SEM vs. R/3 for Financial Statement Planning

  • by Paul Halley, Director SEM Practice, Business Information Solutions (BIS)
  • November 15, 2003
Very few organizations have not performed some variation of financial statement planning at one time or another. These plans are usually produced to fulfill legal statutes or regulatory filings, so much time is often put into their accuracy. Private-sector organizations often engage in this type of activity on a weekly basis. The process involves the production of forecasted profit-and-loss (P&L), balance- sheet, and cash-flow statements. Public-sector organizations tend to carry out this exercise annually, with the result influencing part of or all the next year's budget.

Very few organizations have not performed some variation of financial statement planning at one time or another. These plans are usually produced to fulfill legal statutes or regulatory filings, so much time is often put into their accuracy. Private-sector organizations often engage in this type of activity on a weekly basis. The process involves the production of forecasted profit-and-loss (P&L), balance- sheet, and cash-flow statements. Public-sector organizations tend to carry out this exercise annually, with the result influencing part of or all the next year’s budget.

Regardless of the existence of profits within your organization, it is almost a certainty that somewhere, someone within your organization is planning its finances. I wrote this article for those in the private sector, but the topics and functionality can easily be adapted for use by the public sector.

So where can SAP users perform financial statement planning? The answer to this question is simple: in R/3 or in Strategic Enterprise Management (SEM). Why you would choose to use one of these SAP modules over the other is a question I will discuss later. The answer involves flexibility, timeliness of data, the ability to create “what-if” scenarios, and your company’s definition of financialstatement planning.

So what is financial statement planning? In the simplest terms, it is the process a business goes through to predict what its financial statements will look like at a specific point in time. These statements usually consist of P&L, balance-sheet, and cash-flow statements, but planning of this type can involve much more than those three statements. Investments, taxes, headcount, sales, profitability, and cost-center planning are just a few of the plans that businesses commonly use to help derive their forecasted P&L, balance-sheet, and cash-flow statements.

Paul Halley

Paul Halley is director of Strategic Enterprise Management (SEM) for Business Information Solutions, LLC (BIS). Prior to joining BIS, Paul was SAP America's and SAP Public Sector's leading expert on SEM. As the SEM product manager and lead solutions engineer, Paul was responsible for some of the first US SEM implementations and the subsequent rollout of SEM throughout North and South America. He has a BA degree in economics from Illinois Wesleyan University and an MBA from the Owen School of Management at Vanderbilt University.

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