How to Reduce the Risk of Manual Journal Entries in SAP

Manual journal entries are an essential part of financial reporting. They allow finance teams to record accruals, corrections, reclassifications, provisions and other transactions that may not originate from a standard source document.

However, this flexibility also makes manual journals a critical area of financial control.

Unlike a payment supported by an invoice or a goods receipt connected to a purchase order, a manual journal may begin with a finance user deciding the amount, account, cost object, posting period and accounting treatment.

This does not mean that every manual journal is inherently high risk. Nor does it mean that organisations should simply try to eliminate manual journals.

Rather, the focus lies in what happens around the journal.

How is the information validated? Who reviews and approves it? Can the preparer also post the entry? Is supporting documentation retained alongside the journal? Can the organisation demonstrate the complete history of the transaction during an audit?

The risk of manual journal entries in SAP therefore depends less on the number of journals being processed and more on where the controls are applied.

If controls operate only after a journal has posted, the organisation may be able to detect a problem. If the controls operate during preparation and approval, the organisation has a better opportunity to prevent the problem from reaching the ledger.

Why the Risk of Manual Journal Entries in SAP Requires Preventive Controls

Most transactions recorded in the general ledger originate from another business process.

A payment is normally supported by an invoice. A goods receipt is connected to a purchase order. A customer receipt may have a remittance or transaction record.

A manual journal may have no equivalent source transaction.

Instead, the journal may be prepared in a spreadsheet, reviewed by another finance user, approved through email, and subsequently entered into SAP. Supporting documentation may then be retained in a shared folder or separate system.

Each step may appear reasonable. However, the wider process can become fragmented.

APQC identifies manual journal entries as a persistent source of errors and expense. For organisations operating SAP, the risks generally fall into five connected categories.

1. Data Integrity and Posting-Error Risk

SAP journal posting errors typically arise when journal information does not comply with live master data, account determinations, cost objects, tolerances, or finance validation rules and the most common cause is validation happening too late in the process.

When preparation happens in a standalone spreadsheet, some of these checks may not occur until the journal is entered or posted into SAP.

Potential issues can include:

• Incorrect account combinations
• Invalid cost centres or other cost objects
• Incomplete information
• Duplicate journals
• Incorrect values
• Entries that fail SAP finance validation
• Journals posted to the wrong period

The later an error is identified, the more work may be required to correct it.

A journal may already have completed several approval stages before failing at posting. Alternatively, an incorrect entry may be posted and only become visible during reconciliation or subsequent review.

2. Compliance and Segregation-of-Duties Risk

A journal approval is only effective when it is connected to the process that allows the journal to post.

Where approval occurs via email or another informal process, the approval may provide evidence that a review occurred. However, it does not necessarily prevent the journal from being posted without that approval.

This creates a distinction between a documented procedure and an enforced control.

Segregation of duties may also be weakened where one individual has sufficient access to prepare, approve and post a journal.

A controlled journal process should be able to demonstrate that:

• The requester cannot approve their own journal
• The correct approval route was followed
• Higher-risk or higher-value journals received the required level of review
• Posting could not take place before approval
• Posting authority was appropriately restricted

These requirements become particularly important when users retain powerful SAP finance posting transaction codes that allow journals to be posted outside the intended workflow.

3. Audit and Evidence Risk

Auditors need to see more than the final document posted into the ledger.

They may need evidence of :

• Who prepared the journal
• Why the journal was required
• Who reviewed it
• Who approved it
• Whether the preparer and approver were different people
• What calculations and documentation supported the entry
• When each action took place
• Whether the journal was later amended or reversed

When this information is spread across SAP, email inboxes, spreadsheets, shared folders and external approval systems, the organisation may need to reconstruct the journal history.

Reconstruction creates both administrative effort and the possibility of gaps.

The audit trail may therefore show the posting without providing a complete record of the decisions and controls that preceded it.

4. Financial Close Delay Risk

Manual journal activity frequently increases during month-end and year-end close.

At the same time, finance teams may have less capacity to manage errors, delayed approvals, and incomplete documentation.

A process that depends on manual coordination can require employees to :

• Send approval requests
• Chase outstanding approvers
• Confirm which version of a journal is current
• Re-key journal information
• Correct errors identified during posting
• Locate supporting evidence
• Maintain separate status trackers

Each activity may appear small. Across a large journal population, the accumulated effort can create material delays.

The core objective is not simply processing journals more quickly; it is to reduce avoidable administration while maintaining the controls required for an accurate and auditable financial close.

5. Data Security and Infrastructure Risk

The location of the journal workflow is another important consideration.

A journal may be prepared, staged or approved outside SAP before being transferred back into the ERP for posting.

This can introduce :

• Additional movement of sensitive financial data
• External systems holding journal information
• More integration points
• Additional infrastructure to secure and maintain
• A broader IT compliance and audit scope
• Additional testing when SAP is upgraded
• Fragmented workflow and audit records

Automating a manual process on an external platform does not necessarily remove these considerations.

It may improve certain administrative activities while introducing a separate environment that must be governed, integrated, secured, and audited.

SAP Journal Entry Controls: Detective Versus Preventive Approaches

Two broad types of control can operate around a journal entry.

A detective control identifies a problem after it has occurred. Examples may include reconciliations, exception reports, and reviews performed after the journal has posted.

A preventive control is designed to stop an incorrect or non-compliant journal from posting in the first place.

The distinction matters.

A reconciliation may identify that an incorrect value has entered the ledger. It does not prevent the value from being posted.

An exception report may reduce the time required to identify unusual activity. It does not necessarily stop the activity from occurring.

Reducing the risk of manual journal entries in SAP means moving validation, approval, and evidence capture earlier in the process, before a journal reaches the ledger, not after.

This means :

• Validating journal information during preparation
• Enforcing approval before posting
• Applying segregation of duties through the workflow
• Capturing evidence as the journal moves
• Keeping the process connected to the SAP system of record

1. Validate Journal Data Before It Posts

Early validation is one of the most important controls in a manual journal process.

In a standalone spreadsheet, a finance user may be able to check calculations and review the structure of a journal. However, the spreadsheet may not have access to the live SAP data and finance rules that will ultimately determine whether the journal can be posted.

The first complete validation may therefore occur when the journal reaches SAP.

This can result in errors being identified after the journal has already been reviewed or approved.

SAP-integrated Excel preparation can move validation earlier, Promenta’s free SAP journal posting Excel upload tool is one way finance teams start this process without a full workflow investment.

Relevant checks can be performed against live SAP data while the journal is still being prepared. These may include :

• Account determinations
• Cost object validation
• Tolerances
• SAP finance validations
• Mandatory fields
• Duplicate prevention
• Posting-period requirements

Promenta uses a fully validated virtual journal document and supports a full simulated posting before the journal is submitted.

This allows potential errors to surface to the requester during preparation rather than at the final posting stage.

The timing of validation matters because an error identified before submission can be corrected before it creates additional review, approval, and close activity.

Why the Validation Environment Matters

Validation should take place against the financial environment where the journal will ultimately be posted.

Where an external platform uses a separate rule set, certain SAP-specific issues may only become visible when the journal is transferred back into SAP.

Validation inside the SAP landscape uses the same environment and rules that govern the live posting.

This reduces the risk of a journal appearing valid in one system but failing when it enters the ledger.

2. Route Approval Through the Posting Path

Approval should be more than an administrative sign-off.

A journal may be approved via email, but if the user can still post it regardless of whether approval has been received, the approval is not being enforced by the system.

A controlled SAP workflow can make approval a condition of posting, for a detailed walkthrough of how this works, see how the SAP journal entry approval workflow operates step by step.

Routing may be configured according to criteria such as:

• Company code
• Journal value
• General ledger account
• Journal type
• Department
• Business unit
• Legal entity
• Risk level

Different journals can therefore follow different approval paths based on the organisation’s financial-control requirements.

The workflow can also prevent the requester from approving their own journal and require the appropriate level of independent review before posting.

Connecting Approval with SAP Access

Segregation of duties is weakened when users retain standing access that allows them to bypass the controlled workflow.

Where appropriate, organisations can remove powerful posting transaction codes from everyday users and allow journals to post only through the approved process.

This connects the approval policy to the underlying SAP authorisation structure.

It also reduces the need for finance teams to chase approvals manually. Notifications, substitute approvers, team inboxes and workflow status can help keep journals moving without undermining the required review.

3. Keep Supporting Evidence Connected to the Journal

Supporting documentation provides the context behind a manual journal.

This may include :

• Calculations
• Explanations
• Supporting schedules
• Source data
• Management approvals
• Accounting assessments
• Other evidence supporting the treatment

When this information is retained separately, finance and audit teams may need to search across different locations to understand the basis for the journal.

A controlled SAP process can keep supporting evidence attached to the relevant journal workflow and finance document.

The workflow can capture :

• The initial request
• Supporting attachments
• Review activity
• Approval decisions
• Rejections
• Amendments
• Resubmissions
• Posting
• Subsequent reversal activity

The audit trail is then generated as the journal moves through the process rather than being assembled after the close.

This helps preserve the relationship between the transaction, its supporting evidence and the decisions taken around it.

4. Consider Where Automation Operates

The word automation can describe several different architectural approaches.

Some solutions operate on an external platform and subsequently write approved journals back into SAP. Others automate data movement between Excel and SAP. A further approach is to operate the journal workflow natively within the organisation’s SAP environment.

Each approach may provide useful capabilities. However, they can have different implications for security, validation, integration, governance and auditability.

An external platform may require:

• Journal data to leave the SAP environment
• Additional servers or cloud infrastructure
• Connectors or middleware
• Separate security and access controls
• Additional IT compliance management
• Integration testing
• Revalidation following SAP upgrades
• Audit evidence to be maintained across multiple systems

A native SAP approach keeps preparation, validation, approval and posting within the SAP landscape.

This can provide :

• Less unnecessary movement of sensitive financial data
• One central system of record
• Alignment with existing SAP authorisations
• Validation against live SAP finance rules
• Connected workflow and audit records
• Reduced external infrastructure
• A more concentrated governance and audit scope

For organisations with strict financial-control, data-security or compliance requirements, where the workflow operates is therefore a central evaluation question.

What a Lower-Risk Manual Journal Process Looks Like

A lower-risk process does not necessarily eliminate manual preparation.

Finance professionals may continue to use Excel where it provides the flexibility required to calculate, analyse and structure complex journal information.

The opportunity is to place a controlled workflow around that preparation.

A structured process may follow this path :

Excel preparation → SAP validation and posting simulation → controlled submission → approval and segregation of duties → supporting documentation → posting → continuous audit trail

In this model:

• Journal information is validated against live SAP data during preparation
• Errors are identified before the approval process completes
• Approval is enforced as a condition of posting
• The requester cannot approve their own entry
• Supporting evidence remains connected to the journal
• Workflow activity is captured continuously
• Sensitive finance data does not need to leave SAP
• Finance leaders can monitor outstanding and ageing journals

Each risk is addressed closer to its source rather than being detected later through reconciliation or audit review.

How Promenta Supports the Process

Promenta’s Journal Management solution is designed to manage preparation, validation, approval and posting natively within SAP ECC and S/4HANA, without an external server in the journal path.

The solution includes:

• SAP-integrated Excel preparation
• Real-time SAP validation
• Dynamic SAP pick lists
• Duplicate prevention
• A fully validated virtual journal document
• Full simulated posting before submission
• Configurable approval workflows
• Segregation-of-duties controls
• Self-approval prevention
• Supporting documentation and attachments
• A continuous and reportable audit trail
• Workflow status and reporting
• No external middleware or server for the core process

Promenta has been an SAP-certified partner since 2002, with a journal management solution trusted by enterprises including Honeywell, Nike, BASF, Nestlé, and Lockheed Martin see Promenta’s customer portfolio and SAP certification for full details.

SAP S/4HANA Standard Journal Upload Versus Promenta Journal Management

It is important to distinguish a complete journal management workflow from the standard S/4HANA journal upload functionality.

How Does Promenta Journal Management Differ from SAP S/4HANA Standard Journal Upload?

Capability	SAP S/4HANA standard upload	Promenta Journal Management
Excel templates	One generic upload template	A template manager supporting multiple Excel templates
Excel functionality	No in-built Excel functionality	An in-built Excel Add-In with real-time SAP integration, SAP validation, dynamic pick lists, duplication prevention and journal risk mitigation
Workflow	No standard workflow; customers design and build their own	Enterprise journal workflow with segregation of duties, compliance controls and a reportable audit trail
Configuration	Workflow capability needs to be designed and developed	Highly configurable, no coding required and native within S/4HANA

The standard upload can help move journal data into SAP. A complete journal management process also needs to consider preparation, validation, approval, segregation of duties, supporting evidence, reporting, and auditability.

The Role of AI in Journal Preparation

AI has the potential to support journal preparation and identify unusual activity before a journal is submitted.

For example, AI may assist with:

• Preparation
• Classification
• Pattern identification
• Anomaly detection
• Supporting explanations
• Identification of unusual combinations

However, AI does not remove the need for compliance-grade controls.

Validation, approval, segregation of duties, supporting evidence, and accountability remain essential.

Automation may change how quickly a journal is prepared. It does not change who is responsible for reviewing and approving it.

Human judgement and system-enforced controls therefore remain central to the journal process.

Conclusion

Reducing the risk of manual journal entries in SAP is not merely about reducing the number of journals an organisation raises.

Manual journals are still required where finance judgement is necessary.

The more important question is whether the process surrounding those journals provides the industry-standard level of control, visibility and auditability.

Finance leaders should consider :

• Are journals validated against live SAP data before approval?
• Are potential posting errors identified during preparation?
• Is approval enforced as a condition of posting?
• Can requesters approve their own journals?
• Can users bypass the workflow through standing SAP access?
• Does supporting evidence remain connected to the journal?
• Can the complete journal history be reported from one place?
• Does sensitive finance data need to leave SAP?
• Are external systems, connectors or infrastructure increasing governance requirements?

A controlled SAP journal workflow can help organisations move validation, approval and evidence closer to the point of preparation and posting.

This changes the journal process from one that detects risk downstream to one that is designed to prevent avoidable errors and control failures before they reach the ledger.

Promenta has been an SAP-certified partner since 2002, with a journal management solution trusted by enterprises including Honeywell, Nike, BASF, Nestlé, and Lockheed Martin see Promenta’s customer portfolio and SAP certification for full details.

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