What is SAP FICO

SAP FICO Meaning:

SAP FICO stands for Financial Accounting and Controlling. This we can consider as 2 modules like SAP Finance (FI) and SAP Controlling (CO).

• SAP Finance – SAP Finance facilitates the preparation of accurate financial statements, encompassing Balance Sheet and Profit & Loss statement, to meet external reporting requirements, including tax submissions, regulatory filings, and financial disclosures.
• SAP Controlling – It takes care about management of Costs, Revenues, and Profitability for Internal reporting purpose.

SAP FI – Finance Sub-modules:

• GL Accounting (GL): It ensures accurate financial reporting, compliance with accounting standards, efficient transaction processing, real-time financial visibility, and improved decision-making. It integrates with AP, AR, AA, CO etc.
• Accounts Payable (AP): Whatever configuration part, Master data and transaction data related to vendor are part of AP. It also includes APP, Discount receiving from vendor etc.
• Accounts Receivable (AR): Whatever configuration part, Master data and transaction data related to customer are part of AR. It also includes Dunning procedure, Credit control area, Discount allowed to customer etc.
• Bank Accounting: Bank Accounting: It facilitates payments and receipts through integration with House Bank, Bank Key, Account ID, Electronic Bank Reconciliation Statements (E – BRS), and Direct Merchant Entry (DME), streamlining financial transactions and ensuring accurate cash management.
• New Asset Accounting (AA): it’s main function is to manage and accurately value an organization’s fixed assets, ensuring precise financial reporting and decision-making.

SAP CO – Controlling Sub-modules:

• Cost Element Accounting (CEA): It indeed acts as a bridge to integrate FI and CO modules by capturing costs or revenues.
• Cost Center Accounting (CCA): It manages costs associated with a specific functional area, department, or activity for internal reporting purpose (As it only captures the costs).
• Cost Re-allocation: It helps to re distribute the costs from one cost element / Cost Center to another cost element / cost center.
  • Example: Cost incurred Rs. 90/- by departments F100, S100, P100 and total paid by F100. Now we can distribute the cost Rs. 30/- each to S100 and P100.
• Internal Order (IO): Internal Orders are used when Cost Center reporting is insufficient, providing more detailed cost tracking and analysis for specific short-term events, projects, or activities.
• Profit Center Accounting (PCA): It captures the costs and revenues for specific organizational units, such as departments, business segments, or product lines, etc.
  • Example: Department A profit Rs. 100000, Dep “B” profit Rs. 50000. Here Department “B” is performing not well when compared to Dep “A”. So management can take necessary actions to improve profitability of Dep “B”.
• Profitability Analysis (COPA): It provides detailed profitability analysis and reporting capabilities. It enables organizations to analyze profitability by market segments, customers, products, or regions, identifying profitable and non-profitable areas to support strategic decision-making.

Profit Center Accounting vs Profitability Analysis (COPA):

• PCA – Internal organization units. COPA – Market Segments, Customers.
• PCA – Internal Reporting. COPA – External Reporting.
• PCA – It integrates FI & CO. COPA – It integrates FI, CO, SD & MM Modules.

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Configurations, master records and Transactional processes of SAP FICO Sub-modules wise:

• SAP Finance Enterprise structure: Click here
• SAP Finance GL Accounting: Click here
• SAP Finance Accounts Payable: Click here
• SAP Finance Accounts Receivable: Click here
• SAP Finance Bank Accounting: Click here
• SAP Finance New Asset Accounting: Click here
• How to Create a Controlling area in SAP: Click here
• SAP Controlling – Cost Element Accounting: Click here
• SAP Controlling – Cost Center Accounting: Click here
• SAP Controlling – Profit Center Accounting: Click here