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 > newGL. 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.
The configuration for document splitting characteristics for General Ledger for this blog is as below.
[IMG] Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledger
Configuration for CO-relevant document splitting characteristics can be performed in IMG menu path
Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for Controlling
I will also assume you have configured the GL account default for realised foreign exchange loss/ gain.
[IMG] Financial Accounting (New) > Accounts Receivable and Accounts Payable > Business Transactions > Outgoing Payments > Outgoing Payments Global Settings > Define Accounts for Exchange Rate Differences
This GL Account is created as an expense cost element.
What I am demonstrating
In this blog I will demonstrate foreign exchange loss/ gain realised during the purchase to pay process. I will create a Purchase Order from an Australian company for an overseas vendor in US Dollars. I will raise the Purchase Order against 2 cost centres that have different profit centres assigned to them. This will allow me to demonstrate the split that occurs when the foreign exchange gain or loss is realised during payment. The Goods Receipt is performed against this Purchase Order. When the Invoice is received, the exchange rate USD:AUD has changed. And when the payment is made against this Invoice, the exchange rate has changed again.
The Invoice Payment process will trigger a realisation of foreign exchange gain or loss. Based on configuration, these will post to relevant GL Accounts. Document Splitting process will ensure that these gain / loss line items will be split by cost centre based on the original split during Goods Receipt.
Foreign Exchange realised during Purchase to Pay process
Goods Receipt against Purchase Order
I performed a goods receipt against Purchase Order 4500017212. The Purchase Order is raised on a US Vendor in US Dollars for services against two cost centres (that have different profit centres assigned to them). At the time of Goods Receipt, the USD:AUD exchange rate is 1.025. The Goods Receipt of USD 250 posts the following entry:
The document is already split by Profit Centre. Hence, the General Ledger view is similar to the Entry view:
Invoice Receipt against Purchase Order
After the Goods Receipt and before the Invoice could be received from the US vendor, the USD:AUD exchange rate moved to 1:1.035. The Invoice is received for a value of USD 255. I posted the difference of USD 5 to an expense account and to a different profit centre compared to the profit centre on the two original postings.
The Vendor account is credited with the new exchange rate of 1.035. The foreign exchange difference of USD 2.50 attributed to the two GRIR line items is split in the same ratio (1:1.5) as the original expense and assigned to the same GL 621030, cost centre (1322 /1721) and profit centre (1300 / 1701) as the original expense.
The Invoice Receipt document will undergo a split for the Vendor line item; the split will happen in the same ratio as the original posting.
Vendor Payment and foreign exchange realised
This Vendor Invoice is due for payment. The exchange rate has now moved to 1.045. Exchange rate differences attributed to payment process are written off to Profit & Loss account; the account is defaulted in the configuration mentioned in the Assumption section of this blog. This GL Account is a cost element with no default or automatic account assignment. SAP will expect a cost object to be posted against the gain/ loss cost element. However, SAP pre-delivered Document Splitting will post the cost centre against this line item from the original posting.
The payment document in Data Entry view is as below. The exchange rate difference of USD 2.55 is split in the same ratio as the original posting. Document Splitting has carried over the cost centre information from the previous process and assigned the split to the cost centre.
The General Ledger view splits the Vendor Account and the Bank Account in the same ratio as the previous posting:
Variation to this process/ design
Default Account Assignment to Forex Cost Element
If you have defined a default account assignment for this GL Account, the system ignores the default account assignment and will assign the cost centre from the original document.Document Splitting inherent in newGL overrides the default account assignment configured by users.
I configured the default account assignment for forex gain/ loss cost element as below:
[IMG] Controlling > Cost Center Accounting > Actual Postings > Manual Actual Postings > Edit Automatic Account Assignment
The vendor payment document posted as shown below. The above configuration was ignored by the system.
Document Splitting “Constant” assigned to Forex GL Account
I assigned a Constant for the item category of forex gain/ loss GL account in the Document Splitting rule (configuration shown below).
Strangely, the system ignored this rule as well. This could pose a problem for users who want to post forex gain/ loss to a single default cost centre. Generally, forex differences are assigned to corporate or treasury.
If any of the readers had requirement to post forex to a different GL and managed to do so (using standard SAP), could you share your experience with other readers using the Comment box below?
Forex GL Account not a Cost Element
Another variation of this design is if you have not defined the foreign exchange loss/ gain GL Account as a Cost Element. In this case, the system will perform a Document Split only at the Profit Centre (scenario) level. It will not post the gain/ loss line item to the cost centre (cost object).
The split on Vendor and Bank line item occurs in the same ratio as the split in the original document.
The process of Document Split on subsequent processes is relatively simple. Document Splitting for certain subsequent processes works automatically in SAP without any extended Document Splitting configuration. SAP picks the split on the original document and uses that as the split basis for the subsequent document.
I hope this blog has helped you understand the design behind document splitting of subsequent processes. 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
Index of my blogs on Document Splitting in new GL in SAP ECC
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.