Sub Modules of SAP FI And SAP CO [Advantages & Disadvantages]

In this SAP tutorial, we will check various sub modules of SAP FI and SAP CO and their uses in business and organization.

Keeping a thorough record of your financial activities is undoubtedly one of the most crucial parts of operating a business. Even if you design and deliver the most cutting-edge good or services available today, your company will fail if you don’t keep accurate records.

Submodules of SAP FI

There are SAP FICO sub-modules that makeup SAP FI. Accounts receivable, Payable, Asset, General Ledger, and Bank Accounting are the sub-modules that are frequently employed. The links between each submodule are active, and they all integrate simultaneously.

The following are included as submodules of SAP FI:

• General Ledger(FI-GL): All of a company’s transactional information is recorded in the general ledger. It serves as the principal document that contains all accounting information. Transactions involving customers, purchases from vendors, and internal business transactions are frequent entries in the general ledger.
• Accounts Receivables (FI-AP): Records all client transactions and oversees customer accounts. Customers will have their own accounts, and when transactions are made to those accounts, the general ledger reconciliation accounts are immediately updated with the new data. Accounts receivable transactions include dunning, customer report execution, posting of invoices and credit memos, down payments, and invoice payments.
• Accounts Payable (FI-AR): Includes all interactions with vendors and manages vendor accounts. The execution of vendor reports and the posting of invoices credit memos, down payments, and invoice payments are only a few examples of transactions.
• Bank Ledger (FI-BL): All bank transactions are recorded in accounting. Bank reconciliation is performed to reconcile all transactions listed on bank statements with those in the system. Since transactions are updated in real-time and all SAP FI sub-modules are connected, accurate financial information may be retrieved from the system whenever needed.
• Account for Assets (FI-AA): Oversees all of the business’s fixed assets, such as its real estate, construction projects, and heavy machinery. Transfers, sales, retirements, revaluations, and depreciations are all examples of transactions.
• Management of Funds (FI-FM): The management of funds within a firm is done using this module. The Fund Management module communicates with other modules such as Bank Accounting, General Ledger (G/L, SAP AR/AP, and SAP Material Management) to obtain fund details. It includes all financial transactions related to receiving funds, spending funds, and incurring future costs. It aids in the development of budget forecasts and efficient money management.
• Management of Travel (FI-TV): The management of a company’s travel expenses is done using this module. It covers all aspects of the travel request, including the planning and costs associated with each trip. Due to its connectivity with all other SAP modules, it aids businesses in effectively managing their travel expenses.
• Unique Purpose Ledger (FI-SL): Using the values from the various application components, the Special Purpose Ledger enables you to report at multiple levels. You can gather or integrate data, and produce totals, using the Special Purpose Ledger’s modules. Also, real and planned values that have been transferred to the Special Purpose Ledger from other SAP applications or external systems can be adjusted, evaluated, and distributed.

Read Enterprise Structure in SAP FICO

Sub Modules of SAP CO

One of SAP’s functional modules, SAP Controlling, handles cost computation, cost analysis, cost planning, and overhead control for the company. You must be aware that there are two different sorts of reporting in businesses: internal reporting and external reporting.

SAP Controlling (CO) assists in reporting all costs and Profitability Analysis to the internal management while SAP Finance (FI) deals with external reporting.

These SAP Controlling submodules are listed below

• Cost element Accounting: According to reports of profit and loss accounts, the Cost Element component analyses the costs and profits of the company. In the FI module’s General Ledger section, cost elements correspond to the corresponding cost and revenue element accounts. Accounting for cost elements identifies the sources and aspects of an organization’s costs
• Cost center accounting: The cost of internal divisions like material manufacturing, sales, marketing, or human resources is covered by the cost center accounting component. In contrast to revenue, it mainly concentrates on expenses.
• Internal orders: The costs associated with internal organizational projects are the focus of the Internal Orders sub-module. These projects often have a straightforward structure and short duration (otherwise, they would be managed with the SAP PS – Project System module). These initiatives may either be capital or expense-based.
• Product cost controlling: To determine the value of internal product costs, one uses the SAP CO Product Costing module. Profitability and management accounting for production also use it. When putting up Product Costing, there are two places that you can set. Planning for Product Cost Cost object management planning for cost centers is the foundation of product costing. Planning total dollars and quantities for each cost center in a plant is the aim of cost center planning.
• Profit center accounting: The Profit Center Accounting component, as its name suggests, oversees all of the company’s profits related to its many business lines. Profit centers oversee both costs and revenues, in contrast to cost-center accounting, which only deals with expenditures.
• Profitability analysis: An understanding of the company’s profitability for each product or service is provided through profitability analysis. Making judgments about product price, distribution methods, and target market segments all depend on it. It also makes it possible to analyze profitability in great depth for each country, region, type of product, and distribution channel.

Advantages of SAP FI and CO

SAP FI (Financial Accounting) and CO (Controlling) are two of the most widely used modules in the SAP ERP (Enterprise Resource Planning) system. They offer numerous advantages to businesses, including:

• Integrated financial management: The integration of SAP FI and CO provides a complete financial management solution. It ensures that all financial transactions are tracked and recorded in real-time, providing accurate financial information to stakeholders.
• Efficient financial reporting: SAP FI and CO provide powerful financial reporting tools that allow businesses to generate financial reports quickly and easily. These reports can be customized to meet specific business requirements and can be used to analyze financial performance.
• Cost-effective accounting: The use of SAP FI and CO can help businesses reduce their accounting costs. This is because the modules automate many of the accounting processes, reducing the need for manual intervention.
• Improved decision-making: The use of SAP FI and CO provides businesses with accurate and up-to-date financial information. This helps business leaders make informed decisions about resource allocation, investment, and other financial decisions.
• Enhanced control and compliance: SAP FI and CO help businesses maintain compliance with financial regulations and internal control policies. The modules offer powerful audit and control features that enable businesses to monitor financial activities and detect any anomalies.
• Easy integration with other SAP modules: SAP FI and CO integrate seamlessly with other SAP modules, including materials management (MM), sales and distribution (SD), and production planning (PP). This makes it easier for businesses to manage their operations in a unified system.

Disadvantages of SAP FI and CO

While there are numerous advantages of using SAP FI and CO, there are also some disadvantages to consider, including:

• High implementation costs: Implementing SAP FI and CO can be expensive, as it requires a significant investment in software licenses, hardware, and implementation services.
• Complexity: SAP FI and CO are complex modules, that require specialized knowledge and training to use effectively. This can result in a steep learning curve for users.
• Customization challenges: Customizing SAP FI and CO to meet specific business requirements can be challenging, as it requires knowledge of the underlying data structures and programming languages.
• Maintenance costs: Maintaining SAP FI and CO can be costly, as it requires ongoing updates, patches, and support services.
• Integration challenges: While SAP FI and CO integrate seamlessly with other SAP modules, integrating them with non-SAP systems can be challenging.
• Security risks: As with any enterprise software, SAP FI and CO are vulnerable to security risks such as data breaches and cyber attacks.

Conclusion

This SAP tutorial explains, various sub modules of SAP FI and SAP CO and their uses in business and organization. We have also discussed advantages of SAP FI and CO and disadvantages of SAP FI and CO.