Attributed Profitability Segment - SAP S/4HANA

By Anand Seetharaju

Characteristics from a profitability segment can be read and posted to income statement line items based on the best guess principle. This feature was introduced in account-based CO-PA (now Margin Analysis) in S/4HANA 1610. You can use drill-down reporting on posted data. Without attributed profitability segments, you must wait until month-end activities such as settlement, allocation and top-down distribution. With the new feature, you can achieve real-time profitability reporting during the month.

With S/4HANA, you can perform contribution margin reporting in CO-PA using both costing-based and Margin Analysis. SAP recommends Margin Analysis as the default solution, however both can co-exist. Only Margin Analysis updates the universal journal (ACDOCA), and all future innovations will happen with Margin Analysis. Customers considering both approaches may find it difficult to justify costing-based COPA in S/4HANA since most costing-based functionality is now available with Margin Analysis.

The following new features are introduced with Margin Analysis in S/4HANA 1610

•     Cost of goods splits using cost splitting profile
  
  
•     Price splitting per variance category using price difference splitting profile
  
  
•     Attributed profitability segment – characteristics update without settlement
  
  
•     Event-based revenue recognition without settlement
  
  
•     Prediction ledger with statistical sales conditions
  
  

Let's explore attributed profitability segments

With Margin Analysis, revenue and cost are always reconciled with the profit and loss statement since the data is stored in the universal journal. You do not need to reconcile Margin Analysis with GL. In addition, you can drill-down on any characteristic such as brand, sales group, product group, or customer group using data stored in the universal journal.

These characteristics are typically derived and posted to the universal journal at the time of logistical billing documents or at period end with settlement, allocation, or top-down distribution. Figure 1 displays how the universal journal enables single source of truth for reporting by storing all information from various components in one place  –  single source of truth.

Figure 1: Universal Journal Integration

Attributed Profitability Segment vs. Real Account Assignment Derivation

With attributed profitability, you can derive characteristics early in the process with the best-guess principle, rather than wait until period-end settlement activity. For example, let's assume, in project-based billing, you have WBS costs not yet billed to the customer. A settlement rule is created with brand or customer group in the profitability segment account assignment.

When a document is posted to WBS, the characteristics are derived from the settlement rule and updated in the universal journal. Another example is to derive characteristics with expense postings to a cost center. The attributes derivation helps you perform profitability analysis reporting before the month-end closing settlement process. These attributes are statistical in nature rather than real account assignments and used primarily for reporting.

Meet Anand Seetharaju in-person at SAP Controlling Financials 2023 Conference, Sept 17-19 San Diego, CA Use coupon code: JJ100 for $100 off: Click here now 

 
At the time of document posting, the system determines whether a real account assignment or attributed assignment is involved. In the case of a real account assignment object identified by the sending application such as settlement of cost object to CO-PA or billing document in a sales order scenario, profitability segment number is transferred to G/L along with the combination of characteristics exists in CO-PA segment.

With an attributed profitability segment identified (activation in IMG), the system determines whether a settlement rule exists along with the corresponding profitability segment data and then populates characteristics on the income statement line item on the document to enable drill-down reporting for supported account assignment objects. If no settlement rule exists, but a sales order item exists in income statement line item and sales order carries a profitability segment, the G/L line item is populated with characteristics from profitability segment from the sales order. If sales order does not carry a profitability segment either, certain characteristics are read from sales order header.  

To derive attributed profitability segments, GL accounts must be setup as either Primary costs/Revenue or Secondary costs.

The characteristics apply for both P&L and some balance sheet accounts.

The following account assignment objects are supported when G/L line items post:

• Cost Center
  
  
• Internal Order
  
  
• Project
  
  
• Sales Order
  
  
• Production Order
  
  
• Service and Maintenance Order with SAP Note 2497666
  
  

To use attributed account assignments, activate the derivation in CO-PA configuration shown in Figure 2.

Menu path:

Controlling>Profitability Analysis>Master Data>Activate Derivation for Items without profitability segment

Figure 2: Configuring Attributed Profitability Segment

First create a WBS and assign PSG settlement rule with 100% as shown in Figure 3. I added brand as one of the characteristics among others to be derived.

Figure 3: Settlement Rule Added to a WBS

To learn more about Profitability Segments, and other SAP FICO topics become a member Click here now:

Next, post a general ledger document to the WBS. The universal journal shows brand derived as shown in Figure 4. The CO-PA reports do not show these characteristics until settlement is performed. You may have to write a new ad-hoc ACDOCA report using a CDS view and/or analysis for office query to view the characteristics.

Figure 4: Universal Journal display with Brand Derivation

As of writing this blog (tested in 1809), the logic works only with settlement rules with 100% assignment to profitability segment. If you want to split profitability segments, the settlement rules are not considered unless the split is assigned to an identical profitability segment.

Refer to the example in Figure 5. This is documented in SAP Note 2439201 – S/4HANA Finance: Derivation logic when determination “attributed profitability segments”.  The below example depicts such a scenario. Refer to Note 11 for future release on this functionality.

Figure 5: Settlement Rule Splits

The universal journal in Figure 6 shows brand not derived when multiple settlement rule exists with a split criterion.

Figure 6: Universal Journal Shows Brand Not Derived

Conclusion

Attributed profitability segments help you perform multi-dimensional reporting on CO-PA characteristics such as product, customer, brand, product group before month-end closing. You can further refine the characteristics at closing.

You accomplish this by setting up a settlement rule on account assignment objects. Documents posted based on the settlement rule and information available at that point in time (best guess). The prerequisite for this is account-based CO-PA.

When working on SAP Margin Analysis we recommend you work with our ERPCorp SAP experts:

Learn about ERPCorp Coaching & Consulting