Basic and extended document splitting in SAP S/4 Hana

In this blog I will try to explain the basic and extended settings of documents splitting in SAP S/4 Hana.

Document splitting was introduced with New GL in SAP ECC, with SAP S/4 Hana some functionalities was enhanced.

Introduction:

Document splitting is a powerful and mature tool in S/4 Hana that can be used for the two followings reasons:

  1. To issue complete financial statement by specific characteristic: Profit center, Segment, Joint venture, Segment (To meet some legal requirement: Segment reporting for IFRS8.
  2. To help manager to analyze Working capital for profit center or segments and measure their performance.
  3. Meet some legal business requirement like segment reporting.

How it works?

In SAP S/4 Hana new GL is activated by design but document still optional.

If you want to go with document splitting you need to activate it before going live, otherwise a subsequent activation will need more efforts and can cause some inconsistencies in the production system.

When you activate document splitting, the general ledger view of the document will display additional line items by document splitting characteristics defined for GL accounting. (In GL view data is read from BKPF and ACDOCA table).

Document View:

Document%20view

Document view

Like when document splitting is not activated, BS accounts like vendor are not splitted in the document view.

GL View:

GL%20View

GL View

As we can see in our example with document splitting even BS account can will be splitted by profit center and segment depending on the basis item category (Expense account in this case).

To achieve this we need to configure document splitting in the system.

We can choose to use the basic document splitting with the standard splitting method or create our own splitting method to meet to business requirement.

NB: Creating a new document splitting is not an easy task, you should be aware about all the impacts of your changes in the system, document splitting method : 000000012 is defined carefully and ca meet all the user requirement.

Basic%20and%20extended%20document%20splitting

Basic and extended document splitting

So, let’s start with the basic configuration of document splitting.

Basic document splitting :

1/ Classify GL account for document splitting

Item categories are very important in document splitting, they will be used to define the items categories to be splitted and the base item categories to be used for splitting during a transaction posting.

Item categories are delivered by SAP and cannot be changed (If you want to create a new one you should contact SAP).

The classification of accounts by business categories is already known by the system for 14 of the 18 standard categories.

We need to classify accounts only for the following business categories :

  • Revenue account
  • Expense account
  • Bank account/cash account
  • Balance sheet account

IMG Activity :

ISPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Classify G/L Accounts for Document Splitting

2/ Classify document type for document splitting

The start points of a document splitting process is the document type and not the GL account.

For each document type a transaction and a variant are assigned.

The mix of business transaction and business transaction variant will define the assigned item categories.

When we use basic document splitting, document splitting method 000000012 will control how the item categories in the document will be splitted based on the base item categories.

IMG Activity:

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Classify document types for document splitting

Classify%20document%20types%20for%20document%20splitting

Classify document types for document splitting

The rules were already defined for the existing document type, you can use another variant if needed.

If you create new specific document types, you need to maintain them in this configuration point.

3/ Define Splitting characteristics for GL accountings

In this step, we define the characteristics for which we want to activate the document splitting:

  • Profit center.
  • Business Area.
  • Joint venture.
  • Segment.

With SAP S/4 Hana we can also add a custom field (Coding block from ACDOCA) as document splitting characteristic.

IMG Activity:

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledger Accounting

Define%20Document%20Splitting%20Characteristics%20for%20General%20Ledger%20Accounting

Define Document Splitting Characteristics for General Ledger Accounting

Profit center is the most used char for document splitting.

Select zero balance account to balance all your posting for this characteristic.

During the posting if an account is allowed to be splitted or if the balance of the characteristic is different to Zero, the system will automatically use this account to balance.

4/ Define Splitting characteristics for controlling

We can also define splitting characteristics in controlling.

For example, if we activate WBS as a controlling char, in a cash discount scenario, during payment posting (Passive document splitting) the system will look for the WBS element from the original account and populate it.

IMG Activity:

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Define Document Splitting Characteristics for Controlling

Define%20Document%20Splitting%20Characteristics%20for%20Controlling

Define Document Splitting Characteristics for Controlling

5/ Define Zero Balance Clearing Account

As explained before SAP is using the Zero balance account to balance characteristic to zero after document splitting.

With SAP S/4 we can define different Zero balance accounts for different purposes :

  • Standard account for zero balance
  • CO Posting Primary – Zero Bal. Account
  • Zero Balance for Cash Pooling

IMG Activity:

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Define Zero-Balance Clearing Account

If we want o use different Zero balance account, we can define different Zero balance accounts for each: Business transaction/ Transaction variant in the document splitting method.

6/ Define constant for non-assigned process

 

In some scenarios the system is not able to derive the characteristic, In this case we need a standard assignment object.

IMG Activity:

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Define constant for non-assigned process

Define%20constant%20for%20non-assigned%20process

Define constant for non-assigned process

7/ Activate document splitting

 

Once all the configuration is done, we can go an activate document splitting.

We should be careful with this step; the subsequent deactivation of document splitting can cause a lot of inconsistencies.

If needed, we can deactivate this functionality for some company codes (If not required).

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Document Splitting > Activate Document Splitting

Activate%20document%20splitting

Activate document splitting

Document splitting method 0000000012 will be used by default.

Inheritance:  After the splitting if some lines still without account assignments, these lines inherit the document splitting characteristics from other lines. (Document splitting characteristics must be unique within a document)

Standard A/C assignment and constant: If inheritance is activated, standard A/C assignment is used we some lines are not splitted and the document spitting characteristic is not unique, in this case the system will default the constant characteristic.

Extended document splitting:

If the splitting method 000000012 doesn’t suit our business requirement, we can copy it and adapt it (Even if it’s not recommended, the splitting method 0000000012 can meet all the user requirements)

Define splitting rule:

 

Extended%20document%20splitting

For each Business transaction/ Transaction variant we can choose the strategy:

  • Inheritance.
  • Default account assignment.
  • Account key for Zero balance account
  • Account categories to be splitted.
  • Basic item category from which the splitting should derive the assignment.

Extended document splitting

The passive document splitting logic can also be changed in extended document splitting.

Please share with us your feedback, suggestions, questions  and thoughts regarding this topic in comments.

For more information and to get updated with all new SAP S/4 Hana insights I encourage you to follow the SAP S/4HANA Finance : https://blogs.sap.com/tags/67837800100800006927/

For similar content please follow my profil.