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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

applicon. Fyrirlestrarheiti I.  Treasury Applications from SAP. integration to FI/CO and CM III. an overview II.  Demo Denmark I Iceland I Sweden I UK I www.  Transaction Manager.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 Gaining Efficiency in Finance   Control Processes Efficiently   Measure Profitability   Manage Risks   Support Audits   Decrease Cost of Finance   Control Costs   Accelerate Financial Close   Define Benchmarks and KPIs   Organize Finance Operations   Link Strategy with Execution Efficiently across the Enterprise   Handle Mergers & Acquisitions Supporting Excellence in Optimizing Working Capital Corporate Operations   Manage Real-Estate   Free-up Working Capital   Manage Global Travel Policies   Decrease Day Sales Outstanding   Develop Talents & Leadership   Decrease Bad-debt write-offs Denmark I Iceland I Sweden I UK I www.com .applicon.

applicon. working Reconcile invoice cash disputes cash & pay worthiness capital Cash and Treasury liquidity Bank Communication and risk In-house cash Management management management Denmark I Iceland I Sweden I UK I www.com .Financial Supply Chain Management and Treasury Applications from SAP Electronic bill Credit presentment Dispute Collections management and payment management management Check Finance Issue Forecast Resolve Collect Settle credit.

Treasury Applications from SAP SAP Treasury and Risk Management Risk Analyzers Manage Financial Risk Credit Risk Market Risk Portfolio Analyzer Transaction Manager Manage Financial Hedge Mgt Exposure Mgt Instruments MM FX DER DEB SEC COM SAP Bank Communication Management Manage Cash and SAP In-House Cash Liquidity SAP Cash and Liquidity Management Denmark I Iceland I Sweden I UK I www.com .applicon.

routing.applicon.SAP In-House Cash Core Functions and Benefits SAP In-House Cash   Central dispatching. and processing of payments Benefits   Creation of provided account statements to account holders   Reduce physical cash transfers by internal netting   Delivery of financial status to cash management   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 Denmark I Iceland I Sweden I UK I www.com .

SAP Cash and Liquidity Management Core Functions and Benefits SAP Cash Management   Daily cash position   Liquidity forecast Benefits   Electronic bank statements   Currency exposure   Single. reconciled financial data source   Disposition   Enables centralized treasury organization   Flexible planning framework SAP Liquidity Planner   Natively integrated into SAP environment   Liquidity Analyzer as part of SAP ERP   Adaptable to your organization‘s   Mid.and long-term liquidity planning requirements   Decentralized access for data entry   Core SAP ERP component   Central system for liquidity reporting Denmark I Iceland I Sweden I UK I www.com .applicon.

SAP Bank Communication Management Core Functions and Benefits SAP Bank Communication Management   Batching of payments Benefits   Payment approval rules   Improve control over payments   Digital signature   Full auditability ensures compliance   Payment Monitor   Real-time visibility of payment cycle   Payment workflow   Reduces time and cost of bank   Integration to SWIFTNet reconciliations   Lower bank integration costs   Complete transparency of payment status Denmark I Iceland I Sweden I UK I www.com .applicon.

SAP Treasury and Risk Management Core Functions and Benefits SAP Transaction Manager   Support of standard financial instruments Benefits   Integrated and automated straight- through processing  Optimization of hedging and risk management processes through exposure management for operational FX and commodity exposures  Increase transparency by having SAP Risk Analyzers operational and treasury exposures   State of the art risk management evaluated for market risk capabilities  Comply with legal regulations and   Credit Risk Analyzer compliance requirements   Market Risk Analyzer   Portfolio Analyzer Denmark I Iceland I Sweden I UK I www.com .applicon.

applicon. integration to FI/CO and CM III.  Transaction Manager.com 1 december 2009 I 09-12-01 11 I I 11 I . an overview II.  Demo Denmark I Iceland I Sweden I UK I www.  Treasury Applications from SAP. Fyrirlestrarheiti I.

Ratios. SAP Query.SAP Treasury and Risk Management Reporting Credit Risk Analyzer Market Risk Analyzer Portfolio Analyzer Ad hoc reporting: Utilization: Formulas. BI Accounting: Flexible accounting determination. Netting. CashFlow Modified Dietz method Limit management: Value at Risk: Reporting tools: Limits freely definable. Middle office: Risk Valuation tools. Dealer slip. Transaction Manager Compliance Front office: Position and deal reporting. Corporate actions. Settlement NPV. Compliance. Flat files. Position. Prices. On-line limit check exposure. Process monitors Data export: Excel. BI What-if scenario. Absolute Portfolio Hierarchy. Settlement. lending Performance. Deal capture. References. Rate fixing (interest. Controlling. Multidimensional limits Historic. Results database: Relative. Period. Securities Fixed Spot Bonds Cap Bonds deposits Forward Bank loans Floor Warrants Deposits at Swaps Commercial FRA Stocks notice Options paper Swaps Certificates Management CP Futures Facilities Options Repo reports: Positions. Correspondence. FX). Price calculator: Yield calculations: Point & click. Drill- down. Historic results MM FX Debt Derivat. Monte Carlo and other 3rd party Simulate rates: providers. Varians/covarians. Unified Credit risk. risk Time weighted. P&L.applicon. Exercise. Accounting according to many international accounting standards – in parallel. Hedge accounting Denmark I Iceland I Sweden I UK I www. databases. Back office: Standing instructions.com . Sensitivities Money weighted. Repo Futures Sec. ABAP List.

applicon.Transaction Management Process Release Back Trading Accounting office • Create order/contract   Settlement/Control   Postings • Exercise/expiration   Interest rate adjustment   Payment activities • Give notice   Netting   Reversals • Rollovers   References   Accruals/deferrals • Exercise rights   Confirmation letters   Valuation   Securities account transfers   Corporate actions User authorization User defined status codes Limit management Denmark I Iceland I Sweden I UK I www.com .

applicon.incoming .Purchase orders Account n .A/R Account 1 in transit: and borrowings .A/P : .com .outgoing .Orders Total Denmark I Iceland I Sweden I UK I www.Concept of Cash Management Market information Trading Cash management decision Cash Position Liquidity Forecast Bank accounts Payment Financial Subledgers: in currency: transactions investments .

applicon. FIFO   Special treatment for hedging transactions   Many companies needs to report according to several frameworks in parallel Denmark I Iceland I Sweden I UK I www.Valuation of Financial Transactions Different legal frameworks use different principles for the valuation of Financial Transactions.com . This leads to different requirements such as:   Valuation of book value using various methods such as •  Lowest value •  Mark-to-Market •  Amortized Cost   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 •  Average Cost •  Lott accounting principles for example LIFO.

com .applicon.Integration between TRM and GL   In SAP Treasury and Risk Management you use a separate Valuation Area for each accounting principle •  The results of the valuations are calculated separately for each valuation area using a full approach   Each Valuation Area is assigned to a GL Accounting Principle •  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 Denmark I Iceland I Sweden I UK I www.

750 Nominal int. Posting: Account Determination Fixed-term deposit 1 month 3.750 interest Final 1.000 FT deposit 1.000.com .000 Balance sheet account acc.applicon. Debit Bal.000.750 account assignment reference Posting details Flow type 1100 . 3. earned Fxd-term dep.sht Credit Bank 1120 + Debit Bank Credit Bal.sht 1200 + Debit Bank Credit Int. DB000001 Sept 1st 1100 .000.5% Acct assignment ref.000 Denmark I Iceland I Sweden I UK I www.000 Oct 1st 1120 + Final repayment 1.000 Nominal 3.000 Final repayment repayment 1.000. Fixed-term deposit 1. acct 113113 Bank clearing acct 113100 Interest earned 273100 D C D C D C Deposit 1.000. to Oct 1st 1200 + Nominal interest 3.000.

# 3 1 91 Valuation rules for bonds: Bond purchase 90 … Post fees to P/L Valuation Lowest value principle Valuation Area 004 Valuation rules for bonds: Post fees to P/L Mark-to-Market valuation Example: Purchase of new zero interest bond at the cost of Treasury Ledger 90€ with a fee of 1€ At year end the MtM value of the bond is 93€. # 4 … Mark-to-Market valuation Valuation 3 3 Valuation Area 002 Number range 2 Position Costs Unreal. Bank Acc.Integration between TRM and GL using Parallel Accounts TRM Transaction Manager Transaction Management General Ledger Purchase of new bond at the cost of 90€ with a fee of 1€ Number range 1 Position Costs Unreal. # 5 Amortize costs Valuation 1 1 Valuation Area 003 Number range 3 Position Costs Unreal.com . Dummy Bank 2311044 2118500 2112200 2299999 Valuation rules for bonds: Doc. Dummy Bank 3311044 3118500 3112200 3299999 Doc. # 2 91 91 Bond purchase … Activate fees Doc. # 1 Valuation rules for bonds: Bond purchase 90 1 91 Post fees to P/L Doc. amortized cost is 1€ at year end Denmark I Iceland I Sweden I UK I www.applicon. Valuation Area 001 1311044 1118500 1112200 1220155 Doc.

amortized cost is 1€ at year end Denmark I Iceland I Sweden I UK I www.Integration between TRM and GL using Parallel Ledgers TRM Transaction Manager Transaction Management General Ledger Purchase of new bond at the cost of 90€ with a fee of 1€ Ledger 1 Position Costs Unreal. # 3 1 91 Valuation rules for bonds: Bond purchase 90 … Post fees to P/L Valuation Lowest value principle Valuation Area 004 Valuation rules for bonds: Post fees to P/L Mark-to-Market valuation Example: Purchase of new zero interest bond at the cost of Treasury Ledger 90€ with a fee of 1€ At year end the MtM value of the bond is 93€. # 5 Amortize costs Valuation 1 1 Valuation Area 003 Ledger 3 Position Costs Unreal.applicon. Dummy Bank 311044 118500 112200 299999 Doc. Valuation Area 001 311044 118500 112200 220155 Doc. # 4 … Mark-to-Market valuation Valuation 3 3 Valuation Area 002 Ledger 2 Position Costs Unreal. Dummy Bank 311044 118500 112200 299999 Valuation rules for bonds: Doc. Bank Acc. # 2 91 91 Bond purchase … Activate fees Doc. # 1 Valuation rules for bonds: Bond purchase 90 1 91 Post fees to P/L Doc.com .

an overview II.  Demo Denmark I Iceland I Sweden I UK I www. integration to FI/CO and CM III.com 1 december 2009 09-12-01 I 20 I I 20 I .  Treasury Applications from SAP.applicon.  Transaction Manager. Fyrirlestrarheiti I.