As digitalization has accelerated everywhere, CFOs and their organizations are empowered to think and act differently. They are now at the center of all decisions. They need the insights and tools to provide a sound and nimble response to any situation and support and intelligent financial accounting for new business models. In the following please find selected innovations in the SAP S/4HANA Cloud 2102 release for Finance to support CFO’s and their organizations to setup a flexible parallel accounting, conduct efficient what-if-planning analysis and implement a self-auditing finance in the cloud. Moreover see how SAP S/4HANA Cloud 2102 for Finance supports Solution Order accounting for new business models.
Video 1: Release Highlight Video on Finance
Highlights described in the video:
Flexible assignment of accounting principles to ledgers
In order to run parallel accounting processes in their systems, customers need to use several accounting principles, for example, IFRS and a local accounting principle, such as HGB. New customers who use SAP Central Business Configuration (CBC) to configure their systems can now flexibly assign the accounting principles they require to their respective ledgers.
This means that new customers can change previously the previously fixed assignment of accounting principles to ledgers according to their business needs.
- Change the pre-delivered assignment of ledgers to accounting principles that you have in your scope (for example, all accounting principles of the countries/regions in scope and IFRS, if IFRS close is needed).
- Assign accounting principles uniquely, that is, assign one accounting principle to one standard ledger (and company code).
- Changed assignments are also valid for all extension ledgers and the ledger for alternative fiscal year variants.
If you want to change the assignment of ledgers to accounting principles, you can edit the assignments on two different levels as long as no postings exist in your system:
- On ledger level, that is, for the whole entity: The same accounting principle is valid for all company codes.
- On ledger/company code level: Use this option for local accounting principles that are specific to a country/region. In this case, leave the ledger level empty.
Video 2: Flexibly assign your required accounting principles to your respective ledgers (note: no audio voice available)
Simulation Cockpit for Financial Planning in SAP Analytics Cloud
The simulation cockpit for financial planning in SAP Analytics Cloud allows stakeholders in management or a central controlling department to perform what-if-simulations for sample processes based on changes to drivers, such as sales quantity or personnel expenses.
As a controller, you may want to know the effect of changing the quantity of a sales product or the price of a raw material. After you have identified the driver you want to change and the corresponding simulation scenario, you can start the corresponding simulation. You are then guided step-by-step through the planning process. You can change the drivers, perform the corresponding data actions, and check the intermediate result in the reports. At the end of each simulation scenario, you can see the impact on the most important KPIs, for example, product profitability and your P&L statement.
- In a volatile business environment, it is important for companies to be able to quickly react to changes and adapt their business accordingly. Our Simulation Cockpit enables the customer to change selected drivers and see the impact on important KPIs like Profitability and in the overall P&L.
- To have a consistent approach for simulation, we offer the same logic as for the normal planning cycle which as well provides integrated processes and functions that are re-used in this context.
- The user is guided through the whole process by the cockpit, which provides access to all required entry layouts, planning functions, and reports in a meaningful sequence.
Video 3: Integrated Financial Planning Content and Simulation Cockpit
- Simulation Cockpit offering pre-delivered sample simulation scenarios and supporting functions like version management, data flow overviews, and display settings.
- Simulation scenarios guiding the user though the process in a streamlined way.
- Reports for checking the impact of a change directly in the cockpit.
SAP Financial Compliance Management
The aspects of financial compliance are as numerous as they are varied, and knowing which ones are relevant for your organization can be challenging. SAP Financial Compliance Management provides all the tools needed to ensure that your organization adheres to local laws and regulations. From documenting the processes in place for your organization to setting up checks and controls, the solution enables you to fulfill all tasks necessary to ensuring financial compliance.
- Identify financial compliance risks to your organization and business processes and create controls to mitigate them effectively.
- Design controls and link them to existing organizational units and business processes.
- Monitor the performance of controls and determine their effectiveness.
- Document a regulatory framework of applicable laws and regulations.
- Detect issues in the implementation of controls and create remediation plans.
Video 4: The first version of SAP Financial Compliance Management provides an effortless way of maintaining your compliance processes (note: no audio voice available)
Further Highlights not described in the video:
Inclusion of Subscriptions in Solution Orders for Consumption-Based Business
Solution Order Management expands its business scope to support consumption-based business by integrating to SAP Subscription Billing. This integration enables solution orders to offer subscription services as well as sales and service products in a single order.
- Support the transformation of products to higher-margin services and solutions by combining products and services in one order
- Increase revenue by selling combinations of physical products, one-time, recurring, and consumption-based services
Video 5: Transform into a Solutions and Subscription Business with Intelligent Finance
- Enable a new solution order to offer subscription services
- Display and edit rate plan information for a subscription service
in solution orders
- Create subscriptions in SAP Subscription Billing through solution order orchestration
- Visualization of the created subscriptions in Solution Order Progress app
- Enable solution order API with the capability to create and edit
- Analyze margins based on solution order and the related subscriptions
Reporting and process flexibility updates for revenue recognition in project-based sales and services
This app monitors the work-in-progress (WIP) details for project-based services and helps users to evaluate the aging of the WIP. The app is based on real time data of the new project billing solution – enriched by data from the Universal Journal. It shows information such as WIP, billed revenue and manual accruals, allowing users to analyze profitability at an early stage.
- Provide more granular reporting in customer projects
- Assist project managers in reducing the levels of unbilled work and optimize service invoicing
Figure 1: Report Project WIP Details
- Display WIP and revenue details such as billable revenue, billing requested revenue and revenue write-offs for projects with activated project billing
- Review the calculated WIP in Company Code Currency, which is converted from the WIP in project currency using the exchange rate that is valid on the exchange rate date
- Display information of the project, such as the Project Manager, Service Rendered Date, and Posting Date. The Project Manager and Performed By fields display the employee names in parentheses
- Aggregate the WIP results based on the list of displayed columns
- Show the recognition key of the WBS element for event-based revenue recognition
Predictive Accounting for Service Contracts
Predictive accounting enables you to take the most up-to-date data from areas in S/4HANA Cloud outside of Finance and use it to predict future results at any time. You then have a better understanding of what your accounting results, at the end of the current period or quarter, might look like, and why. With this release, the scope of predictive accounting is extended to also include service contracts as possible source documents for predictions. When a service contract is released, predictive accounting creates predictive journal entries for the expected revenue recognition and billing in a prediction ledger. You can then use these predictions in your reporting and analysis. This allows you to see the predicted impact on your revenue in your balance sheet/income statement earlier. The Display Line Items – Margin Analysis app displays prediction journal entries along with actuals and allows users to analyze the expected results at period/quarter end.
Figure 2: Revenue Forecast with Predictive Service Contracts
For more information on SAP S/4HANA Cloud, check out the following links: