If you are an end user on SAP, you may be familiar with the concept within SAP of open and cleared items. If not, it is effectively SAP’s mechanism for managing reconciled versus unreconciled items on an account. Put very simply, anything that is cleared, is essentially reconciled. This could be a paid supplier invoice, or a settled customer billing document. The subledger, such as customer and vendor accounts, are obvious accounts that would require this type of reconciliation and be managed on an open item basis. However, it extends beyond just the subledger and applies to all other Balance sheet accounts too. Accounts such as bank accounts, accruals, provisions – to name a few –would also be managed on an open item basis.
What types of accounts are managed on an Open Item basis?
I’ve alluded to some already, but here is a basic breakdown of how open item management would be used within your chart of accounts:
- Subledger accounts: i.e. customer and vendor accounts. These are automatically managed on an open item basis. The reconciliation accounts that they roll up into however, cannot be set as open item managed.
- Balance Sheet accounts: Open item management for balance sheet accounts is discretionary and is a setting that is applied to the GL master record in SAP for a specific company code. Generally, most balance sheet accounts are set to be open item managed, unless there is a specific reason not to i.e. a reconciliation account.
- Income statement accounts: these are never managed on an open item basis because of the nature of a P&L account. Income statement accounts need never be cleared during the year and until year end where they are taken to Retained Earnings as part of your carry forward process in SAP.
What does it mean now that my GL account is set to be open item managed?
Once an account is set to be open item managed, any items posted to the account are listed as open items. They remain this way until they are physically cleared within the system against a contra entry. The clearing process needs to be done on a daily basis in order to keep accounts in an orderly manner. Organisations with large volumes of transactional data can spend significant amounts of time managing this clearing process within SAP so that come month end, the accounts are in a fit state to be easily reconciled.
How can I clear my open item in SAP?
SAP provides two ways to clear your account open items, being an automated clearing process and a manual clearing process. The automated clearing is very effective when it works, unfortunately, it requires very specific criteria to be met before clearing can take place.
Criteria such as:
- The open items need to be within the same account. This means you cannot automatically clear items in two different GL accounts or subledgers.
- The open items need to be within the same company.
- The clearing reference to be used for clearing needs to be in the same field on the entries to be cleared.
- The references need to be exact – any difference whatsoever results in the items being treated uniquely and therefore not cleared automatically.
When running automated clearing, if any of these criteria are not met, the items will remain uncleared on the account until someone then manually clears them. Manual clearing is not constrained by the restrictions mentioned for automated clearing and is therefore much more flexible. It allows for clearing across account types and company codes. However, it is exactly as its name describes, it is a very manual and very labour-intensive process. If you have to deal with a large number of accounts, or large volumes of open items, the manual clearing in SAP becomes very unwieldy. The account and reference selections are very clumsy, and the display of references is limited. In short, organisations spend an inordinate amount of time in the manual clearing transactions, clicking away trying to match items for clearing.
How can the BEST GL Clearing module help me?
If your organisation is spending a lot of time manually clearing items within your SAP environment, then the BEST GL clearing is a module that can help you. It is designed to handle large selections and transaction volumes, to clear open items in an automated fashion with the flexibility of manual clearing.
Open items selected using BEST GL Clearing can be cleared across account types and company codes. References can be modified as required to make sure they can be matched – e.g. you may want to strip out leading zeros or special characters. You will not need to post journal entries or perform mass changes to references in order to clear items in your system.
BEST GL Clearing allows you to select the clearing criteria dynamically as you work so that you can apply multiple different clearing rules to your set of open items. No configuration change is required. It also has programmatic search functionality to identify references across multiple different document fields.
Best of all, the entire process can be automated so that repeatable clearing need not be done by a person, but rather run automatically. Therefore, items are cleared without any user intervention. As the process is all within SAP, it uses your SAP standard authorisations throughout the process, and is always governed by your existing system controls and configuration.
Comprehensive reporting allows for you to monitor your clearing and track how open items are being cleared in your system – so you can manage efficiencies.
Accounts that are cleared efficiently are quicker to and easier to reconcile come month end, which helps to shorten your month end close. With items cleared off the accounts, the true reconciling items are visible and can then be managed accordingly. Your staff should be spending time managing these reconciling items rather than their time being consumed just trying to clear the accounts.
If you are struggling with managing your open items, then the BEST GL Clearing module is your answer.
Please contact us for a demo of the full functionality – firstname.lastname@example.org