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Balance Sheet Cash Flow Planning Final Techwave

Balance Sheet Cash Flow Planning Final Techwave

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SAP BI concepts, technology, and best practices

October 2008 Volume 6 | Number 9

Balance-Sheet and Cash-Flow Planning with SAP NetWeaver BI
by Rajasekhar Gummapadu, Manager, Deloitte Consulting LLP
Balance-sheet and cash-flow planning helps you get your cash picture under control. Learn how to design a solid, flexible SAP NetWeaver BI data model for balance-sheet planning. Examine the five key steps required to create balance-sheet planning and cash-flow planning.

>>inside

10 15 18

How to Create a Generic Retractor in Integrated Planning Quick Tip Avoid the SID Generation Error While Activating Data in a DSO SAP NetWeaver BI 7.0 Improve Query Performance and Visibility with BI Statistics

Although global and larger organizations are interested in knowing their consolidated shortterm and long-term cash positions (based on their operational income statement and capital planning), it’s even more important for SAP NetWeaver BI planning resources to know these positions. They need to understand how to implement balance-sheet and cash-flow planning by using SAP NetWeaver BI functionality. The main objective of building the balance-sheet planning application is to generate a long-term cash-flow plan. You can use SAP NetWeaver BI Integrated Planning to implement a global, integrated planning solution for balance-sheet and cash-flow planning.

>> Key Concept
Balance-sheet and cash-flow planning using SAP NetWeaver BI Integrated Planning enable you to look to your company’s financial future, such as key financial ratios, accounts payable, accounts receivable, sales projections and costs, future earnings, and shortterm and long-term cash positions. These financial projections aren’t just for global organizations anymore.

It’s common to implement income statement planning to monitor operational efficiency and to project an organization’s future earnings. However, in today’s global and more competitive business environment, you also need to know the effect that this operational plan will have on future balance sheet items and cash flow. Why would you want to implement balance-sheet and cash-flow planning? For any of a variety of reasons including: projecting your key financial ratios; estimating your accounts payable and accounts receivable positions based on sales projections and cost of sales; estimating the interest income and expenses for the planning period and seeing how they will affect your future earnings; determining the cash-flow structure to verify the organization’s borrowing and paying capability; effectively managing your cash; maximizing the returns on your short-term cash investments; and effectively managing your balance sheet. These benefits aren’t free, however. You must meet some business and technical challenges to achieve this implementation. The biggest challenge is simulating the double-entry system in the
>>continued on page 4

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region details) • Include the balance-sheet and cash-flow planning InfoProvider in SAP SEMBCS to give you multi-provider realtime reporting with actual data • Partition the balance-sheet and cashflow planning InfoProvider for faster performance in the planning application. it’s important to design a solid.>>continued from cover planning solution. I recommend that you physically move your opening balances to the balance-sheet and cash-flow planning InfoProvider because you use them extensively in the functions that help you enhance performance. you create a simple copy-planning function in the Planning Modeler of SAP NetWeaver BI Integrated Planning. • Planning rates (ZFP_RATE): This is the key figure that is used to maintain such planning rates as interest rates. you need to plan one level below the consolidated item (0CS_ITEM) so you can set up multiple lines for each account • Reference consolidated item (ZCS_ ITEM): This InfoObject establishes the account determination rules that map income statement accounts to balance sheet accounts • Timing fiscal year/period (ZFP_ CTFIP): This is the InfoObject that is the reference for the fiscal year/period (0FISCPER). and prior forecast data. swap rates. dividends. such as ZFP_BSML and ZCS_ITEM. forecast. Another challenge is creating an iterative balancing functionality to calculate the balance sheet assets and liabilities. to increase the expense amount. The following points further explain the custom objects used in the model: • Balance sheet manual line items (ZFP_ BSML): In balance-sheet planning. All rights reserved. • Cash-flow item (ZCASHITEM): Cashflow accounts are the solution for cashFrom account 501010 To account 201020 flow planning. • Use the navigational attributes of reporting instead of including the InfoObjects in an InfoProvider (for example. The Five Key Steps Now that you’re aware of the data model. This item holds the master data for all of the different cash-flow categories. you might also need to create some custom InfoObjects. assuming that all other transactions are cash. Integration with SAP SEM-BCS. First. For example. This step extracts the opening balances for SAP SEM-BCS. ZROUND lets you create scenario capability. and the establishment of other calculations. Using the account determination rules. the following InfoObjects can be helpful: ZPLANYEAR provides the capability to plan multiple years. Step 2. and 0VERSION enables you to keep track of budget. and account determination multipliers In addition to these custom objects. Transaction processing in SAP Financial Accounting (FI) and SAP Strategic Enterprise Management Business Consolidation (SAP SEM-BCS) uses the double-entry method when posting journal entries. Since these objects won’t be available in the source systems. This step finalizes the account determination rules that map the balance sheet accounts to the profit and loss accounts. a complex payment structure for the interest payment on each debt instrument. Income statement planning uses the single-entry concept. flexible. I will go over the five key steps required to create balance-sheet planning and cashflow planning: Step 1. you must maintain master data for them in the SAP NetWeaver BI system. You use it to establish timing rules for paying accrued interest on departmental instruments. you estimate Rule — January 0. Account determination rules. you adjust the amount for any expense account without specifying whether to pay that expense increase in cash or credit. Depending on your requirements. you need to determine the integration existing between the balance-sheet planning application and SAP SEM-BCS to get your opening balances. and re-classifying short-term payments on long-term debt to current liabilities. you must create a real-time InfoProvider to host the data for balance-sheet-planning and cash-flow planning. Like account determination rules that handle the double-entry system for credit transactions. SAP NetWeaver BI data model for balance-sheet planning. cash balancing evens out the assets and liabilities and then posts the difference to the cash account.5 The Data Model Since no robust standard content is available for balance-sheet and cash-flow planning. To achieve the functionality you need. Here are some things for you to consider while designing the data model: • Align the data model with the SAP SEM-BCS data model for real-time reporting • Include objects such as version (0BCS_ VERSION) and the reporting value type (0VTYPE) for flexibility in multiple scenarios and versions of planning data Table 1 Example of an account determination rule © 2008 BI EXPERT Reproduction prohibited. such as interest. It also sets up the planning function that calculates the balance sheet amounts to simulate the double-entry system. To do this. Other challenges include the assumptions used to calculate accounts payable and accounts receivable. .

SLICE.SAPexperts. ENDFOR.MADJ.. 200000. DATA YITM TYPE ZCS_ITEM.000) is on credit (credit account: 201020). FOREACH RMADJ. AMT = 0. plant. DATA RATE TYPE F. These rules map the income statement accounts to the balance sheet accounts to create the double-entry system in the planning environment for credit and accrued transactions.#}.SL ICE}. {0CS_TRN_LC. DATA SLICE TYPE ZSLICE. half of it ($5. DATA XITM TYPE 0CS_ITEM. The planning function in Figure 2 reads the income statement planning information to create the balance sheet amounts Figure 2 Code for the planning function For group rates on electronic access. YITM = FITM. IF RATE <> 0. DATA FITM TYPE 0CS_ITEM. if the fuel expenses (profit and loss account: 501010) are $10. ENDFOR.October 2008 • www. and the other half ($5. 200000.MADJ. then the account determination rule is as shown in Table 1. DATA AMT TYPE F. FOREACH FITM. ENDIF. the reference item (ZCS_ITEM) as From Account. DATA RMADJ TYPE ZFP_BSML. YITM. g. DATA MADJ TYPE ZFP_BSML.000) is paid in cash.RFTM IN REFDATA.RMADJ. XITM = TITM. you can also allocate the amounts on one balance sheet to another balance sheet account (e. RATE = {ZPL_RATE.000 for the month of January. call 1-781-751-8799 5 . the consolidated item (0CS_ITEM) as To Account. and equipment. XITM.BSDT. Using this methodology. DATA RREG TYPE ZREGION. and increasing the depreciation reserve section by the same amount).com Figure 1 Balance sheet rules the balances for the balance sheet accounts. AMT = AMT + {0CS_TRN_LC. DATA TITM TYPE ZCS_ITEM.1} = AMT* RATE.BSDT. DATA BSDT TYPE ZFP_BSDT.RFTM.TITM.MADJ. This model uses the Balance Sheet Rules input-ready report. TITM. as shown in Figure 1. to maintain the account determination rules using the InfoObjects. DATA RFTM TYPE ZCS_ITEM. For example. by reducing the depreciation of the property. RATE = 0. FITM. FITM. and the ZFP_RATE key figure to partially or fully allocate this amount to one or more balance sheet accounts. DATA REG TYPE ZREGION.

In the example in Table 1. In addition to the cash-balancing functions. However. For some examples of the formula for retained earnings calculation. but during planning. You create this planning function using the formula extension functionality in SAP NetWeaver BI Integrated Planning. you need to balance your assets and liabilities and then post the difference to the cash account. For example. You can set up transaction systems to perform this balancing automatically. accounts receivable.BSML. This step finalizes the cash-flow rules layout and the calculation functions. and then borrow if you have a deficit or move cash to investment accounts if you have an excess • Calculate your interest expense for additional loans or your interest income on any new investments • Calculate your retained earnings and adjust your balance-sheet planning Cash balancing is an iterative process. you need to borrow from credit lines. Establish cash balancing. accounts payable.5 from the rule number for January. allowing you to create these kinds of calculations. Then. Cash-balancing involves the following activities: • Balance your assets and liabilities and post the difference to cash • Verify whether your minimum cash requirements are met.CSTM. if you assume that an organization wants to have a minimum cash balance of $5 million on hand at all times and its cash balance goes below this amount. ENDFOR. BSML TYPE ZFP_BSML. cash-flow planning requires going through the following stages. Step 4. FOREACH CSTM. Since generating long-term cash-flow planning is the key reason for using a balance-sheet planning application. {0CS_TRN_LC. the rule function reads the profit and loss account information for account 501010. or any other specific calculations that your organization might want to incorporate into its balance sheet planning. The basic accounting rule for the balance sheet is that assets and liabilities must balance. This step finalizes the planning calculations for interest. and the cash-balancing functions. All rights reserved. if the company accumlates excessive cash beyond $5 million. An example of a posted record is shown in Table 2. you also need to define the functions for accounts receivable. ENDIF. you define the relevant master data for ZCASHITEM.000 paid in cash creates the difference between the assets and the liabilities on the balance sheet.000. . in most complex organizations it’s not that simple because cash balances have many restrictions. In other words. then the system should invest that cash in high interest-yielding sources. When the cash-balancing function executes. including its hierarchy. IF CSTM >= 0000300000 AND CSTM <= 0000899999. SUM TYPE F. see Figure 3. First. which is $10. It needs to run multiple times to equalize the assets and liabilities on the balance sheet for all the planning periods.BSML}. assuming that the activity used cash. Conversely. which was created using the formula extension functionality in SAP NetWeaver BI Integrated Planning. interest. SUM={0CS_TRN_LC. it makes the adjustment in the cash account. dividends.based on the account determination rules. you have to manually estimate the accrued balances based on income statement activity. accounts payable. Step 3. in the account determination rule section. dividends. SUM1 TYPE F. the balance of $5. The formula extension functionality in SAP NetWeaver BI Integrated Planning is very flexible. Figure 4 shows sample formula code for the calculation of the accounts receivable amount based on sales and the days-sales-outstanding assumptions.100009}=SUM1 Figure 3 Example formulas for retained earnings calculations © 2008 BI EXPERT Reproduction prohibited.0000251200. For example. the rule function posts the calculated amount to balance sheet account 201020. ZCASHITEM plays an important role in building cash-flow planning Account 201020 Reference account 501010 Amount 5000 Table 2 Example of posted record with account determination rules function DATA DATA DATA DATA CSTM TYPE 0CS_ITEM. SUM1=SUM1+SUM. Cash-flow rules layout and calculation function. and multiplies it by 0.

MD = ATRV (0NUMDAY. month.100005.#. AMT = {0CS_TRN_LC. establishing a relationship between the two. FOREACH CSTM.FYP).BSDT.CSTM. Therefore. You can use the formula extension function in SAP NetWeaver BI Integrated Planning to generate the cash flow (Figure 7 on the next page).BSDT.#. {ZFP_BLNLC. Then. Create an integrated application. MD TYPE F. This cash-flow rules function calculates the cash amount. Next. PC TYPE 0PROFIT_CTR. call 1-781-751-8799 . You can create the hierarchy using transaction RSH1 (edit hierarchy initial screen) in SAP NetWeaver BI. because it hosts master data for the cash items required to present cash flow.#}.0000121100.FYP. This report is created using SAP NetWeaver BI Integrated Planning. SUM=0.#.PC.SAPexperts.October 2008 • www. define the cash-flow rules (Figure 6 on the next page). The cash-flow report is created using ZCASHITEM and the cash-flow hierarchy in BEx Query Designer (Figure 8 on page 9). you need to build the cash-flow report to present the cash flow. ENDFOR. Next.BSML}. AMT TYPE F. PER TYPE 0FISCPER3. changes in a particular balance sheet item also represent the cash effect on the cash-flow item to which it is mapped. and equipment. BSDT TYPE ZFP_BSDT. IF PER <> ‘014’.BSML. These rules map the balance sheet accounts to the cash-flow items. plant. SUM TYPE F. Look at the example of hierarchy with master data in Figure 5. property. DSO = {ZPL_RATE.FYP.100010} =((SUM/MD)*DSO*-1). The final step is to create an >>continued on page 9 For group rates on electronic access.#. Some examples of cash-flow items are depreciation net profit.com DATA DATA DATA DATA DATA DATA DATA DATA DATA DATA CSTM TYPE 0CS_ITEM. ENDIF. you establish the cash-flow hierarchy. ENDFOR. BSML TYPE ZFP_BSML. *MESSAGE W001 (/MSG0) WITH SUM FYP MD.4. FYP TYPE 0FISCPER. and quarter. After you create all of the relevant cash items in master data. DSO TYPE F. FOREACH FYP.FYP. These cashflow rules are maintained in the system using the input-ready report shown in Figure 6. which depicts the organization’s cash-flow structure. you create the planning function to generate the cash-flow amount.PC. PER = SUBSTR(FYP. SUM = SUM + AMT. Figure Accounts receivable calculation Figure 5 Cash-flow hierarchy on ZCASHITEM InfoObject Step 5. You can create various versions of this report to display the cash flow by year.3). IF CSTM >= 0000300000 AND CSTM <= 0000303999. This function calculates the change in the balance sheet account for a particular fiscal year period and then posts it to the cash item to which it is mapped. ENDIF.

FITM. 999997. RATE TYPE F. AMT = 0.Figure Cash-flow rules DATA DATA DATA DATA DATA DATA DATA DATA XITM TYPE 0CS_ITEM. RATE = {ZPL_RATE. FOREACH FITM. Figure Cash-flow amount calculation planning function 8 © 2008 BI EXPERT Reproduction prohibited.#. {0CS_TRN_LC. IF RATE <> 0. IF MADJ <> #.MADJ. AMT = AMT + ENDFOR. FITM. All rights reserved. MADJ1 TYPE ZFP_BSML.#}. CITM.BSDT IN REFDATA.MADJ. BSDT TYPE ZFP_BSDT.1} = AMT* RATE * -1. MADJ TYPE ZFP_BSML.SLICE}. FOREACH SLICE.BSDT. FITM. ENDFOR. SLICE TYPE ZSLICE. MADJ. {0CS_TRN_LC. . CITM. AMT TYPE F. ENDIF. CITM TYPE ZCASHITEM. CITM. 999997. RATE = 0.MADJ.

You use the workbook functionality in BEx Analyzer to create the Excel-based planning applications. As you saw in Figures 1. Business Planning and Consolidation (SAP BPC) and FI/CO. you can use various standard Web items such as tab pages.SAPexperts. dropdown boxes.or Web-based) is right for your balance-sheet and cash-flow planning system. and button groups in BEx Web Application Designer to create the Web-based application following the requirements of your user group and business logic.com. or a Web application using the BEx Web Application Designer. and 8. For group rates on electronic access. SAP NetWeaver BI Integrated Planning. Raj is a qualified Chartered Accountant (India) and a Certified Public Accountant (USA). He has successfully completed multiple implementations as project manager by using his knowledge to bridge the gaps between the business and IT goals.com Figure 8 Cash-flow report >>continued from page 7 integrated application using the inputready report-planning functions that I discussed in the earlier steps. SAP NetWeaver BI Integrated Planning has two ways of putting together the planning application: a Microsoft Excel-based application using BEx Analyzer. Raj serves as the functional and technical lead in the area of financial planning and reporting-related implementations. more than half of which is focused in SAP implementation. 6. n Rajasekhar Gummapadu is an SAP practitioner with more than eight years of cross-functional experience. It is very important to consider the users’ requirements and skill sets before you decide which type of application (Excel.October 2008 • www. You may contact him via email at raj_g@techwavenet. call 1-781-751-8799 . SAP NetWeaver BI. You can integrate these applications with SAP NetWeaver Portal to provide role-based access to the users. He has strong technology and functional experience with SAP ERP solutions in the area of Business Planning and Simulation (BPS). Business Consolidation (SAP SEM-BCS).

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