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Product Information

Colin Thomas
June 17, 2019 | 6 minute read

SAP In House Cash Solution -

Automation of Accounting solution for
Nostro / Vostro posting into General
Ledger
 0  4  3,404

WHITE PAPER

SAP In House Cash Solution -Automation of Accounting solution for Nostro / Vostro
posting into General Ledger
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Table of Contents

Abstract 3

Background. 3

Scenario. 4

Business process. 4

Business Requirement 4

SAP Solutions. 5

Conclusion. 17

Abstract
Nostro and vostro (from Italian, nostro and vostro; English, ‘ours’ and ‘yours’) are
accounting terms used to distinguish an account held for another entity from an
account another entity holds.
 The terms nostro and vostro are used, mainly by banks, when one bank keeps money
at another bank (in a correspondent account often called a nostro or vostro
Follow account). Both banks need to keep records of how much money is being kept by one
bank on behalf of the other. In order to distinguish between the two sets of records of
the same balance and set of transactions, banks refer to the accounts as nostro and
 Like vostro.

Speaking from the point of view of the bank whose money is being held at another
 RSS Feed bank, same solution can be extended to SAP In-House Cash Cross bank posting:

A nostro is our account of our money, held by the other bank area
A vostro is our account of another bank area money, held by us

A vostro account is a record of money held by a bank area or owed to a bank area by
a third party (company code).

The nostro account is a way of the bank area whose money it is, keeping track of how
much is being held by the other bank area. This is similar to an individual keeping a
detailed record of every payment in and out of his or her bank account so that
she/he knows the balance at any point in time.

This white paper explains how the concept used by banks can be extended to SAP
Inhouse Cash, using master data changes and configurations.

Background
An organization which operated globally having subsidiaries handled with multiple
inhouse cash centers. There could be transaction (receipts/payments) processed by
cross bank area accounts. For example: –

Vendor liability of company code 0005 (bank area IHC1 in Co Code 0001) is paid by
in-house cash center held by company code 6000 (bank area IMXN). The following
accounting entries will be posted

Company 0005 a subsidiary of Co code 0001 (bank area IHC1)

1. Payment to vendor

Vendor A/c Dr

To IHC accounts rec/pay Cr

 Inhouse Cash entries in inhouse cash center IHC1

Follow IHC accounts rec/pay Dr.

To IHC Nostro/Vostro Cr
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Inhouse Cash entries in in-house cash center IMXN associated with Co Code 6000

 RSS Feed IHC Nostro/Vostro Dr.

To Bank A/c Cr

Scenario

Business process
Company is doing business across the Globe. We operate in around countries across
globe which are divided into regions. There are In House Cash centers to cater the
payments on behalf of the subsidiary.

Source: SAP.com/google.com

Payment processing of a Co Code 0005 of Region 2 is processed by IHC Center of

Region 1. For example, vendor open item is in Co Code 005 of Region 2, IHC Center of
Region 2 will process a payment order and forward it to In-house Cash center IMXN
(Co Code 6000) of Region 1 for payment.

In House Cash Center for Region1 process the payment from bank account and send
the payment file to SWIFT.
 During day end processing accounting entries for cross bank area should be posted a
Nostro / Vostro account in Balance sheet.
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During month end closing, we need to identify the cross-bank area posting and pass
 RSS Feed manual entries to rectify the IHC accounts receivables/ payable accounts in Balance
sheet. Cross bank area GL posting (day end processing) should be automatically
posted and identified in balance sheet.

Challenges

Technically, the accounting entries will be processed between head office and
subsidiary companies. In-case, of cross bank area posting, accounting treatment
between head office of Bank area1 and Bank area 2 should also be identified and
accounted in balance sheet of respective company codes. Cross bank area entries
are to be identified and manually pass accounting entry.

This White paper helps to setup the system to identify & post the accounting entry
for cross bank areas automatically.

Prerequisites

Required Business Function FIN_INHOUSE_CASH_1

Value Proportions

Automated process with full audit trial

Easy reconciliation of Nostro/Vostro account

SAP Solutions
When a payment to vendor is processed from cross bank area, in the background
system post the payment item in the payment order to a cross bank accounts. The
cross-bank accounts should be created with a product BANK and in the control data
tab of IHC account in General ledger transfer maintain General Ledger group as
“BANK”.
 Follow In customization for the ledger group “BANK” assign Nostro/Vostro GL Account.
During posting system will pick the GL group in the payment items and post
Nostro/Vostro GL accounts accordingly.
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Configuration

Periodic Tasks

General Ledger Transfer Maintain GL Group

General Ledger Transfer Define GL Account Assignment: Current Accounts

General Ledger Transfer Define GL Account Assignment/Items in Post processing

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General Ledger Transfer Transfer Postings Payable/Receivables

Master Data
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Scenario – 1

Cross bank area posting IHC1 to IMXN

Ordering party GL posting will be to BANK GL group (Nostro/Vostro) and recipient

party will be with IHC Cash payable/receivable group.
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GL account view of IHC1 bank area (Co Code 0001), Nostro/Vostro account is
credited in Ordering bank area (IHC1)
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In recipient co code/paying co code, Nostro/vostro account is debited.

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Scenario -2 External vendor payment from cross bank area

Vendor Invoice paid thru IHC

Vendor Invoice paid

 Follow

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IHC IDOCs posted and payment request generated in Co code 6000 under In-house
Cash area (IMXN)

Payment order 97 created with ordering party

 Follow

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Recipient item type with GL group Bank (Nastro/Vostro)

Payment request in Co code 6000 IHC center IMXN

IHC Transfer posting

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Credited Nostro/Vostro GL in Co Code 0001 under bank area IHC1

Payment Posting in Co code 6000

Alert Moderator

Assigned Tags

SAP Financial Supply Chain Management

SAP Treasury and Risk Management

In-house Cash

Conclusion
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 Like About Author

Cash and Liquidity Management Configuration
By LAKSHMI APPIREDDY Mar 10, Colin
2021 Thomas has ten years of domain experience in Financial Accounting and

 RSS Feed fourteen years of SAP experience. His experience in SAP includes business process
re-engineering and SAP implementation in Finance and Manufacturing and Treasury
processes. He holds a master’s degree in Commerce and he is certified in S4 HANA
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