SAP Simple Finance New Options in Profitability Analysis | SAP Simple Finance Tutorials

Even though Simple Finance sounds at the outset like a contradiction in semantics alone, SAP claims otherwise. SAP has built its product with a lot of well-thought out feature frameworks that brings about simple-to-use features along with real-time SAP HANA-powered (know HANA offerings from SAP HANA training) and Cloud-based functionalities which are all pervasive in the IT domain today.

Discover what changes in profitability analysis (CO-PA) when you use SAP HANA as a database. Learn how to link the general ledger and CO-PA and see what functional enhancements have been made to account-based CO-PA to provide greater transparency. Ensure that you get the best of both worlds: figures in the income statement that match the lines in CO-PA, but with sufficient detail to explore your manufacturing costs properly

Learning objectives

By reading this article, you’ll learn how:

• The use of SAP HANA as a database impacts profitability analysis (CO-PA)
• The data structures for costing- and account-based CO-PA differ
• New configuration allows you to record more detail in account-based CO-PA than was previously possible

A key component of SAP Simple Finance is the SAP Simple Finance Add-on for SAP Business Suite powered by SAP HANA. (Learn in depth concepts from SAP Simple Finance Training by SAP Trainings Online) This is a new product, powered by the in-memory capabilities of SAP HANA that allow you to use in-memory technology to further optimize Financials core business processes. (For further details, refer to SAP Note 1968568). The business processes feeding into profitability analysis (CO-PA) have been enhanced to provide better transparency.

SAP Simple Finance links the profit and loss items in Financial Accounting with the relevant items in Managerial Accounting. Thus expense items link with Cost Center, Order, and Project Accounting. Revenue and cost items link with account-based profitability analysis (CO-PA).

In the past, SAP tended to advise companies to use costing-based CO-PA rather than, or in addition to, account-based CO-PA. SAP’s latest product offering, SAP Simple Finance, uses SAP HANA as its primary database, opening up new options for profitability reporting. In this context SAP is choosing account-based CO-PA over costing-based CO-PA. With SAP Simple Finance, you get one version of the truth for profitability reporting with the transparency you previously only got with costing-based CO-PA.

Account-based CO-PA has been enhanced in SAP Simple Finance to provide detailed information on the cost of goods sold, production variances, and invoice quantities that were previously only available in costing-based CO-PA. Costing-based CO-PA continues to exist as an additional option alongside account-based CO-PA.

The characteristics you use for profitability reporting are the same in both types of CO-PA. You set up an operating concern that defines the characteristics that your organization will use (typically products, customers, customer groups, divisions, and plants). These are stored in table CE4. The difference is in the way the transactional data is stored with reference to these characteristics.

In costing-based CO-PA you store the values (revenues, cost of goods sold, production variances, overhead, and so on) for reporting as value fields. The configuration steps essentially map your accounts (such as revenues and sales deductions SAP SD training module gives an overview of all sales and order procurement) and cost elements (such as cost of goods sold, production variances, assessments, and settlement) to value fields. For many years the limit was 120 fields, rising to 200 fields in recent releases.

By contrast, account-based CO-PA uses accounts or rather cost elements for the revenues, sales deductions, cost of goods sold, and so on. There’s actually no limit to the number of accounts you can use, but there was a limitation in the posting logic such that cost of goods sold and variances were always assigned to a single account/cost element and it is this limitation that SAP has removed with SAP Simple Finance.

With the use of Profitability Analysis, it provides the organizations with profitability related information on the performance of its sales channels. Profitability Analysis is used to support decision making, and planning for sales and marketing in an organization. Organizations can define their planning strategy based on the profitability analysis. Following are the key points about profitability analysis.

• The definition of a market is configured in the system by selecting the characteristics that are the subjects of analyses.
• Performance figures may be based either on profit and loss accounts (Account Based CO-PA) or freely-defined value Gelds (Cost Based CO-PA).
• Account-based CO-PA is the recommended approach.
• Cost-based is fully supported but is not integrated in the Universal Journal.
• You can use both approaches in parallel, for number of customers you have to evaluate if there is a need for cost-based CO-PA.

Real time account based profitability

Following are the key features about account-based real-time Profitability Analysis

• The Universal Journal as a single source of truth in Financials provides profitability attributes for every P&L line item.
• The Operating Concern generation appends the CO-PA characteristics to the Universal Journal.
• Profitability attributes are derived online.
• Profitability attributes can be enriched by further processes such as settlement or allocations.

How profitability analyses used in business organizations and how it is considered to be key aspect in enterprises can be learnt from SAP Trainings Online. It is the one stop destination for all SAP training courses in SAP technical and functional modules with best experienced professionals and skilled resources We have been offering courses to beginners, consultants so that they can meet all the challenges in their respective technologies. We provide trainings in India, USA, UK, Canada, Australia, Newzealand, Saudi Arabia and many countries all over the world.

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