SAP FICO: What is, Introduction, Full Form & FICO Module

What is SAP FICO?

SAP FICO is a module of SAP ERP which is used for financial reporting both externally and internally. The objective is to record all financial transactions that are posted by an entity and produce financial statements that are accurate at the end of the trading period. The SAP FICO full form is FI (Financial Accounting) and CO (Controlling).

This SAP FICO basics tutorial is going to explain SAP FICO overview and the major functionalities of the SAP FICO module.

SAP FI is made up of SAP FICO sub modules. The sub-modules that are often used are accounts receivables, accounts payables, asset accounting, general ledger Accounting and bank accounting.

All the sub modules are interlinked and integrate in real time. A trial balance can be extracted at an time and it will always balance because all the sub modules are connected. The diagram below shows the the integration between FICO SAP modules.

SAP FICO
SAP FICO

General ledger accounting

All general ledger accounts that are used for reporting are managed through general ledger accounting. In SAP a set of all general ledger accounts used by a company or a group of companies is called a chart of accounts. These are the accounts that will be used for the preparation of financial statements. Most of the transactions are recorded in sub modules and they are reconciled with the general ledgers in real time. Transactions that can be done in direct in general ledger Accounting include journal vouchers which are posted to adjust or correct transactions. Reversals can also be done from general ledger accounting. Balances in general ledger accounts can be displayed and trial balances extracted from the system.

Accounts receivables

Accounts receivables in FICO SAP is a sub module that captures all transactions with customers and manages customer accounts. Separate customer accounts will be maintained and when transactions are posted in customer accounts, reconciliation accounts in general ledger are updated with the figures in real time. Transactions in accounts receivables include invoice posting, credit memo posting, down payments, invoice payment, dunning and executing customer reports.

Accounts payables

Accounts payables is a sub module that captures all transactions with vendors and manages vendor accounts. Separate vendor accounts are maintained and when transactions are posted in customer accounts, reconciliation accounts in general ledger are updated with the figures in real time. Transactions in accounts payables include invoice posting, credit memo posting, down payments, invoice payment, automatic payment program and executing vendor reports.

Asset accounting

Asset accounting in SAP FICO manages all transactions related to assets for an entity. When transactions are posted in asset accounts, reconciliation accounts in general ledger are updated in real time. Transactions in asset accounting include asset acquisition, asset retirement, asset sale, asset transfer, asset revaluation and asset depreciation.

Bank accounting

Bank accounting captures all transactions with the banks. Bank reconciliation is done to reconcile all transactions recorded on bank statements comparing them to transactions in the system.

All SAP FI sub-modules are integrated and transactions are updated in real time which means accurate financial statements can be extracted from the system at any time.

Summary

  • SAP FICO introduction: SAP FICO module is a module of SAP ERP which is used for financial reporting both externally and internally.
  • SAP FICO meaning: SAP Financial Accounting (FI) and Controlling (CO)
  • All general ledger accounts that are used for reporting are managed through general ledger accounting. In SAP a set of all general ledger accounts used by a company or a group of companies is called a chart of accounts.
  • Accounts receivables is a sub module that captures all transactions with customers and manages customer accounts.
  • Accounts payables is a sub module that captures all transactions with vendors and manages vendor accounts.
  • Asset accounting manages all transactions related to assets for an entity.
  • Bank accounting captures all transactions with the banks.