011000358700000333842003e PDF

Functions in Detail
Cash Management in mySAP Financials

TM
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Contents
Contents
Trends in Global Cash Management 5
The Cash Management Process 7
The Traditional Cash Management Process 8
Inbound Data 8
Cash Reporting 8
Intraday Bank Files 8
Cash Concentration and Funding of Disbursement Accounts 9
Investment and Debt Decisions 9
Currency Management 9
Derivative Transactions 9
Electronic Funds Transfers 10
End-of-Day Data 10
Month-End Data 10
The Cash Management Process with mySAP Financials 10
Inbound Data 10
Cash Reporting 11
Intraday Bank Files 11
Transaction Processing 11
Period-End Processing 11
Benefits of Cash Management in mySAP Financials 12
Key Features of Cash Management in mySAP Financials 13

Inbound Data 14
Bank Statements 14
Lockbox Statements 17
Data from Operational Systems 18
Planning Items 20
Analysis and Decision 20
Cash Position Tool 21
Liquidity Forecast Tool 23
Designing Your Reports 24
Comparison and Control Functions 26
Borrowing, Investing, and Hedging 27
Outbound Data 28
Payment Run Procedure 28
Vendor Payments 30
Cash Concentration and Bank Account Transfers 30
Repetitive Bank-Account Transfers 31
Free-Form Wire Payment 32
3
Contents
Electronic Bank Communication 33

Electronic Bank Statements 33
Supported Formats 33
Electronic Payment 34
NACHA ACH and SWIFT MT100 Formats 34
EDI: EDIFACT and ANSI X12 35
Internet Banking 35
Complementary Software 36
Methods for Bank Communication 36
Proprietary Bank-Communication Software 38
Bank-Connector Workstation 38
Bank-Data Consolidator 38
Direct Connection with an Internet Standard Format 39
Distributed Cash Management 40

Integrating Your Subsidiaries 40
mySAP Enterprise Portals for Cash Managers 42
Beyond Cash Management: Corporate Finance Management

with mySAP Financials 43
Liquidity Planner 43
In-House Cash 44
Transaction Manager 44
Market Risk Analyzer 45
Credit Risk Analyzer 45
Portfolio Analyzer 45
Benefits of Cash Management and

Corporate Finance Management in mySAP Financials 46
Integrated Treasury Solution 46
Integration with Other Operational Systems 47
Integration with Banks and Multiple Bank Platforms 47
Integration to Data-Feed Providers 47
Global Solution 47
4
Trends in Global Cash Management

With the globalization of markets and corporations, the needs of corporate
treasury managers and cash managers have shifted from straightforward cash
management to comprehensive liquidity and risk management. Treasury and
cash management professionals need solutions that integrate accounting and
banking data, automate workflow, and incorporate liquidity and risk manage-
ment functions.
As a treasury or cash management professional in todays fast-paced world,

overseeing a multitude of transactions, cash flows, currencies, and portfolios,
you face greater challenges than ever. As your business becomes more global,
your need to manage cash centrally intensifies, while at the same time, you need
even more local access, input, and review. The potential to streamline your bank
relationships, save on transaction costs, and improve your liquidity control are
strong driving forces toward centralized management, but you must balance
them with the need to meet special conditions in local environments.
And because you now manage information in addition to cash, you have
become an integral part of other business functions. Youre now responsible not
only for executing transactions, but also for anticipating problems, taking
advantage of market changes, controlling costs, planning strategically, and
assisting in meeting corporate goals.
Today, your skill in managing financial assets has a direct impact on your com-
panys competitiveness and shows up both on the bottom line and in the share
price. To fulfill your responsibilities, you need a treasury solution that is inte-
grated with the business and updated in real time as cash-relevant transactions
occur. Managing working capital is of primary importance. An accurate and
timely cash forecast based not only on bank-account, accounts receivable, and
accounts payable data, but also on sales and procurement information helps
you make better investment and borrowing decisions.
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You must look at all steps along the working-capital time line. To do this effec-
tively, you must have a treasury system that is integrated with the enterprise
information system and gives you a complete picture of cash. You can make
superior financing decisions when you have at your disposal all the up-to-date
information about orders placed and entered, the status of shipments and
invoices, procurement expenses, and current credit and market information.
Internet-based technologies support these trends. The Internet is shaping the

practice of cash management more powerfully than any new development since
the advent of funds transfer by wire in the late 1970s. The Internet is a medi-
um for quick and flexible communication with banks, other external treasury
partners, and especially if your company is multinational with subsidiaries
and affiliates. Using the Internet not only speeds your responses to unforeseen
developments, but also lets you use e-business solutions that give you a com-
prehensive view of the entire corporation. E-business solutions can now inte-
grate cash flows of geographically distributed treasury systems with operational
systems such as sales and procurement systems. With integrated, up-to-date
information, you can perform cash management centrally, while still providing
local access and transaction handling.
Your business is constantly changing. Youre making decisions faster and soon-
er. Your treasury system can and should be in a position to help you drive the
business forward. The solution must have a business model that is flexible
enough to match your companys geographic scope and organizational struc-
ture, and it must meet your needs for automation and sophistication.
The solution that meets all these needs is Cash Management in mySAP
Financials.
6
The Cash Management Process

Your daily responsibilities as a cash manager are likely to involve several steps
and follow a very consistent schedule:
The first step each morning is to retrieve, process, and analyze bank and
other financial and operational data. This data includes an electronic state-
ment from the banks of the previous days transactions for posting to the
general ledger.
The second step is to determine the cash position as well as the cash forecast
to ensure that liquidity and funding requirements are met. To do this, you
need the current days files from the bank, an estimate of the days receiv-
ables, plus the anticipated cash flows not already reflected in the system,
such as tax payments. This step is the starting point for investing, borrow-
ing, foreign-exchange, and hedging transactions.
The third step is to transmit payment files to transfer the funds from accounts
payable that are required to invest, pay down debt, or fulfill vendor obliga-
tions. The results of these transfers must then be reflected in the cash man-
agement reports. You can perform outbound transmissions electronically or
in a manual, typically paper-based fashion.
Being able to incorporate bank data, transactional data, and all their resulting
flows with the companys business systems on a global basis is essential to the
success of your cash management system.
7
The Traditional Cash Management Process

Inbound Data
The first step in the traditional cash management process is to access your com-
panys balance and transaction data from the bank. This often involves using
proprietary communication programs from various banks or an off-the-shelf
communication package. Starting with the bank data, you create a cash work-
sheet to begin the process of setting the days cash position. On the worksheet,
you must estimate the days receivables and payables clearings as well as rele-
vant cash flows from other departments such as purchasing and sales. You
might make a simple projection based on the prior day or month, or creating
estimates may require phone calls or faxes from the various departments.
Through a combination of downloading and uploading of data, parsing of data
files, and manual data entry, you incorporate all the necessary data into the pre-
liminary cash worksheet.
Cash Reporting
The cash worksheet is often a spreadsheet generated in Microsoft Excel or Lotus.
It allows you to manipulate the data and add additional flows, such as a pro-
jected tax payment, to the forecasted data. Once entered, the data becomes part
of the worksheet until you manually remove it. As more information becomes
available or the data changes, you must manually edit the report. You must con-
stantly update the worksheet as transactions are initiated, funds transferred, and
deposits concentrated.
Intraday Bank Files

After you review and set yesterdays cash position, its time to set todays cash
position. The first step is to contact the banks again and request todays data.
Specifically, you need the presentment data to determine the funding require-
ments for the controlled disbursement accounts, along with any automated
clearing house (ACH) credits and debits that will affect the accounts today. You
create a second worksheet or update yesterdays worksheet with todays infor-
mation. You must reconcile actual data to planned data, and you must do this
whenever new intraday information is pulled in. You then begin the process of
moving funds to concentrate balances or to fund the disbursement accounts.
8
Cash Concentration and Funding of Disbursement Accounts

Once you have analyzed all the data, you begin the process of executing the
required transactions to concentrate cash or fund disbursement accounts. In the
traditional process, this involves generating the transactions through a series of
phone calls, various bank software packages, or a dial-up session to a bank
mainframe system. It also means stepping through a series of authentication
and authorization procedures to access various systems and identify transaction
limits. You then must copy the results of these transactions to the cash work-
sheet to keep the data current.
Investment and Debt Decisions

Throughout the rest of the morning, you make investment or borrowing deci-
sions to ensure liquidity while maximizing interest income or minimizing in-
terest expense. You must record in the cash worksheet the effect of all your
transactions and the resulting future cash flows. In addition, you must organ-
ize these transactions to facilitate their periodic accruals, deferrals, and valua-
tion, and to calculate the resulting capital gains or losses.
Currency Management
You must also manage individual currencies, following the same data-gather-
ing and analysis procedures you used before, to set and manage the overall cash
position for each currency. Again, you must record and maintain in the work-
sheet the future cash flows and any resulting gains or losses.
Derivative Transactions
Managing currency and interest-rate risk exposure may result in executing
options, swaps, and other steps to offset and limit your risk and exposure. The
various potential financial results of derivative instruments must be reflected in
the cash position and forecast when applicable.
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Electronic Funds Transfers

Before the banks close each day, you must execute electronic funds transfers to
complete the days transactions. These transfers include investment, foreign-
exchange, and derivative transactions implemented throughout the day.
Typically, they also include transactions required by other departments that can
only be executed by treasury because of the IT infrastructure required to trans-
fer the funds. Again, it may require multiple phone calls, software packages, and
dial-up sessions, as well as a series of authentication and authorization proce-
dures to access the various systems and to identify the individual transaction
limits.
End-of-Day Data
You need to poll todays bank data at least once more to verify the transactions
that you initiated throughout the day and to view additional data such as lock-
box deposits and incoming wires. You must then update the cash worksheet
with this new data and prepare to post the days transactions to the general
ledger.
Month-End Data
All the cash management transactions must be managed to allow for the appro-
priate accounting treatment for each period, including cash accounting, for-
eign-currency gains and losses, and interest accruals and deferrals. You must
also reconcile bank statements and accounts payable and accounts receivable
subledgers, and post the required general ledger transactions.
The Cash Management Process with mySAP Financials

Inbound Data
Cash Management in mySAP Financials electronically accesses and automati-
cally reconciles your balance information. The system automatically identifies
unreconciled transactions, flags them as exceptions, and makes them available
to the person responsible for monitoring the corresponding bank account. As
the cash manager, you need only be involved in exception handling. The soft-
ware integrates and automatically feeds into the cash position or the liquidity
forecast all the relevant actual and planned cash data from other business areas
such as sales and procurement. It integrates cash management data from sub-
sidiaries and affiliates using Application Link Enabling (ALE) from local SAP
systems or via upload from spreadsheets.
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Cash Reporting
Real-time reporting within mySAP Financials allows you to view a reconciled
report on the current cash position at any time. From the report, you can easi-
ly research additional data on any suspect balance by drilling down on the
balance in question. This allows you to determine the account affected and the
reason for the transaction in question. The cash-position report automatically
and immediately reflects new transactions. The drill-down functions let you
analyze multiple currencies or balances across companies.
Intraday Bank Files

You can access current-day information automatically and incorporate it in the
cash position. The cash-position report in mySAP Financials gives you the
unique ability to view prior-day, current-day, and memo items on a single
screen, based on the parameters that you define to generate the report.
Transaction Processing
Throughout the day, as you make decisions to concentrate balances, fund cur-
rencies, and execute investment or hedging transactions, the system automati-
cally creates the corresponding cash flows, constantly updating the cash reports.
It also creates payment files and transfers them to the banks electronically.
In addition, you can post cash transactions to the general ledger as cash-in-
transit, providing a foundation for reconciliation with the next mornings bank
statement.
Period-End Processing
Because the system posts all the transactions as soon as they occur, you need
not create any adjusting entries. The system automatically posts accruals and
deferrals and performs all calculations required to determine gains, losses, rev-
enue, and expenses. Results are automatically posted, making the period-end
closing swift and simple.
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Benefits of Cash Management in mySAP Financials

Cash Management in mySAP Financials makes your life much easier and your
work a lot more efficient. The high degree of automation eliminates redundant
data entry and enables accurate, up-to-date cash reporting across countries,
currencies, and subsidiaries. Because bank accounts and subledgers are recon-
ciled automatically, your manual interventions are reduced to simply handling
exceptions, which streamlines your month-end closing process. Your savings in
transaction costs are significant, and you can make better, more informed cash
management decisions. Performing cash management with mySAP Financials
also sets the stage for evaluating and managing risk with the Corporate Finance
Management capabilities of mySAP Financials particularly the risk and trans-
action management functions.
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Key Features of Cash Management in

mySAP Financials
Cash Management in mySAP Financials provides three basic functions:
Quickly and reliably transfers all cash-relevant information from internal
and external sources into the cash management system (inbound data)
Performs analysis and reporting of current and future cash flows to help you
make cash management decisions (analysis and decision)
Communicates with banks and other business partners based on the results
of the decision process (outbound data)
Cash
Market information management Trading
decision
Cash Position Liquidity Forecast
Bank accounts Payment Financial Subledgers

in currency: transactions Investments A/R
Account 1 in transit: and A/P
: incoming borrowings Purchase orders
Account n outgoing Orders
Total
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Inbound Data
The three main sources of cash-relevant data are bank statements, operational
systems, and planning items.
Bank Statements
mySAP Financials supports more than 27 standard formats for bank communi-
cation that are used worldwide. This capability provides the foundation for your
global cash management system. Authorized individuals can access the bank
transaction status or current balances 24 hours a day worldwide.
Prior-Day Bank Statement

The first step in automating the cash management process is to capture the
companys bank transactions electronically from the bank and store them in
your internal bank data storage. This allows the system to perform the task of
reconciliation efficiently and as often as required. Processing is separated from
account reconciliation to allow the monitoring of your account balance to work
independently of cash operations performed outside the treasury department.
The initial data processing can either be memo-oriented or accounting-orient-

ed. The latter is more typical and begins with a general ledger process. This first
processing step posts the bank statement transactions or balance information by
reported-value date. This is the basis for the days cash position. The system
begins each processing day by posting all the prior-day transactions reported
by the bank to the general ledger (bank master accounts and bank-clearing
accounts). It also automatically reconciles the bank account using the previous
days transactions.
The second processing step clears transaction activity that is not critical to
developing the active cash position of your organization. This procedure clears
the appropriate subledger transactions, which were not automatically cleared
and appeared in a post-processing list.
In the case of unapplied funds, a post-processing procedure posts the funds to

the accounts payable and receivables subledgers where appropriate.
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Electronic
bank statement Bank
postings
Swift MT940 EU
MultiCash EU
Lockbox USA
BACS UK Bank Cash position and
Area-specific
ETEBAC F Data liquidity forecast
processing
CODA BE Buffer
03/15
FIDES CH
Banks 100
CSB43 E
Subledger 25
ZENGINKYO JP
IDOC SAP
Interface
. Subledger
. accounts
(A/P, A/R)
Manual bank
statement
Electronic bank statements attach transaction codes to each item. These codes
tell mySAP Financials what kind of transaction the particular bank-statement
item represents. To specify how each business transaction from the electronic
account statement has to be posted, you can define posting specifications for
each transaction code within the system. A posting specification can determine
a general ledger account posting and a subledger account posting known as
area-one and area-two posting, respectively. You can set the posting specifica-
tions to select one or both of these postings.
To process bank-statement items correctly, the system needs to identify the cor-
responding internal open items. To achieve this, the system uses standard algo-
rithms to interpret and search for recognized values in the transaction field of
the electronic bank statement. For example, the system contains algorithms for
check-number search and document-number search, based on the details of
transaction data. If an algorithm is defined to interpret the activity of the elec-
tronic bank statement, the system examines data within the transaction line to
determine whether it represents, for example, a known document number, ref-
erence document number, or check number. If the number is valid and correct,
the system finds and clears the corresponding item or items within the system.
The interpretation algorithm automatically finds incoming and outgoing pay-
ments based on information supplied by customers and the bank within the
bank statement. If the standard algorithms supplied by SAP do not meet all your
requirements for clearing, you can define your own functional algorithms.
15
Two options are available for post-processing electronic bank statements. One
option is to post immediately; the other is to generate batch input. If you choose
to post immediately, you can use the post-processing transaction to modify and
post line items that the system was unable to post automatically for example,
if no matching open item could be found in the system.
For batch input processing, the batch sessions are processed in the background,
and the results are recorded in a processing log. Uncompleted transactions
remain in the sessions as defective records. You then post-process these unsett-
led transactions online. You can delete or edit defective data to assist in the
clearing process. Post-processing is complete when no defective transactions
remain to be processed.
The two-step integrated process described above allows all areas of your organ-
ization to use the same data and reduce transaction-reporting costs charged by
the bank. For example, accounts receivable can review payments received from
customers, accounts payable can review checks that were cashed by vendors,
and cash managers can review all wires and transfers. Everyone can focus daily
on items with problems or discrepancies. Daily automated processing also
results in stronger operational control, because you can identify unexpected
transactions and resolve errors immediately, rather than waiting until the end
of the month when a paper-based bank statement arrives.
Intraday Bank Statements

The determination of daily cash transactions requires taking a proven position
(generated with a proof of position) and combining it with actual and forecast-
ed activity for the day. Integrating active bank-account balance information
and transaction reporting is critical to closely managing position balances and
transactions with your banking partners. Being able to determine the funding
requirement is essential in performing cash concentration. This allows you to
maximize your investment funding and move funds to concentrate balances or
to fund their disbursement accounts only when needed. Cash Management in
mySAP Financials gives you great capability for reporting, integrating, and
reflecting intraday activity either at a transactional level or a balance-deficit
level.
Cash Management in mySAP Financials can retrieve and process intraday (cur-
rent-day) data without the problem of double postings to the general ledger.
Processing intraday electronic statements is similar to processing prior-day
statements. However, current-day data is not posted to the general ledger.
Instead, it is represented on the cash position as memo items, which are later
replaced by the following days electronic bank statement postings.
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You can set the cash-position report to present intraday data with the transac-
tions that the bank file indicates will clear today, rather than the clearing-
account information used in the days earlier report. For example, you could use
first and second presentment of check totals rather than the total, or percent-
age of the total, of outstanding checks as the basis for funding a controlled
disbursement account.
Lockbox Statements
A lockbox procedure accelerates payment receipt and check processing and is
normally offered as a service by banks. A lockbox account is a payment-col-
lection account that you set up with your banks. You can tell your customers to
send payments directly to your lockbox account at a particular bank to accel-
erate the receipt of funds. The bank collects the payments as well as the remit-
tance information or payment advices. It also collects and enters data from
check payments sent by customers and notifies you of the information via file
transfer. Once a day or several times a day, the bank can send you relevant
information about the checks received.
mySAP Financials stores the payment and remittance information in the form
of a payment advice, which is used to clear subledger open items. The lockbox
processing continues by generating automatic postings to both the bank-clear-
ing (general ledger) and accounts receivable (subledger) accounts based on the
advice data. After the lockbox automatic processing program has run, you must
use the post-processing function to correct any checks that cannot be applied
automatically. Your post-processing activities might include applying payments
received, clearing open customer items, or resolving unapplied funds.
The last reconciliation step is to clear the bank-clearing accounts with the end-
of-day bank account statements. Cash Management in mySAP Financials auto-
matically processes the end-of-day account statements and creates postings of
the lockbox deposits on the bank accounts (general ledger). Offset postings are
then created on the bank-clearing accounts (general ledger).
17
mySAP Financials uses intelligent processes to facilitate the highest degree of

cash application based upon the data presented by your banking partner. The
system processes the identified banking-partner transactions and posts remit-
tances to the proper customer. The process clears a high percentage of the open
items in accounts receivable, which minimizes the amount of unapplied cash
and reduces the reconciliation workload in the accounts receivable department.
Professionals in accounts receivable need only to concentrate on the items that
failed to be applied automatically or failed completely due to a data discrepan-
cy. Because the lockbox file processes electronically, you can view the cash
position first thing in the morning, without accounts receivable having to
process anything. Information about the availability of active funds from lock-
box accounts might additionally be blended into the cash position based on
additional bank-statement processing.
Data from Operational Systems

As a cash manager, you must be able to respond quickly to surprising devel-
opments affecting the financial position. You need to know the current cash
position and cash forecast in order to manage the liquidity position of your
company. Reliable data sources and a complete view of your company are a pre-
requisite. Cash Management in mySAP Financials is integrated with your com-
panys operational systems, which reduces the work involved in obtaining and
maintaining all cash-relevant information.
Specifically, mySAP Financials Accounting, mySAP Financials Corporate

Finance Management, mySAP Customer Relationship Management (mySAP
CRM) and mySAP Supply Chain Management (mySAP SCM) are integrated with
the cash management functions of mySAP Financials. This integration allows
for data exchange between the individual applications and a consolidated view
of all cash-relevant transactions. mySAP Financials automatically reflects in the
analysis and reporting tools any business transactions that are entered in areas
such as sales or procurement.
As a business transaction progresses through the system, additional and more

accurate information becomes available and automatically updates your cash
management information. For example, an employee may enter a requisition in
the materials management area and include information about the cost and
required delivery date for the purchase. Using that information, the cash man-
agement function forecasts the disbursement date and amount of the purchase.
18
As the transaction progresses from a requisition to a purchase order, the pur-

chasing system assigns a specific vendor and delivery date. mySAP Financials
then updates the reports with vendor-specific information, such as the vendors
default invoice terms and a more accurate disbursement date.
Once the transaction is invoiced, the cash management functions make the spe-
cific terms and amount payable available for your reports. Finally, when the
invoice is paid using a payment run in accounts payable, the cash management
functions use the date of the check along with historical data on the specific
vendors average check-cashing time to present the expected disbursement on
the cash-position report. Once the check is charged to a specific bank account,
you import from the bank the same-day balance, which updates the cash posi-
tion with a memo record. On the next day, when you upload the prior-day bank
statement, the bank posting replaces the memo record.
Accounts Cash
Purchasing
payable Management
Purchase Liquidity
order forecast
delivery date and
Goods payment conditions
Invoice
receipt
updated payment
history
Outgoing
payment
Cash
Account position
statement
payment according
to arranged/forecast
date
value date based

on bank statement
19
The process flow for incoming payments is similar. Here the SAP system proj-
ects a receipt, taking discounts into consideration, as well as the delivery date
for the sales order, the customer-payment terms, and the customers historical
payment behavior.
Planning Items
Planning items generally reflect expected cash inflows and outflows that are not
caused by actual postings. Planning items can be generated by intraday bank
statements as well as by data imported from operational systems. You can man-
ually enter any cash-relevant transactions that are not covered by these sources.
You can import planning data from subsidiaries using an upload program to
import a spreadsheet, or you can enter them manually. You can give each plan-
ning item a maturity date, which the system uses for automatic archiving once
the date has passed. Planning-item journals give you an overview of planning
items. You can limit the overview to specific items using selection criteria such
as planning type, value date, and currency.
The cash management functions can reconcile planned items with actual bank
postings. The system selects items that have a specific planning date and com-
pares them with the actual bank postings on a specific account or in a specific
bank statement. Criteria for matching the items to the postings include the com-
pany code, bank account, currency, amount, and value date. The system can
generate a list of potential matches for you to manually select and archive the
matching planned items. Alternatively, the system can perform the archiving
automatically, generating an archiving protocol. For automated processing, you
can define tolerance intervals for the amount. Non-matching items are summa-
rized in an exception list for manual post-processing.
Analysis and Decision

Analysis and reporting tools are the basis for your decision-making processes.
Two liquidity analysis tools are available for Cash Management in mySAP
Financials. They differ in terms of the time line they address, as well as the qual-
ity and exactness of the underlying cash flow information.
The Cash Position tool represents the short-term view and reflects relatively
certain and exact information about bank account balances and cash flows in
transit. Cash movements in this report result from bank statements, short-term
treasury transactions, postings to bank-clearing accounts, and confirmed plan-
ning items.
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The Liquidity Forecast has a midterm focus. It is fed with more uncertain and
less exact information from sales and procurement, accounts payable, and
accounts receivable, as well as with midterm financial transactions and uncon-
firmed planning items.
Cash Position Tool

The Cash Position tool acts as a monitor for you to remain on top of the pro-
posed, actual, and active processing occurring in the system. Its purpose is to
provide you with all the information you need to make short-term funding and
investment decisions. You can project the report as far into the future as you
like, but managers typically use it to cover the following one or two days. The
report is updated in real time, providing you with the most current information
at any point in time.
The cash position displays the short-term liquidity status by analyzing the bal-
ances in the bank and bank-clearing accounts with respect to value date. It can
also display confirmed planning items in the form of memo records, as well as
expected cash inflows and outflows from short-term treasury transactions. With
integrated information from all these data sources, you gain a very compre-
hensive view of your short-term liquidity situation based on actual and con-
firmed planning data.
You can analyze the information in the cash-position report along multiple
dimensions, such as currency, business partner, value date, and business unit.
Another key parameter in determining the structure of the report is the group-
ing of accounts. The grouping defines which accounts are to be considered in
the report and which are irrelevant. By requesting different groupings, you can
obtain reports that structure and present the cash-position data in an unlimited
number of formats, according to your information needs.
Flexible reporting enables you to monitor enterprisewide activity by company

or underlying currency and to drill down on cash-position figures to determine
their underlying source and location. You can chose to drill down by levels to
identify the sources of the cash flow. Typical levels in the drill-down are, for
example, incoming checks, outgoing wires, or foreign-exchange transactions.
Alternatively, you can drill down by accounts to reveal the accounts in which
the balance occurred. Whether you drill down by levels or by accounts, the
drill-down ends with the display of either one particular financial accounting
document or the transaction data for a specific treasury transaction.
21
For example, the cash-position report may identify that a total is less than
expected. You can start with that total and use the drill-down capabilities to
identify the source of the discrepancy to be, for example, a controlled disburse-
ment account. By drilling down further on the balance, you might determine
that an unexpected check-payment program run caused the discrepancy. By
drilling down on the position entry, you can view the payment document in the
general ledger (bank accounts) and easily identify the payment recipients and
the amount of the check run.
Grouping
Banks 09/01 09/02 09/03

BANKA 90 130 60
BANKB 40- 20- 30-
:
Level: Accounts:
BANKA 09/01 09/02 09/03 Subledger 09/01 09/02 09/03
F0Subledger 40 80 20 Account 1 10 30 10-
B2Incoming checks 60 60 60 Account 2 20 70 20-
B1Outgoing checks 10- 10- 20- Account 3 10 20- 50
Single Item Display Account 3

Assigment document number amount
19930967654 1 20,000
:
You have a lot of flexibility in displaying the cash management information.

For example, you can request a cumulative display to view the information
from a total-balance perspective or request a delta display to focus on intraday
activity. The time axis is also scalable. You may display the first two weeks in
single days, the following month in weeks, and the remaining time period in
months, for example.
22
Liquidity Forecast Tool

The Liquidity Forecast widens your perspective to the midterm view typical-
ly for the next 1 to 24 weeks. The liquidity forecast focuses on expected cash
inflows and outflows. The accuracy of the information is therefore less certain
than in the Cash Position report. The data sources feeding the liquidity forecast
include not only manually entered planning items, but also data from the func-
tions for materials management, sales and distribution, accounts payable,
accounts receivable, and financial transactions in mySAP Financials Corporate
Finance Management.
You define groups of customers or vendors that caused a specific balance.

Typically, cash managers assign customers or vendors to groups based on cri-
teria such as the likelihood of a cash flow, the projected amount, or the type of
business relationship. Examples of customers and vendor types are domestic
vendors, foreign customers, affiliates, related companies, and so on. As in the
cash-position report, various levels represent the source of the position in ques-
tion purchase orders, sales orders, invoices, loan transactions, or planning
items, for example. Similar to the cash-position report, the structure of the liq-
uidity forecast report is determined by the groups and levels that you specify.
Bank collection
(E1)
(E2)
Groups:
Payer of net Customers with similar payment history
amount (E3) Customers of particular interest
France (E4)
(E5)
F1 =
Posting/Sales
Levels:
FW =
Bill of exchange Balances specified according to level
XA =
Blocking reason A
23
The liquidity forecast report has the same drill-down capabilities as the cash-
position report. You can drill down from a specific balance by level or group,
across companies or currencies. The deepest level of detail is single documents
in such areas as accounts payable, accounts receivable, and materials manage-
ment.
With the help of Cash Position and Liquidity Forecast, you can automatically
and immediately capture and take into consideration all the transactions taking
place along your companys value chain.
Designing Your Reports

For efficient reporting, you need access to central treasury information and the
ability to structure and edit this information.
With Cash Management in mySAP Financials, you can run reports for individ-
ual areas and perform cross-area analyses and evaluations. The cash manage-
ment functions are linked to SAP Business Information Warehouse, so you can
perform management reporting across the entire enterprise and combine cash
management data with other operational data.
You can select reports that help you evaluate cash flows and cash positions
across all the areas of corporate finance management. You can use the drill-
down reporting tool to individually design and interactively process reports. The
reporting tool is highly flexible. You can use it to portray results graphically,
transfer data to PC applications, and link and organize reports into reporting
tree hierarchies.
You can create individual drill-down reports by starting with a predefined

report as a template and adding to or changing the template until it precisely
meets your needs. To comply with formal reporting requirements relating to the
layout of reports, you can design and store personal report templates.
The following example illustrates the capabilities of the drill-down reporting

tool. In the example, the report selects the liquidity forecast and displays
expected cash balances by currency and planning date. The navigation field
lists the characteristics that you can use to further analyze the displayed data.
24
Drill-down reporting works on the principle of a multidimensional data set. To

illustrate the principle, the following example shows a three-dimensional data
set, represented by a cube. You can look at individual cubes within the cube or
at cross-sections of the cube. By swapping around characteristics, you can view
the data from different perspectives.
Reporting structures
MM
SD
Planning date
Planning level x Company code

Planning group Business area
Currency
A/P, A/R
x Planning date x Currency
Bank account
G/L
Com TR
pany
code
1 Drill Down 2 Drill Down 3
1
Planning date
Planning date
Planning date
Currency
Currency
Currency
Com Com Com

pany pany pany
code code code
Planning date
Currency
Com
pany
code
25
In addition to navigating through report data by swapping around characteris-

tics, you can use the drill-down reporting tool to perform numerous classifica-
tion and sorting functions. For each column, you can select a certain number
of maximum or minimum values, expressed as percentage values or absolute
values; the remaining items are then displayed as a total. You can also display
subtotals and totals, sort data in ascending or descending order, and specify
conditions that have to be fulfilled for an item of data to be listed individually,
which ensures that certain items are displayed only in summarized form.
By defining exceptions, you can highlight in various colors the characteristic

values that are unusually high or low. You can define exceptions for both
absolute values (such as the nominal value) and relative values (such as per-
centage variances).
Comparison and Control Functions

Cash Management in mySAP Financials offers a number of comparison and
control functions that you mainly use at period end, such as interest calcula-
tion, account balances, value-date comparison, payment-request journal, and
check-cashing-time evaluations.
The interest-calculation report helps you control the interest calculation

processed by your house banks for your bank accounts. It provides the calcula-
tion based on defined interest parameters and the calculation period as well as
the posting to the bank general ledger accounts.
The account-balance list shows on a monthly basis the balance carried forward
at the beginning of the fiscal year, the total for the period or periods carried for-
ward, the debit total for the reporting period, the credit total for the reporting
period, and the debit balances or credit balances at the close of the reporting
period.
The value-date comparison compares the planned, or agreed-upon, value date

with the actual value date. For each item cleared in a bank-clearing account,
the report finds the corresponding balance-sheet account posting and reports
both items if their dates differ.
The journal for payment requests lists open or cleared payment requests gener-
ated in the system.
26
The check-cashing analysis calculates the average check-cashing time for

checks already redeemed or not cashed yet by each bank account or vendor. It
serves as a control instrument and as a basis for presenting the disbursement of
issued checks on the cash-position report. It also determines the number and
amount total of checks currently outstanding.
Borrowing, Investing, and Hedging

Once the cash position and liquidity forecast have been finalized, decisions can
be made to invest, borrow, or hedge your exposure. You can act upon your deci-
sions using the transaction management functions of mySAP Financials, which
then automatically update either the cash position or the liquidity forecast. In
addition, you can analyze the effects of your decisions on the companys over-
all currency and interest-rate exposure with the help of the risk management
capabilities in mySAP Financials. Financial transactions and risk analysis are
both covered by Corporate Finance Management with mySAP Financials.
Transaction Manager
Money Foreign
Securities Debt Derivatives
Market Exchange
Analysis & Decision
Cash Management Analyzer
Cash Liquidity Credit Risk Market Risk Portfolio

Position Forecast Analyzer Analyzer Analyzer
27
For example, based on the cash position and liquidity forecast reports, you may
discover a liquidity deficit that needs to be funded for 30 days. Within the
Transaction Manager, you have predefined the instruments that your company
uses for debt management. You select a suitable instrument and business part-
ner for the transaction and enter the amount, interest rate, and the 30-day dura-
tion. When you store the transaction, its cash flows are immediately reflected
in the cash-position and liquidity forecast reports. The amounts shown are
todays borrowing amount, the principle repayment, interest paid, and any other
associated costs that you incur in 30 days.
Outbound Data
Payment Run Procedure
Payment runs identify all payments due and prepare them for execution. You
can schedule payment runs to execute automatically or on an as-needed basis.
Payment runs result in document postings to the bank subledger accounts. In
addition, payment runs generate the request to your bank partner to disburse a
payment. You can define parameters for the payment program to specify the
scope of the payment run. Company codes, account types, paying bank, the
desired posting date, the possible payment methods, the date of the next pay-
ment run, and the form of data carrier are some of the specifications you can
use to define a payment run.
Before starting the actual run, you can execute a proposal run. The proposal run
gives you the opportunity to review and edit the targeted payments prior to
their execution and posting. When creating the payment proposal, the system
first checks the results, then writes the proposal log and records any exceptions.
It then generates the proposal list, which you can display or print for review and
editing. Once you have made any modifications and accepted the proposal, the
payment run is scheduled for execution.
28
Master Payment Current Payment

record control parameters requests
Documents
Proposal run
Proposal data set

Edit proposal
Payment run
Print data set
Print program
Bank Payment Payment

Check IDOC
transfer advice summary
For all necessary postings, data carriers are created to initiate the payments.
These data carriers can take on various forms and are transferred to the corre-
sponding bank or other business partners in different ways. Electronic payment
message transfers are the most common way. They result in a much quicker and
more efficient payment process with the banking partner. Valid payment meth-
ods and message formats include check payments, automated clearing house
(ACH) payments, and Society for Worldwide Interbank Financial Telecom-
munications (SWIFT) messages.
29
Vendor Payments
Most companies accounts payable departments set up payment run schedules
as part of the business process. Whether your vendors, customers, or employees
are paid once a day, once a week, or twice a month, the SAP systems payment
program offers a comprehensive payment feature that allows a single payment
run to use various payment methods such as checks, bank transfers, ACH pay-
ments, and payments by Fed Wire. You specify the payment method for each
vendor in the vendors master record. For example, if you select check as the
payment method of choice in a particular vendors master record, the vendor
will always be paid by check. To make an exception, you can specify the pay-
ment method when posting the invoice to the vendors accounts payable. For
example, to pay a particular vendor by wire for one time only, you can set the
posted invoice documents payment method to transfer, and the vendor will be
paid by wire for this particular invoice.
When accounts payable runs the payment program to pay the vendors, a pay-
ment proposal is generated first. You can review the proposal, then complete or
correct it and regenerate it afterward. Once the proposal is correct, it simply
executes. Postings are then made in the banks general ledger clearing account
for outgoing payments and to the accounts payable subledger to clear the open
items and reflect the cash disbursements. When the checks or electronic funds
transfers are cleared with the banks, the end-of-day bank account statement
processing will clear the corresponding bank-clearing account with a posting to
the bank account (general ledger).
Cash Concentration and Bank Account Transfers

A cash concentration activity moves balances from various accounts to a tar-
geted concentration account. If your balances exceed a defined minimum
balance, the system transfers funds to the concentration account. You can then
generate transactions from the cash concentration account to fund disburse-
ment accounts.
You can freely define which accounts to include in your cash concentration
activities. Based on this group of accounts, the system generates a proposal for
all necessary transfers of funds. It automatically creates planning items to rep-
resent these transactions on the cash-position report. You can establish mini-
mum balances and transaction amounts affecting the concentration proposal.
Optionally, you can require an authorization to release the transfers of funds
30
resulting from the cash concentration activity. The system then generates the
payment request and executes the payment run to post the transactions to the
bank general ledger accounts. The system sends the outcome of the payment
run (transfers of funds from the cash concentration account) to the banks in the
form of electronic payment orders.
A bank might handle the concentration service by a sweep account that auto-
matically moves funds from one account to another as a zero-balance account-
ing service. In the case of a sweep account, only those funds required to cover
the sweep need to be monitored. The system performs the same calculations as
the bank for moving the funds and updates the cash-position report appropri-
ately. No payment order is generated or sent to banks in this case.
Status before concentration after concentration

Bank1 1200 5
Bank2 100 5
Bank3 400 1337
Bank4 -350 3
1350 1350
Repetitive Bank-Account Transfers

In repetitive bank-account transfers, the bank routing and bank-account num-
ber remain the same, but the transaction amount varies. Funds can move from
one account to another in the same bank (a book transfer) or be wired from one
bank to another. The movement of funds in a daily cash concentration fund is
an example of a repetitive transaction between two bank accounts. You can
support bidirectional movement of funds for cash concentration by setting up
two codes one for each direction.
Other repetitive payments include those to vendors and treasury business part-
ners, which you are likely to pay by wire on a scheduled basis. You set up codes
to move funds efficiently between two fixed accounts, with the agreement of
the bank receiving the payment instruction.
31
To handle repetitive transfers, you and your banking partner define a repetitive-
transfer transaction number that is associated with the fund movement between
two specific bank accounts. The banks system maintains the number and the
characteristics of the repetitive funds transfer. You also enter the information in
the SAP system so that it can be included in electronic payment messages.
Because the accounts involved and the direction of the flow of funds are fixed,
a lower level of authorization is needed to initiate a repetitive transaction than
to initiate a freely defined transaction. This way, you can give users with lower
authorization the opportunity to generate fund transfers in appropriate circum-
stances.
Free-Form Wire Payment

Cash managers sometimes need to wire payments to business partners and bank
accounts outside the payment schedule. Normally, you need to fill out certain
delivery instructions and authorizations when releasing the wire payment to a
bank or business partner. You can make wire payments to business partners
whose information is preconfigured in your SAP system, as well as to those who
are not preconfigured.
Payment to Configured Business Partners

Business partners configured in the SAP system are known as FI partners. The
master data records of FI partners include payment delivery instructions. Wire
payments to FI partners use the systems vendor payment model. The system
generates an open item on the partners subledger account (accounts payable),
then generates a payment request and makes postings to the bank-clearing
account and the subledger account to initiate the transfer. Later, a post-proces-
sor performs the proper clearing of the vendor-payment posting with a balance-
sheet or profit-and-loss general ledger account.
Payment to Non-Configured Business Partners

Wire payments to non-configured business partners require a higher level of
authentication, since the system contains no instructions for electronic delivery
to the targeted recipient. The system generates an open item on a treasury sus-
pense account and the corresponding posting on this suspense account and a
clearing account. A payment request is generated by these postings to initiate
the transfer. Later on, posting is made between a later configured partner
account and the treasury suspense account to reclassify the payment trans-
action and to clear the item on the treasury suspense account. The last step of
reconciliation is post-processing to offset the partner account and post to the
balance-sheet or profit-and-loss general ledger account. This allows you to pay
business partners who are not yet configured in the system so that the transac-
tion is immediately reflected in the cash position.
32
Electronic Bank Communication

Strong bidirectional data communication between you and your banks is essen-
tial for efficient cash management. You must have interfaces to link your cor-
porate system to bank systems. You can communicate electronically with banks
in a large number of methods and formats, since global and even national
standards have yet to evolve. SAP supports various methods of exchanging
financial data, including electronic file transfer, electronic data interchange
(EDI), and the Internet, and can handle a broad variety of data formats.
Electronic Bank Statements

Supported Formats
BAI and BAI2 Transmission Formats
SAP supports and accepts a variety of file formats for electronic bank state-
ments. In North America, the file standards for transmitting account statements
are Bank Administration Institute (BAI) and BAI2. SAP supports the BAI and
BAI2 standards to import electronic bank account statements and lockbox state-
ments. A transfer program electronically retrieves the BAI and BAI2 files into
the SAP system. The SAP system is configured to maintain the file format and
interpret the data. The system automatically processes the data after importing
it.
MultiCash Formats
Files in MultiCash formats are created from bank statement data received from
the banks (usually in SWIFT MT940) using bank-communication software.
MultiCash is a standard mainly used in German-speaking countries. It can be

easily run using a spreadsheet program or a word processing program. It cre-
ates two files in formats AUSZUG.TXT and UMSATZ.TXT. The AUSZUG.TXT
file contains the header information for the account statements, and the
UMSATZ.TXT file contains the item information. This method allows you to
import data from several bank statements at the same time, including those
from different banks.
33
SWIFT MT940
Many banks provide bank statements in the international SWIFT MT940 format
(with or without structured field 86).
SAP offers the SAP Software Partner Program, in which banks and bank-com-
munication software providers are certified to deliver files to SAP systems in
SWIFT MT940 format.
Examples of other country-specific bank formats supported by SAP include

DTAUS (Germany), ETEBAC (France), CSB43 (Spain), Cobranca (Brazil), and
TITO (Finland).
Electronic Payment
SAP supports and generates various message formats for transmitting payment
files. Printed checks and payment by ACH or SWIFT messages are a few exam-
ples. A payment run may automatically trigger the electronic delivery of pay-
ment messages to your bank partner, resulting in a much quicker and more effi-
cient payment process with the banking partner. SAPs intermediate document
(Idoc) interface is one way to establish such electronic payment processes.
For each payment method, you can select one payment medium generation pro-
gram. These data media exchange (DME) programs process the data for payment
delivery resulting in, for example, printed payment forms (checks), payment
files (in ACH, SWIFT, or Fed Wire formats), or Idocs for EDI delivery. In the pay-
ment parameters, you can specify the payment medium generation program for
each payment method.
After the payment run is completed, you can follow the results in the payment
log. You can review the output of the payment run in the appropriate output
spool (for payment advice) and DME administration (for file-based output such
as ACH and SWIFT messages). You can also review Idoc-based output, such as
the status of the electronic delivery of payment messages, in the outbound Idoc
processing areas.
NACHA ACH and SWIFT MT100 Formats

The SAP system generates payment instructions in various file formats for dif-
ferent countries. In the United States, the National Automated Clearing House
Association (NACHA) ACH format is recognized and accepted as one payment
standard. The SWIFT MT100 format is the supported international standard. It
is also used for some treasury payment transactions in the United States.
34
EDI: EDIFACT and ANSI X12

EDI allows secure electronic data interchange between your company and your
trading partners. Financial EDl (FEDI) allows corporate trading partners to
exchange payment instructions and collections of remittance information elec-
tronically, using a standard format and in a process facilitated by the banks.
Two EDI standards for exchanging financial data are ANSI X12, which is the
U.S. standard, and EDI for administration, commerce, and transport (EDIFACT),
which is an international standard.
The SAP IDoc format was developed by SAP to handle the multiple EDI stan-
dards recognized throughout the world. IDoc is an SAP standard format for data
exchange between systems. Idoc offers significant opportunities for interfacing
external and internal systems. Data exchange using Idoc is message-oriented
and asynchronous. Whereas IDoc is similar to EDI in its logical message struc-
ture, it is independent of the various EDI standards.
Within the SAP system, only IDoc formats are used to manage communications
between various systems. Communication between SAP systems and bank sys-
tems is performed by a bank-connector workstation for EDI format mapping
and file transfer. Both the bank-connector workstation and the banks propri-
etary software act as translators of IDoc to the EDI standard implemented by the
bank. You may implement these bank communication systems by working with
an SAP certified partner in the SAP Software Partner Program.
Internet Banking
The Internet is a cost-efficient medium for communicating financial data in real
time. The most common way to transmit data files over the Internet is to con-
vert them into a human-legible XML document and pass the XML message over
the Internet.
Currently, no global standards are available for direct bank communication over
the Internet. One financial XML standard, Interactive Financial Exchange (IFX),
is a promising Internet message standard that is available now to support cor-
porate banking requirements. IFX will be extended to support corporate Internet
banking.
SAP is developing the framework to support Internet banking using IFX. SAP
will support the IFX standard for incoming bank account statement messages
and outgoing payment messages for multiple payment methods such as ACH
messages, wires, and checks.
35
Complementary Software
SAP certifies complementary software partners that can provide bank-commu-
nication utility software to customers who would like to receive, send, and
translate banking data.
The SAP Software Partner Program includes a technical certification verifying

the successful communication between the SAP system and the complementary
software package. Please visit the SAP Service Marketplace (www.sap.com/serv-
ices) to find out which vendor products are certified. (On the SAP Service
Marketplace, choose Partners, then Software Partners, then Software Partner
Directory, then search by software category for Financial EDI.)
Methods for Bank Communication

Currently, you communicate with your banks using either the banks proprietary
software or a bank-connector workstation. In the future, you will use the
Internet as the medium to receive and send financial data to and from your
banks. E-commerce will be the primary means of exchanging goods and serv-
ices, and initiating corporate payment over the Internet will be the norm.
36
SAP is currently participating in a banking initiative to define a standard for-

mat that all SAP systems can accept from any bank. When the development of
this Internet standard format is complete, you will have a choice of four ways
to transfer banking data with the SAP system. The four ways are shown and
numbered in the accompanying figure as follows:
1. Proprietary bank-communication software
2. Bank-connector workstation for format translation and file transfer
3. Direct point-to-point connection to a bank-data consolidator
4. Direct point-to-point connection using an Internet standard format
SAP R/3 Client
1 Bank
Software
R/3
Bank 1 Business
Bank 1
2 Bank Connector
Connector
Bank 2
Workstation
Bank 3
Connector
Bank 2
4
Internet
37
Proprietary Bank-Communication Software

If you use proprietary bank software to send and receive files to and from the
bank, the bank is likely to distribute the software to you, for you to install,
maintain, and integrate with the SAP system. The software typically provides
file transfer (to push data), authorization and verification procedures, and dial-
up (to pull data). The software can typically communicate with just one bank or
with all the banks within a country.
Bank-Connector Workstation
Another choice is to communicate with your banks using a bank-connector
workstation to translate data in IDoc format (SAPs EDI standard) to the formats
required by your external banks, and vice versa. Your company implements and
maintains the bank-connector workstation, which interfaces with your SAP sys-
tem. This single-platform solution, also known as an EDI subsystem, ensures
that your electronic banking processes are integrated and your data communi-
cation is secure.
The bank-connector workstation system receives bank data, maps it to IDoc for-
mat, and feeds the data automatically into the SAP system. For outbound com-
munication, the workstation imports payment files from the SAP system in IDoc
format, maps them into the target bank format, and electronically remits these
payment files to the banks.
For each bank, you set up a dial-up connection between your SAP system and
the bank-connector system. You can use the bank-connector workstation for
file-based data exchange.
Bank-Data Consolidator
Research is under way into using third-party banking providers to consolidate
banking data from any participating bank in the banks existing formats. The
banking data will be converted to the new format being developed for cash
management banks. You will be able to accept data directly from some banks
and through a consolidator for others, without needing a separate translation
process. Consolidation will be independent of data communication and securi-
ty and can be arranged between you and your banks to meet your requirements.
38
In this scenario, the bank-data consolidator will collect the bank statements and
convert the data to an SAP standard format so that your SAP system can
process it. The SAP format could be IDoc, BAI, or the future Internet standard.
You will subscribe to the services of the bank consolidator service provider. The
bank-data consolidator will collect all bank statements from multiple banks in
multiple formats, map them to the SAP standard format, and store them in a
database. You will retrieve all account statements from a single source. A direct
interface between the bank systems and your SAP system will not be necessary.
You will only need a single dial-up from your system to the bank-data consol-
idator to access all bank account information.
A major benefit is that smaller local banks will be able to send their account
statements to the bank-data consolidator without having to implement the SAP
standard. Also, you will be able to send payment files to your banks even if you
and the banks are not prepared to interface directly.
Direct Connection with an Internet Standard Format

In the future, business processes will be both Web-enabled and integrated across
business partners. SAPs bank communication capabilities are evolving in this
direction. Because there is no global Internet banking standard, SAP is current-
ly working with banks and other software vendors to define the XML-based
standard for direct Internet communication.
The XML-based format will be based on a current Internet standard, and it will
be fully defined to make it accurate and easy to implement. SAP is working with
banks to provide a utility that you will use to link your SAP system to the bank
systems. Many large cash management banks are expected to make this format
available.
Once the standard is defined and implemented by both SAP and the banks, you
will have direct connection over the Internet. SAP will build solutions to con-
vert Idocs to the new XML standard. The solutions will use the SAP Business
Connector to deliver XML-based financial documents to banks. You will imple-
ment the SAP Business Connector in your SAP system to interface with your
banks over the Internet and exchange XML documents. Once connected, you
can receive account statements, send payments, and perform other electronic
banking functions securely over the Internet.
This new financial XML standard will support all Internet banking communica-
tion. You will be able to subscribe to services offered directly by banks, and
access those services from your SAP system.
39
Distributed Cash Management

Integrating Your Subsidiaries
Cash management processes can be very complex if your corporate structures
include several levels of subsidiaries distributed around the world. However,
your potential cost savings are tremendous if you net the liquidity gaps and sur-
pluses of subsidiaries and establish a centralized, intercompany funding pro-
cess. You can save on transaction costs and the spread costs of simultaneous
investing and borrowing activity throughout the enterprise. You have the same
opportunities in risk management: You can net the currency and interest-rate
exposures between subsidiaries, leaving only the overall exposure for hedging.
Finally, a centralized cash management and treasury unit allows for a level of
financial expertise that is less easily achieved using a decentralized system.
If your company is multinational, your system must be able to handle cash

management processes on a regional as well as a consolidated global basis.
mySAP Financials enables you to use both centralized and decentralized best
practices in cash management. Some of your subsidiaries may perform localized
cash management operations, with your centralized treasury center overseeing
and advising them on the basis of the enterprises overall position. Or, your cen-
tral treasury department may handle all the cash management of all regional
subsidiaries. Either way, the SAP system can determine the liquidity at various
levels within the enterprise.
If your enterprise operates on multiple databases, SAP provides the standard

ALE interface to integrate the systems. Thus distributed cash management func-
tions are available for all data contained in the cash position and liquidity fore-
cast. For subsidiaries not running an SAP system, the cash management data
can be uploaded from spreadsheets into Cash Management in mySAP
Financials.
40
01-01-2001 Mexico Japan Europe Australia US Group

USD 40 M -50 M -15 M 5M -10 M -30 M
MXN -3 B 0 0 0 5B 2B
JPY 10 B 20 B -15 B 25 B -23 B 17 B
EUR -10 M 10 M 25 M -10 M 20 M 35 M
AUD 0 -15 M 0 12 M 10 M 7M
Cash Position 01-01 01-02 01-03

EUR 25 M 23 M 32 M
USD -15 M -12 M -10 M
JPY -15 B -15 B -25 B
Corp. ALE CM Europe

Headquarter, CM
US
ALE
ALE
Mexico CM AL CM Japan
E
Cash Position 01-01 01-02 01-03

MXN -3 B 6B 1B
USD 40 M 40 M 30 M
EUR -10 B -12 B -12 B
JPY 10 B -15 B -25 B CM Australia
41
mySAP Enterprise Portals for Cash Managers

SAP delivers predefined and prepackaged functions, called roles, that are based
on the needs of people in various jobs in your organization. A role contains
access to all the functions a user needs to perform his or her daily tasks. You
can edit and personalize roles to meet the exact requirements of your users. SAP
extends this role-based concept to the Internet with mySAP Enterprise Portals.
mySAP Enterprise Portals provides role-based enterprise portals that give users
personalized access to information, applications, and services inside and outside
the enterprise. With enterprise portals, your authorized users can access SAP as
well as non-SAP applications using a standard Web browser, giving them infor-
mation access anytime and anywhere around the world.
SAP provides enterprise portals for the roles of cash managers, dealers, risk con-
trollers, and others.
The information needs and responsibilities of a central cash manager differ from
those of a local one. A central cash manager typically analyzes and aggregates
incoming financial data from subsidiaries and combines it with the headquar-
ters data, thus setting the overall cash position. If you are a global cash man-
ager, you must make sure that all subsidiaries deliver their data in time. They
must forward their cash positions and liquidity forecasts to enable you to make
centralized borrowing, investment, and hedging decisions.
The enterprise portal helps central cash managers in several ways. The launch
pad in the left part of the screen gives you custom-tailored access to all the
functions you need, including non-SAP applications and Web sources. You
never have to leave the familiar environment to access different resources
they are only a mouse-click away.
You can not only pull, but also push information by means of alerts. For exam-
ple, you can highlight unpaid payment items or data that a subsidiary has not
delivered by the agreed-upon time. You can also use the enterprise portal to
access a subsidiarys cash management system over the Internet and to drill
down on unresolved balances.
42
Beyond Cash Management: Corporate

Finance Management with mySAP Financials
mySAP Financials Corporate Finance Management provides integrated plan-
ning, decision support, transaction processing, and risk management. Its capa-
bilities work together with the cash management capabilities where applicable.
Liquidity Planner
The Liquidity Planner streamlines your work in entering, aggregating, and ana-
lyzing expected cash flows for medium- and long-term planning throughout
your enterprise. You can administer templates from a single location to facili-
tate capturing both centralized and decentralized data as well as the correspon-
ding historical data.
Both the planning information and historical values from the operational sys-
tem are immediately available to decision makers at various levels within your
organization. A summary view helps you analyze cash flows across all your
planning units. You can also access extracts of the summary view by organi-
zational group, region, currency, or country, for example.
You can display aggregated data displayed in the currency of origin or in anoth-
er currency, such as a local currency or the group currency. You can use the data
to optimize planning activities, such as interest rate and currency management,
and respond to changes on a timely basis.
For variation analysis, you can choose the same structure for evaluating both
historical and planning data. System support at all levels gives you greater flex-
ibility in the liquidity planning process and better communication within the
enterprise.
Liquidity Planner allows you to significantly extend your planning horizon. In

addition to cash management for short-term liquidity analysis, the Liquidity
Planner provides a centralized system to identify medium- and long-term
liquidity and foreign-exchange risks.
43
In-House Cash
By managing your internal and external group payments, the In-House Cash
function of mySAP Financials Corporate Finance Management can reduce your
costs of processing intragroup and external transactions. You need fewer exter-
nal bank accounts and make fewer international payments. You can gain con-
siderable savings from optimizing your use of cash reserves. The features of In-
House Cash give you greater control over payment transactions on both a
regional and global level, support corporate group structures, and accommodate
changes in those structures due to mergers, spin-offs, or reorganizations.
In-House Cash enables you to set up an in-house bank, allowing you to cen-
trally manage subsidiary accounts in any currency. For subsidiaries, In-House
Cash automates intragroup payment transactions (internal payments); payments
made by group companies to external partners (central payments); and incom-
ing payments for subsidiaries from external partners that are initially credited
to the head office's house bank accounts (central incoming payments). In-House
Cash also helps you calculate and debit interest and other charges, grant cur-
rent account overdrafts, control limits, and generate bank statements for affili-
ated firms.
If yours is a large, multinational corporation, In-House Cash is an obvious

extension of your cash management capabilities, supplementing your central-
ized cash management with in-house banking.
Transaction Manager
A core task in many finance departments is concluding financial transactions.
Your finance department may focus primarily on providing an internal service
for subsidiaries, or it may participate actively in financial markets for invest-
ment, funding, and hedging purposes.
The Transaction Manager gives you the tools to process these transactions at all
stages, from deal capture through transferring the relevant data to financial
accounting. The Transaction Manager supports the requirements of both tradi-
tional treasury departments, which tend to focus more strongly on trading, and
asset management departments. The advantage of this approach is that you can
use a single platform to process all types of transactions from short-term
financing to strategic, long-term investments, as well as currency or interest
rate hedging.
The Transaction Manager is tightly integrated with Cash Management in

mySAP Financials. All treasury transactions are automatically reflected in the
cash position or liquidity forecast.
44
Market Risk Analyzer

Effective market risk management is a decisive factor in securing your compa-
ny's competitive position. Market Risk Analyzer offers comprehensive functions
for analyzing your position, such as mark-to-market valuation for financial
transactions and tools for calculating risk and return figures, including expo-
sure, future value, sensitivities, and value at risk.
Highly flexible report configuration options help you obtain the information
you need to evaluate and control your market risk. When running reports, you
can incorporate both contracted positions and simulated financial transactions
in the calculations, and you can use actual or simulated market prices as a basis
for valuation.
Credit Risk Analyzer

Stricter regulations governing risk control are making it more important than
ever to monitor counterparty risk and keep it within acceptable limits. It is also
necessary to have system support for measuring, analyzing, and managing
credit risks.
The Credit Risk Analyzer addresses these requirements and offers you a com-
prehensive tool for controlling default risks that uses an integrated online limit
management function. With this tool, you can identify and control both tradi-
tional credit risks and settlement and counterparty risks arising from your com-
pany's activities on the financial and capital markets as they occur, and you can
act accordingly.
Portfolio Analyzer
The funds available for investment are often limited, and you have numerous
investment options to choose from. A crucial question to answer during invest-
ment planning is how well your investments have performed.
The Portfolio Analyzer gives you the answers. It measures your exact return on
investments, compares the results with prescribed targets, and breaks down the
overall performance into its component parts by attributing the individual port-
folio positions to the total result. The basis for these evaluations is the portfo-
lio structure, which lets you organize your investments into different categories.
You can evaluate portfolios at different levels in the portfolio hierarchy, or eval-
uate a single asset category across several portfolios.
45
Benefits of Cash Management and Corporate

Finance Management in mySAP Financials
Together, Cash Management and Corporate Finance Management in mySAP
Financials are a fully integrated, multitier solution that adds tremendous value
to your treasury operation.
You have an integrated treasury solution that also is highly integrated with
other operational systems, banks and banks platforms, and external data
sources. You have no interface maintenance costs (costs that can be as high as
three to five times the original software purchase price). You have no risk of
interface degeneration. Integration is ensured by a common and transparent
database, as opposed to a batch interface for uploading and downloading exter-
nal data.
Integrated Treasury Solution

You have liquidity and risk analysis, trading, settlement, accounting, and risk
control in one fully integrated and robust solution. mySAP Financials Corporate
Finance Management delivers the following results-oriented benefits:
Reduced cash-reserve requirements
Increased return on financial assets
Improved liquidity management
Streamlined payment processes
Improved data for a more value-oriented management system
Reduced risk, thanks to efficient, state-of-the-art risk analysis and control
Reduced transaction costs
Increased opportunities for volume discounts and bonuses
46
Integration with Other Operational Systems

Integrated FASB Statement 133 accounting in a single system
Automated reconciliation with general ledger and subledgers
Advanced drill-down capabilities
Improved cash forecasting as better basis for cash management decisions
Cost savings (rationalization, no re-keying)
Improved business control
Integration with Banks and Multiple Bank Platforms

You can exchange business documents for trade execution, confirmation,
and settlement enabling straight-through processing of financial transac-
tions.
Integration to Data-Feed Providers

You can automatically receive financial market data, including foreign-
exchange rates, interest rates, indexes, and security prices, from data-feed
providers such as Reuters and Bridge.
Global Solution
mySAP Financials is a global solution that supports multiple currencies and is
translated into multiple languages. It can operate in a network of multiple
instances, providing enterprisewide information on liquidity and currency risk
position
47
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Neurottstrasse 16
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Mailing address
D-69189 Walldorf
SAP Communication Center
T +49/18 05/34 34 24*
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Functions in Detail

Cash Management in mySAP Financials

IBM, DB2, OS/2, DB2/6000, Parallel Sysplex, MVS/ESA, RS/6000, AIX,

OSF/Motif is a registered trademark of Open Software Foundation.

ORACLE is a registered trademark of ORACLE Corporation, California, USA.

INFORMIX-OnLine for SAP is a registered trademark of Informix Software Incorporated.

ADABAS is a registered trademark of Software AG.

Design: SAP Communications Media

Key Features of Cash Management in mySAP Financials 13

Electronic Bank Communication 33

Distributed Cash Management 40

Beyond Cash Management: Corporate Finance Management

Benefits of Cash Management and

Trends in Global Cash Management

As a treasury or cash management professional in todays fast-paced world,

Internet-based technologies support these trends. The Internet is shaping the

The Cash Management Process

The Traditional Cash Management Process

Intraday Bank Files

Cash Concentration and Funding of Disbursement Accounts

Investment and Debt Decisions

Electronic Funds Transfers

The Cash Management Process with mySAP Financials

Intraday Bank Files

Benefits of Cash Management in mySAP Financials

Key Features of Cash Management in

Cash Position Liquidity Forecast

Bank accounts Payment Financial Subledgers

Prior-Day Bank Statement

The initial data processing can either be memo-oriented or accounting-orient-

In the case of unapplied funds, a post-processing procedure posts the funds to

Intraday Bank Statements

mySAP Financials uses intelligent processes to facilitate the highest degree of

Data from Operational Systems

Specifically, mySAP Financials Accounting, mySAP Financials Corporate

As a business transaction progresses through the system, additional and more

As the transaction progresses from a requisition to a purchase order, the pur-

value date based

Analysis and Decision

Cash Position Tool

Flexible reporting enables you to monitor enterprisewide activity by company

Banks 09/01 09/02 09/03

Single Item Display Account 3

You have a lot of flexibility in displaying the cash management information.

Liquidity Forecast Tool

You define groups of customers or vendors that caused a specific balance.

Designing Your Reports

You can create individual drill-down reports by starting with a predefined

The following example illustrates the capabilities of the drill-down reporting

Drill-down reporting works on the principle of a multidimensional data set. To

Planning level x Company code

1 Drill Down 2 Drill Down 3

Com Com Com

In addition to navigating through report data by swapping around characteris-

By defining exceptions, you can highlight in various colors the characteristic

Comparison and Control Functions

The interest-calculation report helps you control the interest calculation

The value-date comparison compares the planned, or agreed-upon, value date

The check-cashing analysis calculates the average check-cashing time for

Borrowing, Investing, and Hedging

Analysis & Decision

Cash Management Analyzer

Cash Liquidity Credit Risk Market Risk Portfolio