Cash Accounting and Cash Flow Planning with

SAP Liquidity Planner

Stephan Kerber, Dirk Warntje

Content

Introduction .............................................. 3 3.4 Cash Accounting Processes ................... 28

Structure of the Book ..................................... 3 Information Acquisition from
Acknowledgments .......................................... 4 Assignment Mechanisms ...................... 28
Information Acquisition from
1 Business Overview .................................. 5 Bank Statement Information ................ 29
1.1 The Concept of Cash Accounting .......... 5 Information Acquisition from
1.2 Tasks of Cash Accounting and Financial Accounting ............................ 31
Liquidity Planning ................................. 6 Manual Assignment and Manual
1.3 Recipients and the Need for Transfer Posting ................................... 36
Information .......................................... 7 Analysis Reports ................................... 36
1.4 Financial Accounting and 3.5 Conclusion ........................................... 37
Cash Accounting ................................... 8
1.5 Differences to Cash Management ......... 9 4 SAP Liquidity Planner: Liquidity
1.6 Conclusion ........................................... 11 Planning and Reporting
Using SAP BW/SEM ............................... 39
2 Case Scenario: Implementing Cash 4.1 Modeling in SAP BW/SEM .................... 40
Accounting and Liquidity Planning .... 13 SAP Business Content ......................... 40
2.1 Conclusion ........................................... 15 Master Data ......................................... 45
Characteristics ..................................... 53
3 SAP Liquidity Planner: Liquidity Planning Layout in
Analysis Using SAP Actual SAP SEM-BPS/BW-BPS ........................ 54
Calculation ................................................. 17 4.2 The Liquidity Planning Process .............. 63
3.1 Overall Process and System 4.3 Extracting Actual Data .......................... 64
Integration ............................................ 17 4.4 Reporting in SAP BW ............................ 67
3.2 Technical Settings in SAP Actual 4.5 Conclusion ........................................... 69
Calculation ........................................... 17
3.3 SAP Actual Calculation 5 Liquidity Planning and Reporting
(Cash Accounting) ................................ 19 Without SAP BW/SEM .......................... 71
Data Model and Master Data ............... 19 5.1 Overview .............................................. 71
Functionality—Overview ..................... 21 5.2 Customizing .......................................... 71
Customizing SAP Actual Calculation ... 21 5.3 Master Data and Actual Data ................ 75
Tools .................................................... 26 5.4 Planning ............................................... 76
Tables ................................................... 27 5.5 Reporting ............................................. 77
5.6 Conclusion ........................................... 78

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Content

6 Outlook ...................................................... 79

Appendix .................................................... 81
Lee Iacocca and Cash Flow ............................. 81
Indirect Cash Flow .......................................... 81
Plug-in ........................................................... 81
Case Scenario ................................................. 82

Bibliography .............................................. 83

Index ........................................................... 85

2 © Galileo Press 2006. All rights reserved.

Introduction
This book is about money. Where does money come
from and where does it go? Because liquidity is one of the
critical success factors for a company, it is integral to run-
ning a business. The most important aspects of liquidity
are the ability to ensure solvency and generate payment
surpluses. In this context, companies constantly try to an-
alyze and plan their cash flow. Unfortunately, established
applications such as Accounting or Cash Management
don’t provide the necessary information on cash flow re-
quired by companies; however, SAP Liquidity Planner af-
fords you with the much needed relief in this area, as
shown by its first implementations in both nationally and
internationally operating companies. The complex re-
quirements placed on a retrograde liquidity analysis, a
decentral planning tool, and an efficient reporting were
met by the use of SAP Liquidity Planner.
SAP Liquidity Planner is a component that consists of
two applications: Cash Accounting (SAP R/3) and Liquid-
ity Planning (prior to Release 3.5, it was part of SAP Stra-
tegic Enterprise Management (SAP SEM), from SAP Busi-
ness Information Warehouse (SAP BW) Release 3.5 on-
wards, it has been included in BW). Cash accounting
determines the cash flow either based on an electronic
bank statement or data from financial accounting. Liquid-
ity planning is carried out using the planning functionality
in SAP BW. Reporting is performed by SAP BW.
In the past, this component was part of Corporate Fi-
nance Management (CFM), and since the introduction of
mySAP Enterprise Resource Planning (mySAP ERP) in 2004,
it has been located in the Cash Management and Liquid-
ity Management area as part of Financial Supply Chain
Management (FSCM).
This SAP Press Essentials book outlines the concepts of
cash accounting and liquidity planning, as well as the re-
sulting requirements that a business software must be
able to meet. In this book, the authors demonstrate how
you can meet these requirements using SAP Liquidity
Planner and also, how you can implement this product.
Readers of this book should have a sound knowledge of
the accounting application in SAP R/3 as well as SAP BW
and SAP SEM.
Structure of the Book
Chapter 1 outlines the business principles and provides
clear definitions of the terms used in the context of cash
accounting and liquidity planning. In addition, the con-
cept of cash accounting is introduced, along with a de-
scription of its interdependencies with accounting. In the
final sections of this chapter, we clearly distinguish SAP
Liquidity Planner from SAP Cash Management.
Chapter 2 describes a case study that is referred to and
further developed throughout the book. We use this ex-
ample to help you understand the functionality and the
technical concept of SAP Liquidity Planner, but it should
also serve as an aide to you in implementing this compo-
nent.
Chapter 3 and Chapter 4 contain a detailed description
of SAP Liquidity Planner. They provide an insightful intro-
duction to the two main areas of the product: Chapter 3
describes Cash Accounting (SAP R/3), while Chapter 4
deals with Liquidity Planning (SAP BW). In both chapters,
you will also find detailed information on customizing
and the various functions of the application. Wherever
necessary, the case scenario is referred to, enhanced, and
completed.
Chapter 5 describes a workaround for simplified liquid-
ity planning and reporting in SAP R/3 without using SAP
BW.
Chapter 6 addresses possible developments and future
requirements of SAP Liquidity Planner. The Appendix con-
tains additional information.
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Introduction

Acknowledgments

SAP is a registered trademark of SAP AG, Dietmar-Hopp-

Allee 16, D-69190 Walldorf. We would like to thank
SAP AG for its permission to use the trademark and the
materials provided in this book. Note that SAP AG, how-
ever, is not the publisher of this book nor is it responsible
for the contents of this book.
We would like to express our deepest gratitude to our
colleague Robert Bieber who supported us with numer-
ous tips and invaluable information.

4 © Galileo Press 2006. All rights reserved.

1 Business Overview
In this chapter, we will first define and differentiate cash
accounting and liquidity planning. This is a rather impor-
tant step in understanding these concepts as they are of-
ten used in a multitude of ways. Next, we‘ll describe the
tasks performed by cash accounting and liquidity plan-
ning. Because cash accounting and general accounting
are inherently interrelated, we should point out their in-
terrelationships. Lastly, we’ll describe the differences be-
tween cash accounting and SAP Cash Management.
1.1 The Concept of Cash Accounting
In business literature, you’ll find countless discussions
about the concept of cash accounting and its definition. In
these discussions, you’ll also encounter the following
terms: cash budget management, flow-of-funds analysis,
and cash flow statement, as well as cash flow accounting.
Incoming/Outgoing Payments
Expenditure/Revenue
Expense/Profit
Costs/Benefits
Cash Accounting
Cash Basis Accounting Profit and Loss Statement
Cost and Activity Accounting
Figure 1.1 Cash Accounting in the Context of General Accounting (according to Baetge 1992, pp. 3)
Cash accounting records the changes of cash flows, cash
flows being incoming and outgoing payments of liquid
funds such as cash in hand and bank savings.
In accordance with national and international account-
ing standards such as FASB and IAS, we will use the term
“cash flow” in this book to describe the changes in the
means of payment. Liquidity is therefore referred to as a
financial accounting-related concept. Within a certain
period, cash accounting records transactions that have a
direct influence on the stock of liquid funds, regardless of
the period the payments refer to (see Geuppert 2003,
p. 8). This type of recording and displaying of cash flows
can be compared to fiscal accounting, which is used in
the public sector.
Therefore, cash accounting distinguishes itself from ac-
crual accounting and cost accounting. Figure 1.1 illustrates
Data Source
(SAP)
Cash
Accounting
Accounting
Controlling
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1 Business Overview
the basic differences between the various types of ac-
counting.
In addition, it is now apparent that in business theory,
cash accounting always refers to several periods. This
concept is generally adopted by SAP Liquidity Planner.
Because the SAP Liquidity Planner component consists of
two applications (see Section 3.1), the first application,
SAP Actual Calculation, refers to past and current peri-
ods, while the other application, SAP Liquidity Planning
(SAP BW/SEM), considers future periods.
Cash Accounting Liquidity Planning
t (Source: Largay/Stickney 1980, pp. 15)
past current future
period
Retrograde Determination Reciprocal Determination
Figure 1.2 Time-Based Delimitation of Cash Accounting and
Liquidity Planning
1.2 Tasks of Cash Accounting and Liquidity
Planning
The primary task of cash accounting is to provide infor-
mation on a company’s solvency and internal financing
potential. Apart from that, it serves as a basis for the cre-
ation of flow-of-funds analyses and plannings. Compared
to the balance sheet and the profit and loss statement,
cash accounting enables you to better assess the financial
situation of a company.
The ability to generate sufficient liquid funds from its
business activities and to secure these funds in future pe-
riods is one of the prerequisites for a company to survive
(static aspect) (Amen 1999, p. 4). Cash accounting sup-
ports a company in evaluating its solvency status as well
as its insolvency risk.
The comparison of profit and cash flow of the W. T.
Grant company, as shown in Figure 1.3, demonstrates the
importance of analyzing and determining the cash flow
situation. Even though the Grant company was profitable
6 © Galileo Press 2006. All rights reserved.
up until one year before its insolvency, it wasn‘t able to
meet its payment obligations. However, cash flow had al-
ready been negative in earlier years.
Figure 1.3 Comparison of Profit and Cash Flow at W. T. Grant
The reason for such a discrepancy can be found in the dif-
ferent ways in which information is analyzed by account-
ing. For example, discrepancies can occur due to an in-
creased stocking up of a warehouse, an expansion strat-
egy that requires high investments, or by a bad overall
economic situation during which extended terms of pay-
ment are granted.
A classic example that personifies this state of affairs,
and is therefore frequently cited, is the situation at Chrys-
ler Corporation at the end of the 1970s when Lee Iacocca
assumed the position of CEO. At that time, Chrysler had
a high stock of automobiles, compounded by a low de-
mand for these vehicles. The cash flow situation was very
critical (see also the section in the Appendix, Lee Iacocca
and Cash Flow, or Iacocca 1984, pp. 200).
These two examples (i.e., W. T. Grant and Chrysler)
clearly show that in order to evaluate the degree of sol-
vency, cash flow is a far better indicator than the profit of
a company.
Usually a company‘s external financing potential, for
example, by acquiring external capital, is rather limited.
Due to the size of the company or its current situation
(for example, high debt-equity ratio), external financing
can become increasingly difficult. For this reason, the in-
ternal financing potential plays an increasingly important
role within the range of different financing possibilities
for a company (dynamic aspect) (Amen 1999, p. 4).
Internal financing potential means that a company can

generate more revenue than expenditures from its activi-
ties. This potential is also referred to as internal financing
strength. If a company can continuously build up liquid-
ity, in addition to conducting its regular business activity,
this surplus is called strategic liquidity.
To obtain universally valid and comparable informa-
tion on the degree of solvency of a company, the internal
financing potential and the overall financial situation, na-
tional and international accounting principles require
flow-of-funds analyses or cash flow statements as proce-
dures and display formats. Here a distinction is made be-
tween indirect and direct procedures. In this book we
will only describe the direct procedure since cash ac-
counting doesn‘t support the indirect procedure. There-
fore, direct procedure will be a critical part of this book.
You can find an example of the indirect procedure, which
is supported by accounting (SAP FI), in the Indirect Cash
Flow section in the Appendix of this book.
According to national and international regulations,
the flow-of-funds analysis can be divided into three ar-
eas:
 Cash flow from operating activities
 Cash flow from investing activities
 Cash flow from financing activities
According to IAS 7, the basic structure of a flow-of-funds
analysis could look as follows (Kütting/Weber 2001, pp.
467):
 Cash flow from operating activities
+ Incoming payments from customers
– Outgoing payments to suppliers
= Cash flow from operating activities (1)
 Cash flow from investing activities
+ Incoming payments from asset retirements
– Outgoing payments for asset acquisitions
+ Incoming payments from financial asset retirements
– Outgoing payments for investments in financial
assets
= Cash flow from investing activities (2)
 Cash flow from financing activities
+ Incoming payments from equity allocations
– Outgoing payments to company shareholders
+ Incoming payments from borrowings
– Outgoing payments for loans
= Cash flow from financing activities (3)
1.3 Recipients and the Need for Information
The total of the three areas represents the total cash flow
of the company. The cash flow statement is an essential
part of quarterly and annual reports since it meets the in-
formation needs of various recipients (see Section 1.3).
1.3 Recipients and the Need for Information
According to the Financial Accounting Standards Board
(FASB), the major recipients of cash accounting informa-
tion that is contained in a cash flow statement are the fol-
lowing groups (FASB 1978, para. 25):
 Investors, lenders, suppliers, employees
“To investors, lenders, suppliers, and employees, a busi-
ness enterprise is a source of cash in the form of divi-
dends or interests …, repayment of borrowing, pay-
ment for goods or services, or salaries or wages. They
invest cash, goods, or services … expect to obtain suffi-
cient cash in return …”
 Customers
“To customers, a business enterprise is a source of goods
or service, but only by obtaining sufficient cash to pay for
the resources it uses—and to meet its other obligations—
can the enterprise provide those goods or services.”
 Management
“To managers, the cash flows of a business enterprise are
a significant part of their management responsibilities,
including their accountability to directors and owners.”
Figure 1.4 illustrates the major important relationships
between a company and its business partners in terms of
activities and liquidity.
Due to the different kinds of business relationships,
each of the involved parties has a specific need for infor-
mation with regard to cash accounting. The following list
contains the most important items (Geuppert 2003, pp.
10, and FASB 1978, para. 24):
 For management
 Ensuring solvency by optimizing cash flow based
on short-term and long-term liquidity planning
 Determining the internal financing potential,
building up strategic liquidity, and determining re-
quirements for external financing
 Determining financing requirements for planned
investments and integration in cash accounting
and liquidity planning
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1 Business Overview

Investors

Investment Dividends and

Lenders Loan
Withdrawals Suppliers

Amortization and Payment of

Interest Payments
Company Activity

Payment of Payment of
Activity Activity

Employees Customers

Activity Cash Flow

Figure 1.4 Cash Inflow and Cash Outflow from a Company‘s Perspective (according to Geuppert 2003, p. 10)

1.4 Financial Accounting and Cash Accounting

 Ensuring creditworthiness, particularly with regard
to the requirements of rating agencies The data source (see Figure 1.1) for cash accounting is the
 For investors and lenders (equity providers and pro- posting material in financial accounting. In financial ac-
viders of external capital) counting, cash accounts, balance sheet accounts, and
Assessing the ability to pay dividends, interest, and profit and loss accounts (P&L accounts) are interrelated;
amortization therefore, we can also speak of a threefold accounting
 For suppliers system. This account-based integration1, as shown in Ta-
Evaluating the creditworthiness and solvency and ble 1.1, enables you to determine the cash flow required
forecasting the payment behavior based on these in cash accounting.
evaluations
Chart of accounts
 For employees
Cash accounts Balance sheet P&L accounts
Evaluating the creditworthiness, solvency, and future accounts
existence of the company
 For customers Cash accounting Balance sheet Profit and loss
Assessing the delivery reliability and the consistency statement
of conditions Assets
Expen- (without Liabili-
Reve- Expense
ditures liquid ties Profit
The different recipients—and therefore varying informa- nues funds)
tion needs—demonstrate the importance of cash ac- Cash balance P&L account
counting and liquidity planning.
Table 1.1 The Three Parts of Accounting

1 Accounting and consequently ERP systems are structured according to

the principle of double-entry accounting. A triple-entry accounting sys-
tem hasn’t been implemented yet.

8 © Galileo Press 2006. All rights reserved.

 1.5 Differences to Cash Management

In addition, business transactions related to accounting It is apparent that the connection between two account
can be classified as affecting net income and not affecting assignment types demonstrates the source or application
net income, and as having an effect on liquidity and having of funds. This is because the central task of cash account-
no effect on liquidity (Gebhardt 1999, pp. 21). The pay- ing is the “What for” search: “What have funds been re-
ment of a dividend, for instance, is a transaction that af- ceived or paid for?” Let‘s try to clarify this with another
fects the net income and the liquidity; therefore, it is rel- example.
evant for both cash accounting and the profit and loss In the accounting department of a company, a sup-
statement. The depreciation of an asset merely affects the plier invoice (1) is posted. The posting displayed in Figure
net income, but not the liquidity. This distinction makes 1.5 affects the net income, but has no effect on liquidity.
it easier to determine the source of funds and their appli- This is further clarified by the posting example in Table
cation. Figure 1.5 illustrates the relationships between 1.2.
the individual accounts in financial accounting.
Office
Here you can see that there are 14 different account Bank Vendor equipment
assignment types available to post business transactions (1)
$ 100 (2) (2) $ 100 $ 100 (1) $ 100
in accounting. For each account assignment type, we
have provided an example (the following numbers corre- Table 1.2 Vendor Payment

spond to the posting example used in Figure 1.5):

1. Cash payment for office equipment Then the open item is paid (2). According to Figure 1.6,
2. Revenue from cash sales this transaction has an effect on the liquidity, but not on
3. Depreciation of tangible assets the net income.
4. Posting of supplier invoice Only when these two postings haven been linked with
5. Invoicing of an activity each other can you determine the cash flow according to
6. Dissolving of provisions its application. One hundred dollars ($ 100) was used for
7. Revenues from invoices office equipment. This posting is a simple example of the
8. Borrowing direct determination of a cash flow.
9. Payment of supplier invoices
10. Cash payment for material purchases
1.5 Differences to Cash Management
11. Accounting exchange on the assets side
12. Contribution in kind from shareholders In this section, we’ll describe the primary differences
13. Clearing of receivables and payables between Cash Management and Liquidity Planner. SAP
14. Accounting exchange on the liabilities side Cash Management is focused on short-term cash manage-

Figure 1.5 Accounting-Relevant Linking of Cash Accounts, Balance Sheet Accounts, and P&L Accounts

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1 Business Overview

Cash Management Cash Accounting

Cash Management and

Opening Balance
Forecast

Revenues Revenues
Customer Group X Revenue
Customer Group Y Liquid Tangible Assets
… Other
…

Expenditures Expenditures

Vendor Group X Material

Vendor Group Y Personnel
… Taxes
…

Closing Balance Closing Balance

Figure 1.6 Distinction Between Cash Management and Cash Accounting

ment, whereas SAP Liquidity Planner considers medium
to long-term liquidity planning.
Cash Management provides information on the cur-
rent bank account status and it contains a liquidity fore-
cast regarding incoming and outgoing payments from the
perspective of payments for accounts receivables and for
accounts payables (or write: payments to customer and
to vendor). The bank accounts in the general ledger con-
stitute the data basis for the bank account status. If a
bank account shows a current status of $ 500, this status
is displayed in the bank account status in Cash Manage-
ment. The liquidity forecast uses accounts receivable and
accounts payable as a basis. It evaluates the open items
of suppliers and customers, and the terms of payment
stored with the respective documents, and displays this
information in the liquidity forecast. A cash flow is not
mined is “From whom” and “For whom.” What the funds
are paid for cannot be identified. Conversely, cash ac-
counting refers to real cash flow and the source and ap-
plication of funds can be identified. Unlike Cash Manage-
ment, cash accounting requires all general ledger ac-
counts that have an effect on liquidity, as described in
Section 1.4.
Moreover, cash accounting is part of an overall process
that consists of cash accounting and liquidity planning,
which will be described in further detail in Chapters 3
and 4.
Table 1.3 contains a list of the most important differ-
ences:
Cash Management Cash Accounting
No consideration of cash flow Real cash flow consideration

determined, because only the open items are evaluated No identification of source Identification of source and
and application of funds application of funds
and displayed. In addition, the cash flows to be expected
can be displayed only with regard to specific customers Table 1.3 Differences Between Cash Management and Cash
Accounting
and customer groups, or suppliers and supplier groups
respectively. The only information that can be deter-

10 © Galileo Press 2006. All rights reserved.

 1.6 Conclusion

Cash Management Cash Accounting

Accounting as the data All relevant accounts of cash

source, but only bank accounting chart of accounts as
accounts and subledgers data source

Liquidity forecast (based on Forecast of revenues and expen-

open items) ditures possible (based on open
items)

View: Vendors and customers View: Revenue and expenditure

(groups) and bank account items
status

No integration in planning Integrated planning process

process (SAP BW/SEM)

Table 1.3 Differences Between Cash Management and Cash

Accounting (cont.)

1.6 Conclusion

In the following chapters, we define the concepts of

cash accounting and liquidity planning and introduce
them in the context of different accounting types.
Moreover, we describe the group of recipients and
their need for information regarding cash accounting,
and we highlight the interdependencies with account-
ing by clarifying how you can use the information from
accounting to determine your cash flow situation.
Finally, we describe the differences between SAP
Liquidity Planner and SAP Cash Management to out-
line the tasks performed by SAP Liquidity Planner
within the FSCM product portfolio.

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2 Case Scenario: Implementing Cash Accounting and
Liquidity Planning
Based on a specific real-life situation that we’ve encoun-
tered several times, we will build up a scenario for imple-
menting SAP Liquidity Planner. In the subsequent chap-
ters, this case scenario will be further developed in parts.
This example is used to support your understanding of
the functionality and the technical concept of SAP
Liquidity Planner, but it will also serve as an aide in help-
ing you to implement this component.
The initial situation looks as follows: We’ll consider an
international corporation, the IDES Group, which is struc-
tured as follows:
 The corporate headquarters is in Germany. The cen-
tral departments of corporate accounting and global
treasury are also located in Germany.
 Legally independent production sites exist in Ger-
many and Eastern Europe.
 The sales and distribution network stretches across
Europe and the US, with legally independent sales
companies in the respective countries.
 Research and development is located at corporate
headquarters in Germany.
 IDES uses SAP as its standard business software with
the currently implemented applications:
 SAP FI for accounting
 SAP CO for controlling
 SAP SD for sales and distribution
 SAP MM for materials management
 SAP PP for production
 Concerning office applications, IDES uses a standard
off-the-shelf office software.
The current business situation of the IDES group can be
described as follows:
 Existing products have been introduced and distri-
buted throughout the markets and will continue to
be distributed at the same high level for the next two
or three years. However, the company expects a de-
crease in prices in the long run. This means that the
revenues from its core business will go down (cash
inflow reduction). At the same time, the company
forecasts a strong increase in raw material prices and
rising labor costs at the production sites. This will
lead to a situation in which the expenditures in pro-
duction will increase dramatically (increase in cash
outflow). Consequently, net cash flow will be strongly
reduced in the coming years.
 Furthermore, company management expects product
imitations to enter the market in two or three years,
which could lead to price wars and further aggravate
the situation. For this scenario, corporate manage-
ment expects an even stronger reduction of net cash
flow.
 In the preceding year, the company acquired a US-
based competitor in order to strengthen its market
position abroad. This acquisition was financed with a
large bank loan that will be amortized within the next
10 years. So, for a period of 10 years, there will be
payments for amortization and interest (increasing
cash outflow).
Corporate management realizes that a continued pursuit
of its existing strategy can quickly lead to a negative cash
flow situation; however, since the company is expected
to remain sound, the management decides to develop a
comprehensive strategy that should include the factors
mentioned above:
 Future competitors will be met with a product offen-
sive at an early stage. For this reason, investments
should be made for the research and development of
new products. At IDES, the development of a prod-
uct takes two years. To cover R&D for this period, the
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2 Case Scenario: Implementing Cash Accounting and Liquidity Planning
company needs liquid funds (cash outflow for research
and development in the coming two years).
 The existing range of products will be introduced into
new markets, especially in Asia. For this expansion,
the company needs additional funds (cash outflow for
expansion to new markets). At the same time, man-
agement expects additional revenues from selling ex-
isting products to the new markets (cash inflow from
selling existing products to new markets).
 The company wants to maintain the production sites
in Germany. Therefore, corporate management will
develop new work and production models with its
personnel, which are intended to reduce costs and
expenditures (reduction of cash outflow in production
for the coming years).
 In addition, the company checks whether the existing
bank loan can be converted into a maturity loan. This
measure would lead to a reduced cash outflow for a
period of 10 years (reduction of cash outflow by re-
scheduling the existing loan).
Until now, liquidity planning has been conducted by the
global treasury department. The policy unit receives
spreadsheets from the individual subsidiaries and inte-
grates them into a central liquidity planning document.
This planning process proves to be too complicated,
time-consuming, and rigid.
A cash accounting based on value-date dependent
documents from SAP FI is not carried out because Cash
Accounting in SAP Liquidity Planner is currently not be-
ing used.2 The corporate accounting department merely
performs an indirect analysis of actual data (indirect cash
flow statement).
The company management wants to use a tool that
can measure (actual data) and plan (planned data) the in-
dividual cash flows. Based on the new strategy, corporate
management realizes that a powerful tool is required for
cash accounting and liquidity planning, but also for con-
trolling the corporation in general. In addition, the de-
centralized planning process will become more efficient
and less time-consuming. Furthermore, it must be possi-
ble to easily and quickly map the various planning sce-
2 As already described in Chapter 1, you cannot use the SAP Accounting
module to directly determine your cash flow situation.
14 © Galileo Press 2006. All rights reserved.
narios. The tool should also be used as a central reporting
platform.
SAP Liquidity Planner is precisely the tool that meets
the company‘s requirements (see also Section 3.1). As
mentioned in the introduction, SAP Liquidity Planner
consists of two components:
 SAP Actual Calculation (cash accounting)
 SAP BW/SEM (planning application and reporting)
Cash accounting enables you to identify and evaluate the
cash flows in the company with regard to their value
dates. As SAP Actual Calculation accesses the data pro-
vided by SAP R/3 Accounting (cf. Section 1.4), manage-
ment can ensure the quality of the actual data because of
this integration. This data forms the basis for qualified
plan/actual analyses.
Since the planning and reporting functions in SAP Li-
quidity Planner are based on the functionalities of SAP
BW/SEM, the company can optimize the advantages of
this product.
Corporate management benefits from using SAP Li-
quidity Planner in the following ways:
 Direct determination of cash flows
 Quality of actual data by integrating SAP R/3 Ac-
counting
 Extraction from the SAP R/3 systems into SAP BW
 Flexible planning functionalities to map different
planning scenarios in SAP BW/SEM
 Successful implementation of an efficient corporate-
wide planning process due to the use of SAP BW/
SEM as a central planning platform (this is particularly
efficient for decentrally organized companies)
 Central reporting tool for all parts of the company
 Use of SAP BW/SEM for the planning aspects of SAP
Liquidity Planner; this enables you to establish a rela-
tionship with other plannings (for example, sales and
distribution plans, investment plans) and an integra-
tion with liquidity planning.
In various implementation projects, we’ve seen many
companies struggling to survive with ever-changing mar-
ket environments, similar to the initial situation described
above. The companies need reliable and up-to-date in-
formation, as well as the ability to run through various
 2.1 Conclusion

planning scenarios. Often, the focus was on improving  Use the general ledger account, “100000 cash” as an
the planning process. additional cash account.
Our experience has shown that these or similar situa-  You should use the information and assignments pro-
tions, carrying out cash accounting and liquidity planning vided in the following table (see Table 2.1).
with SAP Liquidity Planner can be very useful. In the re-
mainder of the book, we’ll describe the functionality of
2.1 Conclusion
SAP Liquidity Planner and how you can implement it.
In the next two chapters, we’ll only marginally refer to SAP Liquidity Planner is the ideal tool for analyzing
the above example and provide a detailed description of and planning cash flows. By using this tool, you can
the technology and functionalities of SAP Liquidity Plan- identify imminent bankruptcies due to insolvency and
ner. counteract them with the appropriate measures.
When working in Chapters 3 and 4, you should use
the IDES system provided by SAP with the following
data:
 Company code 1000 for IDES AG, company code
2200 for IDES France, and company code 2600 for
IDES Italia.
 Use the international chart of accounts, INT.

Liquidity item (LI) Account number

Summarization item 100000 Cash flow from operating activities ------------

LI 110000 Revenues from product sales 800002

LI 120000 Revenues from services sales 800001

LI 130000 Raw materials 170000

Summarization item 140000 Personnel ------------

LI 141000 Payments of wages and salaries 449000 and 430000

LI 142000 Payments of social insurance contributions 440000

LI 150000 Payments for rents 471000

LI 160000 Payments for materials 476100; 476000

LI 170000 Payments for raw materials 300000

Summarization item 200000 Cash flow from investing activities ------------

LI 210000 Expenditures for financial assets 133000

LI 220000 Expenditures for tangible assets 11000

LI 230000 Revenues from enterprise transfers 11000

LI 240000 Capital gains 133000

Summarization item 300000 Cash flow from financing activities ------------

LI 310000 Revenues from borrowing 62110

LI 320000 Expenditures for loan amortization 62110

LI 330000 Revenues from interest 273100

LI 340000 Expenditures for interest payments 220000

Table 2.1 Case Scenario: Liquidity Item and Account Numbers

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Index

A Cash account 15 Document update 75

ABAP editor 19 Cash accounting 3, 5, 6, 8, 10, 14, 19, Drilldown report 78
ABAP report 28 22, 28, 75, 79
Account-based integration 8 Cash Budget Management 5, 71, 72, 75,
Accounting 8, 11 77 E
Accounts receivable and accounts Cash inflow 8, 13 Electronic bank statement 21
payable accounting 26 Cash Management 5, 9, 10 Element definition 73
Account assignment type 9 Cash outflow 8, 13, 14 External capital 6
Accrual accounting 5 Characteristic 49, 50, 52, 53, 54, 56, 73 Extraction 64, 66
Actual account 22, 23 value 73 Extractor 17
Actual Calculation 14, 17, 19, 21, 27, 35 Chart of accounts 8
Actual data 14, 41, 64, 75, 76 Clearing document 21, 28
Administrator Workbench 41, 64 Clearing transaction 25 F
Allocating assignments from FI informa- Commitment item 72, 73, 74, 75, 76 Financial accounting 8, 9, 19, 21, 31
tion 22 Communications structure 51, 64 Financial accounting-related liquidity 5
Analysis report 36 Company code 19, 72 Financial management area 71, 72
Application menu 28 Company structure 71, 76 Financing requirement 7
Application of funds 9 Consistency check 37 Fiscal year variant 72
Assignment 23 Corporate accounting 13 FI Document Chains 37
from FI information 24 Corporate Finance Management 28 Flow-of-funds analysis 5, 6, 7
mechanism 21, 23, 28 Cost accounting 5 Flow-of-funds planning 6
Creditworthiness 8 Flow data 26, 27
Crystal Reports 40 FM area 72, 75
B Customizing 18, 19, 21, 22, 24, 71 From Bank Statement 23, 30
Bank account 23 From Bank Statement Information 23, 29
Bank statement 23, 30, 31 From FI Information 24, 26, 27, 33, 34,
item 29 D 35, 37
Basic InfoCube 44 DataSource 40 From Invoices 26, 35
Buffer item 35 Data flow 45, 51
Business Area 22 Data model 19, 28, 36
Business Content 40, 41, 42 Data target 40 G
Business transaction code 30 Default item 19, 22 G/L account 26, 32
Business Transaction Events 18 Defining G/L accounts list 37
actual accounts 21 Global treasury 13, 14
query-relevant G/L accounts 22 GR/IR clearing account 25
C query sequences 22, 26
Case scenario 13, 15, 18, 19, 20, 21, 23, Deletion process 26
26, 31, 34, 36, 45, 52, 54, 55, 56, 59 Determinability 20 H
Cash flow 5, 6, 7, 10 Direct determination 9 Having an effect on liquidity 9
accounting 5 Document chain 21, 24, 31 Having no effect on liquidity 9
statement 5, 7, 81

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Index

Hierarchy 52 N R
House bank 22, 30 N:M Treatment 24 Rebuild 27
Net cash flow 13 Recipients 20
New Formula 68 Release status 17
I Number range 19, 36 Reporting 14, 40, 43, 71, 77
IAS 5 object 20 platform 14
IDES 13 Report Painter 73
IDES system 15 Retrograde determination 21
Implementing SAP Liquidity Planner 13 O
Indirect cash flow statement 14 ODS object 43
InfoCube 43, 44, 48, 52, 66 Online update 27, 28, 32 S
InfoObject 40, 43 Overall process 21 SAP Actual Calculation see
InfoProvider 43 Actual Calculation
Information System 28, 36, 71 SAP Business Content see
InfoSource 40, 64, 65 P Business Content
Insolvency 81 Partial reassignment 24 SAP BW 14, 17, 39
risk 6 Plan/actual SAP BW-BPS 54
Installing assignment mechanisms 22 analysis 14, 20 SAP Liquidity Planner 6, 17, 39
Internal financing potential 6, 7 comparison 17, 71, 72 SAP R/3 3, 14, 17, 65
deviation 69 SAP R/3 Enterprise 71
Planability 20 SAP SEM 3, 14, 17, 39
K Planned data 14 SAP SEM-BPS 48, 53, 54
Key figure 57 Planning 76, 79 Scheduler 66
area 54, 55, 56, 61, 74 Solvency 6, 7
data 41, 44, 60 Source of funds 9
L depth 20 Source symbol 36
Layout Builder 54 function 54, 55, 61, 76 Storing global data 21, 22
Lead column 73 functionality 17 Strategic liquidity 7
structure 74 interval 53 System integration 17
Line item 28 layout 48, 53, 54, 59, 60, 73, 74 System table 19
Line items table 27, 29, 36 level 55, 56, 57
Liquidity package 55, 58, 61
analysis 25 process 14, 15, 79 T
forecast 10 profile 74 Test run 28
item 15, 19, 20, 25, 30, 31, 32, 35 screen 61 Tools 26
planning 3, 5, 6, 14, 39, 63, 71, 77 unit 53 Totals list 37
relationship 7 value 74 Totals table 27, 31, 36, 71
workbench 55 Total cash flow 7
Plan version 74, 75 Transactional InfoCube 44
M Plug-in 17, 81 Transaction Events 18
Manual transfer posting 19 Posting data 25 Transfer posting 36
Master data 19, 45, 46, 47, 49, 75 Posting transaction 31 Transfer rule 65
Modeling 40 Profit 6 Transfer structure 51, 65
Multi-planning area 54 Treasury 71, 72, 73, 74, 76, 77
MultiCube 41, 45
MultiProviders 43 Q
mySAP ERP 71 Query 32, 40, 67, 68, 69 U
sequence 23, 30, 37 Update rule 50

86 © Galileo Press 2006. All rights reserved.

 Index

V
Variable 40
Version concept 17

W
Web Template 40

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