Document Splitting in New GL in SAP #6 Set up Zero-balancing for SAP new GL

Document Splitting in New GL in SAP #6 Set up Zero-balancing for SAP new GL

Set up Zero-balancing for SAP new GL

 

Courtesy of Zero Gravity Corporation

Overview

In this blog, I will explore the settings required to activate the zero-balancing (or self-balancing) feature in SAP new GL. Zero-Balancing allows businesses to generate individual financial documents balanced by Profit Centre. Hence, each Profit Centre can now generate a balanced trial balance for itself.

The concept of zero-balancing in newGL is to generate balancing line items for every financial document such that the total by Profit Centre (for that financial document) is zero.

 

Blogs on Document Splitting

In my series of blogs on document splitting, I intend to explain and elaborate the concepts behind Document Splitting and highlight using examples how document splitting can be achieved for various complex business processes. I use Profit Centre as a “scenario” to explain the functionalities; however all processes that apply to Profit Centre also apply to the other scenarios (Segment, Business Area).

To identify the series of blog, I have categorised the blogs under SAP > Document Splitting. If you have questions/ comments/ suggestions, please send me your comments in the form below. Sharing your questions and experience using comment box below will help other readers to gain additional knowledge involved in this functionality.

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Assumption for this blog

You should read by first 5 blogs to gain an understanding of the concepts around document splitting. These 5 blogs form the backbone of this blog series. Where possible in this blog, I will link the context to the foundation blog so you can refer back to the concept, if you want to.

#1  Overview of new GL Document Splitting Process

#2  Architecture of SAP new GL

#3  The Design driving the new GL Document Splitting process

#4  SAP delivered pre-configuration for document splitting in SAP new GL

#5  The semantics of SAP new GL document splitting process

 

What am I demonstrating

Document splitting functionality in new GL allows the users to produce a balance sheet by profit centre (or dimension). However, the Balance Sheet is not a balanced Balance Sheet. To produce a balanced Balance Sheet by Profit Centre, there are certain configuration steps that need to be done.

 

Financial document without self-balancing

Document Splitting functionality in new GL allows the users to produce a Balance Sheet by Profit Centre (or dimension). However, the Profit Centre Balance Sheet is not a balanced Balance Sheet.As you notice in the document below, the total of Profit Centre 1100 is in the credit of $30 and the total of Profit Centre 1000 is in the debit of $30. The Profit Centre Managers do not have enough information in their respective Balance Sheets to analyse the cause of the difference or which Profit Centre is owing/ in debt to their Profit Centre.

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Financial document with self-balancing

If the balance of the account assignment objects concerned is not zero after Document Splitting, the system creates additional clearing line items and posts the items triggered in the document to the specified zero-balance clearing account.

If you have partner characteristics in the document, the system also fills these. Partner characteristics describe the sender and receiver relationships within a posting item. The system creates the clearing lines as follows:

  • If the partner characteristics are filled in the documents (for example, for the transfer of goods), the document balance is formed on the balancing document splitting characteristics and their partner characteristics. The clearing lines are created in accordance with this balance, since the partner assignments already exist.
  • If the partner characteristics are not filled in the documents, the system forms two-sided clearing lines using an amount procedure. The generated clearing lines then receive the partner assignment from the corresponding clearing line.”

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Configuration setting to activate self-balancing

For a detailed review of the configuration settings, read my previous blog on SAP delivered pre-configured settings for Document Splitting.

Assign Scenario “Profit Centre” to Ledger

You should assign the scenarios “Profit Centre Update” to leading ledger and, if required, non-leading ledgers.

This assignment can be configured in IMG menu path

Financial Accounting (New) > Financial Accounting Global Settings (New) > Ledger > Assign Scenarios and Customer Fields to Ledgers

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Define “Profit Centre” as a Document Splitting Characteristic for General Ledger Accounting

The system proposes characteristics based on scenarios assigned to ledger. Select the characteristic “Profit Centre” to split the financial document.

Configuration can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledger Accounting

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Classify G/L Accounts for Document Splitting

G/L Accounts are classified by Item Category. This will allow the system to perform Document Splitting based on Item Category derived on lines of a financial document.

Configuration can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Classify G/L Accounts for Document Splitting

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Classify Document Types for Document Splitting

In this step, Document Types are assigned to Business Transaction and Business Transaction variant. This will ensure that the document type is included in the Document Splitting process.

Configuration can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Classify Document Types for Document Splitting

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Define Zero-Balance Clearing Account

For characteristics that you defined zero-balance setting in Define Document Splitting Characteristics for General Ledger Accounting, you can configure the G/L account where the clearing posting is made.

Configuration can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Zero-Balance Clearing Account

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Activate Document Splitting

SAP allows you to activate Document Splitting for the entire client. Company Codes can be excluded from the activation in the next screen in this configuration.

Configuration can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Activate Document Splitting

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GL Account settings for zero balancing GL Account (SAP OSS note 961937)

SAP OSS note 961937 recommends the following settings for zero-balancing clearing account:

  • Post Automatically only – select “Yes” “To generate the zero balance clearing items of the new General Ledger, the system updates the zero balance clearing account in the relevant new General Ledger only.  When doing so, the system never creates entries in the tables of the entry view (BSEG, BSIS, BSAS) for this account”
  • Line item display – select “No” “As this account is a purely technical clearing account that is only updated in the tables of the new General Ledger but not in the entry view (BSEG, BSIS), corresponding line items that are managed in the BSIS cannot be made available.”
  • Only balances in local currency – select “Yes” “The posting to this technical zero balance clearing account should not affect the foreign currency valuation.”
  • Assign to Item Category – Select “01001” This is a SAP defined item category for self-balancing GL Account.

Conclusion

SAP new GL zero-balancing (self-balancing) functionality is a very useful feature of the new SAP ECC functional architecture. It has eliminated the need to transfer balances from GL to Profit Centre Accounting by simply incorporating Profit Centre as a characteristic in the new General Ledger.

 

Please Share

I hope this blog has helped you understand the configuration behind document splitting. Please do leave your comments below whether this article was helpful; and whether you have any suggestions/ comments; or if you would like to share your experience with document splitting.

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View my presentation on Slideshare

Document splitting in New GL in SAP

Index of my blogs on Document Splitting in new GL in SAP ECC

#1  Overview of new GL Document Splitting Process

#2  Architecture of SAP new GL

#3  The Design driving the new GL Document Splitting process

#4  SAP delivered pre-configuration for document splitting in SAP new GL

#5  The semantics of SAP new GL document splitting process

#6 Set up Zero-balancing for SAP new GL

#7 Customise Document Splitting rules

#8 Use Constants for Nonassigned Processes in SAP new GL

#9 Customise cross company code postings for document splitting

#10  Document Splitting in Cross company code vendor payment

 

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Rajesh has implemented new GL and Document Splitting for several customers. Rajesh has 12 years experience implementing SAP / IT / BPM Finance solutions for several customers globally; he also has 7 years experience working in the business in Finance and Accounting functions. His business process knowledge combined with his IT expertise enables him to provide his customers with best-of-breed advice on business process / IT implementations.

View Rajesh Shanbhag's profile on LinkedIn

 

Comments

  1. Do you think that Zero-Balance Clearing Account must be include in financial statement version?

    • Hi Cristian
      Since zero-balancing is a system generated entry, I do not foresee any balance in that account. Hence, the answer could be either way.

      a/ Most companies have a separate GL range for clearing accounts; this range of GL accounts can be included in FSV; this ensures that the net balances at the end of every transaction is zero (within a company code).
      b/ You could exclude the zero-balancing and clearing range of GL accounts from FSV. However it is a good idea to perform a visual check at end of each month on these clearing account balances to ensure that they are zero (else your balance sheet will not tie up because you have excluded these accounts).

      Regards

      Rajesh

  2. Hi Rajesh,

    Very good documentation. Here is a question for you.

    If I use Business Area in Document Splitting or without DOcument splitting will I be able to generate Balance Balance sheet at Plant level..

    If the answer is Yes, then why SAP is not recommending to use Business Area.

    Thanks
    Shobana

    • Hi Shobana
      Read OSS note 40738. “However, it should also be noted
      that at this time there is no intent to empower Business Area’s as a
      structure with the same level of functionality available with profit
      centers.”

      SAP has stopped development of Business Areas back in version 3.0. SAP suggested object to achieve the same result is Profit Center. Read the OSS note in entirety.
      You can create a plant as a profit center or as a group of profit centers and generate Balance Sheet at plant level through profit centers.
      I have not worked on Business Areas for a long time myself. If you have any specific question on Business Areas, send it over. I might have to walk back in time to recollect the experience.

      Regards

      Rajesh Shanbhag
      Rajesh Shanbhag
      Principal, Verity Business Solutions Pty Ltd
      Productivity Amplified

      PO Box 578, Cherrybrook, NSW 2126
      Sydney, Australia
      M +61 4 1123 8873
      http://www.veritysolutions.com.au
      http://au.linkedin.com/in/veritysolutions
      Twitter: @rshanbhag
      http://www.slideshare.net/rshanbhag
      Skype: veritysolutions

  3. How can we exclude a particular GL a/c from document splitting? i dont want document splitting for that GL…eg Forex gain loss in OKB9

    • Hi Sunando
      Try and exclude the GL gtom “Classify G/L Accounts for Document Splitting” and do not make the splitting characteristic mandatory in “Define Document Splitting Characteristics for General Ledger Accounting”.

      Rajesh

  4. Hi Rajesh

    I want to ask you about Zero-Balance Clearing Account in financial statement version.
    If this account is used for balancing Profit Center then this account should be included in FSV in order to have balance sheet balanced by profit center. But I have the question in which balance sheet position this account should be assigned?
    Additionaly I want to ask you what is the best practise in case of using default Profit Center. Does this default Profit Center should be reposted on “normal” Profit Center?

    Best regards
    Konrad

    • Hi Konrad
      Zero-balancing should be part of current assets/ current liabilities. It is similar to Inter-company balances, so should be grouped in the same group. But this is a decision for each business to take.

      Some of my customers did re-allocate balances in default profit center. It is not easy to determine the drivers to allocate the balances out. For eg, if Purchase Price Variances or exchange rate variances posts to default profit center, how would you allocate this out to departments? What driver would you use to allocate it out? For many of these transactions there is no “normal” profit center. Business however might discuss and
      agree to allocate it out on an agreed ratio to specific profit centers. The trouble usually is there might not be a “normal” profit center to these transactions.

      Regards
      Rajesh

  5. Hi Rajesh,

    As mentioned in your blog, I tried to assign item category 01001 to the self balancing GL, but system throws an error that, The (Technical) item category 01001 is not permitted. If I assign a Balance sheet item category, it works perfectly fine.

    The Self balancing GL is also maintained in configuration.

    Any idea.. why?

    Thanks & Regards,

    kavita

    • Hi Kavita
      EVen if you do not assign it to an item category, the system posts the FI document successfully. And in FAGLFLEXA the item category is 01001. I was just following SAP recommendation.
      And I do not get any error when I assign 01001.

      Regards

      Rajesh

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