Product Costing is the tool used in SAP for planning costs and establishing material prices. It helps in estimating the Cost of goods sold for each product unit. Product Cost planning involves planning the costs for materials without reference to orders and set prices for materials and other cost accounting objects. It consists of creation of material cost estimates and transferring the results of material cost estimates to the material master. 

Inventory Valuation is also a part of Product Costing and allows to valuate stocks of a material either together or separately, that is, according to different valuation criteria. Should this be expanded to include Inventory valuation.

Product Costing does not run in the Central Finance System. All the Product Costing relevant scenarios are maintained in the Source System and then replicated to cFIN System. Only exceptional objects could be maintained centrally in cFIN System and distributed to the Source, for example: Activity Rates planning. Data replicated from the source to the target system helps to enable comprehensive analysis of the financial data to attain Managerial Accounting requirements. 

Material cost estimates function enables you to cost out your finished and semi finished materials and update the material master data with the calculated costs. Customers with distributed source systems require centralized cost estimate information to get a consolidated value chain across different company codes / plants. 

Initial Load of Material Cost Estimates

You can perform an initial load of material cost estimates to transfer material cost estimates from a source system to the Central Finance system, such as loading material cost estimates from periods prior to the start date of ongoing replication.

The initial load of material cost estimates is carried out using the SAP Landscape Transformation Replication Server (SLT).

The initial load has the same restriction and uses the same AIF interface as material cost estimate ongoing replication.

The material cost estimates to be transferred are validated against the transfer rules.

Note: Please specify the data scope of initial load via transaction LTRS in the SLT system before carrying out the initial load. If not, all the relevant material cost estimates in the source system will be transferred in the initial load process.

Define the initial load object in SLT using the predefined initial load object CFI_KEKO_L. 

After the initial load of material cost estimates has been started in SLT, the data is transferred from the source system to the Central Finance system and validated against the transfer rules. The final processing result is shown in SAP Application Interface Framework (AIF), under namespace /FINCF, interface CE_MAT.

Posting TypeTableReplication ObjectLoad Object

Goto SE38, start program IUUC_REPL_PREDEF_OBJECTS.

Add above mentioned Initial load object (CFI_KEKO_L) and replication object (CFI_KEKO_R) by clicking on “Copy predefined object” in below mentioned screen. 

Ongoing Replication of Material Cost Estimates

Product costing in CFIN refers to replicating the cost estimate from source systems to one centralized system in real time. Product costing with CFIN helps display cost estimates with group evaluation and the cost of the whole value chain can be analyzed in one centralized system.

Ongoing replication of Material cost estimates helps you to continuously replicate material cost estimates from source systems to the Central Finance system. For a mixed costing, the material cost estimates are replicated together with the relevant procurement alternatives.

Configuration in SAP S4 Central Finance system: 


You can define rules for replicating cost estimates from a source system to the Central Finance system. During ongoing replication all cost estimates from a source system will be validated against the rules you define here.

  • Only correctly validated cost estimates are transferred from the source system to the Central Finance system.
  • If no rules for cost estimates are defined here, then no cost estimates are transferred to the Central Finance system.

In the header section, you specify the following for replicating cost estimates:

  • Logical System: Enter the logical system of the source system from which the cost estimates are transferred.
  • Reference Object: Select the type of cost estimate that is transferred, for example 0 for Material Cost Estimate.
  • Controlling Area: Enter the controlling area for the cost estimates that are transferred.
  • Plant: Enter the plant for the cost estimates that are transferred.
  • Costing Variant: Enter the costing variant for the cost estimates that are transferred.
  • Costing Date From (Optional): Enter the date from which execution of cost estimates are allowed for transfer.

For each header rule, you need to maintain item rules in the item section, in which you specify the following:

  • Variant: Select the variant, for example Costing Status or Costing Version
  • Variant Value: Enter a value depending on which Variant you have selected. If you have chosen Costing Status for the Variant field, only a specific costing status is acceptable. If you have chosen Costing Version for the Variant field, either a specific costing version or *(representing all costing versions) is acceptable.


  • Currency settings for a controlling area need to be consistent between source and Central Finance systems.
  • Currency settings for a company code need to be consistent between source and Central Finance systems.
  • You have configured the mapping entities for the source data in MDG, mainly including:
    • Material Number
    • Plant
    • Controlling Area
    • Cost Center
    • Cost Element
    • Activity Type
    • Cost Component Structure
    • Cost Component Number
    • Costing Variant

Product Costing Tables for replication:

  • The tables for material cost estimates are KEKO, KEPH, CKHS,CKIS, CKIT.
  • The tables for procurement alternatives are CKMLMV001, CKMLMV001T, CKMLMV002.
  • KEKO (Product Costing Header Data) is the trigger table for SLT extraction, i.e. when there is a change in KEKO, the business data from KEKO and other tables will be extracted and transferred.
  • The table KEKO in the Central Finance system has been enhanced to store the sender’s key fields such as cost estimate number, costing date, etc.

Replicate Material Cost Estimates Manually

You use this function to manually transfer some historical or dedicated material cost estimates. Or you use this function when following errors happen in the ongoing replication.

  • There are errors in AIF during ongoing replication, but you can’t restart these messages properly due to some special reasons.

Run transaction FINS_CFIN_MCE_REPL

The below architecture diagram represents the different interfaces which are available for replication from Source system to Central Finance.


In summery, apply required oss notes for the replication of material cost estimate to target system and apply prerequisites, manual activities mentioned in oss notes such as 2800883 and 2969005. There are functional restrictions that needs to be considered incase of cost estimate initial load and replication. Please read following web link for more information on Material cost estimate replication.

Thank you



Journal Entry Uploader – 1709 Ver and Above

It is very important to have excel template to post massive line items in one transaction, in S/4 HANA 1709 On-premise we have two options for JV upload, they are

  1. Use “Upload General Journal Entries” Fiori app (App ID – F2548)
  2. Use “LTMC” – S/4HANA Migration Cockpit – Migrate your Data to SAP S/4HANA

1. Use “Upload General Journal Entries” Fiori app (App ID – F2548)

you can post journal entries by uploading a templated file that contains entry header and line item information. Postings can be made in all relevant ledgers for the accounts for which you are responsible. If not all the journal entries in a file are uploaded successfully, you must correct errors, copy the batch ID of the initial upload to the file, and then repeat upload. You can perform posting journal entries that are successfully uploaded. You can also navigate from the Post General Journal Entries app to the Upload General Journal Entries app by clicking the Upload New Entry button.

Click here to view the App on Fiori library

Click here to view App information F2548

2. Use “LTMC” – S/4HANA Migration Cockpit – Migrate your Data to SAP S/4HANA



Thank you


Source : SAP

Key Features of SAP S/4 HANA FINANCE – 1709 On-premise Principales características de SAP S / 4 HANA FINANCE 1709 On-Premise

It’s high time to learn new Finance automation process and accept changes that comes with SAP Leonardo for faster decision making, adaptability, innovation, business acceleration, better outcomes.

Let’s go through the “Finance – Innovations”

  • Universal Journal: Subsequent implementation of document split
  • Parallel valuation: 3rd currency in Controlling and Cost of Goods Manufactured.
  • Accounting: General ledger document split
  • Financial Planning: Basic Sales Planning (Activity Price, Consumption)
  • Cash Management: Bank relationship management including bank fee analysis; Improved Integration with Bank Communication Management and In-House Cash
  • Machine Learning for Cash Application – Invoice Matching clear incoming payments by matching them with the corresponding receivables
  • Soft close and prediction: Minimum closing time; Early insight into business trends
  • Integration: Seller-side integration with Ariba Network (invoice and discount management); Cost center (SuccessFactors); Payment advice (Fieldglass); Ariba Pay/ Supply Chain Finance
  • Central finance
  1. Shared Services in Accounts Payables/Receivables
  2. Central reversal and correction capabilities
  3. financial reporting scenarios
  • SAP Fiori apps Roles
  1. Accounts Payable/Receivable Accountant
  2. Accounts Receivable Manager
  3. Controller (Production Costs, Credit)
  4. Treasury Risk Manager
  5. Asset Accountant
  6. General Ledger Accountant
  7. Inventory Accountant


Topic – 1: Universal Journal – subsequent introduction of document splitting

To fulfill the IFRS reporting requirements, you need to report your financial data at a lower level of detail than your company code. With this feature, you can introduce new account assignment objects, such as segment or profit center, and add these account assignments to your journal entries when you post them. To ensure that you have a complete reporting view of each account assignment object, the opening balance is enriched and split, per account. The enrichment of relevant accounting data is carried out in the project cockpit, according to the new account assignment information. To ensure correct processing of open items, at the time document splitting is active, this feature allows you to enrich open items.


Topic – 2: Machine Learning – SAP Cash Application Integration

SAP Cash Application is a cloud service that integrates with S/4HANA Cloud Edition as of 1702 and S/4HANA on-premises as of 1709 (hybrid model).

The integration to SAP Cash Application solution intends to automate the invoice-matching process and provide the prediction results back to the SAP S/4HANA system with the help of machine learning.

SAP Cash Application enables you to match open receivables to incoming bank statement items using machine learning.

In the finance area, and more specifically in the area of accounts receivables, incoming bank statement items are ideally matched automatically to open receivables such as invoices. Any manual post-processing of incoming bank statement items that could not be matched to open receivables takes time and effort. SAP Cash Application uses machine learning procedures to train financial applications in order to learn from manual matchings, and thus achieve higher automatic matching rates.

 Key functionalities of SAP Cash Application:

⊕ Proposing open receivables for incoming bank statement items

You can schedule jobs to receive a list of Machine Learning proposals for matching receivables to existing bank statement items

⊕ Clearing incoming bank statement items.

You can schedule jobs to automatically clear incoming bank statement items based on Machine Learning proposals, if the following conditions are met:

  • The matching rate of the proposal is higher than specified in the configurations
  • The proposed receivables are still open
  • All other clearing rules are fulfilled

 Proposing customer accounts for incoming bank statement items

You can schedule jobs to receive a list of Machine Learning proposals for matching accounts to existing bank statement items.

  • The matching rate of the proposal is higher than specified in the configurations
  • The proposed account is a valid existing account

 Posting incoming bank statement items

You can schedule jobs to automatically post incoming bank statement items to accounts based on Machine Learning proposals.

SAP Cash application detailed workflow:


Topic – 3: Intercompany Reporting 

  • Shows reconciliation amount and difference in object group for company and its partner
  • Drills down to line item details
  • Displays detailed information of document
  • Shows the reconciliation processing status
  • Navigates to reconciliation monitoring page for manual reconciliation
  • Sends mail and reminder to contact person


Topic – 4:  Profitability Analysis in the Universal Journal

Splitting Cost of Goods Sold in SAP S/4HANA

Enhanced functionality enables to split costs of goods sold during more processing such as third party or other processes with account assignment to internal orders or projects

COGS Splitting customizing has been adjusted

Previous COGS Split functionality which processed the splitting only for goods movements with reference to a sales order is still available

Splitting Cost of Goods Sold in SAP S/4HANA 1610 Screen and 1709 Screen



Topic – 5: Material Valuation in S/4HANA  – Material Ledger

  • Up to 3 currencies
    • Tracking historic rates in material master
    • Local legal valuation & e.g. hard or trading currency2017-08-05_010324.jpg
  • Actual Costing
    • Optional revaluation of stock and COGS
    • Leverage Actual cost component split

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Jayanth Maydipalle

Source: SAP, JAM, ML, AI and Other.

SAP Financial Closing Cockpit

Accounting and Financial Close


SAP’s accounting and financial close solutions streamlines the accounting for multiple companies, currencies, charts of accounts, and reporting standards. The solutions enable finance to efficiently close books on time, and create financial statements at the entity and corporate levels for IFRS, U.S. GAAP, or other local and global requirements.

  • SAP offers a modern accounting system for finance teams needing to streamline core financial and closing processes to meet increasingly complex business and disclosure demands.
  • It accelerates your company’s path to financial transformation by eliminating boundaries between transactional and analytical processes combined with proven excellence in accounting and closing capabilities.
  • SAP Financial Closing cockpit = Transactions codes “FCLOCOx


Top 10 Benefits of SAP Accounting and Financial Close Solutions

1. Lower Cost of Finance

Accelerated processes increase productivity and reduce cost. Automate manual steps  to reduce staff workloads which lowers the cost of their work and increases productivity.

2. Accelerated Closing

Reduce cycle time via automation, integration and collaboration. Virtual soft close provides better insight at anytime from anywhere. Accelerate accounting by integrating GL, fixed assets, accounts payables, accounts receivables, inventory, revenue, and costs in real-time.

3. Real-Time Business Insight

Enables fast issue resolution and gets you closer to the business. Monitor in real-time the progress, quality, and financial results of the closing cycle to avoid bottlenecks and address business concerns

4. Responsiveness

Closes the gap between insight and action. Achieve fast, multi-dimensional reporting without replicating information to a data warehouse Instant access anywhere with drill-down from the highest to the lowest level of detail.

5. Harmonization
Harmonize internal and external reporting without redundancy. Unify financial, regulatory, managerial and operational data in a single repository across multiple systems. Eliminate redundant data aggregation for easy analysis down to the lowest   level of detail. Reduction of memory footprint through elimination of redundancy. Unite OLTP and OLAP together for simplified landscape, processes, and analysis.

6. Seamless Access

Self-service access to transactions and analytics anywhere, at any time. Past, present and future analysis at your fingertips to answer tough questions in briefings and meeting.

7. Modern User Experience

State-of-the-art user experience using the latest technology innovations. Intuitive end user training interfaces and guided processes eliminate complex teaching undertakings. Customize templates for event-driven closing tasks and collaboration.

8. Compliance You Can Count On

Efficiently meet the demands of complex compliance regulations. Generate high-quality financial statements and management reports required by international and local reporting standards.

9. Boundless Extensibility

Unlimited potential to extend system to customer’s specific business needs.

10. Foundation for Finance Transformation and Innovation

A seamless path to your finance transformation. Choose your path towards finance transformation with real-time software available in on-premise, cloud or hybrid options.

Reconciliation Functionality in SAP ERP


Execute Entity Close Tasks


Financial Closing Cockpit on Fiori


  Cockpit to monitor the progress of the entity close via KPIs, also on a mobile device

  Analyze the completion rate of closing tasks by multiple dimensions like region, country, company, milestone, working day, etc

  Monitor the tasks delayed or in error with easy collaboration to respective task owners

  Analysis of historic closing cycles


Source : SAP ™

Thank You

Jayanth Maydipalle

Asset under Construction End to end process

Assets under Construction (AuC) are a special form of tangible assets. They are usually displayed as a separate balance sheet item, requiring separate account determination and their own asset classes. During the construction phase of an asset, all actual postings are assigned to the AuC. Once the asset is completed, a transfer is made to the final fixed asset.

Internal orders are used to capture the costs of AuC during the construction phase. Once the AuC is completed, the final asset is created in the appropriate asset class, and the internal order is set to complete. The next settlement transfers the AuC asset value to the completed asset.

Asset Under Construction Process:

Asset Acquisition for Constructed Assets (External Procurment)
·         Create Assets
·         Posting the Closing Invoice
·         Define Distribution Rules for Asset Under Construction
·         Settle Asset under Construction
Asset Acquisition for Constructed Asset (Investment Orders)
·         Creating Investment Order
·         Releasing Investment Order
·         Accounts Payable – Posting Invoice to Investment Order
·         Monitoring Order Progress
·         Asset under Construction Settlement (collective processing)
·         Creating Assets for Complete AuC Settlement
·         Maintaining Settlement Rule for Final Settlement
·         Final Settlement of the Investment Order (Collective Processing)
·         Completion of Investment Order

  • 1.1 Create Assets – Asset under construction


1.2 Create Assets – for Final Settlement



We have created two asset master records, one Asset under Construction and one for the final settlement.

1. 3 Posting the Closing Invoice – Acquisition without order – FB01

In this step, you post the acquisition from purchase with vendor.




1.4 Define Distribution Rules for Asset Under Construction AIAB

In this process step, you maintain the settlement rules for the Asset under Construction created in the previous steps.







You have maintained the rules for the settlement. The execution of the settlement is part of the periodic processing.

1.5 Settle Asset under Construction  – AIBU

With the execution of this step, Assets under Construction are settled according to their settlement rules.

Note Under certain conditions, you may need to capitalize an asset under construction before all suppliers have presented their closing invoices. This can cause a few difficulties, especially if the closing invoice cannot be posted until the fiscal year following the capitalization of the asset under construction, and down payments were already posted to the asset under construction.

Initially, you post the down payment normally. If you then need to capitalize the asset under construction at the end of the fiscal year, but before the closing invoice is received, you post reserves for the total amount of the expected invoice. You post these reserves directly to the capitalized asset (external acquisition with vendor, transaction type 100). In the case where you plan to distribute the values from the asset under construction to several final assets, it makes sense to post the reserve to the asset under construction first, and then capitalize it. Whichever method you use, you must reverse the down payment on the asset under construction, because the down payment is not allowed to appear in the account for down payments to fixed assets. Instead, it must appear in the account for completed assets.

To settle the asset under construction, down payments must be cleared with invoice or forecasted invoice (reserve). The asset under construction can only be settled after this clearing






2.1 Asset Acquisition for Constructed Asset (Investment Orders /Internal Order)

2.1 Create Internal Order – KO01




2.2 Release Investment Order / Internal Order  – KO02

This activity releases investment order.


2.3 Accounts Payable – Posting Invoice to Investment Order – FB60

In this activity, you can enter a supplier invoice without reference to a purchase order.


2.4 Asset under Construction Settlement  – KO8G

In contrast to assessment, you cannot perform settlement across fiscal year boundaries. The system automatically determines the posting date from the posting period/fiscal year using the last day of the posting period. There are three processing types defined for settlement:

  • Automatic: The system selects all the distribution rules for a sender.
  • Periodic: All distribution rules with settlement types PER and AuC are selected. PER rules are applied first. In investment measures, this is followed by settlement to assets under construction.
  • Partial capitalization: Use this processing type if you want to partially capitalize an investment measure which is not yet complete, that is, if you want to settle part of the overall cost to finished assets.

With this process step a periodic settlement is executed. All costs collected on the investment order will be settled to the automatically created AuC.










2.5 Create Internal order Settlement Rule – KO02

In this process step the settlement rules for the final settlement are maintained and the status of the investment order will be set to technical completed, which allows the final settlement of the order.



2.6 Final Settlement of the Investment Order (Collective Processing) – KO8G

The final settlement transfers the costs from the AuC asset to the completed asset and to the cost center as specified in the settlement rules. After the final settlement the balance of the investment order and of the AuC is zero.













2.7 Completion of Investment Order -KO02

In this process step the investment order is closed by changing its status to Closed.




Thank You

Jayanth Maydipalle

Variance and Settlements

Variance Calculation determines differences between the actual costs incurred on a production order and the standard costs of the material produced. Variances are calculated not at once, but for different variance categories. The variances computed are then transferred to CO-PA.

  • Define Variance Keys

The Variance Key is part of the order header and controls variance calculation. The system selects the value set by this step as default value when a material master is created. From the material master, the variance key is then transferred to the order when an order for the material is created.


In Product Cost by Order you usually calculate the variances cumulatively.

In cumulative variance calculation, the target costs are calculated on the basis of the quantity you have transferred to stock for the order. The actual costs are for the entire life of the order. Variance calculation requires that the order have the status DLV (delivered) or TECO (technically completed).

In Product Cost by Period, you always calculate the variances periodically.

In variance calculation by period, the target costs are calculated on the basis of the quantity that you delivered to stock in the period. The actual costs are only for the period in which you calculate variances. Variance calculation requires that a goods receipt was posted for the order in the period. If that is not the case, the system only calculates remaining variances.


  • Check Variance Variants


In this step you define the variance variants. Variance variants determine what variance categories are calculated.



  • Define Target Cost Versions


The target cost version controls various parameters related to calculation of target costs in variance calculation. In variance calculation, target costs are needed as a comparison to the actual costs incurred.

Target cost versions are used in the variance calculation in the following ways:

  • To control which variance (total variance, production variances or planning variance) is calculated
  • To valuate unplanned scrap (scrap variance) Unplanned scrap is valuated in the period-end closing activities when the variances are calculated. You can specify in a valuation variant for WIP and scrap which cost estimate you want to use to calculate the target costs for the valuation of unplanned scrap. You assign the valuation variant to target cost version 0 if you want to include it in the valuation of scrap



  • Define PA Transfer Structure for Settlement Procedure

When variances are calculated in Cost Object Controlling (CO-PC), production variances are determined and stored. When you settle production orders, you can transfer these variances – differentiated by cost element and variance category – to value fields in CO-PA.

Although it is technically possible, via a joint maintenance dialog, to use the same PA transfer structures from different allocation types to settle production variances, you should instead define separate PA transfer structures.




  • Create Settlement Profile

The settlement profile controls various parameters related to settlement.



Profile Text
YBMFP1  PP Valuated to COPA
YBMF99 Rework – Via Notification





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