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_month End & Year Activities in S4 Hana
_month End & Year Activities in S4 Hana
Month-end closing is a procedure that is performed in any company using SAP ERP
every month. This is an important procedure because if it is not completed on time,
employees of the company won’t be able to post new documents in SAP in the next
month. After studying this tutorial, you should have a good understanding of what
activities are performed durithe ng SAP month-end closing process.
The activities in the SAP month-end closing process vary by company, depending on
business requirements, but here are a few that are commonly executed:
First, we will explain the steps to close the prior month and open the current month,
then we will provide instructions on each of the activities listed above.
1.Period Closing/Opening
Before performing closing activities, the previous period is closed to prevent further
postings. Likewise, the new period is opened to allow users to continue transacting.
First, if the organization has integrated the materials management (MM) module, run
the material master period closing transaction code MMPV. On the initial screen,
enter the following information:
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Next, change the open period for FI. You can specify open period for assets,
customers, vendors, materials, G/L accounts and contract accounts separately, or
altogether. This is done based on posting period variant in transaction code OB52.
1. Controlling area
2. Fiscal year of the periods you want to lock
Click the actual button to lock actual postings. You can also enter a plan
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One activity that is usually a part of the SAP month end closing process is to post
accruals and deferrals to ensure that revenues and expenses are posted in the
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correct period. Accruals are expenses or revenues belonging to the current period,
where the physical invoice has not yet been received or issued. Accruals are usually
reversed in the subsequent period. Deferrals are expenses or revenues which are
posted in the current period but which actually belong in a future period.
First, record the accrual document via transaction code FBS1. Enter debit details for
the expense account where the expense should ultimately be realized and credit
details for an accrued expense account.
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1. Company code
2. Posting date as last day of the closing month
3. Select Test Run tickbox
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Recurring entries are commonly used in the SAP month end closing process to post
deferred expenses, or prepaids. Let’s assume that in January, a company has
received an invoice of 3000 EUR for rental costs for the first quarter (January,
February and March). As the February and March portion of the rental expense
should be realized in those months, the invoice itself is posted to a prepaid account,
and deferrals are posted through recurring entry.
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Click on the save icon to enter the recurring entry document. Take note of the
document number displayed on the confirmation screen.
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Next, start the recurring entry program via transaction code F.14. On the selection
screen, enter the following details:
1. Company code
2. Document number of the recurring entry document
3. Fiscal year
4. Settlement period as the last day of the closing month
5. Batch input session name for retrieving the job that will be executed
in the background
Execute transaction code SM35 to retrieve your batch input session. Highlight the
row that has the session name you specified in the previous step and click
the Process button. Select the Display errors only radial button and
click Process again.
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Finally, let’s check the balance of the prepaid rent G/L account via transaction
code FS10N. We can see that January’s rent has been deducted from the balance,
with the remainder to be recorded by processing the recurring entry program in the
coming months.
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3. Automatic Clearing :
Another common activity in the SAP month end closing process is the clearing of
open items from customers, vendors and G/L accounts. To clear these accounts,
execute transaction code F.13. Enter the following details:
1. Company code
2. Tick the Select customers tickbox
3. Tick the Select vendors tickbox
4. Tick the Select G/L accounts tickbox
5. Select GR/IR special process tickbox only if you have utilized scheduling
agreements or some other process where an invoice receipt may not
match up directly with one or more goods receipts
6. Enter Clearing date as the last day of the closed period
7. Select Test Run tickbox
8. Tick the Documents that can be cleared output control setting to see
these items in the report output
9. Tick the Documents that cannot be cleared output control setting to see
these items in the report output
10. Select the Error messages output control setting to see these items in the
report output
You can also specify customer, vendor or G/L accounts explicitly if you want to target
an account. Click Execute to run in test mode and check your results.
You will see a large report with line items depending on the output control settings
you selected, grouped by G/L account. An error log is located at the bottom of the
report. Items with clearing dates in green are matched and can be cleared, while
other items will not be cleared as demonstrated below:
If a company processes items in foreign currencies, there may be open items that
need to be revalued to the company code currency as part of the SAP month end
closing process. Valuation ensures that the financial statements include all financial
transactions aligned in a uniform currency. Have a look at our tutorial on foreign
currency valuation to understand the configuration steps that must be set up for
revaluation to function.
Let’s assume an invoice of 5000 USD is posted mid-April 2017. The exchange rate
used for recording the invoice is 1.21 EUR to 1 USD. At the end of month, the
exchange rate is updated to 1.185 EUR to 1 USD
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1. Company code
2. Valuation date as the key date. The program will consider the documents
that were posted before the key date and which have not yet been cleared
by the key date. The specified key date also informs the posting period
and fiscal year.
3. Valuation area
1. Select the create postings tickbox. If you select this check box, postings
are generated and these are either put into a batch or executed
immediately. If you want to run the valuation in test mode first, deselect the
tickbox.
2. Enter the reversal posting date as the first day of the next period. This field
contains the date that will be used as the posting date by the automatic
reversal postings.
3. Select the reverse postings tickbox to have the system automatically post
the reversal on the specified date.
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Click Execute .
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Valuation Postings
6.Tax Payables
SAP allows you to net together the input and output taxes and post the result to a tax
payable/receivable account.
Let’s assume a vendor invoice is recorded with 14% input tax, as shown below:
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Transaction
S_ALR_87012357 – Advance Return for Tax on Sales/Pur.
code
Run the advance return for tax on sales/purchase report via transaction
code S_ALR_87012357.
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debit to the output tax G/L account. The offset should post to the tax
payable/receivable account, as illustrated below:
7.Asset Depreciation
If the organization has implemented fixed assets, the posting of asset depreciation
should be included in the SAP month end closing process. In the selection screen of
transaction code AFAB, enter the following details:
1. Company code
2. Fiscal year
3. Posting period as the closed period
4. Select the Planned posting run radial button
5. Select Test Run tickbox
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Execute
Depreciation in Background
8.Document Journal
The document journal is created once every month as part of the SAP month end
closing process. It contains the most important data from the document header and
document items of all document postings for a particular posting period. Execute
transaction code S_ALR_87012287 to display document journal. Enter the following
details:
1. Company code
2. Fiscal year
3. Ledger
4. Posting date range from the first day of the closed period to the last day of
the closed period
5. Select Test Run tickbox
6. Leave all other values as defaulted
Click Execute to run in test mode and check the document journal output.
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Financial Statements
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Financial statements should be generated as part of the SAP month end closing
process for reporting to stakeholders. The statements include the balance sheet and
profit and loss statement for a specified period. There may be several financial
statement versions, depending on the requirements of the various stakeholders.
Execute transaction code F.01 to generate financial statements. In the selection
screen, enter the following:
1. Chart of accounts
2. Company code
3. Financial statement version
4. Reporting and comparison years/periods
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