Lesson 2 of 5
Allocation cycles
11 min
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Distributions and assessments run in cycles. A cycle is a container with a header (validity period, allocation type, and in S/4HANA a cycle run group) and one or more segments. Each segment describes one sender-to-receiver relationship: which senders, which accounts, which receivers, and how the amount is split. Cycles are what you run at period end, usually in a fixed order, and they are the main thing you test.
Universal allocation
In S/4HANA, cycles are built and run in universal allocation, SAP's umbrella for cost center, profit center and margin analysis allocations, with intercompany allocation as an additional type. You define cycles in the Manage Allocations app, execute them in Run Allocations, and review them in Allocation Results; the Allocation Flow app visualizes senders and receivers with their debits and credits. Cycles from the classic transactions (for example assessment with KSU5 and distribution with KSV5) can be migrated: SAP provides a Monitor Cycle Migration app and a migration job template in Schedule Overhead Accounting Jobs. Universal allocation posts to the Universal Journal and supports plan versions as well as actuals. Check the app list for your release, because SAP has been adding apps to this area release by release.
Senders, receivers and tracing factors
The sender rule decides how much leaves the sender. "Posted amounts" takes what was actually posted in the period on the selected accounts; fixed amounts and plan values are alternatives. The receiver rule decides how it is split. Fixed percentages are easy and brittle. Fixed portions (ratios) are similar. Variable portions use a tracing factor measured each period, typically a statistical key figure such as square feet, headcount or kilowatt hours, entered or transferred before the cycle runs. You can also weight receivers, for example to give a heavily used area a higher share.
Contoso's facilities cycle uses the statistical key figure FLOORSQFT. In May, Detroit Facilities posted $120,000. Assembly occupies 30,000 square feet, Machining 20,000 and Warehouse 10,000, so the expected split is $60,000, $40,000 and $20,000. Writing that split down before running anything is the most valuable habit in this course.
| Receiver | Square feet | Share | Expected debit |
|---|---|---|---|
| 17101101 Detroit Assembly | 30,000 | 50.0% | $60,000 |
| 17101104 Detroit Machining | 20,000 | 33.3% | $40,000 |
| 17101106 Detroit Warehouse | 10,000 | 16.7% | $20,000 |
| Sender 17101105 Detroit Facilities | Credit $120,000 |
Expected result of cycle CMCFAC01 for May, prepared before the run.
Running a cycle
- PreparePrimary costs for the period posted; statistical key figures entered for May
- Test runRun Allocations in test mode; no posting, full result available
- ReviewCompare sender credit and receiver debits with the expected table
- Live runRun again in live mode; journal entries created
- Check and keepAllocation Results and the documents become test or close evidence
The sequence matters when several cycles exist. A cycle whose receivers are themselves senders in another cycle must run first. If Facilities assesses IT Services and IT Services then distributes to production, Facilities runs first or the IT distribution goes out without its share of facilities cost. Universal allocation supports sequential execution and parallel execution of independent cycles through run groups. Cycles that send to each other can be set up as iterative so the system resolves the mutual allocation; use that only when the business really needs it, because the results are harder to explain.
- Do receivers need to see the original accounts?Yes → distribution cycle · No → assessment cycle
- Is there a measured tracing factor that changes each month?Yes → variable portions with a statistical key figure · No → fixed portions or percentages
- Does any receiver also send costs in another cycle?Yes → order the cycles or use iteration · No → cycles can run in parallel
- Is this the first run of a new or changed cycle?Yes → test run and compare with expected results first · No → test run is still cheap insurance
What would you do?
Maria's colleague in Chicago copies the Detroit facilities cycle for plant 1720 but forgets to enter the May square-feet figures for the Chicago receivers. What happens when the cycle runs, and what should have caught it?
- A cycle has a header and segments; each segment is one sender/receiver relationship with sender and receiver rules.
- Universal allocation: Manage Allocations to define, Run Allocations to execute, Allocation Results to review.
- Variable portions use tracing factors such as statistical key figures entered each period.
- Run new or changed cycles in test mode first and compare with expected results written beforehand.
Check your understanding · not graded
Lesson check
1. What does a segment in an allocation cycle define?
2. Facilities posted $120,000; receivers have 30,000, 20,000 and 10,000 sq ft. What does the largest receiver get?
3. Which app executes universal allocation cycles in test or live mode?
4. Why must Facilities run before IT Services if Facilities assesses IT Services?