Agenda

SAP Cash & Liquidity Management & Payment overview Overview of SAP Cash Management Overview of SAP Liquidity Planner Overview of SAP In-House-Cash Overview of SAP BCM

Take-out from this meeting

The goal is to provide end users with an understanding of how SAP can support an optimized Cash & Liquidity management solution by providing an overall-walk through of the processes and models typically implemented in each of these modules.

SAP Cash & Liquidity Management overview

Agenda

SAP Cash & Liquidity Management overview Overview of SAP Cash Management Overview of SAP Liquidity Planner Overview of SAP In-House-Cash Overview of SAP BCM

SAP Cash Management: business processes

Business processes covered in these modules: Cash position management Manual bank transfers Bank statement processing Short term liquidity overview

Manual forecasting process

Input for currency exposure reporting

The cash position report is based on bank balances from SAP FI, SAP Treasury and manual memos

An example of a cash position report is shown below and the groupings in the first two columns are freely definable

The report functionality allows drill down to a more detailed view of where the cash postions originate from

But SAP Cash Management does also provide an overview to base the medium term liquidity management decisions on

SAP CM data can also be extracted into SAP BW for more flexible and advanced reporting
Non-SAP companies?

SAP BW

Cash position report Liquidity forecast report

Extract of CM data

SAP SAP CM CM

SAP FI GL

Fin. CFs Real and from SAP expected CFs TM from bank and bank clearing Exp. CFs from SAP accounts SD & MM

SAP SD & MM

SAP AR & AP

Expected CFs from SAP AR & AP

SAP TM

With the new EHP5, the functionality in SAP CM will be greatly enhanced

The new layout can look like below

The old List report view in SAP CM

Agenda

SAP Cash & Liquidity Management overview Overview of SAP Cash Management Overview of SAP Liquidity Planner Overview of SAP In-House-Cash Overview of SAP BCM

SAP Liquidity Planner: business processes

Business processes covered in this module: Cash flow forecasting on short to long term basis Reporting of actual cash flows according to the direct method Cash flow forecasting performance measurement Calculation of currency exposures

For most companies the expected short term forecasts provided by the SAP CM module is however not enough

The expected short term forecasts from the SAP CM module is basically only covering the forecast of the PL down to the gross margin and only for those invoices with long pmt terms. If a complete short term forecast is needed e.g. a rolling quarter forecast all the way down to the net result a model should instead be implemented in SAP Liquidity Planner.

With SAP Liquidity Planner (SAP LP) it is possible to enhance the short term forecasting model but also to extend it to a long term forecasting model

Actual Calc.

The LP concept is a forecasting and follow up solution while the CM module is reporting of expected forecasts

The SAP Liquidity Planner concept

The main task of the Actual calculation module is to identify realised cash flows in the operative systems via the banks accounts
The main task of BW is to extract data from the operative systems and BI applications and make them available for reporting The main task for IP / BPC is to provide a tool for all subsidiaries where cash flow forecasts can be entered, calculated, consolidated and sent back to BW for reporting purposes.

The Actual Calculation module is used for extracting actual CFs from SAP FI into the forecasting model
SAP FI cash flow basis Bank statement
Automatic update when bkk statements are available

SAP LI

SAP LI

Initial assignment of default liquidity items (ingoing / outgoing / bank transfer)

Run assignment program FI Run assignment program Invoice

FI postings

Storing of cash flows with real liquidity items

Reports in SAP LI.

Invoice postings

Automatic update upon posting to actual acc. in SAP FI

Reports in BW

Update SAP LI with postings on actual accounts 1)

Initial assignment of default liq. items 2)

Assign liq. items using assignment programs 3)

Report Cash flows (and forecasts 4)

In order to follow up on the actual cash flows, standard reports are available in the SAP Actual calc. module

SAP actual calculation standard reports

In order to get the forecasting and performance functionalities, SAP BPC/IP and BW must be set up
Usage of SAP CM/LP data in entry layouts Actual CF reports per liquidity item

BPC

Bex Analyzer

Actual vs. forecasted CF reports Flexible reports on SAP CM data

Upload of forecasts to BW

SAP BW
Upload of actual CFs from SAP LP

Extract of CM data

SAP actual calculation

Actual CFs Program to deduct liquidity from bank accounts items per actual CF from sublegders

Extract of CM data

SAP SAP CM CM

SAP FI GL

SAP SD & MM

SAP AR & AP

The SAP BW and BPC reporting platform enables integration of CF forecasts and actuals into the same reporting model

The forecasting model(s) can be build in different ways

1. Rely on expected cash flows from the ERP system(s) 2. Ask end users to manually enter their expectations 3. Use historic data to predict the future 4. A combination of the three above

Decision affects the system design and the dependency to other processes

SAP has built a starter kit for the SAP LP solution to enable faster implementation of a long term forecasting solution based on short term forecasting data
System Independe nt Inputs
PO/AP

Analyze/ Remediate/ Aggregate

Define and Maintain Calculation Rules

Calculate Cash Flows

Report

Transaction Data

SO/AR

Define calculation rules

Calculate cash flow

Financials

SAP BusinessObjects Planning and Consolidation Excel interface

Forecast Data

CAPEX
Data analysis of latest liquidity information

Maintain calculation rules

Run currency translation

Sales

HR Aggregation in SAP NetWeaver BW

Upload currency rates for future time frame

Define calculation rules

SAP BusinessObjects Xcelsius Enterprise dashboards embedded in SAP BusinessObjects Planning and Consolidation

Agenda

SAP Cash & Liquidity Management overview Overview of SAP Cash Management Overview of SAP Liquidity Planner Overview of SAP In-House-Cash Overview of SAP BCM

SAP In-House-Cash: processes

Business processes covered in this module: Internal payments Central external payments Central in-coming payments Cross bank payments

Local payments

The SAP IHC solution is optimizing both internal and external payments via centralization

Head office (Europe) Internal Bank

Subsidiary

Internal Bank

USA Region 2 Asia

Subsidiary Subsidiary Subsidiary Subsidiary

Subsidiary

Region 1

SAP AG 2009. All rights reserved. / Page

The payment process for internal payments is now becoming a settlement instead of a physical payment
Example: Subsidiary 1 makes a payment to Subsidiary 2 Corporate Group
Head Office
Subsidiary 3 Subsidiary 2 Subsidiary 1 Pmnt Program OP
2a 1 2b

In-House Cash Center

Account management

Financial Accounting

Payment

Bank Statement

SAP AG 2009. All rights reserved. / Page

External payments are centralized in the IHB and paid out of the Group Treasury disbursement accounts
Example: Subsidiary 1 makes a payment to an external partner Corporate Group
Head Office
Subsidiary 3 Subsidiary 2 Subsidiary 1 Pmnt Program OP
2 1

In-House Cash Center

Account management 3

Financial Accounting

External business partner

Partner bank Payment

Head office house bank Bank Statement

SAP AG 2009. All rights reserved. / Page

It is also possible to make local payments out of the IHB and hence make use of local subsidiary bank accounts
Example: A Subsidiary in Germany makes a payment to an external partner in UK

Headquarter IHC In-House Bank Germany

4 1

Subsidiary UK Financial Accounting

3 5

Subsidiary Germany Pmnt Program OP

Account management

External business partner UK

Partner bank Payment

House ofbank Subsidiary UK Bank Statement

SAP AG 2009. All rights reserved. / Page

The IHC module provides a lot of functionality but does also require some master data setup
FI GL Headquarter IHC
Pmnt clearing

Bank statements

Subsidiary 1

Subsidiary 2 + 100 - 50 .. ..

(1) 200 (2) 540

Limits

- 20 + 50 .. ..

IHC Receiv.

IHC Payab.

(2) 540

(1) 200

G/L Transfer Conditions

Account A
+ 100 - 120 .. .. Blocks

Business partner
No 1 2 Post.dte 30.12.00 31.12.00 Val.dte Curr. Amnt 100.00 C 9.58 D 31.12.00 EUR 31.12.00 EUR

Currency conversion
SAP AG 2009. All rights reserved. / Page

Reporting

Turnovers

Agenda

SAP Cash & Liquidity Management overview Overview of SAP Cash Management Overview of SAP Liquidity Planner Overview of SAP In-House-Cash Overview of SAP BCM

SAP Bank Communication Management: business processes

Business processes covered in this module: Collect and batch commercial and financial payments Approve, Resubmit and Reject payments in a secure environment Monitor payment status Monitor bank statements

SAP Bank communication manager (BCM) optimizes the payment approval, monitoring and communication process

A BCM solution can be setup with and without a payment factory (internal bank)

The BCM module use SWIFT connectivity and an example of a process Flow within the SAP BCM is shown below
SAP ERP SAP Bank Communication Management SAP NetWeaver Process Integration

Execute Payment Program Create Payment Order

Create Batch

Routing

Payment Approval Work List Security

(Approval workflow, Authorization, Digital signature)

Mapping

SWIFTNet

Security Encryption Digital Signature

Import Bank Statement

Receive Status Messages

SAP Integration Package for SWIFT SWIFT Alliance Access / Gateway

Post/Processing and Clearing

SAP AG 2009. All rights reserved. / Page 36

Bank Statement

Resource Adapter

QUESTIONS
Lone Kejser Manager, First Treasury +45 61 55 66 95 lke@first-treasury.com