Account based COPA in SAP

Account based COPA in SAP

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  Accounts based COPA inSAP
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  About SAP-COPA • InSAP, SAP COPA is a submodule under the main module CO. • CO stands for Costing and PA stands for profitability Analysis. • So, SAP COPA is a financial reporting tool to analyze the profitability depending upon various segments.
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  Why Profitability Analysis? •Profitability analysis is used by organizations to get data about the sales of the organization using profitability information. • It helps organizations plan their strategy for approaching sales and marketing.
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  How is theProfitability Analysis done? • Market Analysis is done by selecting the various subjects that are to be analyzed. • The figures are totally dependent on profit or loss (Account-Based Approach) or custom field valued (Costing based Approach). • An account-based approach is usually preferred but costing-based COPA can also be used depending upon the need and requirement. • The segments that have been mentioned can be anything ranging from country, state, customer, product, sales area, business area. • The company now can analyze, using the data from the Sales and Distribution module, material management module, and costing module. • The two methods used for financial reporting are: a) Costing based COPA (CBC) b) Account-based COPA (ABC)
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  Types of ProfitabilityAnalysis 1) Costing Based COPA: • The costs and revenues are grouped as per the value fields. • You can get access to a complete and short-term profitability report all the time. 2) Account-Based COPA: • You can get a report that is reconciled and consistent with financial accounting. • Sales, marketing and product management details can be obtained from it.
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  Costing based V/SAccount based Source: sapbrainonline
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  Advantages of AccountBased COPA • Easier to reconcile with the general ledger. • Easier to set up and takes less time as compared to costing-based COPA as it involves mapping of elements to value fields • Account-based COPA is also called a hybrid of general ledger and costing-based COPA. You can activate both costing- based COPA and account-based COPA at the same time and work on them in parallel. • As it uses cost elements, it is easy to find the differences between general ledger and COPA by simply just lining up the general ledger and account-based COPA. • Just like account-based COPA can be lined up with a general ledger to find out the difference, in a similar way it can also be lined up with profitability segments of costing-based COPA to match up the results. • It is easy to extract more information as it is segregated into various dimensions such as customer, product, etc., and is more dynamic than a typical profit and loss structure.
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  Data flow ofSAP COPA Source: blogs.sap.com
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  Introduction of SAPS/4HANA S/4HANA is an Enterprise Resource Planning (ERP) solution that is developed with advanced technologies like Machine Learning, deep learning, and advanced analytics. S/4HANA provides automation and helps businesses to make intelligent decisions. This runs on SAP HANA which is a leading provider of databases and also supports real- time processing speeds.
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  S/4HANA and AccountBased COPA Most of the businesses started using account-based COPA after the introduction of S/4 HANA, because Account- based COPA has some new features that are not available in either of the two approaches. The most exciting feature is the addition of the balance sheets item in COPA which was not there previously.
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  New features ofAccount Based COPA • Break down of costs into various sub costs like splitting fixed costs to sub costs like labor costs, material costs, etc. • Another new feature that was added that was restricted to costing-based COPA was splitting of price account based on variance category. • The new feature that is added is real-time data flow without waiting for settlement. This feature now exists only in account-based COPA. COSTS
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  Splitting of costof goods sold into various sub-accounts - Importance? • Splitting of cost of goods sold into various sub-components like labor, material, overhead, etc helps organizations to identify the expenses at each and every point. Earlier in account-based COPA, it was just a single line “Cost of Sales”, this does not give much information to analyze the data. This was earlier only available in costing-based COPA. • This capability helps leaders of the organization to evaluate other options to reduce the cost such as sub- contracting some of the areas or moving into another area that has lower labor costs.
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  Configuration (Splitting ofcost of goods) How to enable this new feature in account-based COPA? • Go to IMG → Financial Accounting (New) • Now, navigate to Periodic Processing in the General Ledger Accounting (New) section. • ‘Define Accounts for Splitting the Cost of goods sold’ in Integration → Materials Management.
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  Variance and theImportance of knowing the related details for businesses It is important for organizations to know the variance data to evaluate the margin analysis. Knowing the cause of variance is needed alongside. This capability is more significant in industries like aerospace and car as it directly affects while preparation of the Bill of Materials (BOM).
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  Configuration (checking varianceinformation) • Go to IMG → Financial Accounting (New) • Now, navigate to Periodic Processing in the General Ledger Accounting (New) section. • ‘Define Accounts for Splitting the Cost of goods sold’ in Integration → Materials Management. This is similar to the above process, but in this, we define a price difference splitting profile which is a combination of cost elements and variance.
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  Data Flow ofCOPA after the introduction of S/4 HANA Source: blogs.sap.com
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  Disadvantages of Account-basedCOPA • Statistical conditions from the sales and distribution module cannot be mapped. • It does not allow the breakdown of cost items into cost elements, such as breakdown of fixed and variable costs. On the other hand, costing based COPA allows doing this. • Manual posting cannot be made into account-based COPA like in costing-based COPA. This is restricted because it can cause reconciliation issues with financial accounting.
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  Final thoughts With theintroduction of S/4HANA, there have been a lot of modifications in the Account-based COPA and are on par with costing-based COPA. However, there are certain features that are not present in costing-based COPA.
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