SAP GL Document Splitting Part I

As alluded to in my last post, the document splitter plays a crucial part in the derivation of profit center and consequently in the preparation of management financial statements. Now we’ll start to take a deep dive into document splitting.

There are two prerequisites for using the splitter. First, the NewGL must be active in the box. That should be the case of any recent implementation. Second, there should be an understanding of the desired coding block and the business interpretation of the coding block elements.

Document Splitting Characteristics

The first step to configuring document splitting in SAP is to determine which coding block elements that you will want to have as document splitting characteristics. A document splitting characteristic will be acted on by the splitter to derive more detailed postings.

Document Splitting Characteristics  (1) SPRO->Financial Accounting (New) -> General Ledger Accounting (New) -> Business Transactions -> Document Splitting -> Define Document Splitting Characteristics for General Ledger Accounting

The partner field is used for cross-characteristic postings. For instance, in a posting spanning two profit centers A and B, the debit balance on one profit center A has partner profit center B, and the credit balance on profit center B has partner profit center A. It’s very similar to trading partner for those familiar with that concept.

There are two more options for each characteristic. First, whether the field is mandatory – that is it must be populated on all GL line items. Second, whether the field is zero balanced – whether the sum of the postings must equal zero (debits=credits).

For instance (and most common), if the profit center is set as a mandatory zero balancing characteristic, each line item on a posting must have a profit center and the total (debits-credits) of each profit center must be zero.

Configuration Model

The second key to understanding how the splitter is configured is to understand the theoretical model of the configuration. Once these areas are understood, it becomes much easier to guess what the configuration is doing. In the tradition of help.sap.com, I’ve created the informative diagram below (Ha! Ha! Ha!) .

Configuration for the Splitter

The critical information to glean at this step is that each GL account is assigned to an Item Category and each Document Type is assigned to a Business Transaction Variant. Finally, in the Splitting Method, we establish rules for each Business Transaction Variant on how each item category will be derived. This information is confusing, but it’s key to understanding the nature of the splitter. Memorize it if you must.

Next, we’ll walk through different splitting scenarios.

Active Document Split

The pièce de résistance of the NewGL, the active document split is the standard example used by most FICO consultants. In this scenario, an AR item is offset by two revenue items. Each revenue line item has a different profit center. In the GL View, the splitter breaks the AR line item into two line items – one for each profit center. Furthermore, the amounts on each posting is based on the weighted average of the offset line items. Read that twice – it’s tricky.

When we get to the active document splitting configuration, the key to this example is that the AR item category is split by the revenue category.

Active Split

Inheritance 

Once you have active split down, inheritance is much easier. The key here is that if a posting has one blank line item and all other line items have the same profit center, then the blank line items will receive the same profit center. In the below example, we have a cash item without a profit center that has two expense items with PC 101. In the GL view, the cash item will receive the same profit center.

Inheritance in the SAP Document SplitterInheritance is turned on by default for all business transactions. You do have the option of turning it off at the rule level, but I’ve never seen a reason to do so.

Passive Split

The third type of splitting, is the passive split. The passive split is simple and it’s used whenever you reverse or clear a document. For reversing a document, the splitter will reverse the posting with the exact same profit center derivation as the document being reversed. This makes intuitive sense. The reversal should reverse out the original posting exactly, regardless of the configuration.

Second, for lines that are being cleared, the clearing line items will receive the same profit center split. This approach also makes intuitive sense. If we have an AR line item with $500 on profit center 101 and $300 on profit center 102, then we would expect the clearing document to wipe away $500 on 101 and $300 on 102.

In the next part of the series, we’ll start looking at the basic configuration.

T-Codes, Config Paths, etc   [ + ]

1. SPRO->Financial Accounting (New) -> General Ledger Accounting (New) -> Business Transactions -> Document Splitting -> Define Document Splitting Characteristics for General Ledger Accounting

14 Comments

[…] our following series, we’ll have a look at all of the major ways to configure document splitting. Hold on to your […]

Michael says:

Well written document. Can’t wait to read the next part.
Thanks David!

David says:

Thanks Michael 🙂

Viviana says:

In addition, the idea of deriving the Profit Center is to obtain the advantages of have the segment information (Where the Segment is the new concept in the NGL in order to support reports as IFRS) The profit center in NGL has a field to be completed with the Segment information that allow the user derived not only the profit center, the segment is derived too).
In the text you mentioned the Expliting Method, i also consider is important to mentioned that the “Expliting Method” is only one for all the client. So, SAP let´s us to activate or deactivate the expliting for each company…but in this case, we need an additional deep analysis of all the intercompany process in order to avoid inconsistencies. (I said additional, because in all of cases, you will need to analyze your business transaction in order to detect if all of them are not supported for the rules included in the standard Expliting Method. If any transaction does not supported, you will need to create your own rule, and use, in this cases, a copy of standard Expliting Method to be assigned to your client. (as always, the standard should be reserved as reference).

David says:

Hi Viviana –

Thanks for commenting 🙂 Yes, you’re absolutely correct on all points. The segment is an additional field that has multiple use cases – management break down for financial statement operating segments – as you noted – or even legal entity like where I am now. As always, it depends on the analysis of the coding block.

You do have a very good point that only one splitting method per client. I’m not sure that i can think of too many cases where I would turn off the splitter for individual company codes, as that would seem to cause a lot of inconsistencies – as you also indicate. Do you have a good use case handy?

Have a good day!

David

Viviana says:

Sorry, but I detected in my third reading, that i wrote somthing wrong, .. again the correct one ” you will need to analyze your business transaction in order to detect if all of them ARE SUPPORTED for the rules included in the standard …” 🙂

guido says:

Thanks David for your explanation.
I’d like to have a tip about this issue with splitting in payment transaction of invoice vendor. I posted an invoice vendor and the AP item is offset by two cost items, the splitting is correct and the splitter breaks the AP line item into two line items according profit center.
Then I pay the vendor (transaction F-53) using a banc account like offset and in this payment document the splitter breaks the AP line items (the clearing line items AP will receive the same profit center split) but the bank account instead takes profit center dummy and not the two profit center of AP line items. So the situatione in this:
Invoice :
Entry View GL View
ACCOUNT PROFIT AMOUNT ACCOUNT PROFIT AMOUNT
AP account 300 AP account 101 100
Cost 101 100 Cost 101 100
Cost 102 200 Cost 102 200

Payment document:
Entry View GL View
ACCOUNT PROFIT AMOUNT ACCOUNT PROFIT AMOUNT
Bank account 300 Bank account Dummy 300
AP account 300 AP account 101 100
AP account 102 200
Than you in advance for your help.
Regards
Mauro

David says:

Hi Mauro –

Thanks for reading and for the question. In this scenario, you’re actually seeing what would be expected. The default on the cash account will take precedence over the active split. From a business perspective, (assuming profit center = management entity), this makes sense because the cash is usually not broken down by management entity and is instead owned by general corporate org. Since the payment document will not balance by profit center, you should see the document split clearing account being hit which should account for the usage of the cash by the 101 and 102 profit centers.

An alternative approach would be to remove the default out of your configuration, but that tends to cause problems with other processes. You would then need to carefully configure the splitting rules to get the active split of the cash.

Hope that helps a bit

David

K.V.Reddy says:

Dear Guido,
Check if you you have not activated the “Inheritance” rule. If so, activate it. Your problem will be resolved. This rule only helps to derive the same profit centers for subsequent potings like full/partial payments, discount given, Short remittance account postings and reversal of all of above, in case if they are reversed.

Guido says:

Dear David,
thank you for your answer, I understood very well the concept of management entity and general corporate organization, so I agree with you that from bussiness point of view cash account is part of general corporate organization.
The bottom line is that my goal is to reach a financial statement by profit center, and in my situation we have this (ex. profit center 101):
AP account 0 (100-100)
Cost account -100
It turns out that it doesn’t balance because the amount on cash account is posted in dummy profit center. So how can I have a correct financial stamente by profit center?

For K.V.Reddy, than you for your suggestion, but in my configuration system I have already activated the “Inheritance” rule and I use standard method 0000000012.

Best regards.

Mauro

Asit G. says:

David,

My client is a large packaging company in the mid-west. They have a very unique design, where they do a large amount of intercompany transactions. The consultant before me must not have advised the client to the difficulties they would face 🙂

There is a requirement to post documents using the same custom doc type that will post to intercompany customers as well as intercompany vendors. The problem comes in when we are trying to split the postings to the customer account.

We currently have the doc type set up to split for the standard vendor invoice business transaction, but we cannot seem to be able to add in the customer item category to be split as well as make the vendor item category not required.

Does SAP not allow you to change the item categories to be split in business transactions? I tried creating a new variant, but it does not allow me to add new item categories or make the vendor item category not required. I also tried to create a new business transaction, but it appears that I am not able to.

Thanks,
Asit

Vijaya says:

Hi,

I would like to know whether we can assign two or more partner profit centers to one vendor used in different company codes across the group.

Sergio Cecchin says:

Great explanation but what happened to part 2?

* David Schenz says:

Hi Sergio –

Thanks for the comment. I’ll try and post part 2 in the next few weeks. I have a bad habit of starting three part series and not finishing them 🙂

David

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