A business can get cash from customers in the morning, send cash to supplier in the afternoon and record expenditure on employees before the end of the day. The impacts of each activity on the company’s finances vary. The accounts team needs to know what has been received, paid, the costs that have been incurred and the way the business has done at the end of the month.
That’s where SAP FICO comes in handy. It enables businesses to document and evaluate financial transactions and costs in a systematic manner. When it comes to learning SAP FICO Training in Chennai, it’s crucial for students to grasp the connection and link between these activities.
The learner must be able to appreciate that one business transaction can have a knock-on effect on several elements of the financial system, rather than just accounting.
What happens if a business records a transaction in SAP FICO?
Suppose that a business buys office supplies worth ₹50000 from a supplier on credit. The company receives the equipment today but will pay the supplier later.
The accounting matter from the business’s point of view is that the business has to account for the purchase of the equipment and the amount to be paid to the supplier. The exact accounting treatment depends on the nature of the purchase and accounting policies of the company.
This transaction could include a general ledger and supplier account in SAP. If the appropriate document is posted, the accounting records will show the transaction. If the supplier has been paid at a later date then the payment is recorded on a further transaction to clear the outstanding balance subject to the appropriate process.
This example introduces an important concept, that is, financial accounting is related to business activity. The person completing a transaction must be able to tell which accounts will be impacted and why.
Understanding the Two Main Areas of SAP FICO
SAP FICO is a term used to describe SAP Financial Accounting (FI) and SAP Controlling (CO). The areas provide funding for distinct but related financial needs.
Financial Accounting: What Happened?
Financial Accounting is about recording and reporting financial information. An organization’s processes might range from general ledger accounting, to accounts payable and accounts receivable, asset accounting, to bank-related processes.
For example, when a customer pays, the accounts department should record the payment and be aware of how much the customer had paid out. Once a supplier invoice is paid, the business should record the payment and the appropriate accounting entry.
Pupils should be taught about the purpose of accounting documents, the roles of debit and credit, and how transactions impact upon accounts. These relationships are better learnt than mere codes of transactions without understanding.
Controlling: Knowledge of the sources of costs.
Financial statements provide an overview of the financial position, but they might be helpful to managers to highlight a specific cost, such as spending in a particular department, activity or project.
Controlling supports the internal cost analysis and internal management reporting. For instance, a company could wish to compare the training costs of its human resources department with the operating costs of another department.
Students learn about concepts like cost centres, internal orders and cost allocations which enable them to understand the ways in which organisations organise and analyse costs. The actual process of the integration will vary from company to company, depending on the reporting needs and SAP configuration.
Where Do Daily transactions turn into Financial Reports?
Financial reports are not created in isolation. They rely on the veracity and integrity of underlying transactions.
Imagine a business where the invoices and bills are entered by the customer, the supplier, the payment and the operating expenses are recorded throughout the month. Its finance people should perform account reconciliations at the end of the month, checking the balances, digging into discrepancies and verifying that transactions are in the right accounts.
This is a typical learning exercise:
- Make a note on a sample business transaction, following the relevant process.
- Check the posting accounting document.
- Determine the general ledger accounts involved.
- Review the proper customer or supplier balance.
- Check balances on accounts; view sample financial reports.
- Look into any unusual finding and correct the cause if the situation has been found.
In this way students are able to link up specific entries to the overall financial picture. It also illustrates why the proper presentation of master data, account determination and transaction processing is important.
What are the best SAP FICO Training practice areas for students?
Learning about the accounting processes is good, but doing exercises helps learners to understand how accounting processes work in SAP. Students should be searching for training that will provide them with a business rationale for a transaction, and the system process for that transaction.
Some of the best practice areas are:
General ledger accounting: know how a transaction would impact a ledger account and how the balance of an account would be checked.
Payments to suppliers: Understand payments to suppliers and supplier invoices.
Accounts Receivable: Be familiar with customer invoices, customer payments and outstanding accounts.
Business Assets Accounting: Talk about ways in which business assets are accounted for and how depreciation can be achieved.
Cost centres: Practice the allocation of valid costs as to the cost objects.
Financial Reporting: Understand how transactions are posted to financial statements and accounted for.
This is because courses can have a wide range of scope. Students are encouraged to inquire before enrolling in the course about the topics covered and if the course will offer access to an appropriate practice environment.
Why is “Month-End closing” important?
Month end closing is a convenient topic in which to see how the various facets of the accounting activities dovetail into one another. One of the finance team’s shortcomings is that they can only depend on the transactions being entered. It also has to examine if records are complete and if balances are reasonable.
The activities that need to be conducted for closing depend on the organisation, but may involve reconciling accounts with appropriate financial reports, posting financial adjustments that are required, checking required accounts, and reviewing open items.
A real-life scenario for a student might be to look at a set of sample supplier invoices and payments and find an outstanding payment. The learner would then examine the documents linked to this and come to understand why the balance is still open.
These kinds of workouts build detail orientation, and problem-solving skills. They also bring students to the realization that financial work is not just about putting numbers in but about checking and explaining the results.
Who can consider learning SAP FICO?
SAP FICO could be suitable for commerce graduates, accounting students, finance students, and even those seeking to brush up on their expertise in enterprise financial systems. There are concepts that may be familiar to those who are experienced in accounting, but may require more time for those who are not.
One of the advantages of this is to identify beforehand the changes in the debit/credit rules, journal entry, accounts payable, accounts receivable and the intent of financial statements. It is easier to appreciate the rationale behind how SAP records transactions, based on these fundamentals.
There are numerous career opportunities depending on skill, knowledge, and communication and the employers requirements and experience. Training can be a stepping stone but it’s important to have practical knowledge and interview preparation as well.
Version IT offers you SAP FICO Training in Chennai.
When considering SAP FICO Training in Chennai options, students must not rely on the name of the course. Questions to ask include: does the syllabus include both FI and CO concepts, are business scenarios shown, and can students practise transactions and then check the accounting impacts.
Version IT provides interested learners with the possibility to ask questions about the existing SAP FICO syllabus, training programmes offered, exercises done and the timings of the batches. Verify the information from the institute as it is before taking a decision on enrolment.
Useful learning goal: explain what happens when a business records an invoice from a supplier, when the customer pays a business, or when a business checks their expenses. Being able to describe what happened when the business event occurred, as well as its accounting impact and understanding how the information is reviewed is a stronger base than being able to just memorise the steps in the system.
Looking for an SAP FICO Training Course? Version IT: Discuss the current course syllabus with the students and discuss any practical learning opportunities that may be available to students.
