We have seen companies with regional entities spread across North America, South America, Europe, Asia and Africa desire to shift from a holding company mindset to an operating company approach. The CFO wanted all financial and controlling objects standardized globally. The number one object to harmonize was the chart of account. Another common scenario, we have seen is acquisition driven harmonization. The acquired companies have their chart of accounts aligned with the new parent company. This is typically a reporting and visibility initiative. At times the original chart of accounts in use doesn’t meet the needs of the company. It can be that be the length, logic, and structure did not properly capture the business and reporting needs of the company.

Regardless of the reason for the need to change the chart of account structure in SAP, there are two basic approaches to changing the GL account structure. One is the standard functionality within SAP and the other is the SLO (system landscape optimization) or LT (landscape transformation) solution. We will talk about both methods. Additionally, we discuss some of the key considerations when making a change.

Standard approach:

SAP supports the ability to create a new general ledger account. The new account is then posted to while the existing account is offset. Below is an example.

Your original account was numbered 100 with the text ‘cash’ with a balance of $1000.

100 – Petty Cash

$1000

You create a new a general ledger account 11000 with the description of ‘petty cash.’ The current balance of the new account will be zero until a posting occurs.

11000 – Cash

$0

Postings:

Credit GL Account 100 for $1000 and Debit GL Account 11000 for $1000

After posting

GL Account 100 -Petty Cash

$0

GL Account 11000 – Cash

$1000

That works. However, it is a point in time posting. That means going forwards GL Account 1100 is used after a specific posting period. If one looks at history, you will find the historical balances under the original GL account 100 and the current values going forwards under GL Account 11000.

Your GL account balances will look like the following. Let’s assume the change was made in April with the example.

This approach uses the SAP application. It can be automated to a degree, but remains a semi-manual process. More importantly, history stays with the ‘old’ account definition. Perhaps, there are unique country tax reasons for this approach. Yet, as you can see it is a ‘two-step’ approach that leaves history with the ‘old’ gl account. This implies a mapping exercise with reporting over multiple periods that span the postings to both the old and new accounts.

SAP Landscape Transformation approach:

SAP’s Landscape Transformation changes all usage of the GL account within the system. This means history is also adjusted. It doesn’t matter if it is open, or a closed item posted last period or several years ago, all data is consistently adjusted.

During the mapping effort, there are many consistency checks to validate that the mapping is supported by the SAP application. These checks range checks on the main GL master data in table SKA1 and the company code level GL accounts within SKB1 (master data table for the GL accounts by company code). These checks are very important in merge scenarios and look at the grouping of accounts by the balance sheet, P&L, open item managed, non-open item managed, reconciliation, currencies, postings and even more detailed items.

In contrast to the posting approach your account balances will look as if they were always using the new GL account number.

The Transformation approach ensures a consistent transformation of the GL account structure across transactions, master data and customization data. The process can be a rename / renumbering of individual accounts to a merge of several accounts into a single account.

Regardless of the reason a company needs to change their general ledger account structure, there is a proven approach that consistently converts the system. Over the years we have gathered a few lessons learned while doing many chart of account conversions. If you would like some information or a consultation on the best practices one of our experts can help you.

Related webinars:

Webinar On-Demand How to handle organizational changes in your SAP landscape As business grows, your system landscape also grows due to new applications, expansion to other regions, or new systems from an acquisition. This also entails changes in business requirements that can include legal changes, re-organizations, and remodeling of your entire landscape. ...
Carve-Outs and Divestitures
Data Management
Migrations
Transformation
Transformation & SLO
Speaker: Kees Van Turnhout
Microsoft's Cloud Solution Architect, Roman Broich, talks to Datavard about motivations and possibilities for moving your SAP system to the cloud. Gain greater agility and benefit from better integration of SAP with other services in the cloud. Watch the interview now and learn about: cloud benefits - this is a ...
Cloud
Speaker: Roman Broich
Many customers have made the switch to BW 7.5 on HANA and are now facing the somewhat daunting leap to BW/4HANA. This leap is not an upgrade, but a migration. In our series of espresso sessions on the subject of BitesizeBW find out how you can achieve success in 3 ...
Business Warehouse
BW and BW/4HANA
Migrations
Speaker: Declan McNeela

Datavard Blog Newsletter
Stay informed

Subscribe to our free blog newsletter and receive valuable tips, tricks, and expert knowledge about SAP transformations, SAP data management, cloud migration, TCO reduction, data lifecycle management, and more.