APP Process in SAP FICO – Step by Step Guide

Automatic Payment Program or APP process in SAP FICO enables you to clear open items between customers and vendors. It further makes inter-company payments, processes both domestic and foreign payments and block payment etc.

You can use SAP APP (Automatic Payment Program) to handle both outgoing and incoming payments automatically.

Understand the APP Process in SAP FICO

The automatic payment program determines what you have to pay; when you have to pay; and how you should pay, through the payment rules that you define in the payment program configuration.

Furthermore, in SAP FICO APP process can group several open items that are to be paid into a single payment, if required.

The rules determine the due dates for the payments, payees to whom you need to make the payment. Further, it also determines house banks from which you should process the payment and the appropriate payment methods relevant for the payee or country.

Setup All Company Codes for Payment Transaction

• Paying Company Code
• Whether you need to separate Payments per business area
• Whether you use payment method supplements
• Cash discount
• Whether there are any tolerance days for payable
• Whether you need to include the special G/L transactions in the payment for each of the company codes. (Those company codes which are involved in the payment transactions).

Steps to setup All Company Code

IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup All Company Codes for Payment Transaction

The Paying company code

It is the company code that processes payment transactions centrally for several company codes. Consequently, you assign it to each of the company codes participating in the Payment Program.

Tolerance days payable: Important step in the APP process in SAP FICO

The system adds up the number of days specified here when it determines the cash discount periods and the due date for net payment. This is to say, if you enter 03 in this field for an invoice due on 25.01.2020, it will not be paid until 28.01.2020

1. Setup Paying Company Codes for Payment Transactions- When configuring the system for paying company codes, you can.
2. Specify the minimum amount for which you need to create an incoming or outgoing payment.
3. Show or hide the settings for Bills of exchange payments
4. Specify forms and sender details for advice notes and EDI accompanying sheets

Steps to setup Paying Company Code

IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments= > Payment Method/Bank Selection for Payment Program Prepare => Setup Paying Company Codes for Payment Transactions T Code- OBZ1

Scroll down and expand Forms and Sender Details to configure these details. For Forms, you may use either SAP Scripts or PDF. Then, finally, select the appropriate form from the dropdown list. This is for sender details, provide header, Footer, signature etc.

Setup Payment Methods per country for Payment Transactions

As part of the APP process in SAP FICO, A payment method specifies how you have to make the payment. Popular payment methods include check, Bill of exchange and bank transfer.

Noteworthy, a payment method helps when you enter the payment in the master record of a business partner, line items or payment run parameter.

Several country-specific payment methods (check, ACH, Bank Transfer etc.) have already been configured in the standard system. Thus, enabling you to use any or all of them for company codes.

Steps to setup payment methods per country

IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup Payment Methods Per country for Payment Transactions or T. Code- OBZ3

For each country-specific payment methods, you specify whether it is meant for incoming or outgoing payment. Likewise, whether you can also use it for paying your document type to be used for payment and clearing. Further which payment program is to be used (RFFOUS_S) for paying through check etc.

Setup Payment Methods per Company Code for Payment Transactions

Besides identifying the payment method that you use in your company codes, you also need to stipulate the conditions for a particular payment method’s usage.

You determine the minimum and maximum amount limits for each of the payment methods and specify the grouping criteria for the payment items. Additionally, you make specifications for foreign currency payments, payment form per payment method and optimizing bank selection.

Steps to set up payment method per company

IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup payment Methods per Company Code for Payment Transactions T Code-OBZ4

Related: Scenarios in SAP GL Accounting

Key points to consider in the APP process in SAP FICO

• Minimum Amount and Maximum Amount- It is the amount beyond which the payment program does not select this payment method.
• Distribution Amount- Any payment exceeding this amount is analyzed to determine whether it can be split into more than one payment totalling this amount. You check it independent of the payment method specification in the document item. Certainly, the amount entered here does not have any effect on the payment proposal.
• Single Payment for the marked item- Select this checkbox to make an individual payment for each of the line items. These are line items that are identified with this payment method. However if you do not check it, the payment program makes a single payment. It does it by grouping all the line items relating to a business partner.
• Payment per Due day- Select this checkbox to group payments that are due on a particular date. It ensures that you take the maximum cash discount. Otherwise, the system groups all the payments per vendor, irrespective of the due dates.
• Form for the Payment Medium- The field is visible when you click the Form Data button to expand the section. Select the appropriate form (Example F110_EDI_01) from the available FORMS.

Setup Bank Determination for Payment Transaction

You can configure the system in the line item to determine the bank from the customer and vendor master records or maintain the bank to be used for payments.

Following settings are required:

• The permitted house banks and their ranking list
• The bank account to be used for payments for each bank and payment method and currency if required.
• Further, the amount separately for incoming and outgoing payments those are available for the payment run, for each account at the house bank.
• Likewise, how many days can elapse between the posting date of the payment run and the value date at the bank, depending on the payment method, bank account, payment amount and currency
• Finally, whether the system can determine the value date, taking into account the bank calendar and any individual arrangements entered to with the bank

Steps to setup bank determination

IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup Bank Determination for the payment transaction

Define Value Date Rules

We have already seen how a lag between the posting date and value date works. It may be by maintaining the Days to Value Date in Payment configuration settings. You may also define a rule for each payment transaction at a house bank to arrive at the value date automatically. Use the T Code- OBBA.

Steps to define value date rules

IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business TransactionsàOutgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Define Value Date Rules to maintain the required settings

When you will configure this, the system adds or subtract the specified days. The days are a derivation from the reference date (document date or posting date).

Consequently, the system can check the final date with a factory calendar to decide whether it is a working day. It does so before finally deciding the value date for that transaction.

Define Forms

You can generate payment media using either the classic payment medium program or payment Medium Workbench. In case, if you don’t want to use the standard form provided by SAP, use the Form Painter (T-code- SE71).

Likewise, use the form to copy a standard payment form and make the required change. Even if you don’t want to create your own form, you need to specify the standard texts. The texts that you use for the letter header, letter footer and sending address in letter window per company code.

Conclusion

APP Process – An important business transaction in SAP FICO’s A/P

APP process in SAP FICO is one of the important business transactions for SAP Accounts Payable. Similarly, there are many types of business transactions for SAP FI Accounts payable. These are Maintain Terms of Payments, Define Cash Discount, Release of Payment & more. Certainly, APP in the most important among all business transactions.

Watch Video: Automatic Payment Program Configuration

You may be interested in: Difference between SAP FICO and SAP S/4HANA Finance

SAP Simple Finance (S4 HANA Finance) – Complete Guide for Beginners

Read this article on Skillstek.

What is SAP Simple Finance?

SAP S/4HANA Finance, popularly known as SAP Simple Finance is the new generation Finance module on HANA Platform. It is one of the most important modules of the SAP Business Suite. It includes Finance, Management Accounting, Cash Management (Bank Ledger), New Asset Accounting, Material Ledger, Product Costing & Profitability Analysis.

Top Features of SAP Simple Finance

HANA is not only a Database, but it is also an Appliance, which means it is a combination of Hardware & Software innovation.

SAP has replaced the traditional Disk-based Database with In-memory Database, which has Multi-Core processing with many blades. Likewise, it has replaced Software innovations like Row-based Table with Columnar Table. Consequently, you no kore require separate Index Tables, Aggregate Table etc.

OLTP and OLAP

In SAP S/4HANA Finance, you don’t need to maintain the OLTP & OLAP system separately. Since the HANA Appliance is a combination of both OLTP & OLAP system together. Hence, you can get HANA Reports on the fly.

SAP ACDOCA – Universal Journal

S4 HANA Finance has introduced a Table ACDOCA (Universal Journal) which has replaced lots of Tables from existing ERP (ECC). This includes Finance, Controlling, Asset Accounting, COPA etc.

Furthermore, it has all transaction line Items of FI ( BSEG), CO (COEP), CO Object External Posting (COSP), Secondary Cost Element (COSS). Additionally, it has Open Items like BSID & BSIK and Clear Items like (BSAD & BSAK).

Leading and Non-Leading Ledger

S4 HANA Finance Ledgers combines the latest Leading Ledger and Non-Leading Ledger. Additionally, it has launched new features like Extension (Appendix) Ledger & more in its portfolio.

SAP Central Finance

With SAP Central Finance, you can run SAP S4 HANA Finance in a shared service model. It centralises all transactions into a consolidated instance.

Related: SAP Central Finance – What all you should know

SAP Fiori Design

SAP S4 HANA Finance adopts SAP Fiori design in order to deliver a beautiful and user-friendly finance application for best consumer experience.

What makes SAP Simple Finance simpler?

SAP Simple Finance provides the following advantages:

1. It enables simpler user experience that provides instant access to any financial insight on any device
2. It simplifies process execution for real-time financials that are always reconciled
3. Further, it makes the decision making simpler using prediction and simulation, always on the fly.
4. SAP Simple Finance provides simple solution architecture without aggregates and data redundancies
5. Likewise, the IT strategy also is easier with cloud, on-premise or hybrid deployment options
6. It offers simpler pricing with pricing bundles, including subscription-based pricing for the cloud.
7. Lastly, Simple Finance makes the simpler business justification of a real-time view of the state of the business across all entities and continuous soft close.

Source:https://sap.com

Features vs. Functionality in Simple Finance

Key Performance Indicator	SAP S/4 HANA Simple Finance Functionality
SAP Simple Finance drives Integration of information across enterprise effectively with Single source of truth.	– Universal Journal’s virtual single operating model – Seamless FI-CO Integration – Real-time data across all financial dimensions.
It makes the enterprise’s cost reductions possible.	– Improved automation capabilities in nearly all areas – Real-time insight into global sources – Uses of cash – Elimination of batch jobs
S/4HANA Finance helps better Measure and monitor business performance.	– Consistent business insight and prediction capabilities – Elements discovery across all FI value map – Visualization tools to easily understand your data
It optimizes planning, budgeting and forecasting process.	– SAP BPC for SAP S/4 HANA Finance – Deployment options-on premise cloud – Hybrid-integrate planning – Consolidation functionality in real-time
It executes continuous finance process improvements.	– Financial close, planning, forecasting and budgeting process – Streamline communication with banks – Automate payment workflows – Integrate collaborative finance operations – Fraud and audit management.
SAP S/4HANA Finance provide inputs to enterprise strategy.	– Extended simulation flexibility and speed – On the fly calculation capabilities – Better business advice with more relevant and timely insight
It helps developing talent in the finance organization.	– Use of modern UX and SAP Fiori apps – Improved automation capabilities to get rid of transactional activities – Free up resources for value-added tasks

Business Scenarios in SAP Simple Finance

To illustrate the business value of SAP Simple Finance, I have put various business scenarios which would help you understand the functionalities more precisely.

1- Accounting Financial Close

SAP S/4 HANA Finance’s Central Finance deployment option addresses the challenge of multiple SAP ERP systems. An example of this is the complexity during merger and acquisition. Likewise, SAP S/4 HANA Finance’s month-end close business scenario addresses the current long closing cycles. Additionally, it accomplishes the desire to have a reliable finance data at any time.

2- Treasury and risk management or collaborative finance operations

SAP S/4 HANA Finance’s working capital and receivables management business scenario address the organisation’s pain points. This includes the high days of sales outstanding and cash flow challenges.

3- Enterprise risk and compliance management

The process oversight functions of SAP S/4 HANA Finance help to identify the areas with a high-risk fraud. Thus, it makes the system more secure.

4- Financial planning and analysis

SAP BPC for SAP S/4 HANA Finance addresses the need for dynamic planning and ambition for enterprise-wide integrated planning at the same level. Consequently, it simplifies the planning and analysis process and integrates the control at the central level.

Functional Changes with SAP S/4 HANA Finance

Universal Journal – ACDOCA

Universal Journal in SAP S/4HANA is the single source of truth for financial information. It carries a new data model that combines Controlling (CO), SAP ERP Financials (FI), Asset Accounting (AA), SAP Material Ledger (ML), Profitability Analysis (CO-PA), and other financial data into one Universal Journal entry. Furthermore, these all are represented in the table ACDOCA, with full details for all components. Since the system provides all data in real-time from this single journal. Thus, it reduces the period-end reconciliations and financial reporting preparation efforts considerably.

On the Fly calculation process

The new Universal Journal allows ad hoc, on-the-fly computations for converting periodic transactions from batch to real-time. It does not need the data to be replicated first to other systems such as SAP Business Objects Business Intelligence (SAP Business Objects BI). Further, the reporting is simple, fast, and multidimensional. Hence it makes the drill-down reports almost redundant.

Smooth Month-end and Year-end closing process

The ability to move away from batch-based and towards event-based processing enables period-end processes to run daily or weekly. Thus, it allows organisations to get a real-time view of their profit and loss (P&L). Even more, it provides the business with early visibility into emerging trends.

This functionality facilitates prompt remedial action where necessary, rather than to wait till the month-end. Consequently, it helps accelerate month-end activities by reducing dependency on scheduled and periodic batch jobs and tedious reconciliation efforts.

SAP BPC for SAP S/4 HANA Finance for real-time integrated business planning

This is a new planning functionality in which you can upload planning data using Microsoft Excel, which in turn loads real-time data back to SAP ERP for reporting. It also contains templates for cost centre, internal order, project, profit centre, cost of sales, and P&L planning.

New Asset Accounting in SAP Simple Finance

New Asset Accounting in SAP S/4HANA Finance replaces the classic FI-AA functionality. It simplifies posting logic which in-turn allows seamless integration with the Universal Journal. Due to the real-time postings, there is no need to wait for the month-end depreciation run.

SAP Cash Management

S/4HANA Finance allows an optional replacement for SAP Cash and Liquidity Management. This also adds bank account management, short-term cash position and forecast reports. furthermore, it enables real-time liquidity planning which allows for working capital optimisation.

Noteworthy, SAP Cash Management provides on-the-fly reporting capabilities for cash position and liquidity forecasts.

SAP Smart reporting with Fiori

We already know, Fiori enables the best user experience and friendlier usage of the finance application. To clarify, these are optional replacements for many of SAP’s traditional drill-down reports. While the code framework used by the old reports can’t be accelerated much with SAP HANA. SAP Smart Financials reporting uses the SAP Smart Business mobile UI with online KPIs and essential financial information.

This not only saves time but also enhances the performance of the finance application.

Data Ageing

This technical change replaces SAP data archiving. The new method builds data-ageing objects, creates partitions, and executes data-ageing runs. Thus, it reduces the SAP HANA memory footprint. Noteworthy, while only operational relevant data (hot data) is loaded in the main memory, historical data (cold data) is stored on disk.

New General Ledger in SAP Simple Finance

Now the classic G/L functionality is completely replaced by the new G/L. The classic G/L is only supported before the introduction of SAP S/4HANA Finance.

SAP Credit Management

SAP Credit Management is now completely covered under collaborative finance operations and receivables management.

System Architecture with SAP S/4 HANA Finance

SAP S/4HANA Finance’s Universal Journal architecture is comprised of a single source of truth for all accounting components. Hence, it makes reconciliation a topic of the past.

The new architecture consists of the following elements:

Universal Journal – One Single Source of Truth

Universal Journal provides us One single source for data in FI in the form of line-item table ACDOCA with full details for all components.

The following are some of the Universal Journal features:

• It provides a link on line-item level ( 1:1) between FI and CO
• It also creates a link from CO line items to a dimension table in CO-PA
• Further, it Enhances account-based CO-PA (detailed postings for the cost of goods sold)
• It provides a logical document (SAP HANA View) for analyzing the converged data
• Above all, Universal Journal does entry as the reporting database with:
  • A Universal Journal entry (table ACDOCA) is used for all accounting-relevant data. However, all previously used tables are still supported via compatibility views.
  • All fields are persisted in the Universal Journal entry, such as asset data, CO-PA attributes, and so on. Also, they can be reported from this single table.

Accounts and Cost elements – Merged

Secondary cost elements are created and depicted as G/L accounts with the following activities:

• G/L accounts and cost elements are merged.
• Secondary cost elements and cost element attributes are merged with G/L accounts.
• Surely, you need to maintain the Primary and secondary cost elements at the company code level.

Simplification of reporting in SAP Simple Finance

Now reporting is based on a single source of truth (e.g., replacement of SAP Business Objects BI reporting). Certainly, it allows fast multidimensional reporting on the Universal Journal. This is possible without replicating data to a separate system.

This simplification process does the following:

• It allows cross-area reporting within FI on all possible dimensions for all reporting objects (cost centres, orders, projects, etc.).
• It also Drilldown to all dimensions—for example, from the balance sheet and P&L to a single line item.
• Furthermore, the reporting allows profitability attributes for every P&L line item in real-time.

Reduction of the memory footprint

S4 HANA has reduced the memory footprint by eliminating redundancy.

Capable Finance Structure

Technical preparations have enhanced important structural capabilities of the financial solution (e.g., multi-GAAP, additional currencies, etc.).

CDS Views in SAP Simple Finance

When you activate the SAP S/4HANA Finance, the system replaces following aggregate tables of classic FI-AA with SAP HANA views:

• General Ledger Accounting’s totals tables and secondary index tables, such as tables GLT0, BSIS, and BSAS, and tables FAGLFLEXT, FAGLBSIS, and FAGLBSAS, respectively
• The totals tables and application tables of Accounts Receivable (AR) and Accounts Payable (AP), such as tables KNC1, KNC3, LFC1, LFC3, BSID, BSIK, BSAD, and BSAK
• The totals tables of CO, such as table COSP and COSS

Deployment Options in S/4HANA

Implementation of SAP S/4HANA Finance is undoubtedly a significant strategic decision both for IT and the business. You may use several deployment scenarios based on the situation and the requirements of the organization.

Greenfield implementation

This scenario features a fresh implementation of business processes on the SAP S/4HANA platform. Maybe because it is a new implementation. Otherwise, the reason could be that migrating the existing implementation to SAP S/4HANA provides little benefit.

For any greenfield SAP implementation, brand-new customers might take the view since they’re already implementing SAP. Hence, they should go and get complete new SAP S/4HANA. However, you need to carefully analyse the organization’s specific financial requirements also. This is to determine the components of SAP S/4HANA Finance that require activation. This includes assessing nonfunctional requirements too.

Likewise, you need to expect pre-migration validation checks and data fixes that require patience and persistence.

SAP HANA database migration

In this scenario, an organization is already on SAP ERP 6.0 EHP 7 or above (on a traditional RDBMS). Organizations on mature SAP ERP 6.0 implementations can analyze the impact of what a real-time analytical environment may bring them. Also, to know how they can monetize the value of real-time information which are fast available. Consequently, they can create good value for their organizations.

Technically, this commits the organization to SAP’s proprietary in-memory platform. Organizations need to spend time assessing the business case. This includes the risk of adopting the SAP HANA platform versus running the SAP Business Suite on other platforms, particularly in industries that use many other connected applications.

Related: SAP HANA Migration Guide

Replicate to Central Finance

This scenario replicates all systems, both SAP and non-SAP, into a Central Finance instance before deploying SAP S/4HANA Finance into the company’s environment.

There are organizations which are either not yet ready to upgrade their legacy systems or such an upgrade will be complex and time-consuming. Those organizations should go for the Central Finance deployment option. In this way, they can get benefit from SAP S/4HANA Finance without touching the existing system landscape. In short, by using Central Journal facilities, they can connect legacy SAP and non-SAP systems to an environment based on SAP S/4HANA Finance.

Conclusion

Features and benefits of S/4HANA Finance are enormous. As you dig into the subject you would find amazing facts that why this subject is the most popular module in SAP. For this very reason, it is in high demand. So, if you have an interest in this field of career, step ahead soon and explore more on it.