In-House Cash

SAP AG 2001 In-House Cash - Romanov 1

CFM In-House Cash

Elke Romanov


Agenda

SAP Organizational Entities

System Architecture Scenarios

111

222

Introduction

333

444

666 Systemdemo

555

The In-House Cash Center

In-House Cash Processes


Current Situation

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

InternalBank

Subsidiary

Subsidiary

Subsidiary

Head office(Europe)

Subsidiary

Subsidiary

Region 1Region 1

Region 2Region 2

Subsidiary

US

AsiaSubsidiary

InternalBank

. . . with a high volume of internal and external payment transactions


In-House Cash

In-House Cash is a solution for companies that operates globally to manage their intra-group and external payment transactions more efficiently.

IHC is set up at the group headquarter IHC is a virtual bank where the subsidiaries have current accounts

In-House Cash Center processes all payments between various affiliates.

controls payment transactions on a regional and global levelprocesses internal payment transactions on a cost-effective basisreduces the amount of external bank accounts neededoptimizes cross-border payment trafficautomates and standardizes business processescash resources are kept within the group


Agenda



111

222

Introduction

333

444

666 Systemdemo

555




Organizational Entities

Corporate GroupSubsidiary 3

Subsidiary 2Subsidiary 1

Head Office

In-House Cash Center

Accountmanagement

FinancialAccounting

Functions and Tasks of the OrganizationalEntities Involved


Organizational Entities: Subsidiary

CorporateGroupSubsidiary 3


SubsidiaryIndividual trading entity (e.g. subsidiary) with its own systems (e.g. R/3)

This subsidiary holds one or more current accounts within the corporate group head office (In-House Cash Center).

The subsidiary simply has to define new bank details (for the virtual bank) to the corporate group head office (In-House Cash Center) as though it were a normal house bank.


Organizational Entities: Head Office

Head Office


Accountmanagement

FinancialAccounting

CorporateGroup

Head OfficeThe head office manages the current accounts for the corporate group subsidiaries within the IHC Center.

The financial accounting department within the head office manages theIHC Center general ledger accounts.

Other components such as CO, MM, .... could be in use at the head office.


Organizational Entities: IHC-Center

CorporateGroup Head Office


Accountmanagement

Financial

Accounting

In-House Cash CenterThe IHC Center is situated at the head office and can be a separate organizational entity within the head office.

The IHC Center manages the subsidiaries IHC current accounts as a head office subledger

Represents a part of the company that processes internal corporate groupand cross-group payments.


Organizational Entities: Financial Accounting Dept.

Financial Accounting DepartmentThe general ledger accounts for the IHC Center subledger are set up here.

It holds the IHC Center balances in summarized form.

It creates the balance for the corporate group, taking account of IHC.

The financial accounting department uses SAP-FI.

CorporateGroup Head Office


Accountmanagement

FinancialAccounting


Summary

Organizational entities:

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.


Konten-verwaltung

Finanz-buch-

haltung



Head Office


Accountmanagement

FinancialAccounting


Agenda



111

222

Introduction

333

444

666 Systemdemo

555




Overview of the IHC- Center

Business partner

Conditions

Blocks

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

.........Reporting

Limits

Account A

Bank statements

+ 100- 120

...

G/L Transfer

Currencyconversion

IHCIHC

S1S1- 50+ 340

S2S2+ 200- 150

Pmnt clearingPmnt clearing

IHCPayab.

IHCPayab.

IHCReceiv.

IHCReceiv.

(2) 540

FI – GLFI – GL

200 (1)

540 (2)(1) 200


IHC Center: Conditions

Charges

Interest

Account A+ 100.00- 10.00+ 0.42

Account charge 10.00 USD Credit interest 0.5 %

Debit interest

Credit interest

Overdraft interest

Transactioninterest

Item charges

Direct charges

Periodic charges

Mailingcharges

Account charges


Agenda



111

222

Introduction

333

444

666 Systemdemo

555




Process 1: Internal Payment

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

Pmnt Program OP1.

2a.

2b.

CorporateGroup


Subsidiary 1

Head Office


Accountmanagement

FinancialAccounting

Payment Bank Statement




Subsidiary 1

Pmnt Program OP

Head OfficeCorporate Group


Accountmanagement

FinancialAccounting

Subsidiary 1:

Defines a new (virtual) house bank „IHC Center“ beforehand

Starts the standard payment program and generates a payment order

House bank: IHC Center

Payee: Vendor „Subsidiary 2“

Partner bank: IHC Center

When the IHC Center is in operation, it is possible to freely define thepayment conditions




Subsidiary 1

Pmnt Program OP



Accountmanagement

FinancialAccounting

IHC-Center:

Debits the IHC current account of subsidiary 1=> Receivable due from subsidiary 1

Creates a credit memo for the IHC current account of subsidiary 2 => Payable due to subsidiary 2

Generates and sends bank statements to subsidiaries 1 and 2

The netting amount results from the account balance (based on the turnovers)




Subsidiary 1

Pmnt Program OP



Accountmanagement

FinancialAccounting

Subsidiaries 1 and 2:

Import the internal bank statements in the same way as the bank statements from external house banks via the standard bank statement programs

At this point the system automatically clears the open items

Internal payments without involvement of banks


Subsequent Process: Internal Netting

Head Office


Subsidiary 1- 20+ 50

..

..

Subsidiary 2+ 100- 50

..

..

Subsidiary 3- 100+ 20

..

..

= + 30 = + 50 = - 80


Subsequent Process: Internal Netting

„Sweeping of Subsidiary 1‘s account balance to an external bank account“

6.



Head Office


Accountmanagement

FinancialAccounting

1.

5.

House bank subsidiary 1

4.

Head officehouse bank


2.3.


Currency Conversion Function

-100 YEN Acct 1+100 YEN Acct 2

Payment order)

Currency Conversion FunctionConverts the incoming payment items from the subsidiaries into account currency (manual conversion of payment items with IHC supported)

Enters the account currency and the reference transaction amount (e.g. for bank statement purposes) in the posting documents in IHC.

Generates an additional posting on currency position accounts.

Pmnt Program OP

CorporateGroup


Subsidiary 1

Head Office

In-House Cash CenterAccount

managementCurrency

Conversion Function

FinancialAccounting

TransactioncurrencyYEN

AccountcurrencyUSD

LocalcurrencyGBP


Process 2: Central Payments

Example: „Subsidiary 1 makes a payment to an external partner“

Externalbusinesspartner

Partner bank Head officehouse bank

1.

2.

7. 6.


Subsidiary 1

Pmnt Program OP

CorporateGroup

Head Office


Accountmanagement

FinancialAccounting

5.4.

3.




Externalbusiness partner

Partnerbank

Head Officehouse bank


Subsidiary 1

Pmnt Program OP

Head OfficeIn-House Cash

CenterAccount

management

FinancialAccounting

Corporate Group

Subsidiary 1

The same steps as in process 1

IHC CenterDebits the IHC current account of subsidiary 1

Generates and sends a bank statement to subsidiary 1



IHC Center

IHC Center forwards payment information to SAP-FI (Financial accounting)

Financial Accounting

A payment order (payment request) is created in SAP-FI on the basis of thispayment informationThe payment order is either sent to the head office house bank immediately or at a later point in time (collection of several payment orders = external netting)


Partnerbank



Subsidiary 1

Pmnt Program OP


CenterAccount

management

FinancialAccounting

Corporate Group




Partnerbank



Subsidiary 1

Pmnt Program OP


CenterAccount

management

FinancialAccounting

Corporate Group

SAP-FI

Imports the bank statement via the standard bank statement programs

Head office house bank

Partner bankProcedure is the same as for a „normal“ payment order to a house bank


Process 3: External Incoming Payments via IHC

Example: „Partner pays subsidiary 1“

Externalbusiness partner Pmnt program OP Partner bank Head office

house bank1.

2.

5.

3.


Subsidiary 1

CorporateGroup

Head Office


Accountmanagement

FinancialAccounting

4.





Partner bank



Subsidiary 1



Accountmanagement

Financialaccounting

Business partner

Partner bank

Head office house bank

Procedure is the same as for a „normal“ payment order to a house bank



SAP-FI

Imports the bank statement via the standard bank statement programsIdentifies items which are relevant for the IHC CenterForwards the corresponding items to the IHC Center


Partner bank



Subsidiary 1



Accountmanagement

FinancialAccounting

IHC-Center

Generates a credit memo for the IHC current account belonging to subsidiary 1 Creates and sends a bank statement to subsidiary 1


Process 4: Internal Payments with several IHC Centers


Subsidiary 1

In-House Cash Center America

Accountmanagement

FinancialAccounting

4.


Subsidiary 4

In-House Cash Center Europe

Accountmanagement

FinancialAccounting

1.

2.

3.



Process 4: Internal Payments with several IHC Centers


Subsidiary 1


Accountmanagmt.

FinancialAccounting


Subsidiary 4

In-House Cash Center Europe

Accountmanagmt.

FinancialAccounting

1.

2.

3.

4.

SAP-FI

The incoming payment order from subsidiary 1 generates two payment orders, one in the IHC Center America, and one in the IHC Center Europe

IHC Center A manages a current account for IHC Center E, and vice versa


Process 5: Central Payments with several IHC Centers


Subsidiary 1


Accountmanagement

FinancialAccounting

5. In-House Cash Center Europe

Accountmanagement

FinancialAccounting

1.

2.

3.


Externalbusinesspartner Partner bank

4.



Agenda



111

222

Introduction

333

444

666 Systemdemo

555




Technical OverviewSubsidiary I

Bank statement Payment

R/3 4.0B or EDI-ConverterSubsidiary II

Bank statement Payment

R/3 4.0B or EDI-Converter

CFM (based on R/3 4.6C)

IHC Bank statement Incoming payments

Bank statement

G/L

RFC

IDOC

Payment program

FinancialAccounting(R/3 4.6C)

PAYRQ

Electronicbank statement

General Ledger

BAPI

Subsidiary III

Bank statement Payment program

R/3 4.0B or EDI-Converter

IDOCIDOC

Outgoing payments

House bank

House bank

EDI

EDI


In-House Cash

SAP‘s Corporate Finance Management In-House Cash enables youto optimize your intra-group and external payment transactions more efficiently.

IHC is a flexible software solutionIHC offers numerous advantages, including automated and standardized business processes

In-House Cash Future Plans:

Integration of In-House Cash role in mySAP.com Workplace Supporting financial transactions via links to the Internet or Marketplace. Linking directly to the most up-to date market information


Agenda



111

222

Introduction

333

444

666 Systemdemo

555



Documents

In-House Cash