5.understand Reconciliation Accounts.docx

Understand Reconciliation Accounts

As a member of the finance department of your company, you already followed the way of the logistic invoice into the accounts receivable area of financial accounting. Now you need to understand how the values from the accounts receivables subledger are transferred into your financial statement Transaction with customer needs to be recorded in account books. With each transaction with customer, account receivable may decrease or increase. Hence each customer is to be linked with GL account (account receivable). Whenever transaction with customer is entered, corresponding GL account mapped with customer is posted.

Now let’s consider below two scenarios:

Scenario 1: Each customer is mapped with a different GL account. When transaction with customer C1 is entered, GL account “GL1” is posted. When transaction with customer C2 is entered, GL account “GL2” is posted. When transaction with customer C3 is entered, GL account “GL3” is posted. and so on…

Now if company has 1000 customer, then 1000 different GL accounts will be needed. This increases the number of GL account in chart of account. When number of GL account in chart of account increases, difficulty to manage the accounts increases as well. Hence, we try to achieve the objective of mapping customer to GL account while keeping number of GL accounts as low as possible. Hence this approach of mapping each customer to a different GL account is not used in sap. Scenario 2: Multiple customers are mapped to same GL account. When transaction with customer C1 is entered, customer reconciliation account is posted. When transaction with customer C2 is entered, customer reconciliation account is posted. When transaction with customer C3 is entered, customer reconciliation account is posted. and so on…

Hence, when customer transaction is entered, corresponding customer recon account is posted. Since multiple customers are mapped to same GL recon account hence required number of GL accounts is reduced to a great extent. This reduces the size of chart of account. Recon stands for reconciliation account.

Net balance of customers (C1, C2, C3, and C4 & C5) should be equal to net balance in GL customer recon account.

Hence, net balance of customers (sub-ledger) should always reconcile with net balance in GL recon account in finance (main ledger). Hence, GL account mapped to customer is called reconciliation account or recon account. Recon account cannot be directly posted. Recon account is automatically posted when posting to customer happens.

Open SAP Fiori Launchpad

Provide user name and password to login

Click search icon which is located at the top right corner of the page

Search for “Manage G/L Account Master Data App”

The following page opens up as shown below

Provide chart of accounts name and G/L Account<-click “Go” which is located at the top right corner of the page

Now, you see the G/L Account <-click on G/L Account number to display the detailed information of the account

Now, the detailed information of the account is shown below

Click on company code data<-click on company code to view the company code specific segment of this account

Now, you see the detailed information about the company and also that the account is set up as a “Recon. Account for Account Type: Customers”

Click back to return to the chart of accounts data segment of the account

Click on “WHERE USED” or Scroll down to “WHERE USED”

Here, you see the financial statement versions in which the account is used

Click on home icon to return to the SAP Fiori Launchpad