Paul Ovigele, Ovigele Consulting
In my upcoming session “Accelerate local and global financial closes and period-end reports with improved integration between profit center accounting and the general ledger” which I will be covering in the Reporting & Analytics conference, I will be discussing the integration of profit center accounting with the SAP General Ledger and how the new functionalities aid your period-end processes and reporting.
For those of you that use or are thinking of using the document splitting functionality in the SAP General Ledger, it is important that you understand how passive splitting works. It is easy to overlook this aspect of document splitting, because unlike the other two types (active splitting and zero-balancing) you do not really have to make any specific configuration settings in order for it to work. However, by understanding how the functionality works this will help you to set up your master data and business processes accordingly.
In order to understand passive document splitting, you need to understand the principle of document splitting. This is the process which assigns a characteristic (such as a profit center) to the line item of a financial document by inheriting the account assignment of the offsetting line of that document, with a view to producing full profit center balance sheets. The simplest example is where a customer posting inherits the profit center from the revenue line of an invoice document (the profit center of the revenue line would normally come from the material master or sales order). When this happens the system has performed active splitting. When the invoice is paid, the system will also need to inherit the profit center from somewhere. However, with a payment transaction, the system cannot directly access the profit center from the offsetting line (as the postings usually involve a bank account and a customer account which would not contain the original profit center). Therefore, the system has in-built program logic that can determine which profit center was posted to when the customer line item was posted (during invoice processing) and this profit center is adopted in the customer line of the payment transaction. This is the function of passive splitting.
It is easy to see that, with the system performing the function of passive splitting you do not need to repost items in the “dummy profit center” in cases where the system could not determine the appropriate profit center at the time of the posting. An example that I have experienced in classic general ledger, is where you reset a payment which was cleared in a previous month, but is now open in the current month. When this happens the system assigns the dummy profit center to the payment posting, and you would need to trace this document back to the original invoice which was previously cleared to determine which profit center to assign it to. Then you would need to perform a profit center reposting, either through an assessment/distribution or via a profit center transfer posting (transaction 9KE0). Needless to say, this adds more tasks to your period-end processes and potentially increases your time to close. Passive splitting, therefore helps reduce the number of manual activities performed at period-end and consequently improves the accuracy of your financial reporting.
For more infrormation on how to optimize your SAP Financials landscape, I've put together my top tips in the bo ok 100 Things You Should Know About Financial Accounting with SAP which is published by SAP Press.