Welcome to this blog about the configuration of intercompany (ICO) clearing accounts for cross-company cost allocations in S/4HANA Financial Accounting.
In this blog @BirgitOe and I would like to introduce the configuration activityDefine Posting Scheme for Intercompany Clearing Accounts (delivered with CE2508.3).
Intercompany postings are at the heart of managingcross-entity projects, shared services and centralized operations.
The new configuration activity allows for a transparent configuration of clearing intercompany Management Accounting postings in terms of their reflection in financial accounting and legally compliant reporting.
We will outline the implications of the different approaches for the following areas:
SAPS/4HANA CloudERP allows Management Accounting postings between different company codes by default.
The configuration activity 'Block Intercompany Postings' (ID104056) can be used to allow or block all intercompany postings, or allow ICO postings only for certain combinations of sender and receiver company codes. The introduction of the Universal Journalled to the application of the basic accounting principle of debit = credit by company codeto Management Accounting (CO) postings.
Intercompany clearing (offset) postings are required when one company code provides a service, product, or allocates costs to another company code.
Clearing accounts have to be used to ensure both sides of the transaction are properly recorded with a debit and a credit posting to comply to accounting principles. The clearing account ensures debit = credit and facilitates automatic reconciliation between the two entities.
Examples
For a tax and legally relevant transaction the intercompany clearing is normally posted as follows:
It is recommended to assign a separate intercompany clearing G/L account for each origin G/L account. At least for primary G/L accounts this should be considered, whereas clearing for secondary cost elements can also be posted to a central clearing G/L account. This allows the assignment of the journal entry line items to the same financial statement node, so that those postings do not impact the local financial statements.
This is especially valid for the intercompany travel expense scenario. Here, the travel expenses must be reported in the supplying company. The intercompany allocation must not reduce the amount of travel expenses in the supplying company and increase in the receiving company.
For more information, please refer to the blog byStefan Walz: Intercompany Cost Allocations in S/4HANA Cloud.
Intercompany Management Accounting postings are created via business transactions/applications, such as the following:
Time recording, timesheet postings
Activity allocation
Universal Allocation
-Expense posting through Concur integration
-Manual cost allocation
Manual reposting
For a complete and most current overview refer to saphelp - Intercompany Postings.
The posting scheme for intercompany clearing is determined for all ICO Management Accounting postings, a transaction/app-specific maintenance is not necessary.
The decision for a configuration for intercompany clearing accounts of Management Accounting postings is mainly driven by one of the following questions:
SAPgenerally recommends to use the posting logic of intercompany clearing to non-operative P&L accounts and to create the legally and tax compliant journal entries via billing.
Any deviation should be thoroughly considered regarding its impact, for example, on tax determination and local statutory accounting.
[画像:Thorsten8_0-1762260912779.png]
SAPrecommends to select the posting scheme intercompany clearing to P&L Accounts (Non-Operating).Thus, legally and tax compliant journal entries can be created in a subsequent step via intercompany billing → scope item Intercompany Billing for Cross-Company Cost Accounting Postings (4AN).
The decision for a posting scheme for intercompany clearing of Management Accounting postings should be taken once and consistently. Later changes may heavily impact reporting as well as accounting and tax compliance.
SAPrecommends to select the posting scheme intercompany clearing to P&L Accounts (Non-Operating).Thus, legally and tax compliant journal entries are created automatically in a subsequent step via intercompany billing (for example, if you use the scope itemIntercompany Billing for Cross-Company Cost Accounting Postings(4AN).
Activity allocation of a consultant is effected from company code 1010 (supplying) to company code 1710 (ordering)
In case an alternative posting scheme on the balance sheet account shall be used, this should be thoroughly considered. There is an impact, for example, on tax determination, tax reporting, and local financial statements as the transactions are posted without tax and are accounting-wise not reflecting cross-company transactions like comparable third party transactions in a local financial statement.
Activity allocation of a consultant is effected from company code 1010 (supplying) to company code 1710 (ordering)
Thorsten8_0-1762261794895.png
Reporting impact
If necessary, alternative posting schemes deviating from the configured default can be defined for a specific combination of sender/receiver company codes. These settings are always applied bidirectional, that is, from the sender to the receiver company code as well as from the receiver company code to the sender company code.
The new configuration activity Define Posting Scheme for Intercompany Clearing Accounts (ID107107) will be delivered
The configuration of the intercompany clearing accounts as such remains unchanged and is done in configuration activity Automatic Account Determination (ID100297).
The new configuration activity provides a transparent solution for the determination of the posting scheme of intercompany Management Accounting postings using the following approaches:
(1) Non-Operative P&L Accounts –SAP’s Recommended Approach
This method aligns with best practices since it minimizes risks around incorrect tax reporting or statutory misstatements, while still enabling transparent Management Accounting.
(2) Balance Sheet Accounts – An Alternative for Certain Groups
For organizations operating underconsolidated tax groupsor specific structures, there is the option to post ICO management entries directly tobalance sheet accounts.
The new configuration activity in SAP S/4HANA Public Cloud Edition provides finance teams with greater control over intercompany posting schemes, balancing flexibility with compliance.
For most customers,SAP’s recommended approach, posting to non-operative P&L accounts and leveraging intercompany billing for legal compliance, remains the safest and most sustainable choice.
For specific consolidated groups, posting to balance sheet accounts may provide efficiencies, but only with careful consideration of tax and reporting implications.
This enhancement reflectsSAP’s continued focus on empowering finance teams with configurable, compliant, and transparent intercompany processes.
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