SAP FICO is an important core functional component in SAP ERP Central Component that allows an organization to manage all of its financial data. SAP FICO allows an organization to store a complete version of their financial transaction data. Specifically, the purpose of SAP FICO is to help companies generate and manage financial statements for analysis and reporting, as well as to aid in effective business planning and decision-making.
SAP FICO consists of two sections, SAP Finance (FI) and SAP Controlling (CO). Each of which is used for a specific financial process. SAP FI deals with overall financial reporting and accounting, while SAP CO focuses more narrowly on planning and monitoring costs.
SAP FI enables organizations to make financial statements for reporting and analysis. Types of financial statements may include balance sheets or profit and loss statements.
While SAP FI deals with a company's accounting and internal and external reporting, SAP CO supports processes to plan, report on and monitor costs from business operations. SAP CO can be instrumental in improving the company's profitability.
SAP FICO is a module of SAP ERP which is used for financial reporting both externally and internally. The objective is to record all financial transactions that are posted by an entity and produce financial statements that are accurate at the end of the trading period. The SAP FICO full form is FI (Financial Accounting) and CO (Controlling).
This SAP FICO basics tutorial is going to explain SAP FICO overview and the major functionalities of the SAP FICO module. SAP FI is made up of SAP FICO sub modules. The sub-modules that are often used are accounts receivables, accounts payables, asset accounting, general ledger Accounting and bank accounting. All the sub modules are interlinked and integrate in real time. A trial balance can be extracted at an time and it will always balance because all the sub modules are connected. The diagram below shows the the integration between FICO SAP modules.
All general ledger accounts that are used for reporting are managed through general ledger accounting. In SAP a set of all general ledger accounts used by a company or a group of companies is called a chart of accounts. These are the accounts that will be used for the preparation of financial statements. Most of the transactions are recorded in sub modules and they are reconciled with the general ledgers in real time. Transactions that can be done in direct in general ledger Accounting include journal vouchers which are posted to adjust or correct transactions. Reversals can also be done from general ledger accounting. Balances in general ledger accounts can be displayed and trial balances extracted from the system.
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