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Thursday, May 19, 2022

Transform Finance Operations Using SAP Business Planning And Consolidation

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For a business to grow and succeed, it is vital to plan well. Data from many sources can be used in a variety of ways to help you make strategic decisions. As the company grows in size, large transactions that span over multiple countries make it more difficult to consolidate and plan.

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 converts various economic systems and policies into a single form 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 transferred. As the consolidation process begins, security measures will be taken into account by taking into consideration different business rules.

Collect- This step involves collecting data manually or automatically from reliable sources. After the data has been validated, it is added to the central database. The currency translations for different currencies are also done in this step.

Consolidate This step involves three important tasks: elimination, data validation, and reclassification.

Report – This report is generated automatically by analyzing the data and then adding it to an Excel sheet. The SAP Business Objects 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 is imported multiple times from different sources to the local database. This allows for integration with the consolidation and planning process.

Validation –Data validation is used to verify the transparency of an asset and run liability checks.

Reclassifications Minor adjustments and changes can be made at this point if necessary.

Journals- This allows you to adjust entries in order to comply with the compliance norms. You can do this at a later stage.

Ownership data – This page shows the ownership data and percentage ownership of each owner.

Currency Translations All currencies can be converted into one currency that is accepted (Like US dollars).

Matching – Differences are observed and booked.

IC Elimination –IC revenues are eliminated and the cost of goods are eliminated

Consolidation monitor – This monitor takes care of various currency translations as well as ownership eliminations.

Publishing Group Financials The final statements are released at the conclusion of the consolidation process.

SAP BPC: Introducing Business Rules

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 are three methods that can be used to calculate, which is the 86 Purchase Method and the 70 Proportional Method.

Method-Based Multipliers – This is used to select different entity sources and book these data using different percentages.

There are six rules that govern consolidation type’s models. These are:

Currency Translation – Local currencies can be converted into centrally-used currency for simple calculations.

Elimination of Ownership and Intercompany Activities –Adjustments

US Eliminations –Used for simplifying the system by eliminating IC revenues.

Intercompany Bookings –Reduce intercompany discrepancies by using IC matching methods.

Account Based Calculations – For reclassifications.

Carry forward – This is used to carry forward prior to period closing balances.

Conclusion

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.

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