Best Practices for R/3 Financial and CO-PA Reporting

Quentin Hurst Virtuoso

What Well Cover

Objective: Provide best practices you can implement at home to get the most out of your R/3 Financials investment and reports

Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

What Well Cover Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

R/3 Financials Reporting Overview Now more than ever, financial reporting is at the forefront of an organizations reporting needs

Greater visibility to their data (more/better reports) Verification that existing reports are timely and accurate Stock market collapse New legislation Sarbanes-Oxley New board of directors

Driven by such factors as

Building Block

R/3 Financials Reporting Overview (cont.) This places new requirements on financial reporting teams

Must think outside the box Use new and different reporting tools Ensure that documented reporting standards exist and are followed Need additional knowledge on new tools and best practices Increased interaction and pressure from upper management

For a historical perspective on our current and future economic and regulatory environment, read Manias, Panics, and Crashes: A History Of Financial Crisis by Charles P. Kindleberger

R/3 Financials Reporting Overview

Top 5 Pitfalls for R/3 Financial Reporting Tools

1. Not knowing all of the reporting options in R/3

When all you have is a hammer, everything looks like a nail

2. Not knowing which tool to use for which report 3. Lack of report performance optimization techniques 4. Not making advanced configuration settings, which limits the reporting options GOTCHA! 5. Bad design decisions in the reporting submodules, which negatively impact reporting options

R/3 Financials Reporting Overview

FI/CO Reporting Universe Painter/ Writer

Drill-down

Cash Management

Reporting submodules SAP Query

CO-PA

Special Purpose Ledger

R/3 Financials Reporting Overview

Picking the Right Tool
1. 2. 3. 4. 5. 6. Is a canned report available? Can I make a config. change to use a canned report? Can I use drill-down reporting? Can I make a config. change to use drill-down reports? Can I use Painter/Writer? Can I make a config. change to use Painter/Writer?

Report request no 1 2 no 3 no

no 4 5

no 6

no 7

no 8

no 9

no 10

no 11

Canned report

Drill-down

Painter/ Writer

Reporting submodules

SAP Query

ABAP

R/3 Financials Reporting Overview

Picking the Right Tool (cont.)
7. Can I use a submodule (CO-PA, SPL, Cash Mgmt.)? 8. Can I make a config. change to use a submodule? 9. Can I use SAP Query? 10. Can I make a config. change to use SAP Query? 11. Can I write the report in ABAP?

Report request no 1 2 no 3 no

no 4 5

no 6

no 7

no 8

no 9

no 10

no 11

Canned report

Drill-down

Painter/ Writer

Reporting submodules

SAP Query

ABAP

R/3 Financials Reporting Overview

Picking The Right Tool Dont Forget Periodicity

Accounting Non-accounting period period Painter/Writer Standard Table Painter/Writer LIS/SIS structure CO-PA Drill-Down SAP Query Cash Management Special Purpose Ledger X** X X X* X X* X

R/3 Financials Reporting Overview

In This Session, Youll Learn...

Key reporting tools (and submodules) you should be using How to get the most out of these reporting tools/modules How to alleviate common performance problems Tips for maximizing your reporting options when configuring the reporting submodules Advanced configuration techniques that will enable additional reporting functionality (in Appendix B on the CD)

What Well Cover Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

Getting the Most from R/3 FI/CO

Explore R/3 drill-down reporting Discover the Special Purpose Ledger Start using R/3 Cash Management! Consider implementing CO-PA

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting

Powerful, flexible tool that draws data from InfoCubes

Enables reporting on multiple characteristics at once Users can slice and dice data A single report can fulfill multiple report requests Originally built for CO-PA, but now also usable for other FI/CO areas Foundational technology for BW reporting

See Appendix B for more on how to use this tool for PCA/Costing

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting (cont.)

Powerful, flexible tool that draws data from InfoCubes (cont.)

Getting the Most from R/3 FI/CO Where can I use it?

Explore R/3 Drill-Down Reporting (cont.)

General Ledger (G/L) Accounts Payable (A/P) Accounts Receivable (A/R) Profit Center Accounting (EC-PCA) Treasury (TR) Enterprise Controlling Consolidations (EC-CS) Controlling-Profitability Analysis (CO-PA) Project Systems Product Costing Special Purpose Ledger

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting (cont.)

There is no single place to access drill-down reporting

You must go to the specific application area you want to do drill-down reporting on

See the handout on drill-down reporting for transaction code characteristics and value fields for each area

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting Output Types Standard drill-down layout

In 4.6C, there are new output types that you can use

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting Output Types (cont.) New layout options

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting Output Types (cont.)

Graphical output

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting Output Types (cont.)

ALV output

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting Output Types (cont.)

Tip

You can give your users the option of selecting which output type to use when executing the report

Getting the Most from R/3 FI/CO

Tips for Drill-Down Reporting

Dont include too many characteristics in your report

Hinders performance A good rule of thumb is to limit characteristics to six or less Line item report for reconciliation Other drill-down reports that have additional characteristics Other SAP report types that are useful for your report See Appendix A for details!

Use report-to-report interface to link to other reports

Use frozen data for reports that take a long time to run

Use mass print settings when you need hard copies

Getting the Most from R/3 FI/CO

Explore R/3 Drill-Down Reporting (cont.)

Creating and using drilldown reports

Getting the Most from R/3 FI/CO

Discover the Special Purpose Ledger

The Special Purpose Ledger is a user-defined, flexible ledger

Captures only what you want, for the activities you want, in the time frame you want In very general terms, SPL can be thought of as the CO-PA of FI An SPL can update based on any activity You can pick up FI accounts as well as cost elements You can set up a series of ledgers that roll-up into one another for consolidated reporting
R/3 Profit Center Accounting is actually a Special Purpose Ledger!

What can I do with an SPL?

Getting the Most from R/3 FI/CO

When is the SPL a Good Fit?

The SPL is particularly good when you need to:

Report off of a different fiscal year variant Report off of a different organizational structure Report on a different accounting basis (cash basis) Combine data from different parts of the system that arent normally available in a single transaction or reporting tool Consolidate data that falls outside of EC-CS or SEM Consolidations Stage data for export to an external consolidation tool Report off a subset of system activities Handle complex foreign currency reporting issues

Getting the Most from R/3 FI/CO

Special Purpose Ledger Best Practices

Include all currencies you need when defining the ledger

It is hard to add them later! At a minimum, include transaction currency and local currency

Research how your data flows before trying to set up an SPL

Make sure you identify all of the activity types that you need to map To capture all of the characteristic data you need You will also have to maintain integrated master data via transaction code GCS1

Use user exits in movement types

Getting the Most from R/3 FI/CO

Special Purpose Ledger Best Practices (cont.)

Use Painter/Writer and drill-down to create SPL reports

Your SPL totals table is available as a reporting table in Painter/Writer Use transaction code GCRE1 to activate drill-down reporting for your SPL You will also have to maintain integrated master data via transaction code GCS1

Note

See also: How to Tap into the Power of the Special Purpose Ledger Quentin Hurst

Getting the Most from R/3 FI/CO

Start Using R/3 Cash Management

What is Cash Management?

Submodule within Treasury Used to report short-term and medium-term cash position and forecast Electronic bank statement Lockbox processing The Cash Management Position (CMP) report The Liquidity Forecast (LF) report
Well cover the CMP and LF reports since theyre particularly important!

Key Cash Management features you should use

Note

Getting the Most from R/3 FI/CO

What Is the CMP Report?

Used to forecast cash position in the short-term

Based on banking transactions entered in R/3 Looks at actual cash transactions only Great tool to help manage float timing differences of when different deposits, outgoing checks, wires, etc., clear the bank

T code FF7A

Getting the Most from R/3 FI/CO

What Is the LF Report?

Used to forecast liquidity position over short/medium term

Forecasts future obligations and receipts Based on business transactions entered in R/3 Includes transactions to convert outgoing/incoming documents to cash Purchase orders, A/P invoices Sales orders, A/R invoices

Getting the Most from R/3 FI/CO

What Is the LF Report? (cont.)

T code FF7B

Getting the Most from R/3 FI/CO

Cash Management Best Practices

The CMP and LF can be combined

You can merge the two reports together to get a consolidated picture of your cash and liquidity positions Provides the optimum view of short-term cash position and forecasted cash position

Use a proper bank account G/L structure Set up the appropriate number of planning groups

You can always combine

Key to a good CMP is value dating timely transaction entry

What Well Cover Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

Leveraging CO-PA Best Practices

Consider Implementing CO-PA

Why Implement CO-PA?

R/3 module for tracking and analyzing profitability Helps you understand where your profits come from Captures revenue and cost of goods sold conditions from Sales and Distribution (SD) Can also capture variances and assessments
Materials Manager (MM) variances, Production Planning (PP) variances, CO assessments, and FI journal entry activity

Gives you the information you need to make strategic decisions

Which are the most profitable customers? What product lines give me maximum contribution margin?

Leveraging CO-PA Best Practices

Top CO-PA Pitfalls

Poor report performance Bad design decisions limits what data you can report on Inconsistent value for the same key figure on different reports Difficult or erroneous reconciliation
GOTCHA!

Leveraging CO-PA Best Practices

Getting the Most from CO-PA

1. 2. 3. 4.

Choose value fields strategically Ensure consistency with key figure schemes Boost performance with summarization levels Hasten runtimes with report splitting and Report/Report Interface (RRI) 5. Reconciliation tools

In the Appendix on the CD, there are five more CO-PA best practices!

Leveraging CO-PA Best Practices

Strategically Choose Your Value Fields

Many teams skimp on the number of value fields they set up

Example: setting up a single field called Net Revenue instead of the components as separate fields Its indivisible once its posted As time goes on, you will be asked to break out Net Revenue to its individual components for analysis

R/3 wont allow you to break the data out later

Leveraging CO-PA Best Practices

Strategically Choose Your Value Fields (cont.)

Break potentially useful conditions into their own fields

Even if you dont have a current requirement to justify the field, in the future someone will probably ask You can always add value fields together when detail isnt needed

Leveraging CO-PA Best Practices

Ensure Consistency with Key Figure Schemes

Key figure schemes are groupings of value fields

You set them up once and use them across your reports Ensures line items have the same definition across reports Net revenue, total cost of goods sold, etc. When creating your report forms, you have the option of using value fields or key figures

Leveraging CO-PA Best Practices

Ensure Consistency with Key Figure Schemes (cont.)

Set up key figure schemes via transaction KER1

Leveraging CO-PA Best Practices

Ensure Consistency with Key Figure Schemes (cont.)

Leveraging CO-PA Best Practices

Ensure Consistency with Key Figure Schemes (cont.)

How to use them in reports

When creating the report form, you will be prompted on whether to use characteristics, value fields with characteristics, or a key figure scheme

Leveraging CO-PA Best Practices

Boost Performance with Summarization Levels

Summarization levels speed up report runtimes

You define summary levels (tables) and specify an update frequency R/3 generates, loads, and updates the summary tables When designing reports, you tell R/3 to use the summarized data R/3 fills in any missing data from original table (new with 4.5!)

The best tool for maximizing CO-PA report performance!

Leveraging CO-PA Best Practices

Boost Performance with Summarization Levels (cont.)

Summarization levels speed up report runtimes

SL

First

SL

SL

Report

R/3
If no ne fo und

CE3

Leveraging CO-PA Best Practices How to set them up

Boost Performance with Summarization Levels (cont.)

1. Define summarization levels using transaction code KEDV 2. Then tell R/3 to load the level by executing report RKETRERU Transaction code KEDU 3. Schedule report RKETRERU to periodically run to update your levels Create variant in KEDU, then schedule a batch job to run off of that variant

Leveraging CO-PA Best Practices

Boost Performance with Summarization Levels (cont.)

Tcode KEDV

Leveraging CO-PA Best Practices Keys to success

Boost Performance with Summarization Levels (cont.)

Choose a frequent update strategy to get the most boost normally a nightly update strategy is used Set up and transport your levels from your Gold/CTS client Include dependent characteristics in summarization levels Dont define too many summarization levels (8-20 suffice) Avoid redundant summarization levels Make sure to periodically delete unused summarization levels Use the delivered summarization level tools
You can also use the summary tables created by summarization levels to hasten custom ABAP reports

Tip

Leveraging CO-PA Best Practices

Hasten Runtime with Splitting and RRI

Report splitting and report/report interface

Both improve performance Break one report into multiple reports Useful with large number of characteristics or high data volume Report splitting one report automatically calls the other RRI from the first report list you use, manually navigate to the lower-level report using a menu path
Splitting RRI
Original slow report Faster runtime: 2 smaller reports; one calls the other when needed

Whats the difference?

Leveraging CO-PA Best Practices How to split reports

Hasten Runtime with Splitting and RRI (cont.) Use transaction code KE3L

Leveraging CO-PA Best Practices

Hasten Runtime with Splitting and RRI (cont.) For drill-down reporting, go to the Options tab in either the create or change mode and click on the Report assignment button

How to set up a report/report interface

Leveraging CO-PA Best Practices When to use splitting

Hasten Runtime with Splitting and RRI (cont.)

Reports that use a lot of characteristics or characteristics that have a lot of values performance becomes an issue Users typically do the same drill-down, e.g., company code, then product line, then customer When you want to link different types of reports, such as ABAP programs to Painter reports or SAP queries to drill-down reports Users dont use a single drill-down approach, so splitting isnt a viable option
When splitting a report, users are limited to specific drill-downs

When to use RRI

Leveraging CO-PA Best Practices

Reconciliation Tools

Standard delivered CO-PA reconciliation report in R/3 4.5+

Name was derived from its transaction code KEAT Tries to reconcile FI, PCA, SD, and CO-PA at an SD condition/account level Provides a quick overview of any discrepancies Offers drill-back functionality for out-of-balance entries

Leveraging CO-PA Best Practices

Reconciliation Tools KEAT

T code KEAT

Leveraging CO-PA Best Practices

Ease Reconciliation with KEAT

Unfortunately, KEAT has some drawbacks

Not completely reliable, especially in make-to-order environments FI initiated updates arent tracked well or consistently Report output isnt customizable Use as a quick check to identify errors If KEAT shows an error, generally it is an error Doesnt always show all errors Still need a more reliable reconciliation tool for detailed reconciliations

The verdict:

Leveraging CO-PA Best Practices

Set up COS for Easier Reconciliation

What is Cost of Sale (COS) reconciliation?

Simply stated, it is the creation of a COS cost element in CO, coupled with the necessary configuration to force a CO-PA segment update during any COS activity The solution provides Dual update into CO-PA delivery and billing A separate value field for each update A low-data alternative to setting up account-based COPA

Leveraging CO-PA Best Practices 1. 2. 3. 4. 5.

More Best Practices in the Appendix!

Benefit from R/3s frozen data feature Boost performance with summarization data Use realignments for mass changes Leverage line item reports Start using characteristic hierarchies

Resources Dig into your system... On CO-PA or financial reporting: help.sap.com The R/3 Reporting Made Easy Guidebook Configuring SAP R/3 FI/CO, by Quentin Hurst and David Nowak Sybex 2000 On your CD

Drill-down reporting handout Appendix A: More CO-PA best practices Appendix B: Using Drill-Down for PCA and Product Costing!

7 Key Points to Take Home Drill-down reporting isnt just for CO-PA anymore Search for the node information system in the IMG

You may be surprised at the tools you will find

There are report optimization techniques in CO-PA that arent available to other reporting tools There are specific reasons why you would use a Special Purpose Ledger

7 Key Points to Take Home! (cont.) SAP Query has been given a bad wrap give it a try Cash Management Position and Liquidity Forecast are two strategic reporting tools that are often overlooked Dont forget the Appendices

Your Turn!

Questions?

How to Contact Me: qahurst@virtuosollc.com