All ERP software supports every business process with its distinct modules helping to gain better visibility of analytics and in turn easing the entire cycle of operations of each module’s distinct process. SAP is one such player in the ERP world with 40+ years of expertise in providing unique business solutions drafted for your business’s needs.      

The core business modules offered by the SAP ERP software are:   

  • Human Capital Management (SAP HCM)
  • Production Planning (SAP PP)
  • Material Management (SAP MM)
  • Financial Supply Chain Management (SAP FSCM)
  • Sales and Distribution (SAP SD)
  • Project System (SAP PS)
  • Financial Accounting and Controlling (SAP FICO)
  • Plant Maintenance (SAP PM)
  • Quality Management (SAP QM)

This article focuses on elaborating on the core functionalities of the SAP FICO (Finance and Controlling) module. Let’s dive in to understand Finance and Controlling.

Defining SAP FICO Module

In SAP ERP Central Component, SAP FICO is a vital functional element that enables a business to handle all its financial data. A business can store a comprehensive copy of its financial transaction data using SAP FICO. SAP FICO is specifically designed to assist businesses in producing and managing financial statements for analysis and reporting as well as supporting efficient company planning and decision-making.

An on-premises enterprise resource planning (ERP) system known as SAP ERP Central Component (SAP ECC) is sometimes referred to as simply “SAP ERP.” ECC benefits from SAP FICO’s financial accounting and controlling capabilities.

SAP Finance (FI) and SAP Controlling (CO) make up SAP FICO, and they are each utilized to perform financial operations. SAP CO focuses on cost planning and monitoring, in contrast to which SAP FI focuses on comprehensive financial reporting and accounting. Although SAP FI and SAP CO were first published as separate modules, their integration has become so complete that most people now refer to them as a single module.

Components of SAP FICO Module

As seen earlier we do know that SAP FI and SAP CO are two different modules, let us look into each one of them in detail.

To begin with the SAP Finance module;

Components of the SAP Finance:

General Ledger accounting: The purpose of general ledger accounting is to give a comprehensive report for both internal and external accounting, including accounts, journals, monthly debits and credits, balance sheets, and recording of all company activities.

Asset Accounting: SAP enables asset categorization and determination of values for depreciation computations in each asset type.

Bank Accounting: The system’s bank transactions, including cash management, are managed using bank accounting.

Special Purpose Ledger: The SAP FI ledgers for financial reporting are defined by the special purpose ledger.

Travel Management: This monitors all business operations pertaining to travel arrangements. This will involve scheduling excursions and controlling travel costs.

Funds Management: It is employed for managing the income and cost budgets.

Accounts Payable: All vendor-related accounting data is maintained and managed by Accounts Payable.

Consolidation: Multiple financial statements from distinct parts of a business can be combined using consolidation. A summary of the financial status of the organization is reflected in these financial statements.

Accounts Receivables: Accounts Receivable maintains and records all accounting information about customers.

Well, that is all about the finance module now it is time to dive inside the Controlling module and its components. From the earlier sneak peek, we got to know that the CO module controls the operations of Cost Center Accounting, Profit Center Accounting, Product Costing, Profitability, etc.

Components of SAP Controlling: 

Cost Elements: Based on the income statements the cost elements provide a broad picture of all the company’s expenses and revenues. The genesis of the expenses is described by cost element accounting. Cost factors are distinct expenses that the business has.

Cost centers: The expenditures related to the organization’s internal divisions or departments, such as sales, production, marketing, or human resources, are dealt with by cost centers. Cost centers only include costs; they exclude income.

Profit Centers: All cost information about the company’s business lines is handled by profit centers. In contrast to Cost Centers, which solely deal with expenditures, it deals with both expenses and income.

Internal Orders: Smaller internal projects or non-fixed assets, such as a temporary marketing campaign, are managed using Internal Orders.

Profitability Analysis: The business can evaluate the profitability of its products with profitability analysis. Profitability analysis will be helpful when deciding on issues like product price, distribution methods, and target market groups. Additionally, it enables several degrees of granularity in the analysis of profitability, such as for every nation, kind of product, route of distribution, or profitability for each client.

Product Costing: Data about the expenses incurred in producing the company’s products and services is managed through product costing. Analyzing product prices can assist in controlling production costs and maximizing efficiency.

Now let us take a look at the modules that work along with the FICO module,

Modules Integrated with SAP FICO: 

  • SAP Sales and Distribution (SD)
  • SAP Quality Management (QM)
  • SAP Production Planning (PP)
  • SAP Materials Management (MM)
  • SAP Plant Maintenance (PM)

Next Generation of SAP FICO: SAP S/4HANA Finance 

The first component of the Business suite to be completely redesigned to work with SAP’s brand-new, lightning-fast in-memory HANA database is SAP Simple Finance.  This new product combines New GL with several categories of Extension Ledgers as well as full Management Accounting solutions. These include cash management, cost of goods analysis, material ledger new asset accounting, overhead management, and product cost calculation.

Depending on the version, S/4HANA’s precise functionality changes. Even if some of the functionality could be included in ECC 6’s subsequent upgrade packs. However, S/4 HANA’s GUI still offers many of the ECC 6 functionality. Sometimes it is simple to improve and identify the transactions. Additionally, the previous and current transactions can co-exist together.

With S/4HANA’s brand-new features SAP’s ERP features have advanced significantly. It has improved the user experience more than anything. Processing speed is accelerated by in-memory technology. Customers of the Fiori APP for cloud computing may access their system at any time and from any location. As a result, S/4HANA’s impact has also extended to financial accounting. As a result, it has evolved beyond SAP FICO (Finance & Controlling), which was ECC-based.

To know more about SAP FICO and how to upgrade your organization with SAP S/4HANA Finance get in touch with our expertise!

Until then stay tuned to learn more about the various modules of the ERP systems!


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