SAP Treasury integration with financial accounting and cash management
Johan Dannestig
Fyrirlestrarheiti
I.
Treasury Applications from SAP, an overview
II.
Transaction Manager, integration to FI/CO and CM
III.
Demo
Denmark I Iceland I Sweden I UK I www.applicon.com
1 december 2009
I09-12-01 2I I2I
Fyrirlestrarheiti
I.
Treasury Applications from SAP, an overview
II.
Transaction Manager, integration to FI/CO and CM
III.
Demo
Denmark I Iceland I Sweden I UK I www.applicon.com
1 december 2009
I09-12-01 3I I3I
Today’s business challenges in Financials What are the responsibilities of the CFO?
Ensuring Compliance and Mitigating Risks
Driving Strategy and Growth
Measure Profitability Control Costs Define Benchmarks and KPIs Link Strategy with Execution Handle Mergers & Acquisitions
Control Processes Efficiently Manage Risks Support Audits
Gaining Efficiency in Finance
Supporting Excellence in Corporate Operations
Manage Real-Estate Manage Global Travel Policies Develop Talents & Leadership
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Decrease Cost of Finance Accelerate Financial Close Organize Finance Operations Efficiently across the Enterprise
Optimizing Working Capital
Free-up Working Capital Decrease Day Sales Outstanding Decrease Bad-debt write-offs
Financial Supply Chain Management and Treasury Applications from SAP
Electronic bill presentment and payment
Credit management
Check creditworthiness
Cash and liquidity management
Issue invoice
Finance working capital
Forecast cash
Treasury and risk management
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Dispute management
Resolve disputes
Collect cash
In-house cash
Collections management
Settle & pay
Reconcile
Bank Communication Management
Treasury Applications from SAP
SAP Treasury and Risk Management Manage Financial Risk
Manage Financial Instruments
Risk Analyzers Credit Risk
Market Risk
Portfolio Analyzer
Transaction Manager Hedge Mgt MM
FX
Exposure Mgt DER
DEB
SEC
COM
SAP Bank Communication Management Manage Cash and Liquidity
SAP In-House Cash SAP Cash and Liquidity Management
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SAP In-House Cash Core Functions and Benefits SAP In-House Cash
Central dispatching, routing, and processing of payments
Benefits
Creation of provided account statements to account holders
Delivery of financial status to cash management
Reduce physical cash transfers by internal netting
Reduce number of bank accounts
Tracking of payment status
Save bank fees for bank accounts and payment transactions
Avoid cost for external cross-border payments
Gain more interest keeping cash within the group
Reduce hedging deals concentrating exposure within the group
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SAP Cash and Liquidity Management Core Functions and Benefits SAP Cash Management
Daily cash position
Liquidity forecast
Electronic bank statements
Currency exposure
Single, reconciled financial data source
Disposition
Enables centralized treasury organization
Flexible planning framework
Natively integrated into SAP environment
Adaptable to your organization‘s requirements
Core SAP ERP component
SAP Liquidity Planner
Liquidity Analyzer as part of SAP ERP
Mid- and long-term liquidity planning
Decentralized access for data entry
Central system for liquidity reporting
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Benefits
SAP Bank Communication Management Core Functions and Benefits SAP Bank Communication Management
Batching of payments
Payment approval rules
Digital signature
Payment Monitor
Payment workflow
Integration to SWIFTNet
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Benefits
Improve control over payments
Full auditability ensures compliance
Real-time visibility of payment cycle
Reduces time and cost of bank reconciliations
Lower bank integration costs
Complete transparency of payment status
SAP Treasury and Risk Management Core Functions and Benefits SAP Transaction Manager
Support of standard financial instruments
Integrated and automated straightthrough processing
Benefits Optimization
of hedging and risk
management processes through exposure management for operational FX and commodity exposures SAP Risk Analyzers
State of the art risk management capabilities
Credit Risk Analyzer
Market Risk Analyzer
Portfolio Analyzer
Denmark I Iceland I Sweden I UK I www.applicon.com
Increase
transparency by having
operational and treasury exposures evaluated for market risk Comply
with legal regulations and
compliance requirements
Fyrirlestrarheiti
I.
Treasury Applications from SAP, an overview
II.
Transaction Manager, integration to FI/CO and CM
III.
Demo
Denmark I Iceland I Sweden I UK I www.applicon.com
1 december 2009
I 09-12-01 11 I I 11 I
SAP Treasury and Risk Management Reporting Ad hoc reporting: Point & click, Unified databases, Position, P&L, Period, CashFlow Reporting tools: SAP Query, ABAP List, and other 3rd party providers, BI Results database: Portfolio Hierarchy, Drilldown, Historic results Management reports: Positions, Performance, Ratios, Compliance Middle office: Risk exposure, Controlling, Compliance, Data export: Excel, Flat files, BI
Credit Risk Analyzer
Market Risk Analyzer
Utilization: Formulas, Credit risk, Settlement risk
Price calculator: NPV, Prices, Sensitivities
Limit management: Limits freely definable, Multidimensional limits
Value at Risk: Varians/covarians, Historic, Monte Carlo
Portfolio Analyzer Yield calculations: Money weighted, Time weighted, Modified Dietz method
Simulate rates: What-if scenario, Relative, Absolute MM
FX
Debt
Derivat.
Fixed deposits Deposits at notice CP Repo
Spot Forward Swaps Options Futures
Bonds Bank loans Commercial paper Facilities
Cap Floor FRA Swaps Options Futures
Securities Bonds Warrants Stocks Certificates Repo Sec. lending
Transaction Manager Front office: Position and deal reporting, Deal capture, Exercise, Dealer slip, Valuation tools, On-line limit check Back office: Standing instructions, Correspondence, Netting, Settlement, Rate fixing (interest, FX), References, Corporate actions, Process monitors Accounting: Flexible accounting determination, Accounting according to many international accounting standards – in parallel, Hedge accounting
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Transaction Management Process Release
Back office
Trading Create order/contract Exercise/expiration •Give notice •Rollovers •Exercise rights
Settlement/Control Interest rate adjustment Netting References Confirmation letters Securities account transfers Corporate actions
Accounting Postings Payment activities Reversals Accruals/deferrals Valuation
•
•
User authorization User defined status codes Limit management
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Concept of Cash Management Market information
Trading
Cash management decision
Cash Position
Bank accounts in currency: Account 1 : Account n Total
Payment transactions in transit: - incoming - outgoing
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Liquidity Forecast
Financial investments and borrowings
Subledgers: - A/R - A/P - Purchase orders - Orders
Valuation of Financial Transactions Different legal frameworks use different principles for the valuation of Financial Transactions. This leads to different requirements such as:
Valuation of book value using various methods such as • • •
Different approach to transaction costs • •
•
Costs are included in the book value Costs are posted directly to profit and loss account
Valuation of gain and losses when selling from the position such as •
Lowest value Mark-to-Market Amortized Cost
Average Cost Lott accounting principles for example LIFO, FIFO
Special treatment for hedging transactions Many companies needs to report according to several frameworks in parallel
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Integration between TRM and GL
In SAP Treasury and Risk Management you use a separate Valuation Area for each accounting principle •
Each Valuation Area is assigned to a GL Accounting Principle •
•
The results of the valuations are calculated separately for each valuation area using a full approach The valuation area “001” should be assigned to the leading ledger in GL When TRM generates postings with payment information it ensures that the payment is only made once
It is possible to have a valuation area in TRM that does not post to the GL •
The results of the valuations are then only available in TRM and meant for internal treasury reporting
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Posting: Account Determination Fixed-term deposit 1 month 3.5%
Acct assignment ref. DB000001
Sept 1st
1100 -
Fixed-term deposit
1,000,000
Oct 1st
1120 +
Final repayment
1,000,000
Oct 1st
1200 +
Nominal interest
3,750
Balance sheet account acc. to account assignment reference
Posting details Flow type
Fxd-term dep. acct 113113 Deposit Final repayment
D 1,000,000
1100 -
Debit Bal.sht
Credit Bank
1120 +
Debit Bank
Credit Bal.sht
1200 +
Debit Bank
Credit Int. earned
Interest earned 273100
Bank clearing acct 113100 C
1,000,000
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FT deposit Nominal int. Final repayment
D 3,750 1,000,000
C 1,000,000
D Nominal interest
C 3,750
Integration between TRM and GL using Parallel Accounts TRM Transaction Manager Transaction Management Purchase of new bond at the cost of 90 € with a fee of 1 €
Number range 1
Valuation Area 001 Valuation rules for bonds: Post fees to P/L Mark-to-Market valuation
Doc. # 1 Doc. # 4
Doc. # 2 Doc. # 5
Bond purchase Valuation
Number range 3
Valuation Area 003 Valuation rules for bonds: Post fees to P/L Lowest value principle
Valuation
Number range 2
Valuation Area 002 Valuation rules for bonds: Activate fees Amortize costs
Bond purchase
Doc. # 3
Bond purchase
Position 1311044 90
Costs 1118500 1
3
Position 2311044
Unreal. 1112200
91
Costs 2118500
Unreal. Dummy Bank 2112200 2299999 91
1
90
…
3
91
Position 3311044
Bank Acc. 1220155
…
1
Costs 3118500 1
Unreal. Dummy Bank 3112200 3299999 91
…
Valuation
Valuation Area 004 Valuation rules for bonds: Post fees to P/L Mark-to-Market valuation
Denmark I Iceland I Sweden I UK I www.applicon.com
Example: Purchase of new zero interest bond at the cost of 90 € with a fee of 1 € At year end the MtM value of the bond is 93 €, amortized cost is 1 € at year end
Integration between TRM and GL using Parallel Ledgers TRM Transaction Manager Transaction Management Purchase of new bond at the cost of 90 € with a fee of 1 €
Ledger 1
Valuation Area 001 Valuation rules for bonds: Post fees to P/L Mark-to-Market valuation
Doc. # 1 Doc. # 4
Doc. # 2 Doc. # 5
Bond purchase Valuation
Ledger 3
Valuation Area 003 Valuation rules for bonds: Post fees to P/L Lowest value principle
Valuation
Ledger 2
Valuation Area 002 Valuation rules for bonds: Activate fees Amortize costs
Bond purchase
Doc. # 3
Bond purchase
Position 311044 90
Costs 118500 1
3
Position 311044
Unreal. 112200
91
Costs 118500
Unreal. 112200
Dummy Bank 299999 91
1
90
…
3
91
Position 311044
Bank Acc. 220155
…
1
Costs 118500 1
Unreal. 112200
Dummy Bank 299999 91
…
Valuation
Valuation Area 004 Valuation rules for bonds: Post fees to P/L Mark-to-Market valuation
Denmark I Iceland I Sweden I UK I www.applicon.com
Example: Purchase of new zero interest bond at the cost of 90 € with a fee of 1 € At year end the MtM value of the bond is 93 €, amortized cost is 1 € at year end
Fyrirlestrarheiti
I.
Treasury Applications from SAP, an overview
II.
Transaction Manager, integration to FI/CO and CM
III.
Demo
Denmark I Iceland I Sweden I UK I www.applicon.com
1 december 2009
09-12-01 I 20 I I 20 I