Purchase Order Accruals in SAP S/4HANA

Venkata S. Palle, Principal, Global Practices, DiSC Execution, Bristlecone

Organizations procure a wide variety of consumables, goods and services to run their day-to-day operations. On delivery, invoicing and payment for the products or services rendered can pose quite a challenge. Some of the challenges arise from invoices being delayed or if advances had been paid – for example, insurance payments and subscriptions. Finance has the legal obligation to accrue or defer these service and consumable costs as well as advance payments at month-end or quarter-end.

Before SAP S/4HANA Accruals Management, automating the management of the entire accruals and deferments process was a near impossibility. The S/4HANA Accruals Management tool helps calculate, validate and post transactions automatically along with workflow setup for approvals.

Accruals: In some cases, financial expenses belonging to the current month will be invoiced in future periods. For example, a supplier may have delivered consumables, but has not yet submitted an invoice.

Deferrals: Defer or delay recognizing certain revenues or expenses. Revenues are deferred to a balance sheet liability account until they are earned in a later period. When the revenues are earned, they will be moved from the balance sheet account to revenues on the income statement.

The following diagram depicts the overall purchase order accruals process.


SAP S/4HANA 1909 includes the following features:

  • Accrual engine posting line items are stored only in ACDOCA
  • All currencies of general ledger accounting are supported
  • Standard finance reversal process transactions FB08 and F.80 are supported
  • No redundant storage of accrual documents
  • Enables complex postings, such as more than two lines items
  • No separate balance carryforward required
  • Transaction ACACCARRYFORWARD is obsolete

The following diagram depicts the overall purchase order accruals process.

Interested in taking a deeper dive? Check out this white paper: Purchase Order Accruals in SAP S/4HANA 1909 and reach out to us at info@bcone.com to book a demo.