Treasury

Overview
 Scope of Financial supply chain
management
• Financial supply chain management
(FSCM) is an integrated approach to
provide better visibility and control over
all cash-related processes.
• Better predictability of cash flow,
• Reduction of Working capital.
• Reduction of operating expenses and end-
to-end integration of business processes.

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 Financial supply chain
management
• Process flow
Credit Cash & Dispute Collections
management liquidity management management
management

Check Issue Forecast Finance Resolve Collect Settle

credit invoic cash working dispute Cash & pay
worthiness e capital Reconcile

Electronic bill Treasury & In-house cash

presentation Risk management
management

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 SAP Treasury and Risk
Management (TRM)
• SAP Treasury and Risk Management is a series of solutions
that are geared towards analyzing and optimizing business
processes in the finance area of a company.
• Integration
• SAP Treasury and Risk Management is an integrated
solution, in which the various components are closely
linked. The financial transactions managed in the
Transaction Manager can be evaluated and monitored
using the analyzer components. In addition to the TRM
analyzer components Market Risk Analyzer, Portfolio
Analyzer, and Credit Risk Analyzer, the Transaction
Manager is also linked to SAP Cash Management

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 Components of Treasury
1. Business partner
2. Basic functions
3. Transaction manger
4. Market risk analyzer
5. Credit Risk analyzer
6. Portfolio Analyzer (FIN-FSCM-TRM-PA)

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SAP Treasury and Risk
Management (TRM)

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 Transaction Manager 
• The Transaction Manager is a powerful instrument that executes
efficient liquidity, portfolio and risk management. You have the option
of carrying out liquidity and risk analysis in the Transaction Manager.
Based on these analyses and the current conditions on the financial
markets, you can make decisions about future investments and
borrowings.
• The Transaction Manager:
• helps you manage your financial transactions and positions. This
involves trading, back office, and the connection to Financial
Accounting.
• helps you utilize existing rationalization and enables you to automate
typical processes.
• provides flexible reporting and evaluation structures for analyzing your
financial transactions, positions, and portfolios.
• enables you to directly measure the effects of the financial transactions
on the liquidity or interest rate risk, due to being integrated in Treasury
and Risk Management.
• The Transaction Manager can be used in companies, asset
management areas, and in traditional Treasury departments.

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 Features of Transaction Manager
• The Transaction Manager helps you realize the
following corporate goals:
• 1.Financial services for affiliated group companies.
• 2.Activities on financial markets for investing liquid
funds.
• 3.Financing short-term and long-term investment
projects.
• 4.Hedging potential or existing risks.
•

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Components in the Transaction
Manager
1. Money market
2. Foreign Exchange
3. Derivatives
4. Securities

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Product types in the money
market

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 Money market
1. Money market transactions are used for short to medium-term
investment and barrowing liquid funds.
2. The money market area is a sub component of the Transaction
manager and is closely integrated with other components.
3. You can implement cash management decisions in the Money
Market area based on the liquidity surplus or deficit determined in
Cash Management.
• 4. It is also closely linked to the Financial Accounting (FI)
component since all the data that is relevant for posting in the
Money Market area is automatically transferred to FI.
• 5. You can maintain current market data (exchange rates, securities
prices, reference interest rates, indexes etc.) in various ways

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 Features of Money Market
• Trading
• The trading area contains functions for entering money market
transactions. It also enables you to also call up information on
transactions or make changes at a later date. Collective
processing functions are available to help you manage your
transactions efficiently.
• Types of products in the Money Market area are:
• ●     Fixed-Term Deposits
• ●     Deposits at Notice
• ●     Commercial paper
• ●     Interest rate instruments
• ●     Cash flow transactions

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 Master Data Management
• Financial transaction processing in the
Transaction Manager is based on master
data.

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 Cash Management – Liquidity
Forecast Process
• Treasury consists of one module that could be
potentiality used for the cash flow statement
preparation-TR –CBM (Cash Budget
Management). This module would allow to
classify all the cash inflows and outflows using
the “Commitment items" defined as SAP master
data. Then the cash flow statement should be
probably prepared in the report painter.
•

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 1.Cash
• Cash management
Position
• 1. cash management is used monitor payment flows and
safeguard liquidity, so that you can meet your payment
commitments
• Integration:1. cash management is a subcomponent of treasury.
• This means it is closely linked with treasury management (TR-
TM)
• and market risk management (MRM).
• 2. Cash management offers the functions described above for
liquidity analysis purposes while MRM offers methods and
process of assessing risks positions.
• 3.Treasury management contains the actual financial
translations and the portfolio analysis functions.
• 4.Cash management is integrated with many other SAP
components
• For eg:the liquidity forecast integrates cash in-and outflows from
financial accounting, purchasing, and procurement with long-term
liquidity analysis.
•

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 Cash position
• Cash position supplies information on the current financial
situation in your bank and bank clearing accounts. Integration
with payment advices means that cash position can give you an
• Overview over Short-term liquidity movements.
• Integration:--The cash position reproduces the activity in your
bank accounts. it is derived from the prompt entry (on their
value date). of all payments made within a short period of time.
• Data is supplied from three sources.
• 1.Fi postings to the G/L accounts relevant to cash management.
• 2.Memo records entered manually.
• 3.Cashflows from transactions managed in the treasury
management .

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 The graphic below illustrate of the cash
position in the Sap system
• .
Electronic Bank Planning
Statement analyses

FI
Financial CM Cash Management
Accounting
Cash position
Bank Accounting

Correspondence

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 Cash Budget management
• Is to identify control payment flows in light of
liquidity considerations
• While cash management takes a short term view,
Cash budget management deals with medium-
term and long – term liquidity developments
• Before you can use cash budget management you
must also having the financial accounting. The
cash balances come from cash and bank
accounts in financial accounting. Every posting
made in financial accounting affects the balances
in cash budget management

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 CBM includes the following
• 1 . Displaying businessfunctions
transactions having an affect on liquidity
. By revenue and expenditure item
• 2. planning and displaying the payment flows and funds
balances for any period you choose
• How to use cash budget management
• The SAP system distinguishes between different forms of
organization, which have specific meanings within their
respective applications. You can use them to define your
company structure from an application specific viewpoint.
• For example you can use company codes and business areas to
define your business for accounting purpose and controlling
areas to define your business for controlling purposes. Financial
Management Areas (FM area) perform the same function in cash
budget management and funds management
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 Process flow
• Process flow

Funds
Financial Accounting Controlling Management
Client Area
Company Business
Area FM area
Code Organizational
Balancing Organizational
Cross Unit in cost
Unit Unit Cash
application Independent Accounting
(for Budget
component Balance Management
Sheet internal
balance And funds
unit management
Sheet)

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 CBM and Funds management
• Cash budget management covers the whole
company. its main task is to identify impending
shortages or surpluses of funds in your business.
• In funds management the business is divided into
areas of responsibility, which are then monitored
centrally. Budget funds are assigned to the
individual areas of responsibility.
• The ultimate aim of funds management is to
compare to actual data with the existing budget and
to highlight any variances which have occurred

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 Difference between CBM & CM
• 1.Planning interval:-- Cash management deals only with
the short-term liquidity of a business, while cash budget
management is concerned with the medium term and
long term.
• 2.Division of revenue and expenditure:-- Cash management
divides revenues and expenditures by customer and
vendor group. While, cash budget management, the
division is by revenue and expenditure item.
• Financial budget:--Planning is not possible in cash
management, but you can use cash budget management
to plan payment flows for any periods you want .

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 Financial management area
• The FM area is the commercial organizational unit, within which
cash budget management and financial budgeting are
conducted. It structures the business as a viewed from cash
budget management.
• Financial accounting: The company code
• Cash budget management :The financial management area.
• Cash budget management you will be working with financial
management areas (FM areas) not company code.
• One are more company codes can be assigned to an FM area.
• You can choose have different currencies in your company
codes. You can also choose an Fm area currency which is
different from those company codes.

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 Commitment item
• The basis data object in cash budget management is the commitment
item.
• 2.With commitment items, you can divided business transactions
affecting liquidity in your business into revenue, expenditure, and
balance items.
• 3.Commitment hierarchy:-- Commitment items are arranged in
hierarchs. A distinction is drawn between
1) Account assignment items:--Make up the lowest level in the
commitment item hierarchy.
2) summarization items:--You define a hierarchy by combining account
assignment items at various summarization levels you decide yourself.
3) 4. You cannot plan in a summarization item, nor can you post to it.
Data is totaled up using the bottom up principle.

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Commitment item master record
• You must define an item category and
financial transaction in each commitment
item master record. The item category
controls whether the commitment is a
revenue, expenditure, or balance item.
The financial transaction is important
When data is being recorded in cash
budget management.

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Authorization check in cash budget
management
• By allocating authorizations, you determine which
objects your personal may process and what processing
functions they may use.
• 2. Profiles consist of authorizations, for one work center.
• The authorizations in cash budget management are
checked in the following order.
1. Version authorization
2. FM area authorization.
3. Commitment item authorization.

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Assigning commitment items to G/L
accounts
• 1.For data to be recorded in cash budget
management, you must always enter an
account assignment when posting data in
the feeder system.
• 2.If do not define in the commitment item
in the G/L account, you must specify one
when entering a document, otherwise the
system cannot post the document.

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 Business transaction for CBM
feeder system
• The following business transactions are supported in CBM
• 1.)All financial accounting postings, in which “real” financial accounting
documents are produced. For exaple
• 1.Actual values in relation to payments in and out.
• 2.Commitments values are bank clearing (Debit and credit side).
• 3.Commitment arising invoice issued and received
• 4.Commitments are down payments (debit and credit sides)
• 5.Commitments are down payment requests (debit and credit sides)
• Recurring entry documents are not integrated .
• 2).From Materials Management.
• Commitments arising from purchase request ion.
• Commitments arising from purchase orders.
• Commitment arising from goods receipt
• 3).Commitments are funds reservation

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 Objectives
To know our future cash inflows and
outflows to assess Liquidity
Forecast
Process proposed should be
automated fully

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 Process Requirements
 Reports for Daily, Weekly & monthly
liquidity position at company Level
 Consolidation of these reports at Group
level

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 Process Diagram
Role Inputs Pr ocess Steps Outputs/ Repor ts

F&A
FI Transaction

Purchase Order
MM

Liquidity Forecast
Sales Order Liquidity Forecast
SD Reports
Variance
Reports

Treasur
y Investment

Start

Repayment

Loans

Start

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 Master Data in Cash
– Planning Level
Management
• Structure for Liquidity Forecast

• to explain the beginning and ending account balances.

– Source Symbols
• divides the planning levels according to the sources
– Planning Groups
• customers and vendors are assigned to planning groups by means of master
data entries
– Groupings
• maintained to specify which levels and accounts / planning groups
– Structure
• enable you to group together bank and sub ledger accounts in the Liquidity
forecast
– Planning Type & Memo Records
• planning type controls the manual entry of planned memo record

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• The Items of the liquidity forecast report are picked up from the
following components:
–Financial Accounting – Open Items accounted &
account balances
–Materials management – Purchase Requisitions
& Orders
–Sales and Distribution – Sales Orders
–Treasury and Risk management – Investments,
Loans, Deposits, Foreign exchange

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 Major Benefits
Integration from all sources of Cash Flows
Real time updated Data
Actual Figures based on the updated data
Automated Process
Flexibility in Reports in term of Periodicity
Flexibility in terms of Selection of Parameters
Comparison Reports

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