, which defines the validity period and also
influences the interest calculation dates (Figure 2).
For cash security deposits, interest can be calculated for each line
item. You can do this individually or in a mass process. In the FI-
AR module, you can track security deposits with the help of
special G/L indicators and calculate interest on them. The main
difference is that there is no easy way to manage security deposit
requests and non-cash security deposits. The only option is to use
noted items. Noted items (transaction F-38) are statistical items
that can be used for security deposit requests or letter of credits.
You have to use two FI-AR functions, special G/L indicators and
noted items, to cover the same functionality in FI-CA.
Installment Plans
The FI-AR module does not provide functionality for the man-
agement of installment plans. In FI-CA, installment plans can be
created for outstanding receivables for different installment
plans, i.e., weekly or bi-weekly installments. The old receivables
are then cleared and new receivables are created. This allows for
easy tracking of installment line items. You can charge additional
costs or calculate interest on the installment items upon creation.
In Figure 3, a bi-weekly installment plan with four installments
is created for all open items of a customer. The system then takes
all open items and divides the total amount due into four install-
ments with new due dates.
In this example, an installment plan with four installments is
created for the total amount of $66.15 (Figure 4). The starting
date for the first installments is 07/23/2004. The next installment
due dates are based on the interval type, bi-weekly in this case.
Cash Desk Payments
One of the main features in FI-CAis a robust cash desk compo-
nent (Figure 5). With this component, you can manually post and
assign payments at a cash desk. You can process the following
payment types:
Incoming cash payment
Incoming card payment
Incoming check payment
Security deposit Figure 2
Functionality FI-AR FI-CA
Security deposits Limited functionality. Security deposits can
be created as noted items.
Comprehensive solution available for cash and non-cash security
deposits. Interest can be calculated for cash security deposits.
Installment plans No solution available Installment plans can be created for open receivables
Electronic bank statements (EBS) EBS payments are fully supported EBS payments are fully supported
Account debit payments Automatic account debits are supported via
ACH debit functionality
Automatic account debits are supported via ACH debit functionality
Cash desk payments Limited functionality via check deposit or
payment functionality
A robust cash desk solution that allows for cash, checks, and credit
card payments
Credit processing Credit processing with check issuance Credit processing with check issuance
Dunning Multiple dunning levels and procedures
available
Each dunning level can be customized with different activities
Collection agencies No solution available Comprehensive solution. Doubtful receivables can be interfaced to
different collection agencies
Reporting A variety a standard A/R and aging reports
are available
A limited number of reports are available. SAP expects that cus-
tomers use Business Information Warehouse (BW) for reporting.
Functional comparison between FI-AR and FI-CA Table 2
10 2004 FI/CO EXPERT Reproduction prohibited. All rights reserved.
Postal order (wire transfers)
Outgoing cash payment
Outgoing check payment
From an organizational point of view, branch offices are created
for different departments. Within these branch offices, you can
create separate cash desks, which provides a segregation of the
single cash desks within an organization.
Within the FI-CA cash desk, you can apply payments to open
receivables by selecting open items by business partner or con-
tract account. You can post additional payments directly to
revenue accounts by using the TrPostg to key. This key is a short
account assignment key for transfer postings. Accounts and
account assignments i.e., cost center or internal orders are
assigned to each key in Customizing. This is advantageous
because users only have to know their respective short assign-
ment keys in order to record revenue correctly.
In comparison, the FI-AR module does not have functionality
that allows you to process both customer payments and revenue
posting from a user-friendly, one-screen transaction. Payments
against open receivables can be applied using transaction F-28
(incoming payments) and incoming checks can be deposited
using transaction FF68. If you deal with a lot of incoming pay-
ments by check, cash, or credit card and need to apply these
payments against open receivables or just record the payment as
revenue, there is no good alternative in the FI-AR module.
Dunning
With FI-CAs dunning functionality, you can automatically send
dunning notices, or payment reminders, to your business partners
to remind them of overdue payables and to request payment. You
can also trigger user-defined dunning activities, i.e., transfer
items to a collection agency.
Dunning takes place in two steps. In the first step, the dunning
program determines:
The contract accounts to be dunned and the items due for dunning
The valid dunning procedure and the related dunning levels for
the individual items
The dunning groupings in which the items are summarized
The dunning functionality uses this information to create a pro-
posal structured by dunning groups.
In the second step, the dunning program triggers the relevant
dunning activities for the individual dunning groupings. You are
free to choose the criteria by which dunning notices are grouped.
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Create a weekly installment plan Figure 3
Bi-weekly installment plan items Figure 4
Cash desk payments entry screen Figure 5
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Martin Ullmann has more than 10 years of experience with SAP R/3. He is a manager with Ariston Consulting, which specializes
on the high tech, utility, and public sector industry. His main area of expertise lies in the FI/CO area with focus on new compo-
nents, integration, enhancements, and business process improvements. Martin can be reached via email at
Martin.Ullmann@Ariston-Inc.com.
For example, you can create a dunning grouping using any or
combination of the following criteria: business partner, currency,
company code, or dunning recipient. You can define additional
dunning criteria and group them as needed. You can also define
dunning activities as required. For instance, a dunning level can
trigger the printing of a dunning notice or lead to the termination
of a contract. The dunning activities are industry-specific, but
you can also customize them based on your requirements.
You can also calculate dunning charges and request them from
your business partners. Calculation of interest on items due is
also possible during the dunning run. You can post the charges
and interest relevant to the general ledger (G/L). By specifying
amount limits in Customizing, you can prevent negligible
amounts from being dunned. The system records all dunning data
for each item in a dunning history.
In terms of creation of dunning notices and charges, no differ-
ences exist between the FI-AR and FI-CA module. You can do a
lot more than just creating dunning notices in FI-CA by means of
the dunning activities. SAP delivers user exits or events that
allow you to program your own dunning activities as needed.
Table 3 shows an example of multiple dunning levels with differ-
ent dunning activities.
Collection Agencies
If a customer does not pay his receivables and all measures have
been taken to collect the receivables, many companies use collec-
tion agencies to prevent losing the receivables. FI-CA enables
you to manage postings connected to submitting receivables to a
collection agency and the exchange of information with those
collection agencies. Files are created for items that are submitted
to collection agencies.
FI-CA also allows for the automatic processing of incoming files
received by collection agencies for collected payments from the
agencies. In comparison, the FI-AR module does not provide any
functionality that can handle the automatic exchange of informa-
tion to and from collection agencies.
Reporting
One of the weak points of FI-CA is its limited reporting function-
ality. SAP expects that customers who use the FI-CA module also
have Business Information Warehouse (BW) installed. The FI-
AR module has better and more standard reports available and it
will take considerable time and effort to develop these reports in
FI-CA without using BW. SAP has recognized these shortcom-
ings and promised improved reporting capabilities in future
releases.
Is FI-CA an Alternative for You?
As shown in the previous examples, FI-CA incorporates more
A/R functions than just processing invoices and payments and
maintaining master data. These functions are necessary if you
deal with a large customer base and a high volume of invoices
and payments. This is the case with a utility, insurance, or
telecommunications company or in the public sector. My descrip-
tion of FI-CA functionality can be a starting point for your
decision process. If you determine that the described functions
are necessary for your business, than FI-CA could be a valuable
alternative to the standard FI-AR component.
Dunning level and activity example Table 3
Dunning level Dunning activity Comment
1 5 % dunning charge and
creation of dunning notice
FI-AR and FI-CA allow the
creation of dunning
charges and notices
2 Automatically creation of a
work order in order to shut-
off services (utility industry)
Only possible in FI-CA
3 Forward open receivables to
collection agencies
Only possible in FI-CA