In House Cash Mgt

SAP In-House Cash & Electronic Payments ManagementCreating a virtual bank to better manage internal p ayments.

George Kamtsioras| Business Development | SAP Hellas and Cyprus

Limassol, June, 11th,2013

Financial Excellence with Treasury Applications from SAP

Treasury applications from SAP

SAP Treasury and Risk Management

Risk Analyzers

Transaction Manager

Manage Global Financial Risks

Optimize Debt and Exposure Management Hedge Management

Credit Risk Analyzer Market Risk Analyzer Portfolio Analyzer

© 2013 SAP AG. All rights reserved. 2Internal

Transaction ManagerMoneyMarket

ForeignExchange

Secu-rities

Com-modities

Deri-vatives

Debt Mgmt

Optimize Debt and Investment Strategies

Manage Cash and Liquidity

SAP Cash and Liquidity Management

Cash Management Liquidity Planning

Optimize Payments and Bank Communication

SAP In-House Cash

SAP Bank Communication Management

Why do I need In-House Cash?

Multinational corporate structures with a high volume of internal and external

payment transactions can improve by using In-House Cash in following issues:

■ Payment transaction control on a regional and global l evel

■ Cost-effective processing of internal and external payme nts

■ Reduction of external bank accounts


■ Reduction of external bank accounts

■ Reduction of cross-border payments

■ Automation and standardization of financial processes

Relevance of In-House Cash

The concept of an In-House Cash solution is relevant, if one or more of the following factors are present:

■ Multi-country activity

■ Banking in many countries

■ Significant inter -company trading


■ Significant inter -company trading

■ Advanced Cash Management operations

■ Regular change of banks

© SAP AG 2009. All rights reserved. / Page 5

Current Situation

Internal Bank

InternalBank

Various and ever-changing multi-national corporate group structures . . .

SubsidiaryUSA

Head office(Europe)


Internal Bank

Region 1

Region 2

. . . with a high volume of internal and external p ayment transactions

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Asia

Subsidiary

Corporate Group

Organizational Units

Subsidiary 2

Subsidiary 3

Head Office

In-House Cash Center

Account management

FinancialAccounting


Subsidiary 1

Organizational Units

�Operative subsidiaries 1,2,3...

�The IHC Center and the financial accounting department are situated within the head office

�The IHC Center (manages the subsidiary current accounts)

�The financial accounting department manages the chart of accounts and the general ledger balances

management

Account Overview

Account A

Limits

G/L Transfer

Subsidiary 1

- 20+ 50

..

..

Subsidiary 2

+ 100- 50

..

..

Headquarter IHC

IHC Receiv. IHC Payab.

Pmnt clearing

(1) 200

FI – GL

(2) 540

(2) 540 (1) 200

Conditions

Bank statements

+ 100- 120

..

..

Blocks

Reporting

Currencyconversion

Business partner

Turnovers

No Post.dte Curr. AmntVal.dte

1 30.12.00 31.12.00 EUR 100.00 C

2 31.12.00 31.12.00 EUR 9.58 D

Condition Master Data

Head Office

D 4912132213 C


10.00 100.00

0.42

Charges� Account maintenance

10.00 USD

Interest� Credit interest 0.5%

Value date� Posting date +1 day

Condition Group Category: Interest

Condition group category Interest

0004


Condition group

Conditon category Debit interest Credit interestOverdraft interest

Transactioninterest

0004 Interest of affiliated companies

Condition Group Category: Charges

Condition group category Charges

0004


Condition group

Conditon categoryItem charges

Mailingcharges

Account charges

Direct charges

Periodic charges

0004 Charges of affiliated companies

Condition Group Category: Value Date

Condition group category Value date

0004


Condition group

Conditon category

0004 Value date of affiliated companies

Value dateValue date subject of final payment

In-House Cash Major Business Processes

� Internal Payments

�Central Payments


�Central Payments

�External Incomings

Process 1: Internal Payment

Example: “Subsidiary 1 makes a payment to Subsidiary 2”


Process 2: Central Payments

Example: “Subsidiary 1 makes a payment to an externa l partner”


Process 3: External Incoming Payments Via IHC

Example: “Partner pays subsidiary 1”


Payment Challenges Compliance, Security & Efficiency Issues

High Maintenance Costs For Communication Interfaces

Security Issues

Cumbersome Interfaces Hinder Compliance Efforts

Process Inefficiencies


Cost of Working Capital

Dependency on House Banks

Lack of Payment Transaction Transparency

Situation Without Bank Communication Management


With Bank Communication Management


The Batch and Payment Monitor provides an overview of the batch life cycle: creation – approval – sending – confirmation – completion (bank statement).

The monitor has two levels: � Initially, it shows only batches (‘headers’)

� On drill-down, it shows all the payments (‘items’) that belong to the chosen batch

Detail: Batch and Payment Monitor


Drill-down

Detail: Approvals

Once the Payments are batched, it can be decided if a Batch has to go for Approval or not

This is done in the customizing setting ‘Mark Rules for Automatic Payments (No Approval)’

Payments with no approval are called ‘Automatic Payments’


Approval

Process

Batch 2

Batch 1

Detail: Digital Signatures

Digital Signatures are used in the Approval Process of the Batches

The object that is signed is the ‘action document’ (Log from the ‘Approve Payments’ Transaction) and not the ‘batch file’

Digital Signatures are based on customizing for the existing Signature Tool


Increased complianceMulti-eye release procedures for payment approvals

Personal digital signatures for outgoing payments for internal audit

Release of individual payments or entire batches

Flexible approval rules (low-value payments = only one approver, for example)

Approval, rejection, or resubmission of payments

Features


Approval, rejection, or resubmission of payments

Flexible sorting and structuring of approval work list

Batching of paymentsLogical structuring of payment files

Flexible batching rules that can be enhanced

Automatic creation of unique identifiers

Exception handling Visibility of errors in payment status monitor

Automatic generation of alert workflow items

Enhancing SAP Bank Communication Management with Central In-House Bank and Payment Factory


Business Benefits

� Reduce physical cash transfers by internal netting

� Reduce number of bank accounts

� Reduce administrative overhead

� Enhance security, transparency and compliance

� Save bank fees for bank accounts and payment transactions


transactions

� Avoid cost for external cross-border payments

� Reduce float and value date losses

� Gain more interest keeping cash within the group

� Reduce hedging cost using economies of scale

� Improve competitive position in external money markets

�Reduce maintenance costs

Thank You!

Documents

In House Cash Mgt