Utilization Postings: Process in a Nutshell

Post Accruals (via Accrual Engine)

There are two main ways to post accruals:

1. Opening Accrual Posting

• Done once when the accrual object is created.
• Example: Transaction ACACTREE02
• Scenario: Standing Accruals

2. Periodic Accrual Postings

• Done periodically (e.g., monthly).
• Managed via accrual posting run.
• Two calculation options:
• Linear (simple spread of total amount)
• Plan Minus Actual (more dynamic, based on posted actuals)

Post Actual Costs (in FI)

• Example: Transaction FB01
• Reference to Accrual Object must be included in the cost line item.
• This reduces the accrual amount (called utilization).

Utilization can be:

• Additional lines are created immediately during the FI posting.

• Utilization is posted separately during the period-end accrual run.

Finish the Accrual Object

• After all actuals are posted, mark the accrual object as finished:
• Use: ACACTREE02 → Edit → Terminate Accrual Subobject Prematurely
• Status changes to: “F” (Prematurely Finished)
• If any accruals remain, they are automatically released during this step.

 

Accrual Closing Frequency

Using an Accrual Closing Frequency allows differentiation between:

• Utilization of accruals from the previous fiscal year, and
• Utilization of accruals from the current fiscal year.

This differentiation can be achieved through:

• Different journal entry types
• Separate G/L accounts, for example:
• Posting to distinct cost accounts and/or accrual accounts
• Additional account assignments, such as posting the utilization to a different cost center
• (Note: This requires a BAdI implementation: Change Additional Account Assignments)

 

Accrual Object as a Field in the Coding Block

• When posting journal entries, a reference to an accrual object can be entered directly in the coding block.
• The accrual object reference field is available on the following posting screens:
• Manual journal entries: Transactions FB01 and FB50
• Supplier invoices: Transaction MIRO
• The visibility of the accrual object field in the coding block depends on the field status of the corresponding G/L account.

Purpose of the Accrual Object Field

• When an accrual object reference is entered in an invoice item, the Accrual Engine can automatically reduce the related accruals for that specific accrual object.
• This reduction process is referred to as the utilization of accruals.

 

Accrual Object in Journal Entries – Account Field Status

• The Accrual Object field can be made available in posting screens by configuring it as optional or mandatory in the field status of the corresponding G/L account.
• This configuration is performed in Transaction OB14, under the section “Additional Account Assignments.”
• Transaction OB14 requires specifying the Field Status Variant, which is defined in the company code master data (Customizing view V_001_B – “Enter Global Parameters”).

Field Status Determination

When entering a journal entry or invoice, the field status of each field (including the Accrual Object) is determined by the combination of:

• The Field Status Group maintained in the G/L Account Master Record (Transaction FS00)
• The Field Status defined in the Posting Key Configuration (Transaction OB41)

 

 

Utilization of Accruals – Possible Scenarios

The Accrual Engine supports several scenarios for how accruals can be posted and utilized:

1. Utilization of Standing Accruals

• Definition:
  The full accrual amount is posted once, at the time the accrual object is created.
• Posting Behavior:
• The Accrual Engine posts the amount as an opening posting using accrual transaction type IP.
• Later, when actual cost postings reference the same accrual object, the system automatically performs utilization postings, which reduce the accrual balance accordingly.

2. Utilization of Periodic Accruals

• Definition:
  The accrual amount is posted gradually—each period, the accrual method calculates the amount to be posted as an accrual.
• Posting Behavior:
• The periodic accrual posting run posts these accruals using accrual transaction type PP.
• Subsequent postings referencing the accrual object trigger utilization postings, which reduce the accrued amounts.
• Recommendation:
  This scenario can be used but is not recommended due to certain drawbacks.
  Instead, it is recommended to use the “Plan Minus Actual” approach.

3. Plan Minus Actual Approach

• Definition:
  This approach is period-based and functions similarly to the Purchase Order Accruals (POAC) process.
• Calculation Logic:
• Accruals = Planned Costs – Actual Costs
• The planned costs are determined by the accrual method.
• The actual costs are derived from postings that reference the accrual object.
• Posting Behavior:
• The periodic accrual posting run posts the calculated accruals.
• Utilization postings only occur for accruals posted in previous periods, since actual costs in the current period simply reduce the current period’s accrual amount.

 

Utilization of Accruals – Not Supported Scenarios

The following scenario does not support utilization postings:

Opening Posting and Periodic Postings Combined

• The accrual item type is configured to perform both an opening posting and periodic postings.
• This means that the two transaction types —
• IP (Opening Posting) and
• PP (Periodic Posting)
  — are both assigned to a posting schema in the IMG activity:
  “Assign Accrual Item Types to Journal Entry Types and Posting Schemas.”
• In this setup, utilization postings are not meaningful, because the system cannot determine which amount (the opening amount or the periodically posted amount) should be reduced by the utilization posting.
• Therefore: Do not assign transaction types UP (Utilization Posting) or UL (Late Utilization Posting) to a posting schema for this accrual item type.

 

Utilization of Standing Accruals

1. Initial Accrual Posting

• When an accrual object is created, an opening posting is made to record the initial accrual amount.

2. Subsequent Utilization Postings

• Utilization postings occur automatically when costs are posted with reference to the accrual object.
• These postings reduce the previously recorded accruals accordingly.

3. Use Case: Opening Posting and Later Utilization
This process is typically used when:

• The total accrual amount is already known and should be posted in full immediately as an accrual.
• One or more invoices are expected to be posted in the future; these invoices will automatically reduce the accruals upon posting.
• The invoices are posted as regular costs, not directly to the accrual account.

 

 

Utilization of Periodic Accruals

1. Posting of Periodic Accruals

• Accruals are created automatically by the periodic accrual posting run.

2. Utilization by Actual Costs

• When costs are posted with reference to an accrual object, utilization postings are generated.
• Important: Only accruals with a posting date prior to the cost posting date are used for utilization.

3. Use Case for Periodic Accruals

• Accruals are intended to increase gradually over time.
• One or more invoices are expected to be posted in the future. These invoices will automatically reduce the accruals.
• Invoices are posted as regular costs; they do not post directly to the accrual account.
• The Accrual Engine generates a utilization posting that credits the cost account and debits the accrual account.
• This can happen online or via the periodic accrual posting run.

4. Handling Insufficient Accruals

• If there are not enough accruals at the time the invoice is posted, the excess costs remain in the cost account.
• If the periodic accrual run posts additional accruals later in the same period:
• The overshooting costs from the invoice remain as costs.
• The periodic run does not increase the utilized amount of the invoice.
• Note: This behavior differs from the Plan Minus Actual approach.

5. Resulting Pattern – Saw-Tooth Chart

• Accruals increase gradually over time through periodic postings.
• More precisely, the increase occurs step-by-step, resembling a staircase rather than a smooth line.
• Drops in accruals occur intermittently due to utilization postings caused by actual cost postings.

 

Utilization of Periodic Accruals: Drawbacks

There are two main drawbacks to using periodic accruals:

1. Limited utilization based on posting date:
   Only accruals with a posting date earlier than the posting date of the actual costs (e.g., an invoice) can be utilized.
2. Unutilized excess costs:
   If the actual cost amount exceeds the available accruals, the excess portion will not be utilized during the next periodic posting run.
   While it might seem that this would be corrected in the following run (since it increases the accrual amount), the new accruals have a later posting date and therefore cannot be utilized against the earlier actual costs.

If this utilization behavior is not desired, it is recommended not to use this scenario.
Instead, use the Plan Minus Actual approach. In that method, after actual costs are posted, the next periodic accrual run ensures that the accruals are fully reduced by the actual costs.

 

 

Plan Minus Actual Approach

The Plan Minus Actual approach works similarly to the Utilization of Periodic Accruals method but has several key differences:

1. Utilization of accruals:
   Actual cost postings (for example, supplier invoices) can only utilize accruals that were posted in previous periods.
2. Accrual calculation logic:
   In the current period, the accrual amount is determined using the formula:
   Accruals = Cumulative Planned Costs – Cumulative Actual Costs
3. Automatic correction mechanism:
   Because this formula is based on cumulative planned and actual costs, each periodic accrual run automatically corrects the accruals for the current period.
4. Advantage over Utilization of Periodic Accruals:
   Due to its corrective logic, the Plan Minus Actual approach is generally more reliable and may be the preferred method compared to the Utilization of Periodic Accruals scenario.
5. Accrual Engine calculation:
   The Accrual Engine must calculate three values:

• Planned costs
• Actual costs
• Accruals, using the formula
  Accruals = Cumulative Planned Costs – Cumulative Actual Costs
  (with the condition that accruals can never be negative)

Retrospective and Prospective Linear Calculation

Concept

• Retrospective:
  When periodic amounts are changed, the new amounts are applied to all periods, including those before the change.
• Prospective:
  When periodic amounts are changed, the new amounts are applied only from the effective (Valid From) period onward.
  Earlier periods remain unchanged.

 

Linear Accrual Methods: Retrospective vs. Prospective

• The standard accrual method LINEAR is a linearization method that operates in a retrospective manner.
  This means that when changes are made, the revised amounts are applied to all periods, consistent with the behavior of the classic Accrual Engine.
• The new accrual method LINEAR_PRS is also a linearization method, but it works in a prospective manner.
  In this case, changes are applied only from the effective (valid-from) period onward.
  This method has been available since release 2020.

 

Retrospective and Prospective Shift Operator

Concept

• Retrospective:
  When the periodic amounts of a source accrual item are changed, the shift operator adjusts all affected periods, shifting the entire set of changed periodic amounts, including those before the change.
• Prospective:
  When the periodic amounts are changed, the shift operator retains all previously shifted amounts before the effective (Valid From) period, and applies the changes only from the Valid From period onward.

Behavior by Accrual Method

• Shift Operator S (based on standard accrual method LINEAR)
• Works in a retrospective way.
• This behavior is identical to that of the classic Accrual Engine.
• Shift Operator S (based on accrual method LNR_PRS_PS)
• Works in a prospective way.
• The underlying accrual method LNR_PRS_PS itself also operates prospectively.

 

 

Signs in Accrual Objects

General Concept

The Accrual Engine supports scenarios where no utilization postings are used.
In such cases, only opening and periodic postings (and, if applicable, a release posting in case of early completion) are performed.

• The opening posting records the Total Amount To Be Accrued to the accrual account (e.g., 12,000 USD).
• The periodic postings then transfer partial amounts from the accrual account to a P&L account (for example, 1,000 USD per month) until the accrual account balance reaches zero.
• Therefore, the opening and periodic postings have opposite signs.
• If the Total Amount To Be Accrued is positive,
• the opening posting credits the P&L account, and
• the periodic postings debit the P&L account.

Utilization and Release Postings

Utilization and release postings always have the opposite sign compared to the related accrual postings, because they reduce the accrued amount.

• In the Standing Accruals case:
  Utilization and release postings have the opposite sign to the opening posting.
• In the Periodic Accruals and Plan Minus Actual cases:
  Utilization and release postings have the opposite sign to the periodic postings.

Recommended Signs for the Total Amount To Be Accrued

• Standing Accruals Case
• The Total Amount To Be Accrued should typically be negative.
• This is because the opening posting debits the P&L account, while utilization and release postings credit it.
• Therefore, when creating an accrual object in transaction ACACTREE02, the user must enter the Total Amount To Be Accrued with a negative sign.
• (Note: In future releases, a customization option is planned to automatically invert the sign so users can enter positive amounts.)
• Periodic Accruals Case
• The Total Amount To Be Accrued should typically be positive.
• Plan Minus Actual Case
• There is no fixed Total Amount To Be Accrued.
• The accrual amount is recalculated each period as the difference between planned costs and actual costs.
• However, the Total Planned Costs are usually positive.