Important Terminologies in SAP FICO


SAP FI stands for the finance module of the SAP environment. It is used to report transactions both internally and externally. The aim of FI is to record all sorts of finances and transactions of an organization or entity and create the corresponding statements. For purposes of tax and accounting, it is crucial that everything is kept track of.

SAP Fi is made of several smaller modules. The most used submodules are those such as asset accounting, account receivables and payables, and bank accounting. For an outsider seeing SAP FI for the first time, the numerous terminologies can be intimidating. The portals such as Stechies can help you get used to these. Here are some of the critical finance terms and their meanings

Company Code: The smallest unit for which a self-contained account be drawn up for any sort of external or internal reporting purposes.

Fiscal Year: This is a period of 12 months for which financial statements are drawn up, and inventory is also taken up. It is a very commonly used term in finance.

Fiscal Year Variant: This variant generally elaborates on how the calendar year and fiscal year are related. The fiscal year variant declares the various periods and particular periods of the year and the way the SAP Environment must determine these periods.

House Bank: In this, the bank is represented by a business partner by which the internal transactions may be processed.

Account Type: This particular details the area of accounting to which an account belongs to. Examples are vendor accounts, G/L accounts, customer accounts, asset accounts, etc.

Business Area: A unit within an organization that needs audited transactional financial statements for external use. This generally means a separate responsibility within an organization.

Fund: It is a fiscal object that contains a set of accounts used for the purposes of budgeting and controlling costs and to figure out the source of funding and its use. Generally, the financial data is split into funds, allowing specific activities to be performed and objectives to be met according to the numerous limitation, and restrictions. The Fund is in fact, the lowest level for which a balance sheet must be created.

Funds Centre: An independent unit within the Funds Management module. It is also the lowest level of responsibility for any sort of monitoring and controlling of budgets and costs. These are generally arranged in a sort of multilevel hierarchy.

Sponsor: An external entity of organization that finances a project conducted by some other organization. The sponsor is generally mentioned during the event since it is done with the goal of marketing themselves to a broader audience.

Special Purpose Ledger: This feature allows creating balance sheets that are based on the fund accounting. At the transactions are processed, the financial activities will be posted to the SPL simultaneously. Split processor functionality is used to allow for the creation of entries. SPL will divide the transaction into even smaller parts, to allow the correct splitting based on business area and funds.

Customer Aging: Account and receivable invoices aging is used as an essential measure to review accounts of customers for payments that are delayed.

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