Overview:
In this blog, I aim to provide a comprehensive overview of the week-based calendar year (5-4-4) in SAP. This includes a detailed explanation of its business relevance, configuration steps and end user activities to help you to understand and implement effectively.
Introduction:
In the world of financial & operational planning, business often follow various fiscal calendar structures to suit their reporting needs. One of the most commonly used fiscal structure is the week-based calendar year and the week-based calendar is classified as below.
4-4-5 ( Four weeks, Four weeks, Five weeks)4-5-4 ( Four weeks, Five weeks, Four weeks)5-4-4 (Five weeks, Four weeks, Four weeks)
The 5-4-4 calendar year is commonly used in industries like Retail, Manufacturing and Consumer goods. The traditional Gregorian calendar groups months unevenly, the week-based calendar or 5-4-4 calendar standardizes fiscal periods into consistent pattern.
The 5-4-4 calendar provides a more consistent comparison of weekly sales and operational performance across periods, since each period includes a similar number of business days and weekends. This model helps to avoid the complications of monthly calendar anomalies like varying number of days and differing number of weekends.
In SAP, Most of the standard reporting, financial periods & closing processes are designed around calendar or Non-calendar structures. Introducing a week-based model like 5-4-4 require rethinking of how you define the fiscal year variant, Mapping of posting periods and align with dependent modules. This change require or can have implications on both configurational changes and business process alignment.
When a week-based calendar year is activated in accounting, Revenue Recognition aligns with the defined fiscal period duration, using a specified fiscal period-end instead of the traditional Gregorian calendar month-end. This process is particularly tailored for the Daily Ratable plan, under which Revenue Recognition calculates the daily revenue of contract and distributes it proportionally across the days within each fiscal period.
Since we’re implementing the 5-4-4 calendar year structure for one of our clients, I wanted to share some key insights from the experience. During my research on this structure, I couldn’t find much documentation(s) or discussions. To bridge that gap I am sharing my learnings and approach in this blog.
Business Use case:
If a manufacturing entity runs its production operations, material planning and cost tracking based on weekly schedules. However the organization currently follows a standard month based fiscal year in SAP, which causes several operational disconnects:
Production cost don’t align financial periods making it difficult to analyze performanceLabor and overhead variances are uneven across months with different week counts. Weekly KPI’s are not reconciled properly
Solution:
By Implementing the week-based calendar year structure in SAP, we were able to help the customer effectively address the challenge outlined above.
Post Implementation benefits:
Cost efficiency in sync with actual weekly activities.Period end closings and reporting become consistent and comparableThe business gains better control over cost trends, weekly variances and plant performance
Implementation Approach:
The week-based accounting calendar can be implemented in SAP using one of the two approaches depending on business requirement
Beginning of the year Mid of the year
Mid year: When switching to week-based calendar in the middle of your fiscal year, first configure a shortened fiscal year (to close out the old calendar early)
If you’ve already posted transactions in the current fiscal year or need to adjust historical data, you need to perform the System Landscape Optimization(SLO) to re-map and migrate existing postings.
As a best practice, it is recommended to implement the week-based calendar year at the start of the fiscal year
Below are the configurational steps required
Create a new Fiscal Year variant – OB29Set the Fiscal year to Short-end Fiscal year (Mid year)Maintain the periods – OB29Assign the Fiscal year to Company code – OB37Adjust the posting periods – OB52 (if require)Create Weightings – OA85Activate period weightings at depreciation level – OAYL
Configuration walkthrough:
Create Fiscal Year Variant: OB29
SPRO – Financial Accounting – Financial Accounting & Global settings – Fiscal Year – Maintain Fiscal year variant
Create weightings in Asset Accounting : OA85
SPRO – Financial Accounting – Asset Accounting – General Valuation – Fiscal Year Specification – Define weightings of periods – Weight periods in fiscal year version
Activate period weightings at depreciation level : OAYL
SPRO – Financial Accounting – Asset Accounting – General Valuation – Fiscal Year specification – Define Weighting periods – Specify area for individual period weighting
End user Activities or Testing scenarios:
Create Asset Master Record – AS01Post Asset Acquisition – F-90 Run Depreciation (AFAB) or Check the Asset values (AW01N)
Asset explorer:
The values have been calculated according to the 5-4-4 proportion. For Period 1, the value is 1006.43 for period 2 it is 805.14, for period 3 it s 805.14. These same values apply for periods 4 through 12 as well.
Example:-
Asset Acquisition = 5000/-
Useful life = 7 Years
Depreciation value 5000/7 714.2851
To get a new proportion value for period 1 = 714.2857*0.09615 = 68.78
To get a new proportion value for period 2 = 714.2857 *0.07692 = 54.945
To get a new proportion value for period 3 = 714.2857 *0.07692 = 54.945
Same will repeat for the respective periods.
Weighting Factor = Weeks in period52 or 53 in case of leap year
For Instance, Weighting Factor = 5/52 = 0.09615
Model of 5-4-4 structure:
Note: It is advisable to coordinate with the CO,MM & SD Module teams to ensure the alignment and avoid potential integration issues during or after the fiscal year structure changes. Also, Make sure to check the period end activities & Custom report (if applicable)
Conclusion:
The 5-4-4 calendar brings structure and consistency to financial periods, aligning better with the weekly business operations. with the right setup and co-ordination, it lays the foundation for more streamlined reporting and smarter decision making.
Overview: In this blog, I aim to provide a comprehensive overview of the week-based calendar year (5-4-4) in SAP. This includes a detailed explanation of its business relevance, configuration steps and end user activities to help you to understand and implement effectively. Introduction:In the world of financial & operational planning, business often follow various fiscal calendar structures to suit their reporting needs. One of the most commonly used fiscal structure is the week-based calendar year and the week-based calendar is classified as below.4-4-5 ( Four weeks, Four weeks, Five weeks)4-5-4 ( Four weeks, Five weeks, Four weeks)5-4-4 (Five weeks, Four weeks, Four weeks)The 5-4-4 calendar year is commonly used in industries like Retail, Manufacturing and Consumer goods. The traditional Gregorian calendar groups months unevenly, the week-based calendar or 5-4-4 calendar standardizes fiscal periods into consistent pattern.The 5-4-4 calendar provides a more consistent comparison of weekly sales and operational performance across periods, since each period includes a similar number of business days and weekends. This model helps to avoid the complications of monthly calendar anomalies like varying number of days and differing number of weekends.In SAP, Most of the standard reporting, financial periods & closing processes are designed around calendar or Non-calendar structures. Introducing a week-based model like 5-4-4 require rethinking of how you define the fiscal year variant, Mapping of posting periods and align with dependent modules. This change require or can have implications on both configurational changes and business process alignment. When a week-based calendar year is activated in accounting, Revenue Recognition aligns with the defined fiscal period duration, using a specified fiscal period-end instead of the traditional Gregorian calendar month-end. This process is particularly tailored for the Daily Ratable plan, under which Revenue Recognition calculates the daily revenue of contract and distributes it proportionally across the days within each fiscal period.Since we’re implementing the 5-4-4 calendar year structure for one of our clients, I wanted to share some key insights from the experience. During my research on this structure, I couldn’t find much documentation(s) or discussions. To bridge that gap I am sharing my learnings and approach in this blog.Business Use case: If a manufacturing entity runs its production operations, material planning and cost tracking based on weekly schedules. However the organization currently follows a standard month based fiscal year in SAP, which causes several operational disconnects: Production cost don’t align financial periods making it difficult to analyze performanceLabor and overhead variances are uneven across months with different week counts. Weekly KPI’s are not reconciled properly Solution:By Implementing the week-based calendar year structure in SAP, we were able to help the customer effectively address the challenge outlined above. Post Implementation benefits:Cost efficiency in sync with actual weekly activities.Period end closings and reporting become consistent and comparableThe business gains better control over cost trends, weekly variances and plant performanceImplementation Approach:The week-based accounting calendar can be implemented in SAP using one of the two approaches depending on business requirementBeginning of the year Mid of the yearMid year: When switching to week-based calendar in the middle of your fiscal year, first configure a shortened fiscal year (to close out the old calendar early)If you’ve already posted transactions in the current fiscal year or need to adjust historical data, you need to perform the System Landscape Optimization(SLO) to re-map and migrate existing postings.As a best practice, it is recommended to implement the week-based calendar year at the start of the fiscal year Below are the configurational steps requiredCreate a new Fiscal Year variant – OB29Set the Fiscal year to Short-end Fiscal year (Mid year)Maintain the periods – OB29Assign the Fiscal year to Company code – OB37Adjust the posting periods – OB52 (if require)Create Weightings – OA85Activate period weightings at depreciation level – OAYL Configuration walkthrough:Create Fiscal Year Variant: OB29 SPRO – Financial Accounting – Financial Accounting & Global settings – Fiscal Year – Maintain Fiscal year variant Create weightings in Asset Accounting : OA85SPRO – Financial Accounting – Asset Accounting – General Valuation – Fiscal Year Specification – Define weightings of periods – Weight periods in fiscal year version Activate period weightings at depreciation level : OAYLSPRO – Financial Accounting – Asset Accounting – General Valuation – Fiscal Year specification – Define Weighting periods – Specify area for individual period weighting End user Activities or Testing scenarios:Create Asset Master Record – AS01Post Asset Acquisition – F-90 Run Depreciation (AFAB) or Check the Asset values (AW01N)Asset explorer: The values have been calculated according to the 5-4-4 proportion. For Period 1, the value is 1006.43 for period 2 it is 805.14, for period 3 it s 805.14. These same values apply for periods 4 through 12 as well. Example:- Asset Acquisition = 5000/- Useful life = 7 YearsDepreciation value 5000/7 714.2851To get a new proportion value for period 1 = 714.2857*0.09615 = 68.78To get a new proportion value for period 2 = 714.2857 *0.07692 = 54.945To get a new proportion value for period 3 = 714.2857 *0.07692 = 54.945Same will repeat for the respective periods. Weighting Factor = Weeks in period52 or 53 in case of leap yearFor Instance, Weighting Factor = 5/52 = 0.09615 Model of 5-4-4 structure: Note: It is advisable to coordinate with the CO,MM & SD Module teams to ensure the alignment and avoid potential integration issues during or after the fiscal year structure changes. Also, Make sure to check the period end activities & Custom report (if applicable)Conclusion:The 5-4-4 calendar brings structure and consistency to financial periods, aligning better with the weekly business operations. with the right setup and co-ordination, it lays the foundation for more streamlined reporting and smarter decision making. Read More Technology Blogs by Members articles
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