In today’s dynamic and highly-regulated financial landscape, managing complex financial products and maintaining accurate accounting processes can be quite the feat without the right personnel or resources for the job…
This is where SAP FPSL (Financial Products Subledger) comes in to help.
Keep reading to learn more about the SAP Financial Products Subledger (FPSL) solution and its key capabilities and features, as well as where our team of SAP consultants can fit in your organization (and help optimize your financial operations.)
What is FPSL?
Financial Products Subledger is a solution designed to help companies support various different financial services, maintain compliance with accounting principles and regulations, and manage business transactions more efficiently across the board.
With a well-defined FPSL solution, like SAP FPSL, companies can leverage more accurate data to gain better insights into their most important financial processes, reducing redundancy and simplifying workflows in the long run.
Understanding the SAP FPSL Solution
SAP FPSL (Financial Products Subledger) is a subledger solution provided by SAP designed specifically for financial institutions to manage complex financial products and accounting processes across their entire organization.
The primary purpose of FPSL in SAP is to enable accurate and transparent accounting for financial products, including loans, leases, investments, and other financial business planning and management tools.
And, as a fully integrated solution, SAP FPSL simplifies SAP Finance processes, including general ledger processing, accounts payables, profitability analysis, and management accounting.
This way, companies can connect operations across multiple SAP modules and areas of the software, including the SAP Analytics Cloud (SAC), to streamline accounting operations and comply with regulatory reporting requirements and accounting standards.
Key Regulations Addressed in SAP FPSL
- IFRS 9: Built to control the scope that covers financial instruments and investments.
- IFRS 15: Helps companies recognize revenues related to the deferral and accrual of revenue based on performance obligations.
- IFRS 17: Handles accounting for insurance contracts.
- US GAAP LDTI: Enables companies to manage insurance-related contracts and facilitate long duration targeted improvements (LDTI)
What Comprises SAP Financial Architecture?
From loans and leases to investments, SAP FPSL empowers organizations to streamline their accounting operations, ensure regulatory compliance, and unlock actionable insights for better, more informed decisions.
Let’s take a closer look at the main components of the SAP Financial landscape…
1) Transaction System
A transaction system (TP system) in SAP FPSL helps companies identify and manage the source systems from which trades and transactions are made, making it easier for users to keep track of business transactions from both SAP systems and third-party solutions and facilitate more efficient business planning over time.
2) SAP FPSL
SAP FPSL provides the tools needed for companies to improve financial product management across teams, including these three key components…
- Accounting rules: Reads finance data and posts sub ledger postings.
- Source data layer: Stages data for sub ledger processing functions.
- Results data layer: Stores data values from FSDM and sub ledger postings.
3) SAP FSDP
SAP FSDP acts as the underlying data layer in which users receive important data from the TP system, leverage data for sub ledger processing, and support the entire sub ledger.
The “data layer” simplifies management functions for various data sources, including cash flows, transactions, IFRS 9 credit-related parameters, and more.
4) SAP S/4HANA
SAP S/4HANA makes up the general ledger layer, providing reliable support for core financial data sources, including fixed asset management and accounts payable, and acting as a sub ledger for the S/4HANA solution.
Companies can also leverage advanced drill-down functionality to analyze ledger and sub ledger postings more efficiently and ease financial reconciliation across the board.
5) Additional Financial Instruments
These optional components cover a wide range of functionality, including group reporting for enterprise consolidation and SAP Analytics Cloud functionality for bank and insurance reporting scenarios.
Main Features Included in SAP FPSL
Here are a few of the key features of the SAP Financial Products Subledger solution…
SAP FPSL architecture is based on a well-defined data model that comprises all entities used for both Financial Accounting and Controlling, providing a stronger foundation for financial data management across the board.
Virtual Data Model
Financial Products Subledger is integrated with the virtual data model located within the SAP S/4HANA solution, including CDS views and journal entry items.
The SAP FPSL solution provides pre-built integration with SAP S/4HANA and the General Ledger Accounting module, making it easier to manage financial transactions and improve efficiencies across the entire organization.
Accounting Data Management
From making valuations based on important business events and accounting methodologies to creating journal entries, managing financial impairment, or managing regulatory requirements based on a centralized database, SAP FPSL simplifies data management across the board.
Efficient Data Flows
SAP FPSL supports advanced data tiering within SAP HANA and applies two-level partitioning features to tables with large volumes of data to improve performance and enhance the flexibility and scalability of core SAP solutions.
Advantages of SAP FPSL for Any Organization
1) Financial product modeling: SAP FPSL provides the tools needed for users to define, analyze, and model financial products to capture unique characteristics, terms, and conditions.
2) Contract management: The Financial Products Subledger solution provides tools for managing financial contract lifecycles, including their creation, modification, and termination, and helps organizations track contractual obligations and accounting events.
3) Accounting and valuation: SAP FPSL supports automated accounting and valuation processes to help ensure accurate calculation of interest, fees, and provisions. It also integrates with the general ledger and other financial systems for better consistency across the board.
4) Risk and compliance: With FPSL in SAP, financial institutions can monitor and manage risks associated with financial products, including credit risk, market risk, and liquidity risk. It also improves compliance with regulatory requirements and frameworks, like International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP).
5) Reporting and analytics: SAP FPSL provides advanced reporting and analytics capabilities, including predefined reports and customizable dashboards, to generate financial statements, perform financial analysis, and support better decision-making in the long run.
How Can We Help?
Whether you’re new to the SAP environment, looking to find new ways to make system ownership efficient for your existing SAP solution, or anything in between, Surety Systems is here to help (and lead your project team to success.)
Our team of senior-level, US-based SAP consultants have the knowledge, skills, and experience needed to handle even your most complex financial workflows and performance management initiatives with flying colors.
Getting Started with Our Team
Interested in learning how our team of SAP consultants can help eliminate time consuming tasks across your internal workflows and other accounting solutions?
Are you thinking about implementing FPSL or building integrations with other source systems, but don’t know where to begin?