Dear,
The high performance technology of S4 HANA has made possible the elimination of many SAP intermediate tables and the development of the SAP Simplification initiative in S/4HANA.
A great improvement is the new concept of Event Based Accounting which permits the valuation of assets (including Work in Process) at the time of the Event without having to wait until the end of Period close.
Event Based Accounting Revenue Recognition (Event Based Accounting) is possible as a consequence of the integration of Analytical and Financial Accounting into the Universal Journal, with the Object Cost being part of the Coding Block, instead of being spread amongst multiple Financial and Analytical Accounting Tables.
This is an architectural design that opens the door to extend all the Accounting reporting needs to one flexible coding block, providing the foundation for a consistent single source of the truth which does not require complex reconciliation processes to guarantee the validity of the results.
As SAP Financial Products Subledger integrates directly with the Universal Journal of S/4HANA, Event Based Accounting improves the capabilities for the Financial Reporting of a Bank or Insurance Company.
For instance, the Costs of a marketing Campaign, collected in an Marketing Internal Order, can be evaluated in Real Time, simplifying the End of Period processes. As the Universal Journal has become the Single Source for Accounting, also for the Accounting of Financial Instruments, it reduces the complexity of the Bank’s Accounting and Disclosure processes.
Developing an Event Based Accounting for Financial Instruments presents other challenges. Financial Instruments valuation requires estimation of future Cash-Flows, Market Data, Credit, Liquidity and Market Risk adjustments, Collaterals and Exposures evaluation. But until the equivalent functionalities of Event Based Accounting are available for Financial Instruments, having a Single Source of Truth for Financials in the Universal Journal is a major advantage in the preparation of the Financial Statements.
The SAP HANA In-Memory Computing performance supports General Ledger line items reporting possible, so we can build reports on all the provided attributes stored in the Universal Journal without having to replicate the data to Business Information Warehouse or any other aggregated repository.
This integrated architecture increases traceability, facilitating the revenue recognition analysis, from accounting postings to commitments and other operational events.
With the integration offered by the Universal Journal we get for all postings of the SAP subledgers (Assets Management, Financial Instruments, Projects, Sales, Materials, etc.), with its costs, revenues, and revenue recognition postings, including the option for multi-currency accounting.
Additionally, the S/4 HANA and FPSL architecture provides parallel valuation capabilities with parallel ledgers.
As the Financial System has to be transformed from a model based in volume to a model based in Capital Optimization, it requires to track the flows of Capital consumption. All these capital consumption flows are already in SAP systems, speaking SAP language. The only alternative is that the financial system “speaks” the same language in order of tracking the capital consumption flows. This is what SAP professionals call “Integration”.
The last 11 years our team has worked in modelling all the economic events and business flows represented in the SAP systems of the Real Economy, in terms of Capital and Liquidity consumption and generation. With this information, our systems measure how to offer Financial Instruments for covering Capital and Liquidity gaps or investing Capital and Liquidity surpluses, optimizing the Capital and Liquidity consumption of the system.
We are working on presenting our system to the market, and looking for business partners and investors, if you are interested do not hesitate in contacting me at ferran.frances@capitency.com
Looking forward to reading your opinions.
Kindest Regards,
Ferran Frances.
www.capitency.com
Join the SAP Banking Group at: https://www.linkedin.com/groups/92860
Visit my SAP Banking Blog at: http://sapbank.blogspot.com/
Let's connect on Twitter: @FerranFrancesGi
Ferran.frances@capitency.com
