Treasury and Risk Management: Warning

4/19/2020
Treasury and Risk Management

Generated on: 2020-04-19
SAP S/4HANA Cloud | 2002
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Original content: https://help.sap.com/viewer/e5ec5859d8e54df98492d80564a734c0/2002.500/en-US
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Trade Finance
Purpose
Trade nance transactions are used for special nancial transactions provided by banks and nancial institutions that facilitate
trade transactions.
Integration
The Trade Finance area is a subcomponent of the Transaction Manager and is closely integrated with other components.
You can implement cash management decisions in the Trade Finance area based on the liquidity surplus or de cit determined in
Cash Management. The system records the impact transactions have on the liquidity of a company by value date, for each ow in
Cash Management. To do this, the data from Trade Finance is transferred to Cash Management automatically. This integration
simpli es the work processes involved in transaction management from entering potential transactions through to the related
accounting activities. The Trade Finance area offers the function for foreign currency valuation to calculate gains and losses.
It is also closely linked to the Financial Accounting (FI) component since all the data that is relevant for posting in the Trade
Finance area is automatically transferred to FI.
Features
Front Office
The front office area contains functions for entering trade nance transactions. It also enables you to also call up information on
transactions or make changes at a later date. Collective processing functions are available to help you manage your transactions
efficiently.
The following product types and transaction types are now available in the trade nance transactions:
Product Type Transaction Type
86A Bank Guarantee 100- Bank Guarantee - Issue
200 - Bank Guarantee - Receive
85A Normal Letter of Credit 100- Normal Letter of Credit - Issue
200 - Normal Letter of Credit - Receive
85B Standby Letter of Credit 100- Standby Letter of Credit - Issue
200 - Standby Letter of Credit - Receive
 Note
Please note that the integration with SD is currently not supported.
Back Office
Once you have entered nancial transactions in the Front Office area, you settle them in the Back Office area. The Back Office
area also contains functions for checking and changing the transactions. Transaction postprocessing primarily involves:
Adding any missing transaction data that is needed to process the transaction further
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Preparing for posting and payment (for example, by checking the accounts used)
The collective processing functions are also available in the back office.
For more information, see Process Trade Finance Transactions - Collective Processing.
Accounting
Once you have entered the transactions in the Front Office area and checked them and added any missing details in the Back
Office area, you then need to process them for accounting purposes. The Accounting area includes functions for transferring data
to Financial Accounting, such as posting reports or position management postings. It also includes functions for parallel
valuation.
For more information, see Treasury Accounting.
Master Data Management
Financial transaction processing in the Transaction Manager is based on master data.
For more information, see Master Data.
Related Information
Letters of Credit
Bank Guarantees
Standby Letters of Credit
Letters of Credit
Use
A letter of credit is a document issued by a bank guaranteeing that a bene ciary will receive payment provided that certain
documents have been presented to the bank as required.
Letter of credit transactions include transaction types for issuing and receiving letters of credit.
The banks (or business partners) charge additional fees based on the principal amount of a letter of credit in the issuing and
receiving process and based on certain conditions. The fee calculation process takes place during all stages of the letter of credit
lifecycle. The fee calculation is based on four condition types for different amounts.
For more information, see Calculating Fees for Letters of Credit.
In addition to creating and changing letters of credit, the system also supports functions for rollover, reversal, termination, order
expiration, order execution, and presentation of documents.
Prerequisites
Before you can use the letter of credit transactions, you need to do the following:
Create your business partners, assign the corresponding roles to these partners, and maintain the transaction
authorizations.
Set up the standing instructions (correspondence, payment details) and release the business partner.
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Features
For more detailed information, see Create Letters of Credit and Calculating Fees for Letters of Credit.
Create Letters of Credit

With this app, you can create letters of credit.
Prerequisites
See Letter of Credit, Processing Letters of Credit as a Receiver, and Processing Letters of Credit as an Issuer.
Procedure
1. Launch the Create Letter of Credit app in the Trade Finance Transactions group on your SAP Fiori launchpad.
2. Enter the company code, product type, transaction type, and partner.
3. Make the following entries in the Speci cations area:
Currency: If you do not specify a currency when you create a nancial transaction, the system automatically uses
the currency of the company code.
Portfolio: If you want to assign the transaction to a portfolio, enter this portfolio in the corresponding eld.
4. Decide whether the activity is an order or a contract.
You can create a letter of credit transaction directly as a contract. A transaction becomes legally binding with the activity
category Contract.
5. If you work with external number assignment, you have to enter a key for the transaction in the corresponding eld. This
enables the transaction to be uniquely identi ed within a company code. Otherwise, the system assigns a number
automatically and displays this number when you save the transaction.
6. Choose or press Enter to go to the basic data screen for letters of credit.
7. Enter required data for the letter of credit on the Structure tab. For more detailed information, see Basic Data - Trade
Finance
8. Choose More Worklist to branch to your worklist.
9. Choose Documents to branch to the documents overview for this transaction.
10. Choose Save to save the letter of credit.
11. You can also branch to the entry screens for the general transaction management functions. To do this, you use tabs.
For more information, refer to Tab Pages.
12. To use additional functions, choose More Extras or More Environment .
Presentations of Documents Against Letters

of Credit
Use
In transactions where letter of credit is used for payment of goods or services, the seller needs to present certain documents to a
bank to get payment after the goods or service has been delivered. The buyer may accept or reject a presentation after checking
whether the presented documents meet the conditions of the letter of credit.
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Presentation Management
You can manage the whole process of presenting documents against letters of credit.
For issuing letters of credit, you can
Create a presentation after receipt
Accept a presentation
Reject a presentation
Settle a presentation
Accept and settle a presentation
For receiving letters of credit, you can
Create a presentation for preparation
Record the status of a presentation by accepting, rejecting, settling, or accepting and settling a presentation
Financing Transactions for Accepted Presentations

You can create an import or export bill advance loan and then link the accepted presentation to the existing nancing
transaction. After that, the reference relationship between the nancing transaction and the accepted presentation is
generated automatically.
For issuing letters of credit, you can link the presentation to an import bill advance loan.
For receiving letters of credit, you can link the presentation to an export bills negotiation.
Create and settle the import or export bill advance loans as an interest rate instrument (product type 55A) using the
Create IR Instrument and Process MM Transactions - Collective Processing apps.
 Note
When you create the import or export bill advance loan, make sure that the Amount is within the presentation amount.
And for netting purpose, make sure that the start date of import or export bill advance loan is as the same as Payment
Date of the letter of credit.
Using the Process Trade Finance Transactions - Collective Processing, you change the letter of credit and set the link to
the import or export bill advance loan on the detail screen of the presentation in the Financing Transactions for Accepted
Presentations area.
Calculating Fees for Letters of Credit

Use
For trade nance transactions such as letters of credit and bank guarantees, a certain amount of fees are charged by the business
partner during the issuing or receiving process and based on certain conditions, such as a payment rate. The fee calculation
process takes place during all stages of the letter of credit lifecycle. The fee calculation for letters of credit is based on four
condition types for different amounts.
You can create and maintain the fee conditions for letters of credit (L/C) using the Create Letter of Credit app or the Process
Trade Finance Transactions - Collective Processing app.
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Prerequisites
Before you can calculate the fees for letter of credit transactions, you need to make the necessary settings.
Procedure
1. Issue a letter of credit using the Create Letter of Credit app.
2. Enter the required data for the letter of credit on the Create Letter of Credit: Structure tab.
3. Choose Fee Conditions to switch to the fee condition overview.
4. Choose Create Fee Conditions in the Overview of Conditions.
5. Choose a possible condition type from the list in the Possible Condition Types dialog box.
6. Enter the required data on the Amounts tab on the Condition Details screen.
If the fee is a xed value, specify the condition amount on the Currency-Related Data block.
You can choose between two types of calculation method for the amount of the condition type:
a. A percentage rate.
b. A xed amount for the total contract period.
This amount, however, is split per payment period.
 Example
You pay 1200 EUR as a fee for the total amount of the L/C for a one-year contract, but the fee is paid on a
monthly basis. This means that you pay a monthly fee of 100 EUR.
If the fee is calculated based on one of the four condition types listed below, specify the percentage rate and the interest
calculation method.
In this eld, you specify which interest calculation method is used. The input help provides de nitions of each method. (You
can choose from standard interest calculation methods such as act/360, 360/360, act/365, act/366, or 365/360.)
Condition Type Name of Condition Type Description
1204 Fee on Total Amount Calculated based on the total amount of

the L/C
1205 Fee on Presented Amount Calculated based on the total amount of

the presentation
1206 Fee on Available Amount Calculated based on the remaining credit

amount
1207 Fee on Overdraft Amount Calculated based on the over-utilized

amount
Specify the rounding category, rounding unit, and base unit.
7. If the fees are paid or calculated on a regular basis, enter a calculation date and a due date on the Dates tab.
Features
The fee cash ows corresponding to the speci c fee condition are updated when the following data is changed:
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Change of total amount
There are two possible changes to the total amount:
You change the amount value directly on the Structure tab.
However, this change cannot be made if any L/C cash ows based on the total amount have already been posted.
You change the amount of the nominal increase or decrease in the dialog box.
This change cannot be made if it affects any cash ows that have already been posted.
The fee cash ows are updated automatically based on the new total amount if the total amount of the L/C is changed
before the L/C has been posted.
 Example
A company applies to issue an L/C from January 1, 2016 to June 30, 2016 with a total amount of 1 M EUR. The fee
condition is calculated with a percentage rate of 1.2% and an interest calculation method of 30/360, and it is paid
monthly. Once the amount is posted, the fee cash ows are as follows:
Date Fee Amount
1/31/2016 1000
2/28/2016 1000
3/31/2016 1000
4/30/2016 1000
5/31/2016 1000
6/30/2016 1000
If the end user increases the total amount of the L/C to 2 M EUR by adding a new nominal fee on April 1, 2016, the new
fee cash ows are then as follows:
Date Fee Amount
1/31/2016 1000
2/28/2016 1000
3/31/2016 1000
4/30/2016 2000
5/31/2016 2000
6/30/2016 2000
Change of contract term
The fee cash ows are updated automatically based on the new contract term if the contract term of the L/C is changed.
You cannot change the contract term if it affects ows that have already been posted, such as moving the end date of the
contract term to before the date of the posted ows.
Change of fee condition
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The fee condition can be changed and the corresponding fee cash ows are automatically updated.
You cannot change the fee condition if it affects ows that have already been posted. This means that you cannot change
the percentage rate because doing so would lead to the recalculation of the posted ows.
Presentation
Fee calculation is triggered during the presentation process and presentation settlement.
When the new presentation is created, the fee cash ows are automatically updated for the fee conditions with condition
type Fee on Presented Amount, Fee on Available Amount, and Fee on Overdraft Amount.
When the presentation is saved or settled, the fee cash ows with a calculation due date later than the presentation date
are automatically updated.
The presentation is not usually affected by a fee cash ow that has already been posted. An error message is issued if
exceptions occur.
Rollover
If an L/C is rolled over, the update of the fee cash ow is automatically triggered and the fee is calculated up to the new end
date of the L/C based on the assigned fee condition.
Termination
If the termination date is after the end date of the L/C, the fee cash ows are calculated up to the end date of the L/C.
If the termination date is before the end date of the L/C, an automatic update of the fee cash ows is triggered.
If the termination date lies in the middle of the period of the L/C, the fee cash ow is calculated only up to the termination
date.
 Example
The monthly fees for the L/C are paid at the end of each month, but the termination date is August 15. The fee is
therefore calculated up to and paid on August 15.
Reversal
If you reverse your L/C, the system changes the status of the ow and of the nancial transaction.
A warning message is issued in cases when a nancial transaction includes posted ows (fee ows and other cash ows) to
indicate that some ows will be posted after the reversal has been performed.
Related Information
Letters of Credit
Create Letters of Credit
Basic Data - Trade Finance

Use
A standby letter of credit is a document issued by a bank on behalf of an applicant. It is used as "payment of last resort" in cases
when the applicant fails to ful ll a contractual commitment with the party that requests the standby letter of credit.
Standby letter of credit transactions include transaction types for issuing and receiving standby letters of credit.
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The banks (or business partners) charge additional fees based on the principal amount of a standby letter of credit in the issuing
and receiving process and based on certain conditions. The fee calculation is based on the total amount of the standby letter of
credit.
In addition to functions for creating and changing standby letters of credit, the system also supports rollover, reversal,
termination, order expiration, and order execution.
Prerequisites
Before you can use the standby letter of credit transactions, you need to:
authorizations.
Set up the standing instructions and release the business partner.
Make the required settings.
Features
For more detailed information, see Create Standby Letters of Credit and Calculating Fee Flows for Standby Letters of Credit.
Create Standby Letters of Credit

Prerequisites
See Standby Letters of Credit, Create Letters of Credit, and Processing Standby Letters of Credit as an Issuer.
Procedure
1. Launch the Create Letter of Credit app in the Trade Finance Transactions group on your SAP Fiori launchpad.
Currency: If you do not specify a currency when you create a nancial transaction, the system automatically uses
the currency of the company code.
You can create a standby letter of credit transaction directly as a contract. A transaction becomes legally binding with the
activity category Contract.
5. If you work with external number assignment, you have to enter a key for the transaction in the corresponding eld: This
6. Press Enter to go to the basic data screen for standby letters of credit.
7. Enter required data for the standby letter of credit on the Structure tab. For more detailed information, see Basic Data -
Trade Finance.
8. Choose Worklist to branch to your worklist.
9. Choose Documents to branch to the documents overview for this transaction.
10. Choose Save to save the standby letter of credit.
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12. To use additional functions, choose More Extras or More Environment .
Calculating Fees for Standby Letters of

Credit
Use
For trade nance transactions such as letters of credit and bank guarantees, a certain amount of fees are charged by the business
partner during the issuing or receiving process and based on certain conditions, such as a payment rate. The fee calculation
process takes place during all stages of the letter of credit lifecycle. The fee calculation for letters of credit is based on four
condition types for different amounts.
You can create and maintain the fee conditions for standby letters of credit (SLOC) using the app Create Letter of Credit or the
Process Trade Finance Transactions - Collective Processing.
Prerequisites
Before you can calculate the fees for letter of credit transactions, you need to make the necessary settings.
Procedure
1. Issue a standby letter of credit using the Create Letter of Credit app.
2. Enter the required data for the standby letter of credit on the Create Letter of Credit: Structure tab.
 Note
Note that for standby letters of credit only the condition type 1204 with pro le category Total Credit Line is available.
This amount, however, is split per payment period.
 Example
You pay 1200 EUR as a fee for the total amount of the SLOC for a one-year contract, but the fee is paid on a
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calculation method.
Features
However, this change cannot be made if any SLOC cash ows based on the total amount have already been posted.
The fee cash ows are updated automatically based on the new total amount if the total amount of the SLOC is changed
before the SLOC has been posted.
 Example
A company applies to issue an SLOC from January 1, 2016 to June 30, 2016 with a total amount of 1 M EUR. The fee
condition is calculated with a percentage rate of 1.2% and an interest calculation method of 30/360, and it is paid
monthly. Once the amount is posted, the fee cash ows are as follows:
Date Fee Amount
1/31/2016 1000
2/28/2016 1000
3/31/2016 1000
4/30/2016 1000
5/31/2016 1000
6/30/2016 1000
If the end user increases the total amount of the SLOC to 2 M EUR by adding a new nominal fee on April 1, 2016, the new
fee cash ows are then as follows:
Date Fee Amount
1/31/2016 1000
2/28/2016 1000
3/31/2016 1000
4/30/2016 2000
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Date Fee Amount
5/31/2016 2000
6/30/2016 2000
The fee cash ows are updated automatically based on the new contract term if the contract term of the SLOC is changed.
Rollover
If an SLOC is rolled over, the update of the fee cash ow is automatically triggered and the fee is calculated up to the new
end date of the SLOC based on the assigned fee condition.
If the termination date is after the end date of the SLOC, the fee cash ows are calculated up to the end date of the SLOC.
If the termination date is before the end date of the SLOC, an automatic update of the fee cash ows is triggered.
If the termination date lies in the middle of the period of the SLOC, the fee cash ow is calculated only up to the
termination date.
 Example
The monthly fees for the L/C are paid at the end of each month, but the termination date is August 15. The fee is
Reversal
If you reverse your SLOC, the system changes the status of the ow and of the nancial transaction.
Related Information
Create Standby Letters of Credit

The trading area contains the key functions for entering and changing transaction data. To map transactions in the system
efficiently, you rst have to enter the basic data.
Initial Data
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Company Code
When you enter the company code, you determine which division within your group is acting as the contracting party for
the transaction.
Product Type
The product type indicates which specialization of the product category is involved in the current transaction.
Product types are prede ned by SAP.
Example of product types:
Product Type Product Category Name
85A 850 Letter of Credit
86A 860 Bank Guarantee
Depending on which product type you enter, the system calls up a different entry screen. The entry screens are described
below.
Transaction Type
Transaction types de ne which specialization of the transaction category - issuing or receiving letters of credit or bank
guarantees - is involved in the current transaction.
Transaction types are prede ned by SAP.
Example of transaction types:
Product Type Transaction Type Name of
Transaction Type
85A 100 Letter of Credit - Issue
85A 200 Letter of Credit - Receive
86A 100 Bank Guarantee - Issue
86A 200 Bank Guarantee - Receive
Partner
You specify a third party as a partner in the system that issues the letters of credit or bank guarantees at your request or
noti es you about a letter of credit or bank guarantee issued with you as the bene ciary (see Business Partner ).
The partner charges a certain amount of fees for a letter of credit or bank guarantee in the issuing or receiving process. An
additional fee is also charged based on the total amount of the letter of credit or bank guarantee and including certain
conditions, such as the payment rate.
For more information, see
Calculating Fees for Letters of Credit
Calculating Fees for Bank Guarantees
Calculating Fees for Standby Letters of Credit
Transaction
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If you have speci ed external number assignment, you enter the key that uniquely identi es a nancial transaction within a
company code in the Transaction eld in the External Number Assignment area.
Otherwise, the system assigns a number automatically.
Basic Data
General Basic Data for Trade Finance Transactions
Amount
This is where you enter the amount of the transaction. The nominal amount is used as the basis for calculating
interest. Special characters or other alphabetic values are prede ned as an abbreviation for thousands or millions.
You can use the following input help:
Special Character Meaning
m millions
t thousands
Term
Here you enter the start and the end of the transaction term. Your system automatically shows the CPU date as the
default value. You can enter ' +' for the number of days and '++' for the number of months.
 Example
+2 means that the start of term is today + two days.
Flow Type
Specify a ow type for the transaction. The type of ow within a nancial transaction speci es how the ow
concerned is interpreted in terms of nancial mathematics and nancial accounting. A ow type can be used only in
connection with a nancial transaction if the ow type has been assigned to the corresponding prede ned product
type.
Bene ciary/Applicant
Speci es the counterparty of the transaction.
Underlying Transaction
Speci es the underlying transaction type and number of the transaction.
Basic Data for Letter of Credit Transactions
Issuing Bank/Advising Bank
Speci es the bank that issues the letter of credit or advises the bene ciary of the letter of credit.
Place of Expiry
Speci es the place where the bene ciary presents documents against the letter of credit.
Con rmation Instruction
Speci es whether the letter of credit needs to be con rmed by a con rming bank.
Time Zone
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Speci es the time zone of the place where the bene ciary (seller) presents documents against the letter of credit.
Goods and Shipping
Speci es the terms and conditions related to goods and shipping.
Presentation
Speci es the terms and conditions related to presentations against the letter of credit.
Payment
Speci es the terms and conditions related to payment for the letter of credit.
Documents
Based on your business needs, you can decide whether to maintain this section. To maintain the documents for a
letter of credit, you can add document types. Alternatively, you can select a document template.
For each document type, the following activities are allowed:
Specify whether it is creation-related or presentation-related
Specify the number of the originals and copies required
Upload attachments for presentations
Select a status (Waiting for Check, Rejected, or Accepted)
Basic Data for Bank Guarantee Transactions
Form of Guarantee
Speci es the form of the bank guarantee. A direct bank guarantee is issued by the applicant's bank (issuing bank)
directly to the guarantee bene ciary without involving a correspondent (advising) bank. By contrast, an indirect
bank guarantee is issued by a correspondent bank (usually the guarantee bene ciary's bank) upon the counter-
guarantee of the guarantee applicant's bank.
Bank Guarantee Type
Speci es a bank guarantee type that you have de ned. For more information, see the description in the self-service
con guration app De ne Bank Guarantee Types.
Basic Data for Standby Letter of Credit Transactions
Issuing Bank/Advising Bank
Speci es the bank that issues the standby letter of credit or noti es the bene ciary about the standby letter of
credit
Auto Extension Period
Speci es the validity term of one automatic extension of the standby letter of credit
Extension Expiry Date
Speci es the latest term end date for the standby letter of credit
Extension Expiry Date
Speci es the latest term end date for the standby letter of credit
Nonextension Notice Days
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Speci es the minimum number of calendar days before the next automatic extension for notifying the bank that the
standby letter of credit is not to be extended anymore
Drawing Mode
Speci es whether multiple drawings against the standby letter of credit are allowed
Process Trade Finance Transactions -

Collective Processing
With this app, you can collectively process trade nance transactions.
Use
Collective processing enables you to process trade nance transactions. Besides being able to use functions to select and display
transactions, you can also go to the individual screens for processing the trade nance transactions.
Key Features
Depending on your speci c requirements, you can choose to issue or receive trade nance transactions using the following apps:
Create Letter of Credit
Create Bank Guarantee
For more information about how to issue or receive trade nance transactions, see the following documentation:
Processing Letters of Credit as a Receiver
Processing Letters of Credit as an Issuer
Processing Bank Guarantees as an Issuer
Processing Bank Guarantees as a Receiver
Processing Standby Letters of Credit as a Receiver
Processing Standby Letters of Credit as an Issuer
Information for Key Users

The SAP Fiori apps reference library has details about the content necessary for giving users access to an app on the SAP Fiori
launchpad. To see this app’s Fiori content, go to the SAP Fiori apps reference library and search for the app. Then select SAP
S/4HANA Cloud as the product. On the Implementation Information tab, select the correct release. The details are in the
Con guration section.
Device Type
Desktop
Processing Letters of Credit as a Receiver

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Prerequisites
For more information, see Letters of Credit.
Process
On the SAP Fiori launchpad, you can nd the Create Letter of Credit app and the Process Trade Finance - Collective Processing
app in the Trade Finance Transactions group. From here, you can access all the trading and processing functions for letters of
credit (L/C).
1. Create L/C order.
After you have reached an agreement with the business partner regarding whether L/C is to be used as the settlement
method, you create an L/C order in the system to request that an L/C be issued. You can also create an L/C contract
directly.
For more information about creating letters of credit, see Create Letters of Credit.
2. Execute or reverse L/C order.
After receiving the request for an L/C to be issued, you can go through the L/C details. If the request is approved, you
execute the order and ask the issuing bank to issue the L/C. After execution, the order becomes a contract. Otherwise, the
order is reversed.
3. Settle or reverse L/C contract.
If the issuing bank approves the application for the L/C, you enter all the L/C information, such as the L/C number, and
then settle the L/C contract.
Otherwise, the L/C contract is reversed including a reversal reason. Then, the L/C is in the activity Order. After that, you
can either adjust the L/C and reopen the application process or close the application by order expiration.
4. Accept or reject a presentation.
After documents against the L/C are presented, you create a presentation, and accept, reject, or accept and settle the
presentation.
5. Create import bill advance loan (optional)
a. Create and settle the import bill advance loans as an interest rate instrument (product type 55A, transaction type
200) using the Create IR Instrument and Process MM Transactions - Collective Processing apps.
 Note
When you create the import bill advance loan, make sure that the Amount is within the presentation amount.
And for netting purpose, make sure that the start date of import bill advance loan is the same as Payment Date
of the letter of credit.
b. Using the Process Trade Finance Transactions - Collective Processing, you change the letter of credit and set the
link to the import bill advance loan on the detail screen of the presentation in the Financing Transactions for
Accepted Presentations area.
The system creates a reference of reference category LOC Letter of Credit Financing between the import bill
advance loan and the L/C.
6. Roll over L/C (optional)
If the shipment of goods or payment cannot be settled within the planned time frame, you need to negotiate with the bank
and issuer to adjust the L/C amount or term. You roll over the L/C and change the L/C amount or end of term.
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 Note
If accepted presentations exist, the changed amount should not be less than the total accepted presentation amount.
After reaching an agreement with the issuer on the adjustment and after negotiating with the issuing bank, the settles the
rollover contract.
7. Terminate L/C (optional)
You terminate an L/C in the following scenarios:
You nd that the total amount of an L/C has been paid and want to terminate this L/C.
You nd that one L/C has expired and want to terminate this L/C.
Although one L/C has not been paid completely, you want to terminate this L/C after reaching an agreement with
the issuer that this L/C will not be paid anymore.
8. Settle L/C presentation.
After the payment for a presentation is settled, you settle the presentation in the system.
 Note
After a presentation is settled, no data can be changed anymore. However, if you nd some mistakes later on, the
settled presentation can be reversed. After reversal, the presentation becomes an accepted presentation.
 Note
You can reverse your action to an activity until the activity cannot be reversed anymore.
Processing Letters of Credit as an Issuer

Prerequisites
For more information, see Letters of Credit.
Process
app in the Trade Finance Transactions group. From here, you can access all the trading and processing functions for letters of
credit (L/C).
1. Create L/C contract.
After the advising bank informs the receiver of the L/C from the issuer, you create an L/C contract in the system and enter
all the information.
For more information about creating letters of credit, see Create Letters of Credit.
2. Settle or reverse L/C contract.
If there is no problem with the L/C, you settle the L/C contract.
Otherwise, you return the L/C and reverse the L/C contract.
3. Create L/C presentation.
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After the goods were shipped as negotiated, you create a presentation against the L/C and upload documents as required.
4. Send L/C presentation to bank.
If all the required documents are ready, you send the presentation to the bank.
5. Accept L/C presentation.
After a presentation is accepted by the receiver, you accept the presentation in the system.
6. Create export bill advance loan (optional)
a. Create and settle the export bill advance loans as an interest rate instrument (product type 55A and transaction
type 200) using the Create IR Instrument and Process MM Transactions - Collective Processing apps.
 Note
When you create the export bill advance loan (export bill negotiation), make sure that the Amount is within the
presentation amount and the end date of export bill advance loan is within the presentation period.
b. Using the Process Trade Finance Transactions - Collective Processing, you change the letter of credit and set the
link to the export bill advance loan on the detail screen of the presentation in the Financing Transactions for
Accepted Presentations area.
The system creates a reference of reference category LOC Letter of Credit Financing between the export bill
advance loan and the L/C.
7. Roll over the L/C (optional)
If the shipment of goods or payment cannot be settled within the planned time frame, you need to negotiate with the bank
and receiver to adjust the L/C amount or term. You roll over the L/C and change the L/C amount or end of term.
 Note
If accepted presentations exist, the changed amount should not be less than the total accepted presentation amount.
After reaching an agreement with the issuer on the adjustment and after negotiating with the issuing bank, you settle the
rollover contract.
8. Terminate L/C (optional)
You terminate an L/C in the following scenarios:
You nd that the total amount of an L/C has been paid and want to terminate this L/C.
You nd that one L/C has expired and want to terminate this L/C.
Although one L/C has not been paid completely, you want to terminate this L/C after reaching an agreement with
the receiver that this L/C will not be paid anymore.
9. Settle L/C presentation.
After the payment for a presentation is settled, you settle the presentation.
 Note
After a presentation is settled, no data can be changed anymore. However, if you nd some mistakes later on, you can
reverse the settled presentation. After reversal, the presentation becomes an accepted presentation.
 Note
You can reverse your action until the activity cannot be reversed anymore.
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Processing Bank Guarantees as a Receiver

Prerequisites
For more information, see Bank Guarantees.
Process
On the SAP Fiori launchpad, you can nd the Create Bank Guarantee app and the Process Trade Finance - Collective Processing
app under the Trade Finance Transactions group. From here, you can access all the trading and processing functions for bank
guarantees.
1. Create bank guarantee order.
After the Trader reaches an agreement with the business partner regarding whether bank guarantee is needed, the Trader
or Treasury Manager creates a bank guarantee order in the system to request that the bank guarantee be issued. The
Treasury Manager can also create a bank guarantee contract directly.
For more information about creating bank guarantees, see Create Bank Guarantees.
2. Execute or reverse bank guarantee order.
After receiving the request for a bank guarantee to be issued, the Treasury Manager goes through the bank guarantee
details. If the request is approved, the Treasury Manager executes the order and asks the issuing bank to issue the bank
guarantee. After execution, the order becomes a contract. Otherwise, the Treasury Manager reverses the order.
3. Settle or reverse bank guarantee contract.
If the issuing bank approves the application for the bank guarantee, the Treasury Manager enters all the bank guarantee
information, such as the bank guarantee number, and then settles the bank guarantee contract.
Otherwise, the Treasury Manager reverses the bank guarantee contract and provides a reversal reason. Then, the bank
guarantee is in the activity Order. After that, the Trader can either adjust the bank guarantee and reopen the application
process or close the application by order expiration.
4. Optional
a. Roll over bank guarantee contract.
If the amount or validity term of the bank guarantee needs to be changed, the Treasury Manager needs to negotiate
with the bank and the exporter regarding adjusting the bank guarantee amount or term. Then the Treasury
Manager rolls over the bank guarantee and changes the bank guarantee amount or end of term.
b. Settle bank guarantee contract rollover.
After reaching an agreement with the exporter on the adjustment and after negotiating with the issuing bank, the
Treasury Manager settles the contract rollover.
5. Optional
a. Terminate bank guarantee contract.
If the bank gives a noti cation that one bank guarantee is not needed, the Treasury Manager terminates this bank
guarantee, and the consumed credit line will be released.
b. Settle bank guarantee contract termination.
With the joint consent of the exporter and the importer, the Treasury Manager settles the bank guarantee contract
termination.
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6. Settle bank guarantee.
When you save a settlement activity, the system changes the activity category of the transaction to record how it is
monitored and processed in the back office area.
The contract can only be posted after it has been settled.
 Note
You can decide whether settlement operation is done manually or automatically upon con rmation when de ning a
transaction type.
Processing Bank Guarantees as an Issuer

Prerequisites
For more information, see Bank Guarantees.
Process
On the SAP Fiori launchpad, you can nd the Create Bank Guarantee app and the Process Trade Finance - Collective Processing
app under the Trade Finance Transactions group. From here, you can access all the trading and processing functions for bank
guarantees.
1. Create bank guarantee contract.
After the bank informs the exporter that a bank guarantee has been received from the importer, the Treasury Manager
creates a bank guarantee contract in the system and enters all the information.
For more information about creating bank guarantees, see Create Bank Guarantees.
2. Settle or reverse bank guarantee contract.
If everything is ne with the bank guarantee, the Treasury Manager settles the bank guarantee contract in the system.
In the case of problems with the bank guarantee contract, the Treasury Manager reverses the bank guarantee contract and
provides a reversal reason. Then, the bank guarantee is in the activity Contract with the status Reversed.
3. Optional.
a. Roll over bank guarantee contract.
If the amount or validity term of the bank guarantee need to be changed, the Treasury Manager rolls over the bank
guarantee and changes the bank guarantee amount and end of term.
b. Settle bank guarantee contract rollover.
After reaching an agreement with the importer on the adjustment and after negotiating with the issuing bank, the
Treasury Manager settles the contract rollover.
4. Optional.
a. Terminate bank guarantee contract.
If the bank guarantee is not needed or the related duties have been performed, the Treasury Manager terminates
this bank guarantee and returns the bank guarantee to the bank.
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b. Settle bank guarantee contract termination.
With the joint consent of the importer and the exporter, the Treasury Manager settles the bank guarantee contract
termination.
 Note
You can decide whether settlement operation is done manually or automatically upon con rmation when de ning a
transaction type.
Processing Standby Letters of Credit as a

Receiver
Prerequisites
For more information, see Standby Letters of Credit.
Process
app in the Trade Finance Transactions group. From here, you can access all the trading and processing functions for standby
letters of credit (SLOC).
1. Create SLOC order.
After you reach an agreement with the business partner that an SLOC is required as a guarantee for the payment, you
create a SLOC order in the system to request that an SLOC be issued.
You can also create an SLOC contract directly. A transaction becomes legally binding with the activity category Contract.
For more information about creating standby letters of credit, see Create Standby Letters of Credit.
2. Execute or reverse SLOC order.
After receiving the request for an SLOC to be issued, you go through the SLOC details. If the request is approved, you
execute the order and ask the issuing bank to issue the SLOC. After execution, the order becomes a contract. Otherwise,
the order is reversed.
3. Settle or reverse SLOC contract.
If the issuing bank approves the application for the SLOC, you enter all the SLOC information, such as the number of the
SLOC, and then settle the SLOC contract.
Otherwise, you reverse the SLOC contract and provide a reversal reason. Then, the SLOC is in the activity Order. After that,
you can either adjust the SLOC and reopen the application process or close the application by order expiration.
4. Roll over SLOC (optional)
If the shipment of goods or payment cannot be settled within the planned time frame, you need to negotiate with the issuer
and bank to adjust the SLOC amount or term. You change the SLOC amount or end of term and roll over the SLOC.
After reaching agreement with the issuer and the bank on the adjustment, you settle the rollover contract.
5. Terminate SLOC (optional)
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You terminate an SLOC when it is no longer needed.
6. Settle SLOC termination (optional)
When the SLOC termination is con rmed as correct, it can be settled.
 Note
Processing Standby Letters of Credit as an

Issuer
Prerequisites
For more information, see Standby Letters of Credit.
Process
app in the Trade Finance Transactions group. From here, you can access all the trading and processing functions for standby
letters of credit (SLOC).
1. Create SLOC contract.
After the advising bank informs the issuer of the SLOC from the receiver, you create an SLOC contract in the system and
enter all the information.
For more information on creating standby letters of credit, see Create Standby Letters of Credit.
2. Settle or reverse SLOC contract.
If there is no problem with the SLOC, you settle the SLOC contract.
Otherwise, you return the SLOC and reverse the SLOC contract.
3. Roll over SLOC (optional)
If the shipment of goods or payment cannot be settled within the planned time frame, the two parties need to negotiate
with each other and the bank to adjust the SLOC amount or term. You change the SLOC amount or end of term and roll
over the SLOC.
After reaching agreement with the receiver and the bank on the adjustment, you settle the contract rollover.
4. Terminate SLOC (optional)
You terminate an SLOC when it is no longer needed.
5. Settle SLOC termination (optional)
When the SLOC termination is con rmed as correct, it can be settled.
 Note
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Bank Guarantees
Use
A bank guarantee is a pledge on the part of a bank to make good someone's debt in the event that he or she cannot pay it. This
type of guarantee is essentially an agreement to stand as a cosigner on a transaction. In the event that the original party cannot
follow through, the bank can be called upon to provide the payment.
Bank guarantee transactions include transaction types for issuing and receiving bank guarantees.
The banks (or business partners) charge additional fees based on the principal amount of a bank guarantee in the issuing and
receiving process and based on certain conditions. Increases and decreases in the amount of the bank guarantee are re ected in
the fees. The fee calculation process takes place during all stages of the bank guarantee lifecycle.
In addition to functions for creating and changing bank guarantees, the system also supports rollover, reversal, order expiration,
order execution, contract settlement, contract termination, and termination settlement.
Prerequisites
Before you can use the bank guarantee transactions, you need to do the following:
authorizations.
Make the required settings in the con guration steps of the De ne Bank Guarantee Type function in the Manage Your
Solution app.
Features
For more detailed information, see Create Bank Guarantees and Process Trade Finance Transactions - Collective Processing.
Create Bank Guarantees

With this app, you can create bank guarantees.
Prerequisites
See Bank Guarantees, Processing Bank Guarantees as an Importer, and Processing Bank Guarantees as an Exporter.
Information for Key Users
The SAP Fiori apps reference library has details about the content necessary for giving users access to an app on the SAP Fiori
launchpad. To see this app’s Fiori content, go to the SAP Fiori apps reference library and search for the app. Then select SAP
S/4HANA Cloud as the product. On the Implementation Information tab, select the correct release. The details are in the
Con guration section.
Procedure
1. Launch the Create Bank Guarantee app in the Trade Finance Transactions group on your SAP Fiori launchpad.
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Transaction Currency: If you do not specify a currency when you create a nancial transaction, the system
automatically uses the currency of the company code.
You can create a bank guarantee transaction directly as a contract. A transaction becomes legally binding with the activity
category Contract.
5. If you work with external number assignment, you have to enter a key for the transaction in the corresponding eld. This
6. Press Enter to go to the basic data screen for bank guarantees.
7. Enter required data for the bank guarantee on the Structure tab. For more detailed information, see Basic Data - Trade
Finance
8. Choose Fee Calculation to calculate bank guarantee fees. For more information, see Calculating Fees for Bank Guarantees.
9. Choose Worklist to branch to your worklist.
10. Choose Save to save the bank guarantee.
12. To use additional functions, choose Extras and Environment from the menu.
Calculating Fees for Bank Guarantees

Use
For trade nance transactions such as bank guarantees, a certain amount of fees are charged by the business partner during the
issuing or receiving process and based on certain conditions, such as a payment rate. The fee calculation process takes place
during all stages of the transaction life-cycle. The fee calculation for bank guarantee is based on four condition types for different
amounts.
You can create and maintain the fee conditions for bank guarantees (BG) using the Create Bank Guarantee app.
Prerequisites
Before you can calculate the fees for bank guarantee transactions, you need to make the necessary settings. For more
information, see Bank Guarantees.
Procedure
1. Issue a bank guarantee using the Create Bank Guarantee app. For detailed information, see Creating Bank Guarantees.
2. Enter the required data for the bank guarantee on the Create Bank Guarantee: Structure tab. For more information, see
Basic Data - Trade Finance.
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Note that for bank guarantees only the condition type 1204 is available.
 Note
In case of on-behalf scenario when the fee payment currency is different from transaction currency, you can also
specify the fee currency on the Currency tab for fee ows. For example, an European headquarter creates a deal for its
subsidiary in Japan. The nominal amounts and fees are displayed in EUR. You enter JPY as the currency and specify a
lower limit of 5000 JPY, and the fee ows are then displayed in JPY with 5000 as the threshold.
This amount however, is split per payment period.
 Example
You pay 1200 EUR as a fee for the total amount of the BG for a one-year contract, but the fee is paid on a
calculation method.
Features
However, this change cannot be made if any BG cash ows based on the total amount have already been posted.
The fee cash ows are updated automatically based on the new total amount if the total amount of the BG is changed
before the BG has been posted.
 Note
The total amount of the BG cannot be changed after the BG has been posted. A new fee condition has to be created to
increase or decrease the total amount of the BG. The fee cash ow corresponding to the new fee condition will then be
updated.
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The fee cash ows are updated automatically based on the new contract term if the contract term of the BG is changed.
Rollover
If a BG is rolled over, the update of the fee cash ow is automatically triggered and the fee is calculated up to the new end
date of the BG based on the assigned fee condition.
Termination
The fee cash ows need to be recalculated if the end user has terminated the BG. The fee is calculated up to the
termination date. The last calculation date of the fee cash ow is the termination date.
If the termination date lies in the middle of the period of the BG, the fee cash ow is only calculated up to the termination
date.
 Example
The monthly fees for the BG are paid at the end of each month, but the termination date is August 15. The fee is
Reversal
If you reverse your BG, the system changes the status of the ow and nancial transaction.
More Information
Bank Guarantees
Change Counterparty - Financial Transaction

Use
Under usual circumstances, it is not possible to change the counterparty of a nancial transaction. However, some circumstances
may arise in which it becomes necessary to replace the counterparty. You use this app in such exceptional cases.
Features
The app replaces the counterparty of the nancial transaction as well as the payment details and all relevant transaction ows.
Selection
General Selections
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You use the following criteria to specify the nancial transactions for which you want to replace the counterparty (business
partner in role 0151 (Counterparty):
Company Code
Financial Transaction
Product Type
Transaction Type
Business Partner
Control
In the New Partner eld, you specify the business partner that you want to be the new counterparty of the nancial
transaction.
In the Change Effective From eld, enter the date from which the change in counterparty is effective.
You can run the app rst in a test run. To do so, set the relevant indicator and run the app.
When you run the app in an update mode, the system saves the changes to the business partner.
You can use the Display Transactions - Changed Counterparty app to nd all nancial transactions for which the
counterparty has been changed.
Result
The app issues a results list. This list contains all affected nancial transactions and shows the previous counterparty and the new
counterparty.
Activities
1. Open the Change Counterparty - Financial Transaction app on your SAP Fiori launchpad.
2. Select the affected nancial transactions.
3. Enter the new counterparty.
4. Enter the date on which the change takes place.
5. To exclude transactions that are already completed, set the Exclude Completed Transactions indicator.
6. Run the app in a test run rst.
7. When you are satis ed with the results displayed in the results list, remove the Test Run indicator and run the app in an
update run.
The system makes the relevant changes.
Supported Device Types

Desktop
More Information
At any time, you can use the Display Financial Transactions with Changed Counterparty app to display all nancial transactions for
which you have replaced the counterparty.
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Treasury Correspondence
You can create correspondence documents (con rmation/deal slip) to be sent to your business partners/internal recipient via
mail or print the correspondence both automatically and manually.
If you use the Treasury Correspondence Integration with SWIFT Network integration scenario, you can send and receive the
following kinds of SWIFT message:
MT300 for FX transaction con rmation
MT320 for money market transaction con rmation
For more information, see Exchange Treasury Correspondence via SWIFT.
Once the settings for the processes are nished, correspondence objects are created automatically during the creation of the
nancial transactions for all nancial transactions with a counterparty (business partner) assigned to a correspondence-relevant
business partner group. If you use the Send Correspondence job template available in the Schedule Treasury Back Office Jobs
app, the correspondence is also sent automatically.
In addition, you can manually create, change, and send correspondence objects using the Process Correspondence - Monitor app.
Prerequisites
The following self-service con guration apps are available in the Manage Your Solution app.
De ne Business Partner Group
With this app, you can de ne business partner groups with which to control the correspondence process under Assign
Attributes for Business Partner Groups.
The default business group BPG_DEFAULT is delivered.
Assign Attributes for Business Partner Group
Set attributes to control the outgoing and incoming correspondence process per business partner group, correspondence
class, and recipient/sender type.
Con guration steps relevant for the SWIFT process
Assign Format Mapping for Outbound Process
Assign Format Mapping for Inbound Process
Map Treasury Correspondence Formats
De ne Company Code Additional Data
Assign the bank identi er code (BIC) for your company codes.
On the launchpad in the Correspondence group, the following apps are available for correspondence master data settings and can
be used to in uence the creation of the correspondence objects:
Assign Pro le and BP Group - Internal Recipients
Assign Pro le and BP Group - External Recipients
For more information, see Assign Pro les and Business Partner Groups
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Assign BIC to Business Partner
Assign Correspondence Class - Inbound Process
Assign the correspondence classes for the MT300 and MT320 formats to your counterparties (recipient type) dependent
on the business partner group.
De ne Fixing References
De ne Values for Expiry Time - FX Options
Treasury and Risk Management correspondence is integrated in the Output Management. The settings are precon gured for
Treasury and Risk Management correspondence. When you use the prede ned PDF forms, you use the Output Parameter
Determination app only to assign the relevant print queue.
Within the Output Management, the administrator can de ne your own PDF templates on the basis of the delivered PDF
templates.
Output Parameter Determination
Maintain Form Templates
Download templates and upload again after modi cation
Maintain Email Template
Download templates and upload again after modi cation
Maintain Print Queues
Maintain more print queues instead of the standard Default
Features
Process Correspondence - Monitor
Send Correspondence (also available as job template under Schedule Treasury Back Office Jobs)
Treasury Alerts - Correspondence
Related Information
Display Treasury Alerts
Process Correspondence - Monitor
Send Correspondence

Treasury and Risk Management: Warning

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Treasury and Risk Management

SAP S/4HANA Cloud | 2002

Original content: https://help.sap.com/viewer/e5ec5859d8e54df98492d80564a734c0/2002.500/en-US

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Product Type Transaction Type

86A Bank Guarantee 100- Bank Guarantee - Issue

200 - Bank Guarantee - Receive

85A Normal Letter of Credit 100- Normal Letter of Credit - Issue

200 - Normal Letter of Credit - Receive

85B Standby Letter of Credit 100- Standby Letter of Credit - Issue

200 - Standby Letter of Credit - Receive

For more information, see Treasury Accounting.

Master Data Management

Financial transaction processing in the Transaction Manager is based on master data.

For more information, see Master Data.

For more information, see Calculating Fees for Letters of Credit.

Create Letters of Credit

3. Make the following entries in the Speci cations area:

4. Decide whether the activity is an order or a contract.

8. Choose More Worklist to branch to your worklist.

9. Choose Documents to branch to the documents overview for this transaction.

10. Choose Save to save the letter of credit.

For more information, refer to Tab Pages.

12. To use additional functions, choose More Extras or More Environment .

Presentations of Documents Against Letters

For issuing letters of credit, you can

Create a presentation after receipt

Accept and settle a presentation

For receiving letters of credit, you can

Create a presentation for preparation

Financing Transactions for Accepted Presentations

Calculating Fees for Letters of Credit

3. Choose Fee Conditions to switch to the fee condition overview.

4. Choose Create Fee Conditions in the Overview of Conditions.

b. A xed amount for the total contract period.

This amount, however, is split per payment period.

Condition Type Name of Condition Type Description

1204 Fee on Total Amount Calculated based on the total amount of

1205 Fee on Presented Amount Calculated based on the total amount of

1206 Fee on Available Amount Calculated based on the remaining credit

1207 Fee on Overdraft Amount Calculated based on the over-utilized

Specify the rounding category, rounding unit, and base unit.

There are two possible changes to the total amount:

You change the amount value directly on the Structure tab.

Date Fee Amount

Date Fee Amount

Change of contract term

Change of fee condition

Standby Letters of Credit

Set up the standing instructions and release the business partner.

Make the required settings.

Create Standby Letters of Credit

3. Make the following entries in the Speci cations area:

4. Decide whether the activity is an order or a contract.

8. Choose Worklist to branch to your worklist.

9. Choose Documents to branch to the documents overview for this transaction.

10. Choose Save to save the standby letter of credit.

For more information, refer to Tab Pages.

12. To use additional functions, choose More Extras or More Environment .

Calculating Fees for Standby Letters of

3. Choose Fee Conditions to switch to the fee condition overview.