SAP FICO is an essential core functional component in SAP ERP Central Component, providing organizations with complete financial data management. Through SAP FICO, companies can store a complete version of their transaction records for analysis and reporting as well as to facilitate effective business planning and decision-making.

SAP ERP Central Component (SAP ECC) is an on-premise enterprise resource planning (ERP) system commonly referred to as "SAP ERP." SAP FICO adds financial accounting and controlling capabilities to ECC.

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SAP FICO consists of two sections, SAP Finance (FI) and Controlling (CO), each dedicated to a particular financial process. SAP FI handles overall reporting and accounting while SAP CO specializes in planning and controlling costs. Although initially released as separate modules, they have now become so tightly integrated that many people refer to them collectively as one unit.

SAP FICO integrates with other SAP Logistics modules, such as Sales & Distribution (SD), Production Planning (PP), Plant Maintenance (PM), Quality Management (QM) and Materials Management (MM).

SAP Financial Instruments

SAP FI is a tool designed to generate financial statements for reporting and analysis, such as balance sheets or profit/loss statements. The suite of modules within SAP FI handles various accounting processes:

General Ledger stores all of a company's transaction data in an account chart. This displays all accounts within the system. Transactions are recorded in sub-modules that can be integrated real time with general ledger data.

Accounts Receivable manages customer accounts and processes customer transactions. This includes posting invoices, credit memo posting, down payments on invoices, payments of invoices or executing customer reports.

Accounts Payable manages all vendor interactions and accounts, such as invoice posting, credit memo posting, down payments for invoice payments, automatic payments programs and vendor reports.

Asset Accounting oversees all transactions related to a company's fixed assets, such as land, buildings and heavy equipment. This includes asset acquisitions, retirements, sales transfers, revaluations and depreciations.

Bank Ledger centrally manages a company's bank account transactions and data. It can reconcile all transactions recorded on bank statements with those recorded in the system for accurate comparison.

Consolidation enables companies to compile financial statements for multiple entities, providing an overview of the company's overall position.

Funds Management oversees budgets related to revenue and expenses within the business.

Special Purpose Ledger defines the ledgers in SAP FI for reporting purposes.

Travel Management manages all transactions related to travel processes, such as booking trips and managing associated expenses.

SAP CO Modules

SAP FI is responsible for accounting and internal/external reporting at a company, while SAP CO offers processes to plan, report on, and monitor costs from business operations. In short: with SAP CO companies can improve profitability. Like its sibling program, SAP FI, SAP CO consists of sub-modules that manage specific processes:

Cost Elements provide an overview of a company's costs and revenues based on profit/loss statements (also known as income statements). Cost element accounting describes the source of these costs, while cost elements represent specific charges that the business incurs.

Cost Centers are internal divisions or departments within a business, such as sales, production, marketing or human resources. Cost Centers only deal with expenses - not revenues.

Profit Centers provide cost data related to each business line within a company. Unlike Cost Centers, which only deal with expenses, Profit Centers manage both expenditures and revenues.

Internal Orders is used for managing costs associated with smaller internal projects or non-fixed assets, such as a limited-time marketing campaign.

Profitability Analysis allows companies to assess the profitability of their products, helping them make informed decisions regarding product pricing, distribution channels and target market segments. Furthermore, Profitability Analysis offers various levels of detail when examining profitability - such as by region/country, product types and distribution channels or individual customer profitability.

Product Costing collects and analyzes information regarding the costs involved in producing a company's goods and services. This analysis can help control production expenses and boost efficiency levels.