Contract Accounting FICA

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Martina Hilzinger, Jrgen Khling, Klaus Plate

SAP
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I.
Market Requirements and Motivation
II.
Overview of Contract Accounts (FI-CA)
III.
Master Data
IV. Key Functions in Business Transactions

V.
Integration
VI. Technical Highlights
SAP AG 2001, Title of Presentation, Speaker Name 2
&RQWHQW
I.
II.
III.
Master Data

V.
Integration

VII. Outlook
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Industries with a large customer base and a correspondingly high

volume of documents to post (such as insurance or
telecommunications companies) are looking for an accounts
receivable and payable component that can manage and process all
business transactions within defined time restrictions.
With the focus on the integration of industry-specific processes and
system architecture, system functions that will support seamless
integration of customer-specific processes and data are required.
Accounting components must addres the new requirements for
system openness, flexibility, and customer orientation.
0DUNHW 5HTXLUHPHQWV DQG 0RWLYDWLRQ ,,
To meet the market requirements for a sustainable, flexible, and powerful

accounts receivable and payable component, the following basic aspects
have to be considered in today's system development:
Mass data processing
Reduction of memory space for storing open and cleared items

Performance of data change functions
Performance of retrieval functions
Fast data input
Acceleration of all critical activities such as posting, payments, and returns processing
Automation of all transactions as far as possible
Flexibility and system openness
Flexible input format

Business process enhancements and seamless integration of customer-specific data
without modification
Separation of user interface, checks, data storage
&RQWHQW
I.
II.
III.
Master Data

V.
Integration

VII. Outlook
2YHUYLHZ RI ),&$ ,
Financial Contract Accounts and Receivable
SAP FI-CA is the response to market requirements for receivables

management for mass data processing industries and for high system
integration.
FI-CA covers all standard accounts receivable and payable functions.
Although FI-CA provides new functions, process enhancements for
account receivable management, and a high degree of flexibility in
functions, it does not replace the SAP classical application FI-AR.
FI-CA represents an alternative subledger for industries with
Large volume of documents to process

Large volume of business partners
Industry- or customer-specific business
processes that need to be

seamlessly integrated into the customers' system architecture
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Availability of FI-CA
Previously, FI-CA was only available in the following SAP industry

solutions:
IS-Telecommunications
IS-Utilities
IS-Media
IS-Public Sector
IS-Insurance
The component was not available for customers outside of these

industries.
Now FI-CA is also available as an industry-neutral version (availability:
Q3 2002)
&RQWHQW
I.
II.
III.
Master Data
SAP Business Partner
Contract Account

V.
Integration

VII. Outlook
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Purpose
A business partner is a natural person, organization, group of natural

persons, or group of organizations in which a company has a business
interest.
The SAP Business Partner manages the cross-application master data,
such as names, addresses, and bank details centrally.
The Business Partner acts as a central anchor for SAP components,
industry solutions, customer developments, and so on.
Specific Features
Role concept
A business partner can have several roles at one time

Roles are determined by role categories, for example, ordering party,
prospective customer, payer, or payee
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Relationship
A business partner can have several relationships with other business

partners
Relationships are determined by relationship categories, for example,

subsidiary of, contact person for, marriage to
Address management
Multiple addresses can be assigned to one business partner; the addresses

are categorized with respect to usage type, for example, delivery address,
mailing address
Business partners' addresses are stored in the Central Address

Management module
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Technical design and infrastructure
Designed to integrate all partner solutions that currently exist in the SAP
System and to utilize technical benefits such as data integrity and freedom
from redundancy
Separation of user interfaces, checks, and data storage using function

modules
Seamless integration of any number of applications without modifications,

even in distributed development environments
Application-specific business partner data (function modules, tables)
remains the responsibility of the various applications)
Business Data Toolset (BDT)
Central control tool for maintaining master data and simple transaction data
Provides generic services for consistently recurring requirements
Used at SAP for maintaining several application objects
Using the BDT, customer-specific business partner enhancements can be
created simply without modification
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Purpose
Object for which open item accounting takes place

Contains application-specific business partner data
Specific Features
Master data structure
Master data is structured according to the business processes that depend on the
contract account
- Incoming and outgoing payments
- Dunning
- Correspondence
Link between contract account and business partner
At least one business partner has to be assigned to a contract account

Several contract accounts can be assigned to one business partner
Additional business partners can be assigned to a contract account
Assignment to company code
Contract account is assigned to one company code which is responsible for payment
and processing. Posting to a contract account will be possible for all company codes
which use the company code in the contract account as 'paying company'
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Planned changes function
A change to a contract account can be entered with the date from which the
changes are to be effective (time dependency)
Customer-specific enhancements
Enhancements can be realized using the Business Data Toolset (BDT)
&RQWHQW
I.
II.
III.
Master Data
V.
Posting and Documents

Payments
Returns
Dunning
Installment Plans
Deferral
Write-Offs
Submission to External Collection Agencies
Integration

VII. Outlook
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Key Functions in FI-CA
SAP FI-CA covers all standard accounts receivable and payable

functions.
In addition, critical business transactions for mass data processing
have been improved and new functions have been implemented.
The following section gives a brief summary of the most important new
and enhanced functions in comparison to the traditional
SAP FI-AR.
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Document
Represents a business transaction that results in the update in

subledger and general ledger accounting
The business view of a document shows
Document header
Document items relevant for subledger accounting (open item)
Document items relevant for general ledger accounting
Specific Features
Posting
Documents are automatically imported from an operational SAP or nonSAP System
Documents can be entered and posted manually
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Cross-date posting
Specific documents can be posted for several dates. (Receivables with

recurring dates, such as installment plans)
Cross-company code posting
The company code is recorded separately for each line item, and not in the
document header.
This enables the user to enter items for several company codes in one
document, so that a cross-company code document can be posted.
Statistical items
Reflect a receivable or payable in the contract account that should initially

not be visible in the general ledger
Do not contribute to the balance of the document

Do not result in an update in the general ledger
Used, for example, for:
z
z
z
Deduction and down payment requests

Statistical outstanding charges
Installment plans
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Mass changes
The following data can be changed for several line items at once
Payment data
Dunning data
Due date data
Locks
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Purpose
To create and process incoming payments
Specific Features
Payment lots
Groups of payments that are to be processed together (e.g. all incoming

payments contained in one bank statement)
Lots are created by entering the data from incoming checks or bank
transfers, either manually or using programs for fast input.
Using an extensive assignment algorithm (clearing control), the system

processes the payment lots and assigns the payment to the related open
item.
Overpayments can be posted as payments on account; underpayments are

posted as partial payments.
10
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Clarification account
Payments requiring clarification are posted to separate interim accounts

and must be processed manually.
A repayment can be initiated for payments which cannot be assigned to an

open item.
Payment program
Enables the creation of outgoing and incoming payments

Determines the open items to be paid according to the selection criteria
entered for the payment run, and according to the due date of the open
items
Selects the payment methods and the appropriate bank

Posts the payment document and clears the open items or creates payment
orders. In case of payment orders, posting and clearing take place as soon
as the order is confirmed with the bank statement.
Provides the data for the payment media

Will be processed in parallel processes to reduce the overall runtime.
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Purpose
To process bank returns that may occur as part of collection

procedures, check deposits, or outgoing payments
Specific Functions in FI-CA
Automatic returns processing
Returns are processed automatically - original receivables or payables are

reopened. Alternatively, new receivables can be posted.
Generation of any further postings that are necessary due to taxes or

charges
Automatic start of follow-up activities
Charging of bank fees
Bank fees and any additional charges can be charged to business partners
Charges can be posted either statistically or to the general ledger
11
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Follow-up activities
Changes in the item

Changes in the contract account
Setting a deferral date, a dunning lock, or payment lock for the reopened
receivables
Workflow connection
Creation of information for the clerk
Correspondence for the business partner
Activities can be defined dependent on
Return history
Return reason
Creditworthiness
Tolerance group
Number of returns
All relevant data is recorded in a return history

Referred to when determining creditworthiness
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Purpose
To remind business partners that their payables are overdue and to

request payment
Specific Features in FI-CA
Dunning activities
Assignment of any number of dunning activities to the various

dunning level, for example,
- Printing a dunning notice
- Termination of a contract
- Activating a lock
Dunning charges
Option of calculating dunning charges using an extensive charges

procedure
The calculation rules can be specified dependent on currency and

creditworthiness.
The charges and interest can be posted either statistically or to the general
ledger.
12
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Dunning history
Dunning-relevant data for each item is recorded in a dunning history.

The dunning history is referred to when determining the dunning level of an
item.
The dunning history can be used at any time to provide information about
the individual dunning activities.
Dunning run reversal
A dunning run can be reversed completely.

The system reverses either the whole run or the items that were not
successfully posted and notes the relevant entries as being reversed in the
dunning history.
Additionally, the system determines and resets the charges and interest
posted during the dunning activity run and resets the creditworthiness for
the customer in question.
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Dunning run for installment plans
Alternative dunning run can be processed for installment plans

Automatic deactivation of an installment plan when a certain dunning level
is reached can be specified
Parallelization
Parallel processes are used to achieve the best possible performance
13
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Purpose
To defer payment for business partners who cannot keep up their

payment obligations
Deferral date
The deferral date is noted in the open item in addition to the due date.
No dunning notices are sent and no payments are collected during the
agreed deferral period.
Once the deferral date has passed without payment being made, the open
item is dunned with the original due date and bank collection is executed
again.
Deferral history
Deferral history is kept in the document
,QVWDOOPHQW 3ODQ ,
Purpose
To arrange payment by installments for business partners who cannot keep up

their payment obligations
Specific Functions
Structure
The installment plan divides source items into several installment receivables that have
a due date in the future.
The installments are posted statistically in FI-CA and are cleared when payments are
made. With every installment cleared, an corresponding part of the original receivables
is cleared as well.
The individual installment is included in the dunning and payment run.
Installment plan set up
Individual installments and their due dates are specified in the installment plan.
Charges can be levied for an installment plan.
The document number of the installment plan is recorded in the original receivables,
which ensures that there is a link between the original receivable and the installment
plan.
14
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Interest calculation
Installment plan processing
Interest can be calculated on the installment plan.

Installments plan can be changed manually.
Due dates and the amount of installments can be changed.
New installments can be added to an active installment plan.
Original receivables will be cleared (partly) automatically, whenever an
installment is cleared. Therefore, all original receivables will be cleared as
soon as the last installment of the installment plan has been cleared.
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Deactivating an installment plan
The installment plan can be deactivated manually.

The original receivable becomes active again and the link between the
original receivable and the installment plan is deleted.
A deactivated installment plan cannot be reactivated, and no further

payments can be assigned to the installment plan.
Installment plan history
The history is updated automatically for every installment plan.

Can be used to determine the source items on which an installment plan is
based
15
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Purpose
To write off open receivables and credits of a business partner because

receivables cannot be collected or payables cannot be disbursed
Specific Functions
Automatic posting
Written off line items are cleared and a write-off document is posted to the
the gain or loss accounts defined in Customizing.
Additionally, rules that specify how the tax adjustment should be made are
defined in Customizing
Check rules
Check rules determine whether and which open items can be written off (to
a certain percentage) automatically.
The rules are defined with the help of a function module and allow the
implementation of customer-specific requirements.
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Reverse write-off
Write-off documents can be reversed, meaning that the receivables or

payables become open again.
Parallelization
Write-off activities can be processed in a mass run.

Documents to be written off can be selected according to various
parameters.
A simulation run can be executed before the update run for monitoring
purposes.
16
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Purpose
Release and submission of receivables to external collection agencies

as well as management of the submitted receivables
Release and submission of receivables

Integrated release and submission of receivables while processing
Dunning
Write-off/mass write-off
Manual indicator for collection order
General submission
Receivables submission management
Managing submitted receivables in separate management
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Processing incoming information
Incoming information from the collection agency can be transferred to the

system - the processing depends on the way the agency forwards the
information:
z
z
In a file: Interest, charge requests, and collected payments are posted

automatically
By letter or telephone: The information has to be posted manually
17
&RQWHQW
I.
II.
Overview ofContract Accounts (FI-CA)
III.
Master Data
V.
Integration
General Ledger Accounting

Cash Management
Controlling
Sales and Distribution
FSCM Biller Direct
FSCM Dispute Management

VII. Outlook
,QWHJUDWLRQ *HQHUDO /HGJHU $FFRXQWLQJ
FI-CA and General Ledger
Transaction figures are not updated automatically in the general ledger

when postings are executed in FI-CA. Instead, the data is summarized
and transferred to the general ledger periodically for reasons
of system performance and

to limit the volume of documents in the general ledger
FI-CA documents are grouped automatically and posting totals are

recorded for each group. These are later transferred to the general
ledger.
Posting and reconciliation programs are available to transfer the data to FI-
GL
General Ledger Accounting can be managed in the same R/3 System as

FI-CA or in separate one.
If
General Ledger Accounting is managed separately, the data can be

transferred by using ALE methods.
18
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FI-CA and Cash Management
FI-CA updates the Cash Management component immediately when a

posting is made.
The Cash Management liquidity forecast and cash position are always
up-to-date.
FI-CA and Controlling
Overhead Cost Controlling is updated automatically during the general

ledger update.
FI-CA and profitability Analysis
Records for the profitability analysis Data will be written on a

accumulated basis during a separate update process. This enables
profitability analysis to be used also for the high volume of data created
within FI-CA
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FI-CA and Sales and Distribution
As part of the integration of FI-CA, bills from Sales and Distribution can
be posted to FI-CA instead of to FI-AR.
FI-CA and SAP Billing Engine
The output data from the SAP Billing Engine can be posted to FI-AR or
to FI-CA.
FI-CA can directly interface with the CRM Billing Engine (there is a
direct business partner-to-business partner connection in the RWInterface; it is not necessary to use AR)
The Billing Engine will be part of the following mySAP solutions
mySAP Customer Relationship Management

mySAP Telecommunications Industry
mySAP Media Industry
... more to come ...
19
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FI-CA and Financial Supply Chain Management (FSCM) - Biller Direct
FSCM Biller Direct enables electronic bill presentment and payment

Customers can see all of their open items, credits, and bills in
a Web browser.
Customers can authorize payment by credit card or direct debit.
Web-based authorizations change the status of open items in FI-CA.
FSCM Biller Direct uses Java Server Pages and runs on SAP
Web Application Server.
Communication between FSCM Biller Direct and FI-CA is handled
by the Java Connector.
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FI-CA and Financial Supply Chain Management (FSCM) Dispute

Management
FSCM Dispute Management will handle customer disputes that result in

payment deductions or defaults.
FSCM Dispute Management supports various channels (for example,
Call Center, Web, SAP GUI).
For each customer dispute, a dispute case is created with a specific
reason code (such as late delivery).
FSCM Dispute Management will interact with FI-CA (for example,
posting of credit memos, and so on.).
20
&RQWHQW
I.
II.
III.
Master Data

V.
Integration

VII. Outlook
7HFKQLFDO +LJKOLJKWV RI ),&$
Technical Highlights FI-CA
Document structure
Documents are implemented with the minimum number of fields required

repetitive structures for installments, subitems for partial payments
Reduced memory space required for storing open and cleared items
Enables high performance processing of critical business transactions
posting, dunning, payment
Parallelization of mass data processing
Openness
Standard process enhancements without modification due to event concept

Event: Time at which an open interface exists - customers can use the
option of creating and activating additional or alternative algorithms in their
own function modules.
21
&RQWHQW
I.
II.
III.
Master Data

V.
Integration
VII. Outlook
22

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),&$

Martina Hilzinger, Jrgen Khling, Klaus Plate

Market Requirements and Motivation

Overview of Contract Accounts (FI-CA)

IV. Key Functions in Business Transactions

VI. Technical Highlights

SAP AG 2001, Title of Presentation, Speaker Name 2

Market Requirements and Motivation

Overview of Contract Accounts (FI-CA)

IV. Key Functions in Business Transactions

VI. Technical Highlights

SAP AG 2001, Title of Presentation, Speaker Name 3

0DUNHW 5HTXLUHPHQWV DQG 0RWLYDWLRQ ,

Industries with a large customer base and a correspondingly high

SAP AG 2001, Title of Presentation, Speaker Name 4

0DUNHW 5HTXLUHPHQWV DQG 0RWLYDWLRQ ,,

To meet the market requirements for a sustainable, flexible, and powerful

Mass data processing

Reduction of memory space for storing open and cleared items

Flexibility and system openness

Flexible input format

SAP AG 2001, Title of Presentation, Speaker Name 5

Market Requirements and Motivation

Overview of Contract Accounts (FI-CA)

IV. Key Functions in Business Transactions

VI. Technical Highlights

SAP AG 2001, Title of Presentation, Speaker Name 6

Financial Contract Accounts and Receivable

SAP FI-CA is the response to market requirements for receivables

Large volume of documents to process

processes that need to be

SAP AG 2001, Title of Presentation, Speaker Name 7

Previously, FI-CA was only available in the following SAP industry

The component was not available for customers outside of these

SAP AG 2001, Title of Presentation, Speaker Name 8

Market Requirements and Motivation

Overview of Contract Accounts (FI-CA)

IV. Key Functions in Business Transactions

VI. Technical Highlights

SAP AG 2001, Title of Presentation, Speaker Name 9

6$3 %XVLQHVV 3DUWQHU ,

A business partner is a natural person, organization, group of natural

A business partner can have several roles at one time

SAP AG 2001, Title of Presentation, Speaker Name 10

6$3 %XVLQHVV 3DUWQHU ,,

A business partner can have several relationships with other business

Relationships are determined by relationship categories, for example,

Multiple addresses can be assigned to one business partner; the addresses

Business partners' addresses are stored in the Central Address

SAP AG 2001, Title of Presentation, Speaker Name 11

6$3 %XVLQHVV 3DUWQHU ,,,

Technical design and infrastructure

Separation of user interfaces, checks, and data storage using function

Seamless integration of any number of applications without modifications,

Application-specific business partner data (function modules, tables)

remains the responsibility of the various applications)

Business Data Toolset (BDT)

SAP AG 2001, Title of Presentation, Speaker Name 12

Object for which open item accounting takes place

Master data structure

Link between contract account and business partner

At least one business partner has to be assigned to a contract account

Assignment to company code

SAP AG 2001, Title of Presentation, Speaker Name 13

),&$