Cash Cockpit in SAP

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Table of Contents
The Cash Management Situation ................. 2 Disposition Reporting .................................. 11 Forecast of the Subsidiary Companies ....... 15 Interactive Disposition ................................. 21 Monitoring the Financial Status .................. 30 Processing Bank Account Statements ........34

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The Cash Management Situation

A company that runs out of liquidity becomes insolvent. This can also happen through the lack of transparency if, e.g. the company is doing well from an operational perspective, however, the expenditures can no longer be covered by the currently available financial means. This example already highlights the importance of a well-functioning cash management system in a company.

The objective in day-to-day cash management is to organise the continuously reoccurring cycles from cash investments or borrowing in a sensible, and thus, profitable or respectively costeffective manner.
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Observance of the cut-off times for the payment authorisations to the banks is critical for the validation to be carried out the same day successfully. As these cut-off times at the banks are partly depending on the currency in the morning, the related cash management decisions, depending on which currency is being managed, must be received by the bank in good time via payment authorisation.

The decisions on whether an interest yield was achieved by investing money or whether money is being borrowed must be made by this point to secure the operational business of the company. The following image 1 shows the individual stages of the control cycle of the disposition cycle. The disposition process starts by importing the electronic bank account statements. This process will be specified in detail later on. In our illustration, we would like to start with the central disposition reporting of the cash cockpit:

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First of all, lets start with a quick overview of the five most important stages in the day-to-day routine.

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Disposition Reporting
First of all, the Cash Manager requires a quick overview of the current liquidity situation. In a typical SAP Standard System, there is a daily cash position and liquidity preview for this. A structured overview is required for the daily disposition. This overview will display the current disposition day with its in- and outflows at a glance and as compact as possible. The process starts with the current account balances of the current accounts (after importing the electronic bank account statements). Next, the scheduled date of the daily disposition is edited in a structured manner. This includes information from various sources such as financial accounting, the plan cash flows of subsidiary companies from the purchase, sales or financial transactions from the treasury (real time integration from the SAP Treasury). It must be possible to make decisions based on this information. In practice, many clients prefer to use the more flexible EXCEL display tool.
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Forecast of the Subsidiary Companies

A high-quality database is the basis for a well-founded and informed investment decision. This also means, e.g. that the liquidity flows of subsidiary companies that participate in the cash-pooling, are included. If all companies use the same SAP System and SAP Client this data integration will already have been carried out. It becomes more time-consuming and costly if subsidiary companies use their own, different IT systems. However, the cash forecast of these companies must be included to be able to get an overall picture of the groups liquidity. However, the outdated SAP Standard Transaction used to enter remittance advice is only partly suitable as it has many input boxes.

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Disposition
Once all cash-relevant data has been compiled, the Cash Manager can start making decisions on which financial transactions would make sense based on the current cash situation. In larger organisations, the daily disposition is set-up in the front office of the Treasury Department. Technically, both borrowing as well as investments belong to the area of disposition; cash requirements are in general covered through the availment of the credit limit (drawing via treasury deals on the financial market). Foreign currency requirements are met through currency transactions. In this process, functions are carried out in the SAP Standard at various positions of the treasury module.

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Monitoring the Financial Status

An integral part of monitoring the financial status is to prevent risks. Having an overview of the current overall external financial liabilities of a corporate group is a significant decision support in all disposition and liquidity planning processes. Generally, an analysis of financial instruments and current accounts is carried out. Furthermore, external accounts that are e.g. outside the cash pool organisation, are also included in the processes and monitored.

Checking the Statements

Processing

of Bank

Account

Before the next steps in the cash management process can be carried out, the SAP data and thus the information basis are to be updated. Electronic bank account statements are imported and
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if possible processed automatically. In the framework of the daily disposition and the preceding reconciliation process, the cash flows announced the day before (remittance advice, financial transactions, cash pool transfers, etc.) must be assigned to the actual data (cash receipt or respectively cash disbursement). This process is also very important to be able to make a decision based on the correct data and to clarify discrepancies in time.

Cash Cockpit in SAP

The Cash Cockpit was created in close cooperation with the specialist department at an SAP Client based on these five process steps. The starting point for this was the SAP Standard which was already outdated in many areas and no longer provided the ideal support for day-to-day business. The objective is to make all relevant data available from one central location (Cockpit) and
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to be able to directly carry out interactions (financial transactions) or transactions.

Demo 1: Overview of the Cash Cockpit

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Disposition Reporting
In the Cash Cockpit, the disposition reporting serves as a database for daily planning. This view summarises all cash-relevant processed in SAP ERP in a reasonable manner.

Contrary to individual, independent assessments such as the cash management position, the Cockpit combines a central access point for the front, middle and back office. The liquidity of Friday 27.05 and Monday 30.05 are displayed at a glance, see image 2. A drilldown makes the analysis of all individual values of the respective figures right down to the last level, the individual receipt, remittance advice or financial transaction possible. In addition to multi-level cash pool, the forecasts of the subsidiary companies as well as the future incoming funds / expenditures based on sales or purchases can be displayed.
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The image was developed together with the Cash Management Department and based on the SAP Standard-Customising (by means of disposition groups), it can be adapted to the requirements of the respective company and to the treasury strategies.
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Contrary to a report that purely serves to provide you with data, in the Cash Cockpit you can check the available database, in which you can e.g. look at the status of the cash forecast reports of the subsidiary companies in detail. If only a few companies within the corporate group have reported the daily forecast, the database should respectively only be used with restrictions to make decisions regarding borrowing or respectively financial investments.

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Forecast of the Subsidiary Companies

Cash-relevant data of the subsidiary companies are indispensible for a central cash management.
If subsidiary companies are included in an SAP System as an operational company code, a uniform database will already be available. If subsidiaries are managed outside of SAP, only replacement technical company codes are required. The missing operational data must be delivered correspondingly.

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Maintain Forecast Profiles

Equipped with a SAP GUI, the subsidiary companies are given central access to the Cash Cockpit. The SAP companies also log on to the central ERP. This process should be made as easy as possible. In the example in image 3, you can see a simple transaction which is used to maintain the forecast values.

Image 3: Maintain the Forecast Profile

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Here, a cash requirement of EUR 10,000 on the account at Deutsche Bank is anticipated for the next working day after the disposition day (30.05). The abbreviation t (thousand) or m (millions) is a standard form in the treasury. In the Standard of the SAP Cash Management, this form is unfortunately completely unknown.

This makes it possible for the Cash Cockpit to enter the data error-free and in a quick manner. This ensures that the right amount of zeros is entered.

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Technically, a SAP Standard Remittance Advice is generated with this transaction. Contrary to the SAP Standard Screen for the compilation of a remittance advice, the new input option is reduced to only a few absolutely required boxes. This reduces the complexity for the subsidiary company and increases the acceptance of the users to enter the data into a SAP system.
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Release Forecast Profiles

Four eyes are better than two. True to this motto, a release process for the forecast data is possible. This is managed via two new reporting objects. Only once the forecast has been entered and released will the green light in the Cash Cockpit appear, as shown in image 4.

Image 4: Cash Forecast Status Overview

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Interactive Disposition
The interactive disposition can build on a solid database planning for the current disposition day. Through this a shortcut to the SAP Treasury and the SAP Monetary Transactions is created. The scheduled closing balances after the disposition in the Cash Cockpit, are a central, standard starting point.

From this view, there are various function options through which the SAP Treasury can be accessed, e.g., to make a financial investment. In the limit column to the left, image 5 shows the currently available financial scope of the individual banks. The other columns indicate the loans due today, new drawings and the new total loan balance.
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Image 5: Interactive Disposition Without having to exit the Cash Cockpit, you can quickly and efficiently run through a complete process in three simple steps. Demo 3 shows how a credit limit is extended through drawing.

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Step 1 New drawing

Once you have selected a row (that corresponds to a bank), a drawing transaction can be carried out via the icon new drawing. Again, a SAP Standard Transaction in the treasury is created in the background without having to run through the complex input screen in the SAP Standard. Image 6 shows an example of such a simplified input.
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r&

Anlegen/ndern Kredittnie

einer

Ziehung

zur

Image 6: Drawing a Credit Limit

Planned drawings can first be simulated by clicking on Note. I.e. the impact of a note on the disposition is immediately visible in the Disposition Reporting of the Cash Cockpit.
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The easy forwards navigation with the FI post icon, see image 5, will immediately navigate you to the second step in which the posting run is carried out.

Step 2 Carry out posting run

The drawing of the credit limit is immediately invested as a treasury deal. The drawing can now be transferred to FI and result in one or multiple postings in the general ledger. The posting log in image 7 shows detailed data. A SAP Standard Log gives information on the whole process. Now, the foundation has been laid to carry out the payment authorisations to the banks directly.

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Image 7: Posting Log

Again, the third step can be access via forwards navigation by clicking on the Pay icon.
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Step 3 Monetary Transactions and Payment Request

The SAP Transaction F111 MONETARY TRANSACTION FOR PAYMENT REQUESTS is automatically accessed via a shortcut from the Cash Cockpit, directly provided with the required selection parameters and, if desired, carried out immediately (see image 8). Provided that an automated bank communication has been set up in the background, this could be considered straight-through-processing. Here, a payment run is very efficiently initiated and a payment request is created.

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 Parameter wurden erfasst

9 Zahlungsvorschlag wurde erstellt

Zahlungslauf wurde ausgefhrt Buchungsauftrage: 2 erzeugt, 2 eriedigt

Statu s

Image 8: Monetary Transactions

If direct connections to your banks have been carried out via SWIFT or EBICs, once the produced data carrier has been released, data can be directly sent to your main bank. The SAP Bank Communication Management can support you in this process.
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Monitoring the Financial Status

Monitoring of the financial status takes place in the context of the market risk analyser, external accounts outside the cash pool organisation and financial instruments.

With the aim of supporting the process, a compact overview of the current external financial liabilities is provided. The origin of the financial liabilities is displayed on an interface according to grouping criteria that are to be defined. As an example in image 9, the current accounts of the whole corporate group are grouped according to countries with the current daily balance. Furthermore, the financial instruments are grouped according to financing instruments, foreign currency and derivatives.
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Image 9: External account, summarised according to countries

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To obtain detailed information, individual bank accounts can be accessed via this overview. This also applies for the financial instruments of the treasury: the individual deals with their cash flows and current market values can be access (see image 10 for external bank accounts and image 11 for financing instruments).

Image 10: Drill down external bank accounts

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Image 11: Drill down financing instruments

The compacted display of the complete financial status can also be viewed in the disposition reporting (first tab of the Cash Cockpit).

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Processing Statements

Bank

Account

The information cycle in the cash management starts every morning by retrieving and processing the electronic bank account statements

Every morning between 7 and 8 oclock, the banks make new bank account statements available to the companies for retrieval. Technically, this happens via a scheduled background job at your end. Alternatively, the Cash Manager can carry out the process step manually (pull process). If you have a connection to the SWIFT network, you can reverse this method by your bank sending you the files directly after the files were compiled (push process).

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Importing Bank Account Statements

To date, in the SAP Standard only the Bank Communication Management is able to track whether a bank account statement has been imported or respectively processed. With the ElkoCockpit you have another alternative. As seen in image 12, the Elko-Cockpit also offers a good overview of which bank account statement of the corresponding bank accounts were imported and processed.

Image 12: Overview of the imported bank account statements

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Demo 4: Monitoring Bank Account Stataments

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Monitoring Matching
Remittance advices and treasury transactions created the day before are now reflected in the actual data. The plan records compiled the day before should be removed via matching (ACTUAL/PLAN), see image 13. The Cash Cockpit also offers an easy and efficient solution for this.

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Demo 5: Matching retrieval

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Further Information

Consultants
bdf Consultants GmbH Zollhof 6 40221 Duesseldorf Deutschland / Germany

Contact Details:
Dr. Ralf Huber +49 171 / 3363 449 r.huber@bdf-consultants.de Thomas Dohmen +49 172 / 2566 907 t.dohmen@bdfconsultants.de

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