Introduction to Document Splitting in new GL

Overview Document Splitting in new GL in SAP ECC is one of the key changes introduced by SAP to streamline multiple reporting requirements and to enable faster close process for its customers. No functionality was more keenly awaited as document splitting. Document Splitting We use Profit Centre as a scenario to explain the functionalities; however all processes that apply to Profit Centre also apply to the other scenarios (Segment, Business Area). New GL before SAP ECC Financial postings in SAP automatically generate values for certain characteristics (like profit centre) on the document. This generation of characteristic value is derived from characteristics already input by users and triggered either by a code inherent in SAP or due to user-defined derivation rules. However, certain lines items in the financial posting (like Payables, Receivables) would not generate any value for profit centre. This is because of an apparent conflict between the requirements for accounting and the requirements for management reporting of financial transactions.

For the purposes of reporting, a Vendor line item could belong to multiple profit centers depending on which profit centre bought goods/ services from it For the purposes of accounting, the Vendor line item belongs to the legal entity that is responsible for the accrual of expense/ vendor dues. All financial postings catered to accounting requirement of the posting they posted to the legal entity responsible for incurring the liability. At the month-end, users could execute a series of steps to transfer Vendor, Customer, Asset and Inventory balances to Profit Centers. During this transfer, the outstanding balance at the time of transfer would split by profit centre and post to respective profit centers. The disadvantage with this process was that the Trial balance by profit centre could only be reasonably generated at the end of the month after the balances were transferred to profit centers. Real-time reporting by profit centre for balance sheet items was not possible, unless the user manually split the lines during data entry. The process to transfer balances to Profit Centre increased the time to close books at end of the month.

Vendor Invoice split before SAP ECC

New GL in SAP ECC Document splitting functionality in new GL performs automatic split in real-time of the line items on a financial document for the user-selected characteristics (called scenarios) like profit centre, segment. SAP delivers pre-configured splitting rules that can be used to perform the online document split. SAP customers can configure the rules to suit their business processes, if the pre-configured rules do not satisfy their business requirements. The document splitting functionality was delivered with another useful functionality zero/ selfbalancing. This functionality enables SAP customers to produce a complete AND a balanced balance sheet and Profit & Loss by Profit Centre. Functions of Document splitting in new GL in SAP: Active Split The amounts on the line items that do not have Profit Centre will be split in the ratio of the amounts on the base line items. The identification of the line item to be split and the base line item can be configured by users. Example of Document Splitting during Vendor Invoice processing (Active Split) Active split occurs when the amounts on the line items that do not have Profit Centre are split by the system based on preconfigured splitting rules.

Let us look at an example of a Vendor Invoice posted in new GL. The Vendor Invoice is posted to expense accounts for costs belonging to two profit centers. There is an input tax posted as part of this transaction. This view is called the data entry view. The Vendor Account is credited with AUD 440.00; this is the amount that is relevant for accounting.

Data entry view Active Split

SAP will split the document in the background based on pre-configured splitting rules. The split document is reflected in the General Ledger view will look as below.

General Ledger view Active split

The amounts on the Vendor line and the amounts on the Tax line are split to the profit centres in the ratio of the amounts of the expense lines. This is a reporting view of the same financial document; the vendor payable is AUD 440 in accounting view but is split by Profit Centre in the reporting view. Functions of Document splitting in new GL in SAP: Passive Split Passive split occurs when the amounts on the line items that do not have Profit Centre are split by the system based on preceding processes. This is defined within SAP code and cannot be configured. An example is when Vendor Invoice is paid, the Vendor line items on the payment document are split in the ratio of the original split in the preceding Vendor Invoice document. Example of Document Splitting during Vendor Payment processing (Passive Split) Let us look at passive split in a business process when the above Vendor Invoice is paid in full. The accounting document in data entry view is as below.

Data entry view Passive Split

SAP will carry over the split on the Vendor line item from the preceding process (Vendor Invoice process) and will split the Vendor line in the payment document in the same ratio. The split document is shown in the General Ledger view.

General Ledger view Passive Split

Functions of Document splitting in new GL in SAP: Self-balancing Document splitting functionality in new GL allows the users to produce a balance sheet by profit centre (or by scenario). However, the Balance Sheet is not a balanced Balance Sheet. If you notice in the document below, the total of Profit Centre 1100 is in the credit of $30 and the total of Profit Centre 1000 is in the debit of $30. The Profit Centre Managers do not have enough information in their respective Balance Sheets to analyse the cause of the difference or which Profit Centre is owing/ in debt to their Profit Centre.

Document not self-balanced by profit centre

The self-balancing functionality in new GL will produce additional entries in General Ledger view to offset the balance in each profit centre in the document. This process will normally occur when

multiple profit centers has been derived on all lines of the financial document and hence, active document splitting was not required the total amount on all lines for any given profit centre is not zero

Self-balanced document in SAP ECC newGL

As in the previous example, the self balancing entry is automatically posted based on configuration settings. In the self-balancing clearing entry below, you will notice that the line item has also populated a partner profit centre. This will allow Profit Centre Managers to analyse the clearing account by Profit Centre owing/ owed.

General Ledger view self balanced document

Conclusion Document splitting functionality provided in new GL in SAP is a very powerful feature of the new SAP version. It allows business users to generate trial balance by Profit Centre in real time. This also makes redundant the month end processes to transfer Balance Sheet balances to Profit Centers another feature of new GL thereby enabling faster month end close.