Organizational structure and business transactions in SAP R/3

Structure of the SAP R/3 System in commercial terms

 Accounting Area
Financial Accounting (FI) Controlling (CO) Asset Accounting (FI AA)

Human Resources
HR

Logistics
Production Planning (PP) Materials Management (MM) Sales and Distribution (SD) Quality Management (QM) Service Management (SM) Plant Maintenance (PM)

Overview of the organization structure in SAP R/3

Client = Group Company Code1 Production Department Company Code2 Plant

Organizational units in the Financial accounting module

Client Company Code Business Area Company Credit Control Area Funds Management Area Dunning Area Chart of Accounts Controlling Area

Client
Central organizational element Top-level structural element of a company Separate unit with its own separate master records and complete group of tables To spesify the client in which the user want to work they have to enter a Client Code when they logs into the R/3 system

Organizational structure of a client

Client Company Code1 Company Code 2 Company Code 3

Company Code
Client can be subdividet into one or more Company Codes Represent legally independent companies Several Company Codes in each client allows you to manage accounting data for different independent companies at the same time

Organizational structure of a Company Code

Company Code (Group) Business Area 1 (North) Business Area 2 (South)

Business Area
One company code can be divided into several business areas One business area may also be used in multiple company codes Only used to provide in-house information in the SAP R/3 system

Company
The smallest organizational unit for which legal financial statements can be prepared Can include one or more company codes Each one of a companys company codes must use the same Chart of Accounts

Organizational structure of a Company

Company Company Code 1 Chart of accounts1 Company Code 2 Company Code 3

Chart of accounts1

Chart of accounts1

Credit Control Area

Organinzational unit in which all account receivable from a customer are totaled Can be defined in such a way that it can be used in several Company Codes

Organizational structure of a Credit Control Area

Credit Control Area

Company code 1 (Subsidiary)

Company code 2 (Subsidiary)

Funds Management (FM) Area

Used to plan the deployments of Funds Identical to the Company Code in broad terms Controls budget management in an independent unit that draws up its own accounts You can assign several Company Codes to one FM Area

Organizational structure of FM Area

FM Area

Company Code 1

Dunning Area
Dunning procedures are usually managed in the accounts receivable and accounts payable departments If dunning is managed independently in several organizational units you must create Dunning Areas

Organizational structure of Dunning Area

Company Code (Subsidary) Dunning Area 1 (Division A) Dunning Procedure 1 Dunning Area 2 (Division B) Dunning Procedure 2 Dunning Area 3 (Division C) Dunning Procedure 3

Chart of Accounts
Contains all of a companys General Ledger accounts Used by both the Financial Accounting and the Controlling modules 1-1 relationship between Chart of Accounts and Company Code or Controlling Area

Organizational structure of Chart of Accounts

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Single-code system:
internal and external accounting form one unit all the postings are accountable you can only calculate a companys net income after determining the neutral expenditure and the neutrale income

Dual-code system:
financial accounting and operating accounting are carried out in two separate settelment areas each settelment is a closed unit

The information in a Chart of account controls how master records are created in the Company Code

Controlling Area
Organizational unit in the Controlling module The information in Financial Accounting is directed towards interested parties from outside the company. Controlling does not have to comply with the legal regulations for financial accounting.

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Organizational structure of Controlling Area

Organizational units in the Logistics modules

The Plant and Sales Organizations organizational elements within the Logistics modules are assigned to spesific Company Codes

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Overview of the organizatinal structures of Logistics elements

Client =Group Company Code 1 Production Department Company Code 2 Plant

Plant and Storage Locations

Companys productions locations and branch offices are represented by Plants One Company code may contain several Plants The plant is the location at which goods are manufactured or a service is performed A plant may consist of several physical Storage Locations

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Organizational structure for plants and storage locations

Company code 1

Plant 1 Production

Plant 2 Dept/Division

Plant 3 Distribution

Warehouse 3

Warehouse 3

Warehouse 3

Warehouse 3

Warehouse 3

Sales Organization Distribution Channel and Line

Sales organization is the top organizational unit in the Sales and Distribution module You can assign one or more Distribution Channels to the same Sales Organization You can assign several Lines to the same Distribution channel Lines represent various product groups

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Organizational structure for Sales Organization, Distribution Channel and Line

Sales Organization (In-Plant Sales Organization)

Distribution Channel (Wholesale)

Distribution Channel (Retail)

Division 1

Division 2

Division 1

Division 2

The structure of the Financial Accounting module

The task of financial accounting department is to record all business transactions systematically and
comprehensively enter all these transactions in the system, and document them

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 Financial Accounting is subdivided into

General Ledger Extended ledger Accounts payable Accounts receivable Asset accounting Consolidation Financial contolling Investment Funds monitoring Travel management

Components of the Financial Accounting module

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Connecting to other SAP modules

The Financial accounting module is linked to almost all the others in SAP Business transactions are recorded as they occur in the form of documents, and stored in a shared database

The document principle

All postings are always stored in the form of documents Each document must be complete before it is posted Each document must contain specific minimum information (document date, document type, posting key, account numbers, amounts) Incomplete or inconsistent Documents cannot be posted

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Real-Time posting
Ensures that all employees at different levels have continous access to a current and uniform dataset SAP R/3 supports Real-Time processing by using a combination of batch processing and dialogue processing

Double-Entry Accounting
Ensures that all the business transactions recorded in subledgers are also posted to the relevant reconsiliation account in General Ledger accounting You can post data in the Controlling application component at the same time

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General Ledger Accounting

Provide a comprehensive picture of the external accounting process and the accounts involved in it Provides the following functions:
Atomatic and simultanious posting of all subledger item to the coresponding ledger accounts Simultaneous updating of the general ledger and controllig data real-time evaluation and reporting of current posting data in the form of account displays and closing accounts with different financial statement versions

General ledger accounts

Contain the increases and decreases that correspond to the flows of goods and services used in the Logistics module contains master records that controls how business transactions are recorded and posted to the account The Master data record identifies whether an account is a reconsiliation account Reconsiliation accounts groups together the value items from the accounts of individual subledgers

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Documents in Financial Accounting

Document type is an importent control elememt in the SAP R/3 system Document type is used to:
identify different business transactions control how account types are posted assign document numbers determine whether a gross or posting is involved

Posting key controls how documents are recorded

Financial statements
Divided by time into daily, monthly and annual financial statements Daily financial statements:
can be created immediately without any extra steps is sorted chronologically in a posting journal

Monthly financial statements:

carry out a number of closing tasks to create it

Annual statments:
The annual accounts is designed to provide information for internal and external recipients Business transactions need to be entered in chronological order

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 Structure of the Balance Sheet and the P&L account:

In SAP R/3 system you can create Balance Sheet and P&L statements in various language and currencies to meet the requirements of companies that operates internationally you can select different classification schemes for communications, tax and international reports

Subledgers
Contain posting data information in detail The following subledgers are part of the R/3 systems ledger:
Account Receivable Account Payable Asset Accounting Inventory Accounting Personell Accounting Bank Accounting

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Account Receivable
Contains the accounting data for all the accounts receivable that are present in the system Customer master data record:
contains all the data that describes the commercial relationship with a specific customer used by the Financial accounting component divided into a general section, a section for individual campany codes and a section for sales data

Outgoing invoices and credit memos:

the system will automatically post invoice and credit memos in the FI module when you create an invoice or credit memo in SD

Prcessing incoming payments:

by computerized direct debiting or manually, by check or bank order

Dunning letters:
to include a customer in the SAP R/3 systems automatic dunning process, you must first enter a predefined dunning procedure in the customer master data record

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 Customizing background for defining the dunning program:

Which company codes must always be included in dunning Which dunning procedure is to be used Which dunning costs are to be charged The net data on which a specific dunning stage is reached Which dunning letter is to be sent to the customer

Account Payable
Manages all vendor accounting data Vendor Master data record:
is created in the same way as the customer master data record contains all the data required for handeling the business relationship

Incoming invoices:
For MM and FI modules you enter this data in the modules Invoice Check Procedure function The Invoice Check Procedure checks the data of an incoming invoice against the data of tha order and delivery

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 Payments:
SAP R/3 system can use the payment program to handle cash transactions automatically Two-stage process The system uses the information in the documents and master record to create a payment proposal list

Customizing backgrund for defining the payment program:

Which company codes always take part in cash transactions and which company codes are to handle payments Which methods of payments are to be used in each case From which bank account the payment is to be made The form to be used for payment

Assets Accounts
administers and monitors a companys fixed assets The following functions are integrated in it:
Asset accounting and valuation Leasing management Consolidation preparation information system

Linked to a great many other modules of the SAP R/3 system

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Bills of exchange
a contractual security whereby the person issuing the bill places himself/herself or a therd party under an obligatin to pay a certain sum within a certain period Payee: recipient of the payer Drawee: person paying Anyone who signs a bill of exchange is liable for the sum A bill of exchange merely documents the legal aspects of payment claims

Bill of exchange strictness

A bill oexchange can be written on any sheet of paper, but only counts as a bill of exchange if it meets the legal requirements:
Must appear in the text of the document in the language in which it is issued it must consist of som other components (certain sum of money, name of drawee, expiery data, place of payment, to whom the payment is to made, day and place of issue, signature of the issuer)

The following variation can apply:

The issuer can also be the drawee The issuer can also be the payee The issuer places itself under obligation

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Accepting a bill of exchange

The obligation of the bill only comes about with acceptance At least two people are always required to create an obligation

Causal debt versus bill-of-exchange debt

Debt relatinship is referred to as abstract because the bill of exchange does not imply its legal reason In crontrast to bill of exchange, the legal reason in the case of claim, is already included The bill of exchange also requires a reason

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Payment and fulfilment

The owner of a bill of exchange can demand payment on the due date Only payment to the legally entitled person counts as fulfilment A bill of exchange protest is the formal documentation stating that a bill of exchange has not paid when due Regress (recourse) can be used in two cases:
When the drawee does not pay When the drawee does not accept liability to pay

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