What is SAP FICO

What is SAP FICO

FI stands for (Financial Accounting) and CO stands for (Controlling). FI and CO are two of the most important and highly demanded SAP modules as they perform and facilitate key financial activities in any organization, producing reports that help stakeholders make better financial. They can also integrate with other SAP modules like SAP SD, SAP PP, SAP MM, SAP SCM, etc.

Financial Accounting FI

SAP FI is a module used for reporting both externally and internally. Its objective is to record all financial transactions that are posted by an entity and produce accurate financial statements at the end of the trading period. SAP FI is made up of sub-modules that integrate and interlink. Some of main sub-modules are:

  • General Ledger

The General Ledger contains all the transaction details of a company. It acts as the primary record to maintain all accounting details. Common general ledger entries are customer transactions, purchases from vendors, and internal company transactions.

  • Accounts Receivable and Payable

The Accounts Receivable records and manages all accounting data related to customers, while Accounts Payable records and manages all accounting data related to vendors.

  • Asset Accounting

It helps in managing a company’s assets. It allows companies to categorize assets and set values for depreciation calculations in each asset class.

  • Bank Accounting

Bank accounting is used to manage the bank transactions in the system including cash management.

Management Controlling CO

SAP Controlling (CO) module provides information to managers and decision makers to understand where the company’s money is being spent. It is essentially an internal cost accounting reporting tool. The main CO sub-modules include:

  • Cost Element Accounting

It offers an overview of the costs and revenues that occur in an organization. Most of the values are moved automatically from Financial Accounting to Controlling. Cost and Revenue Element Accounting only calculate costs which either do not have another expense or only one expense in Financial Accounting.

  • Cost Center Accounting

It is used for controlling purposes within your organization.

  • Activity-based Accounting

It is used to analyze cross-departmental business processes.

  • Internal Orders

Internal orders in SAP CO are used to collect and control according to the job that incurred them. You can assign budgets for these jobs that is system monitored to ensure that they are not exceeded.

  • Product Cost Controlling

It calculates the cost for manufacturing a product or providing a service. It allows you to calculate the price at which you can profitably market for it.

  • Profitability analysis

It analyzes the profit or loss of an organization by individual market segments. The system allocates the corresponding costs to the revenues for each market segment. Profitability Analysis provides a basis for decision-making, for example, for price determination, customer selection, conditioning, and for choosing the distribution channel.

  • Profit Center Accounting

It evaluates the profit or loss of individual, independent areas within an organization. These areas are responsible for their costs and revenues.

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November 27, 2019

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