Configure SAP Finance Organization Structure in 5 Minutes

In this post we will Configure SAP S4 HANA Finance Organization Structure in 5 Minutes. Do not worry if you do not know Finance. The financial setting require to run your own company on SAP is very easy and we will help you through out this journey

1. Business of our Company

Our company manufactures cars in USA. Until now our company manufactured only diesel & petrol Cars, but to change with time, our company has commissioned a new plant under a new company code which manufactures electric cars.

2. Structure of the company

We will configure SAP S4 HANA SD organization structure for our car business as per the picture below

3. Company 1 – This Company Manufactures Cars with IC Engines

Co.Code	PA10	Description-Pankaj Private IC Car INC	Address- Deerfield , Chicago
Plant-1	PA10	Description-PPIC Chicago Plant		Address-Lake cook Road, Illinois, 60089
Plant-2	PA20	Description-PPIC Boston Part		Address-Cambridge, Boston, MA, 02139

4. Company 2 – This Company Manufactures Electric Cars

Co.Code	PP10	Description-Pankaj Private Elect Car INC	Address-Deer Creek , Palo Alto
Plant	PP10	Description-PPELC Fremont Plant	Address-Fremont Boulevard

4.1 Configuration of 1st Company in SAP S4 HANA

In this step we will create our own car business companies companies.

By Definition “A company is an organization unit in Accounting which represents a business organization the requirements of commercial law in a particular country”

4.2 Configuration of 2nd Company in SAP S4 HANA

5. Company Code Configuration for both the companies

In this activity we create our company codes. The company code organizational unit used in accounting. It is used to structure business organization from a financial accounting perspective.

6. Assign the company code to company

Each company code is assigned to a company to enable consolidation. Here we will assign the company codes that will be included in the group accounting to a company.

7. Define Functional Area

Functional area in SAP, is an organizational unit that classifies the operating expenses of company according to functions administration, sales and distribution, marketing, production and research & development.

Functional Area	Name
YP10	PPL-Sales Revenue
YP15	PPL-Sales Discount and allow
YP20	PPL-Production
YP25	PPL-Consulting/Services
YP30	PPL-Sales and Distribution
YP35	PPL-Marketing
YP40	PPL-Administration
YP50	PPL-Research & Development
YP70	PPL-Other gains
YP75	PPL-Other Expenses
YP77	PPL-Gain from investments
YP79	PPL-Gain from shares & loans
YP81	PPL-Interest & similar gains
YP83	PPL-Amort.curr.Fin.Assets;Sec.
YP85	PPL-Interest & similar costs
YP87	PPL-Extraordinary gain
YP89	PPL-Extraordinary expense
YP90	PPL-Taxes from income and revenue
YP98	PPL-Other Taxes
YP99	PPL-Dummy functional area

8. Configured functional area in SAP S4 HANA

9. Define Variants for Open Posting Periods

In this step, we maintain the variants for open posting periods. A posting period variant must be assigned to each company code since the opening and closing of posting periods takes place for each posting period variant.

Two variant defined each for our both company codes

10. Open and Close Posting Periods

In this activity, you can specify which periods are open for posting for each variant.

we are opening period from 2021 01 to 12 2030 for all type of GL accounts

10.1 FI Period Open for IC Car Company PA10

10.2 FI Period Open for Electric Car Company PP10

11. Configure Chart Of Accounts

First step is to give your chart of account a name. If you have more than one company code and all the company codes are using different operating chart of accounts (COA) then cross company code controlling will not be possible so we will use same COA for our both company codes

COA Name – PPIN – Pankaj Private Inc

12. Enter Global Parameters for Company Code

Now enter all the global parameters for both of our company codes as shown below

12.1 Configuring Global Parameter for PA10 Company Code

12.2 Configuring Global Parameter for PP10 Company Code

Please see below the details of Global Parameters entered in the above screens for both of our group companies.

Accounting organization	Config	Detail
Chart of accts	PPIN	Created in earlier steps
Fiscal Year Variant	K4	General Value
Processing parameters
Field status variant	0010	General Value – “Field Status GL Accounts”
Pstng period variant	PA10 or PP10	Created in earlier steps
Max. Exchange rate deviation	10%	max 10% allowed
CoCd->CO Area	2	Cross Co.Code.
Negative postings	Deselected	Negative Postings Not allowed
Enable amount split	NA
Tax base is net value	Selected	tax is calculating net of invoice value and discount. ($100 – $3 discount = $97.00 and on that tax will be calculated)
Discount base is net value	Selected	We cannot tick only the “Tax base is net value” without “Cash discount base is net value”
Tax Reporting Date Active	Selected

13. Create Controlling Area

Create controlling area “PPIN” as per screenshot below. Please note that to avoid errors in material ledger related to currency in S4HANA, Group currency given here in controlling area and Group currency given in SCC4 should be aligned. Please read more about activation of Material Ledger through the post How to activate Material Ledger in S4HANA in 5 Easy Steps

14. Assign Controlling area to our companies

15. Mandatory & Optional Finance Organization Structure

Below is the list of mandatory & optional elements of finance Organization structure

Courtesy : SAP Help. Click Here to read more

Please note that if you are making Business area as optional then in the configuration of global parameter of company code , Select the value of “Cost of Sales Accounting Active” as blank as shown in below screenshot

Note

You can read 5 Minutes guide for SD Organization Structure HERE

You can read 5 Minutes guide for MM organization structure HERE