SAP HANA Integration Between FI and MM Modules – Flow, Configuration & Examples

SAP HANA enables real-time integration between FI (Financial Accounting) and MM (Materials Management) modules. This integration ensures that goods movement and purchase processes automatically generate accounting entries. In this post, we cover the configuration steps, common flow, and FI-MM posting examples.

Understanding FI and MM Integration in SAP HANA: A Comprehensive Guide

Introduction to SAP HANA

SAP HANA is a powerful platform that helps businesses manage their data and processes efficiently. Unlike traditional databases that store data on slow hard drives, SAP HANA uses in-memory computing, which means it keeps data in the computer’s memory for super-fast processing. This speed is a game-changer for businesses that need to track financial transactions, manage inventory, or generate reports in real time. Imagine running a huge store where you need to know exactly how much money you’re making and what’s in stock at any moment—SAP HANA makes that possible.

In SAP HANA, different modules handle specific business tasks. Two of the most important modules are Financial Accounting (FI) and Materials Management (MM). These modules don’t work alone; they are tightly connected through a process called integration. This article will explain FI and MM, how they work together in SAP HANA, and why their integration is critical for businesses. We’ll break it down step-by-step, using simple language, examples, and tables to make it easy to understand.

What is SAP FI (Financial Accounting)?

The FI module in SAP stands for Financial Accounting. Think of it as the company’s accountant who keeps a record of every financial transaction. Whether it’s paying a supplier, receiving money from a customer, or tracking expenses, FI handles it all. Its main job is to ensure that the company’s financial records are accurate, complete, and follow legal accounting rules.

Here’s what FI does in simple terms:

• Records Transactions: Every time money moves—like paying for raw materials or selling a product—FI records it as a financial entry.
• Manages Accounts: FI tracks accounts like vendor payments (Accounts Payable), customer payments (Accounts Receivable), and the company’s bank accounts.
• Creates Reports: FI generates financial reports, such as balance sheets (showing what the company owns and owes) and profit-and-loss statements (showing revenue and expenses).
• Ensures Compliance: FI helps the company follow tax laws and accounting standards, like GAAP or IFRS, so there are no legal issues.

In SAP HANA, FI is faster because it uses the Universal Journal (ACDOCA), a single table that stores all financial data. This means you can get financial reports instantly, without waiting for data to be processed.

For example, if a company buys $1,000 worth of steel, FI records the expense and the amount owed to the supplier. If a customer pays $500 for a product, FI records the income. These records help the company know its financial health at any time.

What is SAP MM (Materials Management)?

The MM module stands for Materials Management. Picture it as the warehouse manager who orders materials, tracks inventory, and ensures the company has what it needs to operate. MM handles everything related to buying, storing, and using materials, whether it’s raw materials for manufacturing or office supplies.

Here’s what MM does in simple terms:

• Purchasing: MM creates purchase orders (POs) to buy materials or services from suppliers.
• Inventory Management: MM tracks how much stock is in the warehouse, like how many units of steel or boxes of paper are available.
• Goods Receipt: When materials arrive, MM records them as part of the inventory.
• Invoice Verification: MM checks supplier invoices to ensure they match the ordered goods and prices.

In SAP HANA, MM benefits from the same in-memory speed, so inventory updates happen instantly. For example, if a truck delivers 100 kg of steel, MM updates the stock count right away, and this information can be used by other modules like FI.

Why is FI-MM Integration Important?

FI and MM are like two sides of a coin. MM deals with physical goods (buying and storing materials), while FI deals with the money side (paying for those materials and recording costs). Without integration, the company’s financial records wouldn’t reflect what’s happening in the warehouse, leading to errors, delays, or even financial losses.

Here’s why FI-MM integration matters:

• Accuracy: Every material movement (like receiving goods) in MM creates a financial entry in FI, ensuring the books are always correct.
• Real-Time Data: In SAP HANA, integration happens instantly, so managers can see financial and inventory data without waiting.
• Cost Control: Integration helps track costs of materials, ensuring the company doesn’t overspend.
• Compliance: Accurate financial postings from MM transactions ensure the company meets tax and accounting laws.

For example, when a company receives goods, MM updates the inventory, and FI records the cost as an asset and a liability to the supplier. If these two systems weren’t connected, the finance team might not know about the new liability, causing confusion.

How Does FI-MM Integration Work in SAP HANA?

In SAP HANA, FI and MM integration is seamless because of the platform’s in-memory database. When something happens in MM (like receiving goods), SAP HANA automatically creates financial entries in FI. This is called automatic account determination, and it relies on specific settings in SAP that link MM transactions to FI accounts.

Here’s a simple overview of how it works:

1. Material Movement in MM: A transaction like goods receipt or invoice verification occurs in MM.
2. Configuration Triggers: SAP uses predefined settings (like valuation class and movement types) to decide which financial accounts to update.
3. Financial Posting in FI: FI records the transaction in the Universal Journal (ACDOCA), updating accounts like inventory, vendor, or bank.
4. Real-Time Processing: SAP HANA’s speed ensures these updates happen instantly, so reports are always current.

The integration is driven by key settings in SAP, which we’ll explain next. These settings act like a bridge between MM’s inventory actions and FI’s financial records.

Key Components of FI-MM Integration

To make FI-MM integration work, SAP uses several components that connect material movements to financial accounts. Let’s break them down one by one:

1. Valuation Class

The valuation class is a code assigned to a material in the material master (transaction MM03). It groups materials with similar accounting needs. For example, raw materials (like steel) might have a valuation class of 3000, while finished goods (like cars) have a valuation class of 7920. This class tells SAP which general ledger (G/L) accounts to use for financial postings.

For instance, if you receive 100 kg of steel, the valuation class links this material to an inventory account (e.g., Raw Materials Inventory) in FI. This ensures the cost of the steel is recorded correctly.

In SAP HANA, the valuation class is stored in the material master’s Accounting view. You can check it using transaction MM03 by entering the material code and selecting the Accounting view. The valuation class is critical because it acts like a map, guiding SAP to the right financial accounts.

2. Movement Type

A movement type is a three-digit code that defines what kind of material movement is happening in MM. For example:

• 101: Goods receipt for a purchase order (adding materials to inventory).
• 201: Goods issue for internal use (removing materials from inventory).
• 601: Goods issue for delivery to a customer.

Each movement type is linked to specific financial accounts. When you perform a goods receipt (movement type 101), SAP automatically updates the inventory account (increase) and the GR/IR clearing account (liability to the supplier). Movement types are configured in SAP to trigger these financial postings, ensuring MM and FI stay in sync.

3. Transaction Keys

Transaction keys are codes that tell SAP which G/L accounts to update during a material movement. They are set up in transaction OBYC (Configure Automatic Postings). Common transaction keys include:

• BSX: Inventory posting (updates the inventory account when goods are received or issued).
• WRX: GR/IR clearing (records the liability to the supplier during goods receipt).
• GBB: Offset entries for inventory postings (used for goods issues or consumption).

For example, when you receive goods, the BSX key debits the inventory account, and the WRX key credits the GR/IR account. These keys are linked to the valuation class and movement type, ensuring the right accounts are updated.

4. Valuation Area

The valuation area determines where materials are valued, usually at the plant level (e.g., Plant 1000). Each plant in a company can have its own valuation rules. For example, steel in Plant 1000 might be valued at $10 per kg, while the same steel in Plant 2000 might be valued differently. The valuation area links MM’s inventory data to FI’s financial records, ensuring accurate cost tracking.

5. Universal Journal (ACDOCA)

In SAP HANA, all financial postings from FI and MM are stored in a single table called the Universal Journal (ACDOCA). This is different from older SAP systems, where data was spread across multiple tables. ACDOCA combines financial and controlling data, making it faster to generate reports like balance sheets or inventory valuations. When MM records a goods receipt, ACDOCA is updated instantly with the financial entries, thanks to SAP HANA’s in-memory processing.

Data Flow in FI-MM Integration

The data flow in FI-MM integration follows the procure-to-pay process, where a company buys materials, receives them, verifies invoices, and makes payments. Each step in MM triggers a corresponding action in FI. Let’s walk through the process step-by-step:

Step 1: Purchase Order Creation (PO)

The process starts in MM with the creation of a purchase order (transaction ME21N). A PO is a document sent to a supplier, requesting materials or services. For example, a company might order 100 kg of steel for $1,000.

At this stage, no financial posting happens in FI because no money has been spent yet. However, if the company uses budgeting, the PO may create a commitment in FI, reserving funds for the purchase. This helps the finance team plan for future expenses.

Step 2: Goods Receipt (GR)

When the materials arrive at the warehouse, MM records a goods receipt (transaction MIGO, movement type 101). This updates the inventory to show the new stock. For example, if 100 kg of steel arrives, MM adds 100 kg to the inventory.

In FI, the goods receipt triggers an automatic posting:

• Debit Inventory Account (BSX): The value of the steel ($1,000) is added to the inventory account as an asset.
• Credit GR/IR Clearing Account (WRX): A liability of $1,000 is recorded, showing the company owes the supplier.

The valuation class (e.g., 3000 for raw materials) and movement type (101) determine which G/L accounts are used, as configured in OBYC.

Step 3: Invoice Receipt (IR)

When the supplier sends an invoice, MM verifies it against the PO and GR using transaction MIRO (Invoice Verification). This ensures the invoice matches the ordered quantity and price. For example, the supplier’s invoice for 100 kg of steel should be $1,000.

In FI, the invoice receipt triggers another posting:

• Debit GR/IR Clearing Account (WRX): Clears the $1,000 liability from the goods receipt.
• Credit Vendor Account: Records a $1,000 debt to the supplier, which will be paid later.

This step ensures the company only pays for what was received and agreed upon.

Step 4: Payment to Vendor

Finally, FI processes the payment to the supplier using a transaction like F-53 or F110. This clears the vendor’s account and reduces the company’s bank balance. The posting is:

• Debit Vendor Account: Reduces the $1,000 debt to the supplier.
• Credit Bank Account: Deducts $1,000 from the company’s bank account.

At this point, the procure-to-pay cycle is complete, and both MM and FI are fully updated.

Table 1: FI-MM Integration Points

Process	MM Action	FI Action	Transaction Key
Purchase Order	Create PO (ME21N)	No posting (optional commitment)	-
Goods Receipt	Record GR (MIGO, 101)	Debit Inventory (BSX), Credit GR/IR (WRX)	BSX, WRX
Invoice Receipt	Verify invoice (MIRO)	Debit GR/IR (WRX), Credit Vendor	WRX
Payment	-	Debit Vendor, Credit Bank	-

This table summarizes the main integration points, showing how MM actions trigger FI postings and which transaction keys are involved.

Example: Buying Raw Materials (Detailed Scenario)

Let’s walk through a detailed example to make the integration crystal clear. Suppose a company, ABC Manufacturing, buys 100 kg of steel (material code: STL001) for $1,000 from a supplier, XYZ Steel Co. The company uses SAP HANA, with Plant 1000 as the valuation area and a valuation class of 3000 for raw materials. Here’s how the process unfolds:

Step 1: Creating the Purchase Order

ABC Manufacturing needs steel to produce car parts. The procurement team logs into SAP HANA and creates a purchase order using transaction ME21N. They specify:

• Material: STL001 (Steel).
• Quantity: 100 kg.
• Price: $10 per kg (total $1,000).
• Supplier: XYZ Steel Co.
• Plant: 1000.

The PO is sent to the supplier. In MM, this creates a record of the order, but no inventory is updated yet because the steel hasn’t arrived. In FI, no posting happens, but if budgeting is enabled, a commitment of $1,000 is recorded to reserve funds.

Step 2: Goods Receipt

A week later, XYZ Steel Co. delivers 100 kg of steel to Plant 1000. The warehouse team records the goods receipt using transaction MIGO with movement type 101. This updates the inventory in MM, adding 100 kg of steel to the stock.

In FI, SAP HANA automatically creates the following posting based on the valuation class (3000) and movement type (101):

• Debit Inventory Account (BSX): $1,000 (increases the Raw Materials Inventory account).
• Credit GR/IR Clearing Account (WRX): $1,000 (records a liability to XYZ Steel Co.).

The G/L accounts are determined by the OBYC configuration, where valuation class 3000 is linked to the Raw Materials Inventory account (e.g., G/L 100100) and the GR/IR account (e.g., G/L 200200).

Step 3: Invoice Receipt

XYZ Steel Co. sends an invoice for $1,000. The accounts payable team verifies it using transaction MIRO. They check that the invoice matches the PO (100 kg at $10/kg) and the goods receipt (100 kg received). If everything matches, MM approves the invoice.

In FI, SAP HANA posts:

• Debit GR/IR Clearing Account (WRX): $1,000 (clears the liability from the goods receipt).
• Credit Vendor Account: $1,000 (records the debt to XYZ Steel Co.).

This ensures the company only pays for what was received and agreed upon.

Step 4: Payment to Vendor

The finance team processes the payment using transaction F-53 or F110. They pay $1,000 to XYZ Steel Co., clearing the vendor’s account. The FI posting is:

• Debit Vendor Account: $1,000 (reduces the debt to the supplier).
• Credit Bank Account: $1,000 (deducts the payment from the company’s bank account).

Now, the entire process is complete. MM shows 100 kg of steel in inventory, and FI shows the financial impact: $1,000 added to inventory, a $1,000 liability created and cleared, and $1,000 paid from the bank.

Table 2: Example Data Flow for Buying Steel

Step	MM Transaction	FI Posting	G/L Account	Amount
Goods Receipt	MIGO (101)	Debit Inventory, Credit GR/IR	BSX (100100), WRX (200200)	$1,000
Invoice Receipt	MIRO	Debit GR/IR, Credit Vendor	WRX (200200), Vendor (300300)	$1,000
Payment	-	Debit Vendor, Credit Bank	Vendor (300300), Bank (400400)	$1,000

This table shows the financial impact of each step, including specific G/L accounts and amounts for clarity.

Structure of FI-MM Integration in SAP HANA

The structure of FI-MM integration involves several components that work together to ensure smooth data flow. Let’s explore each part:

1. Material Master

The material master (transaction MM01/MM02/MM03) is like a profile for each material in SAP. It contains details like the material’s name, type, and valuation class. The Accounting view in the material master specifies the valuation class (e.g., 3000 for raw materials), which links the material to specific G/L accounts in FI.

For example, the material STL001 (steel) has a valuation class of 3000, which is linked to the Raw Materials Inventory account (100100) in OBYC. When a goods receipt occurs, SAP uses this valuation class to post the correct financial entries.

2. Valuation Area

The valuation area defines where materials are valued, typically at the plant level (e.g., Plant 1000). Each plant can have different valuation rules, allowing flexibility for companies with multiple locations. For instance, steel in Plant 1000 might be valued at $10 per kg, while in Plant 2000, it’s $12 per kg. The valuation area ensures MM’s inventory data aligns with FI’s financial records.

3. OBYC Configuration

Transaction OBYC (Configure Automatic Postings) is where the magic happens. It links valuation classes, movement types, and transaction keys to G/L accounts. For example:

• Valuation Class 3000 + Movement Type 101 + BSX = G/L Account 100100 (Raw Materials Inventory).
• Valuation Class 3000 + Movement Type 101 + WRX = G/L Account 200200 (GR/IR Clearing).

This configuration ensures that every MM transaction posts to the correct FI accounts automatically.

4. Universal Journal (ACDOCA)

In SAP HANA, the Universal Journal (ACDOCA) is a single table that stores all financial and controlling data. Unlike older SAP systems, where data was spread across tables like BKPF and BSEG, ACDOCA consolidates everything. When MM records a goods receipt, ACDOCA is updated with the financial entries (e.g., debit inventory, credit GR/IR). This makes reporting faster and more accurate.

Benefits of FI-MM Integration in SAP HANA

The integration of FI and MM in SAP HANA offers several advantages that make business operations smoother and more efficient:

• Real-Time Updates: SAP HANA’s in-memory database ensures that MM transactions update FI records instantly, so financial data is always current.
• Accuracy: Automatic account determination reduces manual errors, ensuring financial records match inventory movements.
• Fast Reporting: The Universal Journal (ACDOCA) allows instant generation of financial reports, like balance sheets or inventory valuations.
• Efficiency: Integration eliminates the need for manual data entry between MM and FI, saving time and effort.
• Compliance: Accurate financial postings ensure the company meets tax laws and accounting standards.
• Cost Control: Managers can track material costs in real time, helping control expenses and budgets.

For example, a manager can run a report in SAP HANA to see how much was spent on raw materials last month, and the data will be accurate to the second, thanks to FI-MM integration.

Common Challenges and Solutions

While FI-MM integration in SAP HANA is powerful, companies may face challenges during setup or operation. Here are some common issues and how to address them:

• Incorrect G/L Account Postings: If the wrong accounts are updated, check the OBYC configuration and ensure the valuation class matches the material master.
• Missing Postings: If MM transactions don’t trigger FI postings, verify that movement types and transaction keys are correctly configured.
• Data Discrepancies: If inventory and financial data don’t match, check the valuation area and ensure all plants are properly set up.
• Performance Issues: In rare cases, large volumes of transactions may slow down processing. SAP HANA’s in-memory database usually handles this, but optimizing batch jobs can help.

Regularly testing the integration (e.g., using transaction MIGO for a test goods receipt) and reviewing ACDOCA entries can prevent these issues.

Conclusion

The integration of FI and MM in SAP HANA is a critical process that connects a company’s inventory management with its financial accounting. By linking MM transactions (like purchase orders and goods receipts) to FI postings (like inventory and vendor accounts), SAP HANA ensures that financial records are accurate, up-to-date, and compliant with accounting standards. The use of components like valuation class, movement types, transaction keys, and the Universal Journal (ACDOCA) makes this integration seamless and efficient.

Our example of buying 100 kg of steel showed how each step—PO creation, goods receipt, invoice verification, and payment—flows between MM and FI, with clear financial impacts recorded in real time. The tables provided summarize the integration points and data flow, making it easy to understand the process.

For businesses using SAP HANA, FI-MM integration offers real-time insights, reduced errors, and streamlined operations, making it easier to manage finances and inventory effectively. Whether you’re a small business or a large manufacturer, this integration is key to running a successful operation.

📌 Also read: SAP HANA FI-SD Integration – Complete Guide