Contract Accounting FICA

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Martina Hilzinger, Jürgen Köhling, Klaus Plate
SAP
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I. Market Requirements and Motivation
II. Overview of Contract Accounts (FI-CA)
III. Master Data
IV. Key Functions in Business Transactions
V. Integration
VI. Technical Highlights
 SAP AG 2001, Title of Presentation, Speaker Name 2
1
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Î I. Market Requirements and Motivation
III. Master Data
V. Integration
VII. Outlook
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Industries with a large customer base and a correspondingly high

volume of documents to post (such as insurance or
telecommunications companies) are looking for an accounts
receivable and payable component that can manage and process all
business transactions within defined time restrictions.
With the focus on the integration of industry-specific processes and

system architecture, system functions that will support seamless
integration of customer-specific processes and data are required.
Accounting components must addres the new requirements for

system openness, flexibility, and customer orientation.
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To meet the market requirements for a sustainable, flexible, and powerful

accounts receivable and payable component, the following basic aspects
have to be considered in today's system development:
Mass data processing

Reduction of memory space for storing open and cleared items
Performance of data change functions
Performance of retrieval functions
Fast data input
Acceleration of all critical activities such as posting, payments, and returns processing
Automation of all transactions as far as possible
Flexibility and system openness

Flexible input format
Business process enhancements and seamless integration of customer-specific data
without modification
Separation of user interface, checks, data storage
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Î II. Overview of Contract Accounts (FI-CA)
III. Master Data
V. Integration
VII. Outlook
3
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Financial Contract Accounts and Receivable

SAP FI-CA is the response to market requirements for receivables
management for mass data processing industries and for high system
integration.
FI-CA covers all standard accounts receivable and payable functions.
Although FI-CA provides new functions, process enhancements for
account receivable management, and a high degree of flexibility in
functions, it does not replace the SAP classical application FI-AR.
FI-CA represents an alternative subledger for industries with
Large volume of documents to process
Large volume of business partners
Industry- or customer-specific business processes that need to be
seamlessly integrated into the customers' system architecture
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Availability of FI-CA
Previously, FI-CA was only available in the following SAP industry
solutions:
IS-Telecommunications
IS-Utilities
IS-Media
IS-Public Sector
IS-Insurance
The component was not available for customers outside of these
industries.
Now FI-CA is also available as an industry-neutral version (availability:
Q3 2002)
4
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Î
Î
III. Master Data
Î
SAP Business Partner
Contract Account
V. Integration
VII. Outlook
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Purpose
A business partner is a natural person, organization, group of natural
persons, or group of organizations in which a company has a business
interest.
The SAP Business Partner manages the cross-application master data,
such as names, addresses, and bank details centrally.
The Business Partner acts as a central anchor for SAP components,
industry solutions, customer developments, and so on.
Specific Features
Role concept
A business partner can have several roles at one time
Roles are determined by role categories, for example, ordering party,
prospective customer, payer, or payee
5
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Relationship
A business partner can have several relationships with other business
partners
Relationships are determined by relationship categories, for example,
subsidiary of, contact person for, marriage to
Address management
Multiple addresses can be assigned to one business partner; the addresses
are categorized with respect to usage type, for example, delivery address,
mailing address
Business partners' addresses are stored in the Central Address
Management module
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Technical design and infrastructure

Designed to integrate all partner solutions that currently exist in the SAP
System and to utilize technical benefits such as data integrity and freedom
from redundancy
Separation of user interfaces, checks, and data storage using function
modules
Seamless integration of any number of applications without modifications,
even in distributed development environments
Application-specific business partner data (function modules, tables)
remains the responsibility of the various applications)
Business Data Toolset (BDT)
Central control tool for maintaining master data and simple transaction data
Provides generic services for consistently recurring requirements
Used at SAP for maintaining several application objects
Using the BDT, customer-specific business partner enhancements can be
created simply without modification
6
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Purpose
Object for which open item accounting takes place
Contains application-specific business partner data
Specific Features
Master data structure
Master data is structured according to the business processes that depend on the
contract account
- Incoming and outgoing payments
- Dunning
- Correspondence
Link between contract account and business partner
At least one business partner has to be assigned to a contract account
Several contract accounts can be assigned to one business partner
Additional business partners can be assigned to a contract account
Assignment to company code
Contract account is assigned to one company code which is responsible for payment
and processing. Posting to a contract account will be possible for all company codes
which use the company code in the contract account as 'paying company'
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Planned changes function

A change to a contract account can be entered with the date from which the
changes are to be effective (time dependency)
Customer-specific enhancements
Enhancements can be realized using the Business Data Toolset (BDT)
7
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Î III. Master Data

Î Posting and Documents
Î Payments
Î Returns
Î Dunning
Î Installment Plans
Î Deferral
Î Write-Offs
Î Submission to External Collection Agencies
V. Integration
VII. Outlook
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Key Functions in FI-CA

SAP FI-CA covers all standard accounts receivable and payable
functions.
In addition, critical business transactions for mass data processing
have been improved and new functions have been implemented.
The following section gives a brief summary of the most important new
and enhanced functions in comparison to the traditional
SAP FI-AR.
8
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Document
Represents a business transaction that results in the update in
subledger and general ledger accounting
The business view of a document shows
Document header
Document items relevant for subledger accounting (open item)
Document items relevant for general ledger accounting
Specific Features
Posting
Documents are automatically imported from an operational SAP or non-
SAP System
Documents can be entered and posted manually
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Cross-date posting
Specific documents can be posted for several dates. (Receivables with
recurring dates, such as installment plans)
Cross-company code posting

The company code is recorded separately for each line item, and not in the
document header.
This enables the user to enter items for several company codes in one
document, so that a cross-company code document can be posted.
Statistical items
Reflect a receivable or payable in the contract account that should initially
not be visible in the general ledger
Do not contribute to the balance of the document
Do not result in an update in the general ledger
Used, for example, for:
z Deduction and down payment requests
z Statistical outstanding charges
z Installment plans
9
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Mass changes
The following data can be changed for several line items at once
Payment data
Dunning data
Due date data
Locks
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Purpose
To create and process incoming payments
Specific Features
Payment lots
Groups of payments that are to be processed together (e.g. all incoming
payments contained in one bank statement)
Lots are created by entering the data from incoming checks or bank
transfers, either manually or using programs for fast input.
Using an extensive assignment algorithm (clearing control), the system
processes the payment lots and assigns the payment to the related open
item.
Overpayments can be posted as payments on account; underpayments are
posted as partial payments.
10
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Clarification account
Payments requiring clarification are posted to separate interim accounts
and must be processed manually.
A repayment can be initiated for payments which cannot be assigned to an
open item.
Payment program
Enables the creation of outgoing and incoming payments
Determines the open items to be paid according to the selection criteria
entered for the payment run, and according to the due date of the open
items
Selects the payment methods and the appropriate bank
Posts the payment document and clears the open items or creates payment
orders. In case of payment orders, posting and clearing take place as soon
as the order is confirmed with the bank statement.
Provides the data for the payment media
Will be processed in parallel processes to reduce the overall runtime.
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Purpose
To process bank returns that may occur as part of collection
procedures, check deposits, or outgoing payments
Specific Functions in FI-CA

Automatic returns processing
Returns are processed automatically - original receivables or payables are
reopened. Alternatively, new receivables can be posted.
Generation of any further postings that are necessary due to taxes or
charges
Automatic start of follow-up activities
Charging of bank fees
Bank fees and any additional charges can be charged to business partners
Charges can be posted either statistically or to the general ledger
11
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Follow-up activities
Changes in the item
Changes in the contract account
Setting a deferral date, a dunning lock, or payment lock for the reopened
receivables
Workflow connection
Creation of information for the clerk
Correspondence for the business partner
Activities can be defined dependent on
Return reason
Creditworthiness
Tolerance group
Number of returns
Return history
All relevant data is recorded in a return history
Referred to when determining creditworthiness
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Purpose
To remind business partners that their payables are overdue and to
request payment
Specific Features in FI-CA

Dunning activities
Assignment of any number of dunning activities to the various
dunning level, for example,
- Printing a dunning notice
- Termination of a contract
- Activating a lock
Dunning charges
Option of calculating dunning charges using an extensive charges
procedure
The calculation rules can be specified dependent on currency and
creditworthiness.
The charges and interest can be posted either statistically or to the general
ledger.
12
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Dunning history
Dunning-relevant data for each item is recorded in a dunning history.
The dunning history is referred to when determining the dunning level of an
item.
The dunning history can be used at any time to provide information about
the individual dunning activities.
Dunning run reversal

A dunning run can be reversed completely.
The system reverses either the whole run or the items that were not
successfully posted and notes the relevant entries as being reversed in the
dunning history.
Additionally, the system determines and resets the charges and interest
posted during the dunning activity run and resets the creditworthiness for
the customer in question.
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Dunning run for installment plans

Alternative dunning run can be processed for installment plans
Automatic deactivation of an installment plan when a certain dunning level
is reached can be specified
Parallelization
Parallel processes are used to achieve the best possible performance
13
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Purpose
To defer payment for business partners who cannot keep up their
payment obligations

Deferral date
The deferral date is noted in the open item in addition to the due date.
No dunning notices are sent and no payments are collected during the
agreed deferral period.
Once the deferral date has passed without payment being made, the open
item is dunned with the original due date and bank collection is executed
again.
Deferral history
Deferral history is kept in the document
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Purpose
To arrange payment by installments for business partners who cannot keep up
their payment obligations
Specific Functions
Structure
The installment plan divides source items into several installment receivables that have
a due date in the future.
The installments are posted statistically in FI-CA and are cleared when payments are
made. With every installment cleared, an corresponding part of the original receivables
is cleared as well.
The individual installment is included in the dunning and payment run.
Installment plan set up

Individual installments and their due dates are specified in the installment plan.
Charges can be levied for an installment plan.
The document number of the installment plan is recorded in the original receivables,
which ensures that there is a link between the original receivable and the installment
plan.
14
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Interest calculation
Interest can be calculated on the installment plan.
Installment plan processing
Installments plan can be changed manually.
Due dates and the amount of installments can be changed.
New installments can be added to an active installment plan.
Original receivables will be cleared (partly) automatically, whenever an
installment is cleared. Therefore, all original receivables will be cleared as
soon as the last installment of the installment plan has been cleared.
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Deactivating an installment plan

The installment plan can be deactivated manually.
The original receivable becomes active again and the link between the
original receivable and the installment plan is deleted.
A deactivated installment plan cannot be reactivated, and no further
payments can be assigned to the installment plan.
Installment plan history

The history is updated automatically for every installment plan.
Can be used to determine the source items on which an installment plan is
based
15
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Purpose
To write off open receivables and credits of a business partner because
receivables cannot be collected or payables cannot be disbursed
Specific Functions
Automatic posting
Written off line items are cleared and a write-off document is posted to the
the gain or loss accounts defined in Customizing.
Additionally, rules that specify how the tax adjustment should be made are
defined in Customizing
Check rules
Check rules determine whether and which open items can be written off (to
a certain percentage) automatically.
The rules are defined with the help of a function module and allow the
implementation of customer-specific requirements.
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Reverse write-off
Write-off documents can be reversed, meaning that the receivables or
payables become open again.
Parallelization
Write-off activities can be processed in a mass run.
Documents to be written off can be selected according to various
parameters.
A simulation run can be executed before the update run for monitoring
purposes.
16
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Purpose
Release and submission of receivables to external collection agencies
as well as management of the submitted receivables
Release and submission of receivables

Integrated release and submission of receivables while processing
Dunning
Write-off/mass write-off
Manual indicator for collection order
General submission
Receivables submission management

Managing submitted receivables in separate management
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Processing incoming information

Incoming information from the collection agency can be transferred to the
system - the processing depends on the way the agency forwards the
information:
z In a file: Interest, charge requests, and collected payments are posted
automatically
z By letter or telephone: The information has to be posted manually
17
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II. Overview ofContract Accounts (FI-CA)
III. Master Data
Î
V. Integration
Î General Ledger Accounting

Î Cash Management
Î Controlling
Î Sales and Distribution
Î FSCM Biller Direct
Î FSCM Dispute Management

VII. Outlook
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FI-CA and General Ledger

Transaction figures are not updated automatically in the general ledger
when postings are executed in FI-CA. Instead, the data is summarized
and transferred to the general ledger periodically for reasons
of system performance and
to limit the volume of documents in the general ledger
FI-CA documents are grouped automatically and posting totals are
recorded for each group. These are later transferred to the general
ledger.
Posting and reconciliation programs are available to transfer the data to FI-
GL
General Ledger Accounting can be managed in the same R/3 System as
FI-CA or in separate one.
If General Ledger Accounting is managed separately, the data can be
transferred by using ALE methods.
18
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FI-CA and Cash Management

FI-CA updates the Cash Management component immediately when a
posting is made.
The Cash Management liquidity forecast and cash position are always
up-to-date.
FI-CA and Controlling

Overhead Cost Controlling is updated automatically during the general
ledger update.
FI-CA and profitability Analysis

Records for the profitability analysis Data will be written on a
accumulated basis during a separate update process. This enables
profitability analysis to be used also for the high volume of data created
within FI-CA
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FI-CA and Sales and Distribution

As part of the integration of FI-CA, bills from Sales and Distribution can
be posted to FI-CA instead of to FI-AR.
FI-CA and SAP Billing Engine

The output data from the SAP Billing Engine can be posted to FI-AR or
to FI-CA.
FI-CA can directly interface with the CRM Billing Engine (there is a
direct business partner-to-business partner connection in the RW-
Interface; it is not necessary to use AR)
The Billing Engine will be part of the following mySAP solutions
mySAP Customer Relationship Management
mySAP Telecommunications Industry
mySAP Media Industry
... more to come ...
19
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FI-CA and Financial Supply Chain Management (FSCM) - Biller Direct
FSCM Biller Direct enables electronic bill presentment and payment

Customers can see all of their open items, credits, and bills in
a Web browser.
Customers can authorize payment by credit card or direct debit.
Web-based authorizations change the status of open items in FI-CA.
FSCM Biller Direct uses Java Server Pages and runs on SAP
Web Application Server.
Communication between FSCM Biller Direct and FI-CA is handled
by the Java Connector.
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FI-CA and Financial Supply Chain Management (FSCM) – Dispute

Management
FSCM Dispute Management will handle customer disputes that result in

payment deductions or defaults.
FSCM Dispute Management supports various channels (for example,
Call Center, Web, SAP GUI).
For each customer dispute, a dispute case is created with a specific
reason code (such as late delivery).
FSCM Dispute Management will interact with FI-CA (for example,
posting of credit memos, and so on.).
20
&RQWHQW
III. Master Data
V. Integration
Î VI. Technical Highlights
VII. Outlook
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Technical Highlights FI-CA

Document structure
Documents are implemented with the minimum number of fields required –
repetitive structures for installments, subitems for partial payments
Reduced memory space required for storing open and cleared items
Enables high performance processing of critical business transactions –
posting, dunning, payment
Parallelization of mass data processing
Openness
Standard process enhancements without modification due to event concept
Event: Time at which an open interface exists - customers can use the
option of creating and activating additional or alternative algorithms in their
own function modules.
21
&RQWHQW
III. Master Data
V. Integration
Î VII. Outlook
22

Contract Accounting FICA

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Contract Accounting FICA

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),&$

Martina Hilzinger, Jürgen Köhling, Klaus Plate

I. Market Requirements and Motivation

II. Overview of Contract Accounts (FI-CA)

III. Master Data

IV. Key Functions in Business Transactions

VI. Technical Highlights

 SAP AG 2001, Title of Presentation, Speaker Name 2

Î I. Market Requirements and Motivation

II. Overview of Contract Accounts (FI-CA)

III. Master Data

IV. Key Functions in Business Transactions

VI. Technical Highlights

 SAP AG 2001, Title of Presentation, Speaker Name 3

0DUNHW 5HTXLUHPHQWV DQG 0RWLYDWLRQ ,

Industries with a large customer base and a correspondingly high

With the focus on the integration of industry-specific processes and

Accounting components must addres the new requirements for

 SAP AG 2001, Title of Presentation, Speaker Name 4

To meet the market requirements for a sustainable, flexible, and powerful

 Mass data processing

 Flexibility and system openness

 SAP AG 2001, Title of Presentation, Speaker Name 5

I. Market Requirements and Motivation

Î II. Overview of Contract Accounts (FI-CA)

III. Master Data

IV. Key Functions in Business Transactions

VI. Technical Highlights

 SAP AG 2001, Title of Presentation, Speaker Name 6

Financial Contract Accounts and Receivable

 SAP AG 2001, Title of Presentation, Speaker Name 7

 SAP AG 2001, Title of Presentation, Speaker Name 8

I. Market Requirements and Motivation

II. Overview of Contract Accounts (FI-CA)

IV. Key Functions in Business Transactions

VI. Technical Highlights

 SAP AG 2001, Title of Presentation, Speaker Name 9

6$3 %XVLQHVV 3DUWQHU ,

 SAP AG 2001, Title of Presentation, Speaker Name 10

 SAP AG 2001, Title of Presentation, Speaker Name 11

6$3 %XVLQHVV 3DUWQHU ,,,

 Technical design and infrastructure

 SAP AG 2001, Title of Presentation, Speaker Name 12

 SAP AG 2001, Title of Presentation, Speaker Name 13

 Planned changes function

 SAP AG 2001, Title of Presentation, Speaker Name 14

I. Market Requirements and Motivation

Î III. Master Data

.H\ )XQFWLRQV LQ %XVLQHVV 7UDQVDFWLRQV

Key Functions in FI-CA

 SAP AG 2001, Title of Presentation, Speaker Name 16

 SAP AG 2001, Title of Presentation, Speaker Name 17

'RFXPHQWV DQG 3RVWLQJ ,,

 Cross-company code posting

 SAP AG 2001, Title of Presentation, Speaker Name 18

 SAP AG 2001, Title of Presentation, Speaker Name 19

 SAP AG 2001, Title of Presentation, Speaker Name 20

 SAP AG 2001, Title of Presentation, Speaker Name 21

Specific Functions in FI-CA

 SAP AG 2001, Title of Presentation, Speaker Name 22

 SAP AG 2001, Title of Presentation, Speaker Name 23

Specific Features in FI-CA

 SAP AG 2001, Title of Presentation, Speaker Name 24

),&$

Mass data processing

Flexibility and system openness

Technical design and infrastructure

Planned changes function

Cross-company code posting

Dunning run reversal

Dunning run for installment plans

Installment plan set up

Deactivating an installment plan

Installment plan history

Release and submission of receivables

Receivables submission management

Processing incoming information

,QWHJUDWLRQ *HQHUDO /HGJHU $FFRXQWLQJ

,QWHJUDWLRQ 6DOHV DQG 'LVWULEXWLRQ

FSCM Biller Direct enables electronic bill presentment and payment

,QWHJUDWLRQ )6&0 'LVSXWH 0DQDJHPHQW

FSCM Dispute Management will handle customer disputes that result in

7HFKQLFDO +LJKOLJKWV RI ),&$

Parallelization of mass data processing