SAP Bank Accounting before 2020
Before the release of SAP S/4 HANA 2020, creating a new House Bank in SAP could be very complicated. The process required creating a new set of main bank G/L accounts and sub-accounts. These were created to allow processing of incoming and outgoing payments.
For companies operating with a significant number of bank accounts, this way of working often led to an enormous extension of the chart of accounts. And because in many companies the creation of new G/L accounts is controlled by an approval workflow, the finance user could often wait several days before the new account creations were approved. After that, the accounts had to be created, and the new configuration(s) had to be transported to the production environment.
This whole process required the involvement of a lot of people and could take a long time. Clearly, this was not ideal!
Simplified Reconciliation Accounts
SAP S/4HANA 2020 has significantly improved the above process. The new approach allows you to create a single Bank Reconciliation account which can be connected to each House Bank in use. Beyond this, there’s only one other requirement: a set of sub-accounts for each payment method.
This new approach will greatly simplify the chart of accounts for many organizations.
How to Set Up Bank Reconciliation in SAP S/4HANA 2020
Setting up Bank Reconciliation in SAP S/4HANA takes only a few simple steps. Let’s run through them now.
First, a Bank Reconciliation account must be created with a G/L Account type “Cash Account” and with a Subtype “B–Bank Reconciliation Account”. Doing this is as simple as selecting two menu options (see below).
Second, any sub-account must be created with a Subtype “Bank Sub Account” and linked to the Bank Reconciliation Account. Again, it couldn’t be easier:
Third, the Bank Reconciliation account needs to be linked to the House Bank using “Manage Bank Accounts” in the Fiori app.
To do this, open the Fiori app and select the bank account to use. Activate
“Edit” mode and click on the button “Migrate G/L Account” available in the “Connectivity Path” tab.
You will also need to enter the new Bank Reconciliation account in the field “Target Bank Reconciliation Account”. (The field is highlighted below). Once you’ve done this, click in “Apply” and the bottom of the screen and save your changes.
At this stage, the Bank Reconciliation Account is not yet active for the House Bank. The account will only become active when the current (main) bank account balance is migrated to the reconciliation account.
Note that, upon the migration’s completion, the previous bank account gets automatically blocked for posting. This smart feature should prevent some headaches down the line.
What’s more, if the main account balance was not correct at the time of migration, you can always return to the previous state by clicking on the “Reverse Migration” button—another useful safeguarding feature.
And that’s it! If you’ve completed the above steps then you’ll have successfully set up a Bank Reconciliation account in SAP S/4HANA 2020. We said it was easy!
You’ll know you’re set up correctly when you see a visual indicator as follows:
Sub-Accounts Balance Clearing after Migration
There is one important thing to note: the migration of a main account balance to the reconciliation account does not impact the balances on existing sub-accounts. Existing balances will remain in use and coexist with the newly created sub-accounts for a so-called “expiry phase”.
These existing balances can be cleared either manually using “Reprocess Bank Statement Items” in Fiori app or automatically.
Automatic clearing requires additional customization to allow the system to look for matching open items in both existing and new sub-accounts. Such automatic clearing is possible after the balances are migrated to the Bank Reconciliation Account and before the House Bank migration status is finalized.
Bank Reconciliation accounts are a great way for companies to simplify their bank accounting process. As of SAP S/4HANA, the chart of accounts has been harmonized and accounts-processing time dramatically reduced. Newly created House Banks are now rapidly available for use, and the configuration of bank processing has been simplified.
As we’ve seen above, the switch to the new approach is also straightforward. Nevertheless, many business users will need transition time to adopt these new ways of processing and reconciling accounts. The old approach has been in use for many years, after all.
If you’d like to go deeper and would like assistance configuring your bank accounts using SAP S/4HANA, Expertum is ready to help. Just get in touch!