Account Clearing in SAP with BEST GL Clearing

Why Reconcile General Ledger (GL) Accounts At All?

The financial statements of your business provide the basis for key decisions by internal and external stakeholders. GL account reconciliation is essential to ensure that GL accounts, and the resulting financial statements, are accurate at month-end or period-end. During the financial close process, incorrect, missing or unauthorised entries need to be identified and corrected. Accruals and adjustments are posted. SAP balances and transactions are validated against financial statements and external system data.

Besides your stakeholder requirements for accurate, complete and validated financial statements, there are also increasing regulatory requirements, particularly for listed companies.

How To Reconcile GL Accounts in SAP?

Standard SAP unfortunately has no functionality to reconcile GL (General Ledger) accounts. Businesses that run SAP are therefore forced to find another way. Accountants download SAP data to Excel or other non-SAP tools and perform a lot of spreadsheet and manual reconciliation to get the job done. Such highly manual or non-SAP processes are not ideal.

BEST is an SAP-certified add-on module that allows automated GL reconciliation directly inside SAP.

• GL reconciliation reports are automatically available in SAP itself, while drill-down to the SAP transactions from the reconciliation reporting allows easy investigation of discrepancies.
• Notes, supporting attachments and GL reconciliation approvals are processed directly in SAP, with full SAP audit trails by user, date and time.
• Existing SAP users are simply allocated additional reconciliation transactions, controlled within the normal SAP authorisations framework.
• Duplicating and interfacing key data to non-SAP systems is not required, as the GL transactions and balances inside SAP are reconciled and reported.
• Historic reconciliations are stored in SAP, providing query resolution and audit evidence as required in the future.
• Automated approvals are processed by the system for low-risk accounts where no transactions are posted during the period or other configurable criteria are met.
• The system matches and automatically clears open items that meet matching criteria. Importantly, automatic clearing for intercompany and other transactions across company codes and GL accounts is possible.
• The Reconciliation Hub allows finance teams to plan and track the reconciliations required during the financial close.

Case Study: See How a Large Listed Business Reconciles GL Accounts in SAP

Dis-Chem has high volumes of transactions posted across many company codes each month. Watch the short video or view the presentation from a recent conference where the team shared its journey of automating GL reconciliations and open item clearing in SAP.

Key GL Accounts To Reconcile in SAP

Typically, most are balance sheet reconciliations, but the same functionality can also be used to reconcile income statement accounts. Below are brief descriptions of what we have seen from BEST SAP customers as the most important GL reconciliations.

Bank Reconciliations

There are two parts to the BEST bank reconciliation in SAP:

• Ensuring that the main bank GL account always reconciles to the actual bank statement and is accurate and complete.
• Ensuring the bank subaccounts are cleared regularly and do not contain long-outstanding items.

This article describes the detailed bank reconciliation functionality.

Intercompany Reconciliations

Within SAP, intercompany transactions may be handled in a wide range of ways. For example, transactions may take place between vendors, customers and GL accounts with various account assignments, trading partners, segments and more. Mapping and matching transactions across these entities is complex and is not made any easier by large volumes. Many businesses consider intercompany reconciliation to be the most difficult part of the period-end close. BEST has met this challenge by allowing different SAP entities to be mapped against each other and automatically reconciled.

Fixed Asset Reconciliations

SAP provides standard transactions to perform this GL-to-asset-subledger reconciliation. However, most businesses still require a monthly review to validate that the GL and subledger agree, as well as reviewing posting values according to various categories. To assist businesses with fixed asset reconciliations in SAP, BEST has a unique fixed asset reconciliation process.

Accrual Reconciliations

Overstated or understated accruals can materially affect the balance sheet, most commonly its liabilities. What should you be trying to achieve with your month-end accrual reconciliations in SAP? And how can the BEST GL Reconciliations module help facilitate this?

Vendor and Customer Subledger Reconciliations

In SAP, it is quite difficult for the vendor or customer subledger, meaning postings made against a vendor or customer, not to balance exactly to the vendor or customer control or general ledger accounts. Some decades ago, we would see this at some SAP sites, but SAP master data and configuration options are now almost always set correctly to ensure that control accounts cannot be posted to except through the subledger. Nonetheless, BEST has a specific check to find entries posted either only to the vendor or customer control GL accounts or only to the subledger.

Besides this specific check, the vendor and customer control GL accounts can also be reviewed and approved through the normal GL reconciliation process as required.

Vendor Statement Reconciliations

The real need in terms of vendor reconciliation is to match and validate SAP vendor line items and balances against vendor statements. This is generally a primary function of the accounts payable department. It can involve many thousands, or even millions, of lines and hundreds or thousands of vendor reconciliations each month.

Statements may be sent by email in a unique PDF or Excel format for each vendor or received in many other ways. One of the key requirements is therefore the ability to read and match all these formats. SAP has a vast array of functionality in the Materials Management (MM) and Financial Accounting (FI) modules involving payments, discounts, down payments, special postings such as withholding tax, held and parked items, GR/IR accounts and more. BEST therefore has a dedicated module for vendor statement reconciliations.

Customer Payment Clearing

Customer payments need to be cleared promptly and accurately against the invoices and other transactions on a customer’s account. This helps ensure correct customer balances and reduces open items on the account. The BEST Customer Clearing module allows customer remittance advice to be uploaded into SAP before automatically matching and clearing the customer account line items and related payment.

Clearing Open Items

Open items should be cleared because excessive numbers of open lines can make GL accounts difficult to work with and, in some cases, result in incorrect balances. Standard SAP has functionality to automate open item clearing, but it has limitations. Open items cannot be automatically cleared across different company codes, different account types, such as customer to vendor, or even across different GL accounts.

This means users need to perform manual clearing, which often leads to high volumes of uncleared items. BEST’s GL Clearing functionality overcomes these limitations to allow automated clearing of open items.

Would You Like To See How To Reconcile GL Accounts Directly in SAP?

If you use SAP and currently reconcile accounts manually outside SAP, please contact us to see how GL accounts can be reconciled automatically inside SAP.