Business planning is crucial for the establishment and growth of an enterprise. Data from different sources can be used in different ways to support strategy-making. As the company grows in size, large transactions that span over multiple countries make it more difficult to plan and consolidate.
SAP BPC helps organizations to make the most of data and to analyze it to create successful plans. SAP BPC can also generate reports that are an integral part of regular audits.
Financial consolidation refers to the collection of transactional and financial data from multiple sources. This can be useful for companies with multiple financial statements. An automated system is essential to simplify the month-end process. We will discuss the importance of consolidating financial information and how to do it.
Consolidating Financial Data is Important
Companies often work in several countries. Different countries have different financial regulations that must be followed. Every company must have the same financial reports every month. They should be easy to understand. It is important to consolidate financial data. It allows you to combine different economic systems and policies by following their rules.
It is possible for a company to be owned by multiple owners from different countries. Therefore, the financial report should accurately reflect this information. It should include the country’s percentage ownership and productivity, as well as other important details. In the SAP BPC consolidated statements, intercompany sales, goods costs, and receivables will be properly reported.
Performing Consolidation Using SAP BPC
The Following Steps Are Required To Complete A SAP BPC Consolidation:
Prepare – This is where the database is created and the master data are transferred. As the consolidation process begins, security measures will be taken into account by taking into account different business rules.
Collect – This step involves collecting data from both manual and automatic sources. After the data has been validated, it is added to the central database. The currency translations for different currencies are also done during this step.
Consolidate – This step involves three important tasks: elimination, data validation, and reclassification.
Report – This report is generated automatically by analysing the data and then adding it to an Excel sheet. The SAP BusinessObjects Dashboard handles business queries.
This is a summary of all the steps involved in the consolidation process. The whole system follows a specific workflow called Business Process Flow (BPF). These are the steps of BPF:
Balance Carry Forward – This step transfers the records and details from the previous year into the new financial year.
Import Actuals – The current data from multiple sources is imported into the local database. This allows for integration with the planning or consolidation process.
Data Validation – Data validation is used to verify the asset’s transparency and run liability checks.
Reclassifications – Minor changes and adjustments can be made at this point.
Journals – These are used to adjust entries in order to comply with the compliance norms. You can do this at a later stage.
Ownership Data – This section includes the ownership data as well as the percentage of ownership for each owner.
Currency Translations – All currencies are converted to one currency that is accepted (similar to the US dollar).
IC Matching – IC differences can be observed and booked here.
IC Elimination – IC revenues and the cost of goods are eliminated.
Consolidation Monitor – This monitor handles the different currency translations as well as ownership eliminations.
Publishing Group Financials – The final statements are released at the conclusion of the consolidation process.
Introduction To Business Rules In SAP BPC
Business rules allow for planning and consolidation of steps to enter metadata into a database. This phase includes various attributes that allow for filtering and differing input data. This phase also allows for different calculations with these data. The environment level contains the business rules. There are two levels of business rules:
Methods – There is a variety of methods available, including the 86 Purchase Method and 70 Proportional Method.
Method Based Multipliers: This tool is used to select different entity sources and book the data using different percentages.
There Are Six Rules That Can Be Used To Consolidate Type Models. These Are:
Currency Translation – For easy calculations, local currencies can be converted to centrally used currency.
Elimination and Adjustments – Eliminates ownership, intercompany activities and other business activities.
US Eliminations – Used to simplify the system, eliminating COGS and IC revenues.
Intercompany Bookings – Reduce intercompany differences using IC matching methods
Account-Based Calculations – Used for reclassifications.
Carry forward – This is used to carry forward balances before the period closes.
SAP BPC is a powerful tool to consolidate data and organize them for use across departments. It is a platform that integrates all financial data within a system. This also plays an important role in the generation of financial reports. The consolidation using BPC is an easy process. It consists of the four-pillar processes described above.
SAP BPC is a great tool for increasing scalability and ensuring steady growth.