SAP FI - SAP Finance - Sub-Modules & Functions - Skillstek

4/5/22, 9:20 AM SAP FI | SAP Finance - Sub-Modules & Functions | Skillstek
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Last Updated on March 2, 2022 by Pradeep

SAP FI (Finance) & its Sub-modules – Beginners Guide
Published by Pradeep on October 23, 2020
What is SAP FI (SAP Finance)?
SAP FI, also known as SAP Finance is the functional module of SAP ERP Financials, which
deals with Finance. While the Controlling (CO) deals with the business’s cost control, which is

the other part of SAP Accounting. Both in combination makes it a complete module. Hence
everyone calls it SAP FICO.

Since SAP FI deals with the financial obligations of the business. Thus, it is named SAP

Financial Accounting of the ERP system i.e. the Finance module in ERP.

On the other hand, the Controlling handles the management of cost and expenses. So, we call it
SAP Management Accounting.
https://skillstek.com/what-is-sap-finance/ 1/16
In this article, we are going to start with what is SAP i.e. the very beginning. So read on.

What all is covered here:-
 What is SAP
SAP ERP Financials

SAP Financial Accounting
 Sub-Modules of SAP Finance
New General Ledger
Features of New GL
Accounts Payable
Accounts Receivable
Asset Accounting
Bank Accounting
Special Ledger
Management Accounting
Financial Supply Chain Management
Treasury Management
What’s Important for you
What is SAP?
The term SAP® is the registered trademark of a german-based company SAP AG. It named its
product by its name itself i.e. SAP.
SAP is an abbreviation that stands for Systems, Applications and Products in Data
Processing.
It is the market leader in business solutions. It provides you with software applications and
services to address unique business needs irrespective of industry.
 What is SAP?
Learn in Detail: What is SAP? (History, Introduction, and Journey)
SAP ERP Financials

You can enhance your financial performance with SAP ERP Financials by accurately managing
liquidity and cash, streamlining processes, and reducing costs.
Key Functionality of SAP ERP Financials

The key functionality of SAP ERP Financials aims to give you the business support you need in
some important areas. These are Finance and accounting, Cost Control, financial supply chain
management, and treasury related. For these requirements, SAP has provided us with four
modules in SAP ERP Financials. These are:-
a. Financial Accounting (SAP FI)

b. Management Accounting (SAP Controlling)

c. Financial Supply Chain Management
d. Treasury Management
While we will learn the Financial Accounting module in detail, we will also briefly understand the
other three modules.
1) SAP Financial Accounting

Financial Accounting i.e. SAP FI (Finance) enables company-wide control and integration of
financial information that is essential for strategic decision making.
It complies with international accounting standards such as the US GAAP and TFRS.
(US GAAP is – Generally Accepted Accounting Principles).
(TFRS is – International Financial Reporting Standards).
Further, SAP Financial Accounting also fulfils the local legal requirements of many countries and

reflects the legal and accounting changes.

The SAP FI component within SAP Financials has several new functions. Its modern
enhancements help to meet today’s financial and management requirements in accounting and

reporting.

Sub-Modules or Components of SAP FI

In SAP FI we have the sub-modules which helps to enhance its efficiency and user-friendliness.
These are:
New General Ledger (New G/L)

Accounts Payable (AP)
Accounts Receivable (AR)
Asset Accounting (AA)
Bank Accounting (BA)
Special Ledger (SL)
Let us read them in detail.
New General Ledger in SAP FI (New GL)

The SAP New General Ledger eliminates the need to maintain multiple ledgers. Its functionality
comprehensively supports both financial and managerial accounting as a single application.

New G/L improves financial accounting and reporting through rules-based, real-time allocations

between business units. It also automates the reconciliation of journal entries across multiple
units.

While in traditional (classic) GL solutions, you require reconciling multiple applications to meet

enterprise-wide reporting requirements.
New G/L provides you with the flexibility to create multiple ledgers such as:
Cost of sales ledger

A consolidation-staging ledger
Segment ledgers
And profit center accounting
All this is within a single application.
Features of New G/L in SAP FI
Parallel Accounting
SAP New G/L allows you to maintain multiple parallel ledgers that support diverse currencies
and financial reporting standards.
Such as IFRS, country-specific regulations such as US GAAP, and any other local requirements
specific to your industry.
You can update these parallel ledgers through a single posting transaction using defined
business rules. These rules govern how transactions are recorded and reported according to
different accounting rules.
Also Read: New Asset Accounting Migration to S/4HANA
Document Splitting
New G/L in SAP FI offers you the option of creating a document enhancement or online split
“when making journal entries. Hence it streamlines the process of posting transactions.
It further allocates them to different cost or profit centers. While at the same time it makes
allocations for specific cost objects.
You can also use the New GL document splitting functionality for customer-defined and industry-
specific fields. You can apply these not only to individual documents but also throughout the

entire document chain.

Single Reconciled Database

New GL features a single reconciled database with robust portioning functionality. Thus it allows

you to create multiple ledgers that all reconcile up to single leading ledgers.
For instance, you can include company-code segment and profit-center reporting dimensions in
a single data source. This can also be extended to include other custom fields.
Related: Scenarios in SAP General Ledger Accounting
Real-Time Reconciliation and Integration
Through a common reconciled database, special ledger postings roll up to the G/L without the
need for manual or automated reconciliation. As a result, managerial and financial accounting is
always reconciled with the G/L.
Fast Close
With the New G/L, you can now accelerate the period-end closing cycle and automate several
period-end activities. For example accruals and journal entries. This is because the data source
is common and always reconciled.
Transparency
New G/L also enables greater transparency for auditing and corporate governance in SAP FI.
 Components of SAP FI

Accounts Payable (SAP FI-AP)
SAP Accounts Payable is used to record and administer accounting data for all your vendors.
SAP FI-AP is an integral part of the purchasing system that automatically makes postings in
response to operative transactions.
In addition, it supplies the Cash management application component with figures from invoices to
optimize liquidity planning.
You can use a built-in payment program to make payments for the payables in SAP FI. The
postings made in FI-AP are simultaneously recorded in various G/L accounts based on the
transaction involved.
You Maybe Interested in: Bill of Material in SAP S/4HANA
Accounts Receivable-(SAP FI-AR)
Similar to FI-AP, FI-AR records and administers accounting data for all your customers. It is an
integral part of sales management. All postings in FI-AR are also recorded directly in the GL.
There are several tools in SAP Accounts Receivables that you can use to monitor open items. By
using a dunning program to remind your customers of their payables.
This program also provides the data that you need for effective credit management and
optimized liquidity planning. This is because it provides links to cash management.
Asset Accounting in SAP FI (FI-AA)

A subsidiary ledger to the G/L, FI-AA (Asset Accounting in SAP FI) is used to manage your
company’s fixed assets in the SAP Finance system. You can use this in any country, regardless
of the nature of the industry.
Additionally, it is integrated with other application areas also.
Furthermore, FI-AA transfers data to and from other SAP components. Hence, you can pass on
depreciation and interest directly to the FI and CO components.

Bank Accounting in SAP FI (FI-BL)

FI-BL (Bank Accounting in SAP FI) enables bank master data management and cash balance

management besides processing incoming and outgoing payments. Using this, you can freely
define all country-specific characteristics. These include:

Specifications for manual and electronic payment procedures
Payment forms, etc.
Special Purpose Ledgers (SAP FI-SL)

Using FI-SL, you can define ledgers for reporting purposes in SAP Financials. You can keep
these under-defined ledgers as G/Ls. Or you can keep them as subsidiary ledgers with various
account assignment objects.
These objects can be either SAP dimensions from various applications or customer-defined
dimensions (such as regions).
Here the SAP dimensions are such as account, cost center, business area, or profit center.
Using FI-SL does not affect the functions of other SAP applications. With the introduction of New
G/L, you may not need FI-SL.
Also Read: Document Types in SAP FICO
2) SAP Management Accounting

Management Accounting is also referred to as SAP Controlling (CO). It helps your analysts and
managers work with the same basic data as your company’s financial accountant.
It also enables the valuation and recording of financial data. This does not only work for SAP
financials reporting but also as the basis for all cost and revenue-related reporting.
For your knowledge, in S/4HANA, Management Accounting has equal importance. It added new
functionality though. Basic concepts remain the same.
The key functions of Management Accounting include the following:-
Investment Management
Master Data Governance
Revenue, and Cost Planning
 Profit Center
 Product Cost
Profitability Analysis
 Cost Center Accounting
Transfer pricing

And many more
Related: Product Costing in SAP
Also Read: Key Updates of SAP Profitability Analysis in S/4HANA 2020
3) Financial Supply Chain Management

SAP FSCM provides you with functions to manage the entire financial supply chain and cash-
flow cycle more effectively. It also helps your collections teams to perform better in managing
receivables.
Further, it analyzes the root causes of late payments and proactively handles customer disputes.

Learn FSCM in: SAP S4 HANA Finance Training


4) Treasury Management

Treasury and cash managers can use Treasury Management to gain insights into transactions
under SAP FI. It looks and controls hedging transactions pooling and allocates cash globally.
It does it with the help of straight-through processing of banking, corporate treasury, and financial
accounting processes.
Also Read: Career in SAP FICO
Importance of SAP FI for you

How much knowledge do you possess for SAP Finance? Learning SAP FI is of utmost
importance for you, especially if you are inclined to SAP Accounting application.
Since, finance is the backbone of SAP Accounting, thus, to become an efficient SAP FI
consultant, you need to go deep into this subject.
Not just, theoretically, you need to understand the things by practical applications. Importantly,
you should see all configurations step by step and apply yourself too. Then only you can do it in
real-time.
As the first step to this, you should either do the SAP FICO course or join the SAP S/4HANA
Finance training, depending upon your background & interest.
This would help you to understand the concepts practically, consequently helping in real-time
work.
All the submodules of SAP FI have their importance and role in the implementation, migration
process.
With the structured system of configuration, sooner or later you would reach up to these
components, this utilizing their unique functionality, thus needing the proper knowledge of each
of them.
So, to sum up, pay equal attention to each one of these to complete your knowledge and scale
up your skills.

Watch Video on Organizational Structure in SAP FICO


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4/5/22, 9:20 AM SAP FI | SAP Finance - Sub-Modules & Functions | Skillstek

Last Updated on March 2, 2022 by Pradeep

Learn in Detail: What is SAP? (History, Introduction, and Journey)

SAP ERP Financials

Key Functionality of SAP ERP Financials

a. Financial Accounting (SAP FI)

b. Management Accounting (SAP Controlling)

1) SAP Financial Accounting

(US GAAP is – Generally Accepted Accounting Principles).

(TFRS is – International Financial Reporting Standards).

Sub-Modules or Components of SAP FI

New General Ledger (New G/L)

Let us read them in detail.

New General Ledger in SAP FI (New GL)

Cost of sales ledger

All this is within a single application.

Features of New G/L in SAP FI

Also Read: New Asset Accounting Migration to S/4HANA

Related: Scenarios in SAP General Ledger Accounting

Real-Time Reconciliation and Integration

You Maybe Interested in: Bill of Material in SAP S/4HANA

Accounts Receivable-(SAP FI-AR)

Asset Accounting in SAP FI (FI-AA)

Additionally, it is integrated with other application areas also.

Special Purpose Ledgers (SAP FI-SL)

Also Read: Document Types in SAP FICO

2) SAP Management Accounting

The key functions of Management Accounting include the following:-

Related: Product Costing in SAP

Also Read: Key Updates of SAP Profitability Analysis in S/4HANA 2020

3) Financial Supply Chain Management

Also Read: Career in SAP FICO

Importance of SAP FI for you

SAP S/4HANA Finance Training

SAP FICO Training on S/4HANA

SAP Central Finance Training

SAP Product Costing Training

Difference between SAP FICO and S/4HANA

A Career in SAP FICO

Asset Accounting in SAP FICO

SAP CO Interview Questions

Best SAP FICO Interview Questions

SAP Product Costing Interview Questions

Universal Journal in SAP

SAP HANA Migration Guide

SAP Central Finance

SAP FICO Interview Questions

Integrated Asset Acquisition in SAP – Process Flow

SAP Management Accounting (SAP CO) – Complete Guide

Dunning in SAP FI – Definition & Procedure

Enter Your Email ID

Integrated Asset Acquisition in SAP – Process Flow

Dunning in SAP FI – Definition & Procedure

Depreciation Area in SAP – Basic Guide

TESTIMONIALS ABOUT BLOG CENTRAL FINANCE S/4HANA FINANCE CONTACT US

SAP FICO COURSE

Copyright 2021 @ Skillstek

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