SAP S/4HANA Cloud sets the standard for traceability and automation of intercompany sales and stock transfer processes in Cloud ERP systems. And with our BlackLine partnership, SAP can offer a great solution for originating non-trade intercompany transactions as well, to make sure that the terms and conditions of these often-tricky arragements are agreed and documented. But what happens when the transactions flow through to the Finance team? These transactions, of course, have to be properly accounted for and eliminated for group financial reporting.

SAP released a solution capability of the Cloud ERP in 2019 that takes advantage of the design paradigms of SAP S/4HANA Cloud called Intercompany Matching and Reconciliation (ICMR):

• Data is not extracted to a separate system, which enables matching to be done continuously during the period.
• It is a fully automated process, including the posting of adjustments, with configurable workflow approvals if required.
• Business users oversee matching and reconciliation rules, not IT; AI can be used for even further automation.
• It is designed for scale with in-memory technology that matches intercompany for the world’s largest businesses.

SAP’s legacy solution in this space, Intercompany Reconciliation, often resulted in a separate subledger that was fed only at period-end. In contrast, ICMR matches the AR  and AP line items and other types accounts, e.g. P&L accounts, in SAP S/4HANA Cloud continuously, with matching runs scheduled regularly. This means at period end, you might not have much “open” intercompany to deal with at all. Smaller unmatched residual amounts can be assigned reason codes and workflow recipients, and/or auto-posted for full automation.

Some companies may have entities not accounted for in SAP S/4HANA Cloud. SAP’s Central Finance approach could be used to bring in transactional line-item data, or other technical options are available. In addition, SAP Group Reporting Data Collection can be used in a form-based approach to bring in data at the balances level for the Group Reporting data reconciliation case. Even the most complex projects can be supported.

Intercompany Matching and Reconciliation

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Optimized visibility with SAP S/4HANA for Group Reporting

One of the main benefits of ICMR is that it provides unparalleled, detailed visibility for customers using SAP S/4HANA for Group Reporting. Once reconciliation is completed and the reconciliation-close snapshot created, the eliminations are triggered in SAP S/4HANA for Group Reporting, adding all of the reason code details available from the transactional system. Have you wondered what was driving differences? Are they driven by currency fluctuations? Now, your team – both local and corporate group accounting – will know.

Integration with SAP S/4HANA Advanced Financial Closing (AFC)

AFC is SAP’s entity close orchestration and visualization tool. Think of AFC as the central monitoring dashboard that shows you the status of your closing activities – whether they are approvals and sign-offs performed by your most senior accountants, technical routines and programs run in your Cloud ERP, or just bots.

SAP sees companies using AFC to monitor repeatable activities beyond the entity close – local statutory reporting tasks, for example, as well as intercompany activities. Your intercompany matching runs can be executed automatically either based on a fixed date/time or a specific status of predecessor tasks and, upon completion, your experts are notified that they can start their subsequent tasks.