Q

How should I be calculating IRR with SAP CRM?

If you are looking for an internal rate of return (IRR) calculator in SAP CRM, you won't find one. But there is a way to develop a way to calculate IRR yourself, according to expert Srini Katta.

Is there a function module in SAP CRM for calculating internal rate of return (IRR)? Or, will I have to develop the code to do this?
There is no direct finance function available; however, calculating internal rate of return (IRR) is done by discounting the future cash flow by a the possible inflation rate. It is a discounted cash flow technique and essentially gives the present value of future returns on the current investment.

My advice is check the interest rates functions currently available in the SAP CRM Leasing and Asset Management module. See if the reverse of interest rate calculations would give you discounted cash flows to arrive at IRR. Otherwise, you'd have to develop the functionality for an IRR calculator, as there is no out-of-box function module to support IRR.

This was first published in June 2007

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