SAP Solution Brief

SAP ERP Financials

FINANCIAL SUPPLY
CHAIN MANAGEMENT
WITH SAP IN-HOUSE
CASH
A Virtual Bank for the Way You Do Business Today

Companies today face extraordinary pressures to conduct business in a smarter, leaner,

and more economic way. In an
increasingly global economy,
that means streamlining financial
processes across organizational
boundaries and international
borders. The number of corporate

SAP Financial Supply Chain Management (SAP FSCM), a set

of applications in the SAP ERP Financials solution, offers an
in-house cash solution for managing those payments: the SAP
In-House Cash application.
With SAP In-House Cash you can:
Improve your credit position
Open up new strategic investment options
Gain improved advantage in external markets
Ensure solvency of subsidiaries
Aggregate deal size to amortize or reduce risk

groups has increased and clusters

of subsidiaries conduct business
with each other and with external
partners often across international borders. This has created
a new business climate in which
managing intragroup and external
payments efficiently is more
important than ever.

SAP In-House Cash enables you to maximize interest accrual and

cash surplus, while giving you a centralized view of subsidiary
and group transactions. At the same time, you can minimize:
Exposure during cash crunches
Netting process times
Bank transfer and transaction costs
Currency exchange and value date losses
Physical cash transfers
Administrative overhead

The Power of Concentration: In-House Banking

Control Payment Transactions Regionally and

Means Fewer External Banks

Globally

SAP In-House Cash helps companies to streamline payment

processing among subsidiaries and with external business
partners. By serving as a centralized, in-house virtual bank,
SAP In-House Cash slashes netting process times, while reducing
costs associated with currency exchanges and bank transfers.
Most compelling, SAP In-House Cash eliminates losses due to
value dating, maximizes cash positions for group entities, and
increases net interest gains.

For a subsidiary, the in-house cash center based on SAP In-House

Cash is a virtual bank that serves as a house bank, which processes
both internal and external payments. Using SAP In-House Cash,
the in-house cash center manages one or more current accounts
for each subsidiary in a group and keeps the accounts in any
currency. The subsidiary keeps one or more accounts with the
in-house cash center as if it were a house bank.

By providing a centralized view into the liquid funds and payment

transactions of all participating subsidiaries, SAP In-House Cash
supports critical decision making for improved investment
strategies. Subsidiaries can pay internal entities without the need
for physical cash transfers between their own internal accounts
or with external banks. Groups gain improved credit positions
for better terms in external money markets. By carrying out
payment orders when individual subsidiaries experience
cash flow bottlenecks, SAP In-House Cash assures continued
solvency a vital hedge in uncertain times.
SAP In-House Cash has all the functions required to completely
centralize worldwide payment transactions, while being highly
adaptable to decentralized or hybrid organizational structures.
SAP In-House Cash addresses all types of organizations, including
subsidiaries and their affiliates, head offices, house banks used by
head offices, and external business partners and their house or
partner banks.
Using the functions of SAP In-House Cash, you can:
Calculate and debit interest and charges
Grant current account overdrafts to subsidiaries
Generate bank statements for subsidiaries
Automate intragroup payment transactions
Automate incoming and outgoing payments for external
partners and partner banks
Pay receivables for subsidiaries

The head office manages the financial accounting software (which

could be the SAP Financials for Banking package or other software) and the in-house cash center. The in-house cash center is
located centrally, so the parent company (or another organizational unit) manages the current accounts. Like a house bank,
the in-house cash center creates and dispatches bank statements
to the subsidiaries. This reduces the float or transfer time for a
payment from the ordering party to the recipient, thereby
eliminating the value date differences between subsidiaries.
Because SAP In-House Cash handles payments between
subsidiaries without using external banks, you avoid the
associated transfer fees. You gain increased control over
cash flow, while subsidiaries reduce netting process times.
Earn a Better Return on Financial Information

As part of SAP ERP Financials, SAP In-House Cash delivers

on-demand reports for instant financial analyses. Postprocessing
and many other functions can be automated, reducing staff
hours spent closing books at the end of a day, month, quarter,
or year.

Maximize Interest Gains

SAP In-House Cash enables you to maximize net interest income

and to disperse that income to subsidiaries. Interest calculations
can be based on several methods. Extra-credit interest earned
by a larger group from external money markets can be passed
on to subsidiaries. You can opt to charge debit interest below that
of the house bank, thereby improving the net interest income
of subsidiaries, and apply an overdraft interest rate if the balance
exceeds the internal overdraft limit.
Gain Advantages in External Money Markets

SAP In-House Cash helps you improve your position in external

money markets by maximizing your credit position, gaining
better interest rates and terms through larger deal sizes, and
amortizing risks over multiple subsidiaries. You can also trim
the number of bank accounts needed and reduce losses due to
exchange rate fluctuations. Central cash management reduces
costs and improves size advantage in external money markets.
With larger credit amounts in the accounts of the in-house cash
center, you may gain access to investment strategies previously
unavailable.
Your Own Business: An Untapped Competitive Edge

SAP In-House Cash delivers powerful benefits:

Streamlined internal and external payment transactions
Reduced currency exchange and value date losses
Maximized interest gains
Hedges against cash flow difficulties
Increased competitive position in external money markets
Multinational organizations must tap every possible advantage to
maximize market position and revenues. Because SAP In-House
Cash manages accounts centrally, you have a direct view of all
payment transactions in your group and of the liquid funds
available in the accounts of all subsidiaries. If cash is tight for a
particular subsidiary, the in-house cash center can ensure its
payment obligations are met. Meanwhile, it can grant current

account overdrafts on short notice, ensuring individual

subsidiaries remain solvent amidst dynamic market conditions.
In todays unpredictable global economy, streamlining business
across all kinds of borders is essential. With SAP In-House Cash,
that necessity can be leveraged as a new source of competitive
strength.
For More Information

To learn more about how SAP In-House Cash can

streamline payment processing, visit our Web site at
www.sap.com/financials.
Powered by SAP NetWeaver

SAP In-House Cash is powered by the SAP NetWeaver platform.

SAP NetWeaver unifies technology components into a single
platform, allowing organizations to reduce IT complexity and
obtain more business value from their IT investments. It provides
the best way to integrate all systems running SAP or non-SAP
software.
SAP NetWeaver also helps organizations align IT with their
business. With SAP NetWeaver, organizations can compose and
enhance business applications rapidly using enterprise services.
As the foundation for enterprise service-oriented architecture
(enterprise SOA), SAP NetWeaver allows organizations to evolve
their current IT landscapes into a strategic environment that
drives business change.

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