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Nucleus Components Of SAP ERP

23rd Oct 2019
| admin |



SAP FICO is a core functional component in SAP ERP Central component that allows an organization to manage all of its financial data. The purpose of SAP FICO is to help companies generate and manage financial statements for analysis and reporting and help with effective business planning and decision-making.

SAP FICO consists of two modules, SAP Finance (FI) and SAP Controlling (CO). Each of which is used for specific financial processes. SAP FI deals with overall financial reporting and accounting while SAP CO focuses more narrowly on planning and monitoring costs. SAP FI and SAP CO were originally released as separate modules but are now so tightly integrated that many people refer to them as simply one module.

What is SAP FI modules? –

SAP FI enables companies to generate financial statements — such as balance sheets profit & loss statement — for reporting and analysis. SAP FI consists of several sub-modules that handle specific accounting processes which are listed below:

  • General Ledger

Contains all of the company’s transaction data in chart of accounts that lists all of the accounts in the system. Transactions are recorded in sub-modules that can be reconciled with the general ledger data in real-time.

  • Accounts Receivable

Captures customer transactions and manages customer accounts. Transactions include invoice posting, credit memo posting, down payments, and invoice payments, dunning, and executing customer reports.

  • Accounts Payable

Involves all of the transactions with vendors and manages vendor accounts. Transactions include invoice posting, credit memo posting, down payments, invoice payments, automatic payments program, and executing vendor reports.

  • Asset Accounting

Manages all of the transactions related to the company’s fixed assets, such as land, buildings and heavy equipment. Transactions include asset acquisitions, retirement, sales, transfers, revaluations and depreciation.

  • Bank Accounting                                                                                          

Deals with all of the company’s bank account transactions and data. It can reconcile all transactions recorded on bank statements and compare them with the transactions in the system.

What is SAP CO modules? –

While SAP FI deals with a company’s accounting and internal and external reporting, SAP CO supports processes to plan, report on, and monitor costs from business operations. SAP CO can be instrumental in improving the company’s profitability. Like SAP FI, SAP CO is comprised of sub-modules that handle specific processes:

  • Cost Elements

Provides an overview of all the company’s costs and revenues based on profit and loss statements, which are also known as income statements. Cost element accounting describes the origin of the costs, and the cost elements represent specific costs that the company incurs.

  • Cost Centers

Deals with the costs associated with the company’s internal divisions or departments, such as sales, production, marketing or human resources. Cost Centres involves only expenses, not revenues.

  • Profit Centers

Handles all of the cost data related to the company’s business lines. It deals with both expenses and revenues, unlike Cost Centres, which deals only with expenses. For example, a global consumer products company may use Profit Centres for health products, soaps and detergents, cosmetics, food and beverages, and so on.

  • Internal Orders

It is used to manage the costs for smaller internal projects or non-fixed assets — for example, a limited-time marketing campaign.

  • Profitability Analysis

Enables the company to analyse the profitability of its products. For example, Profitability Analysis can be useful for making decisions on matters like product pricing, distribution channels, or target market segments. It also allows levels of detail in analysing profitability, such as for each region or country, product types and distribution channels, down to individual customer profitability.

  • Product Costing                                                                                                          

Manages the data about costs required to produce the company’s goods and services. Product costing analysis can help manage manufacturing costs and optimize efficiencies.


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