ac030_46c_en
DESCRIPTION
aTRANSCRIPT
AC030 TreasuryAC030
Release 46C 05.03.2002
AC030 Treasury.......................................................................................................................................................0-1
Copyright.............................................................................................................................................................0-2
Treasury...........................................................................................................................................................0-3
Euro..................................................................................................................................................................0-4
Course Prerequisites........................................................................................................................................0-5
Target Group....................................................................................................................................................0-6
Course Overview.................................................................................................................................................1-1
Course Goals....................................................................................................................................................1-2
Course Objectives............................................................................................................................................1-3
Course Content................................................................................................................................................1-4
Course Overview Diagram..............................................................................................................................1-5
Main Business Scenario...................................................................................................................................1-6
Navigation............................................................................................................................................................2-1
Navigation: Unit Objectives............................................................................................................................2-2
Navigation: Business Scenario........................................................................................................................2-3
Logging On to the System...............................................................................................................................2-4
SAP Easy Access - Standard...........................................................................................................................2-5
Role-Based User Menu....................................................................................................................................2-6
Screen Elements...............................................................................................................................................2-7
Selecting Functions..........................................................................................................................................2-8
Field Help: F1 and F4......................................................................................................................................2-9
Menus: System and Help...............................................................................................................................2-10
SAP Library...................................................................................................................................................2-11
User-Specific Personalization........................................................................................................................2-12
Personalizing the Frontend with GuiXT........................................................................................................2-13
Elements of the Workplace............................................................................................................................2-14
Active Applications (In Use).........................................................................................................................2-15
Workplace Favorites......................................................................................................................................2-16
Personalizing MiniApps................................................................................................................................2-17
Workplace: Advantages.................................................................................................................................2-18
Navigation: Unit Summary............................................................................................................................2-19
Navigation - Exercises...................................................................................................................................2-20
Navigation - Solutions...................................................................................................................................2-25
SAP Treasury Overview......................................................................................................................................3-1
SAP Treasury Overview: Unit Objectives.......................................................................................................3-2
Course Overview Diagram..............................................................................................................................3-3
SAP Treasury Overview: Business Scenario...................................................................................................3-4
SAP Treasury Overview..................................................................................................................................3-5
SAP Support for Business Requirements........................................................................................................3-6
Defining the Organizational Framework.........................................................................................................3-7
Investment and Risk Guidelines......................................................................................................................3-8
Selection of Financial Instruments..................................................................................................................3-9
Hedging..........................................................................................................................................................3-10
Identifying Treasury Processes......................................................................................................................3-11
SAP Treasury Overview: Unit Summary......................................................................................................3-12
Liquidity Management in the Short andMedium Term.......................................................................................4-1
Liquidity Management in the Short and Medium Term: Unit Objectives.......................................................4-2
Course Overview Diagram..............................................................................................................................4-3
Liquidity Management in the Short and Medium Term: Cash Management Scenario...................................4-4
Analysis and Trading Process..........................................................................................................................4-5
Main Targets of Treasury................................................................................................................................4-6
Liquidity Management.....................................................................................................................................4-7
Cash Management: Functions..........................................................................................................................4-8
Electronic Banking: Functions.........................................................................................................................4-9
Electronic Banking: General Process............................................................................................................4-10
Electronic Banking: Check Deposit...............................................................................................................4-11
Electronic Banking........................................................................................................................................4-12
Control Functions..........................................................................................................................................4-13
Cash Position.................................................................................................................................................4-14
Structure/Views of Liquidity Analysis..........................................................................................................4-15
Corporate Group Evaluations........................................................................................................................4-16
Cash Concentration........................................................................................................................................4-17
Liquidity Forecast..........................................................................................................................................4-18
Exercise: Cash Management Functions.........................................................................................................4-19
Cash Position and Liquidity Forecast............................................................................................................4-20
Integration with Other SAP Modules............................................................................................................4-21
Liquidity Management in the Short and Medium Term: Treasury Management Scenario...........................4-22
Treasury and Market Risk Management........................................................................................................4-23
Identifying Treasury Processes......................................................................................................................4-24
Transaction and Position Management Process.............................................................................................4-25
Treasury Management: Functions.................................................................................................................4-26
Liquidity Management in the Short and Medium Term: Money Market Scenario.......................................4-27
Money Market: Product Types......................................................................................................................4-28
Transaction and Position Management Process: Example of a Fixed-Term Deposit....................................4-29
Trading: Entering a Fixed-Term Deposit.......................................................................................................4-30
Creating Contract Data: Fixed-Term Deposit................................................................................................4-31
Organizational Units......................................................................................................................................4-32
Basic Principles of Transaction Management (1)..........................................................................................4-33
Business Partner - Roles and Functions.........................................................................................................4-34
Business Partner - Data: Overview................................................................................................................4-35
Business Partner and Trader Authorization...................................................................................................4-36
Exercise: Creating a New Business Partner...................................................................................................4-37
Creating a Fixed-Term Deposit: Structure.....................................................................................................4-38
Trading Support.............................................................................................................................................4-39
Financial Transactions: Cash Flow................................................................................................................4-40
Financial Transaction Architecture................................................................................................................4-41
Condition Types/Flow Types.........................................................................................................................4-42
Financial Transactions in Cash Management................................................................................................4-43
Exercise: Integrating Trading Functions toCash Management......................................................................4-44
Cash Flows in Cash Management..................................................................................................................4-45
Collective Processing: Money Market...........................................................................................................4-46
Transaction Management: Worklist and Collective Processing....................................................................4-47
Money Market - Fast Processing...................................................................................................................4-48
SAP Business Workflow...............................................................................................................................4-49
Transaction and Position Management Process: Example of a Fixed-Term Deposit....................................4-50
Back Office....................................................................................................................................................4-51
Business Partners: Standing Instructions.......................................................................................................4-52
Correspondence.............................................................................................................................................4-53
Business Partner: Standing Instructions - Correspondence...........................................................................4-54
Business Partner - Payment Details (1).........................................................................................................4-55
Business Partner - Payment Details (2).........................................................................................................4-56
Transaction Settlement / Control...................................................................................................................4-57
Exercise: Confirmation Management and Control Functions in the Back Office Area................................4-58
Transaction and Position Management:Example of a Fixed-Term Deposit..................................................4-59
Accounting.....................................................................................................................................................4-60
Payment Transaction Handling......................................................................................................................4-61
Postings: Account Assignment Reference.....................................................................................................4-62
Customizing: Account Determination...........................................................................................................4-63
Posting a Transaction: Summary..................................................................................................................4-64
Treasury Management and Cash Management..............................................................................................4-65
Transfer to Financial Accounting -Logical Process......................................................................................4-66
Exercise: Posting Due Flows to FI and Evaluating them in Cash Management...........................................4-67
Payment Transaction Handling......................................................................................................................4-68
Posting using the Payment Program..............................................................................................................4-69
Accrual/Deferral Procedures and Methods....................................................................................................4-70
Interest Accruals/Deferrals: Customizing......................................................................................................4-71
Exercise: Interest Amount Accruals/Deferrals at Year End..........................................................................4-72
Transaction History........................................................................................................................................4-73
Liquidity Management in the Short and Medium Term: Foreign Exchange Scenario (1)............................4-74
Liquidity Management in the Short and Medium Term: Foreign Exchange Scenario (2)............................4-75
Foreign Exchange: Product Types.................................................................................................................4-76
Creating an Order: Forward Exchange Transaction......................................................................................4-77
Currency Master Data....................................................................................................................................4-78
Datafeed Architecture....................................................................................................................................4-79
Exercise: Managing Currency Risks in CashManagement using Forex Transactions..................................4-80
Foreign Exchange in Cash Management.......................................................................................................4-81
Netting and Payment Requests......................................................................................................................4-82
Exercise: Active Liquidity Management using Netted Money Market and Forex Transactions..................4-83
Valuation: Valuation Units............................................................................................................................4-84
Foreign Currency Valuation (FCV Determination: 2)...................................................................................4-85
Foreign Currency Valuation..........................................................................................................................4-86
Foreign Currency Valuation (1) - G/L Accounting......................................................................................4-87
Foreign Currency Valuation (2) - G/L Accounting......................................................................................4-88
Foreign Currency Valuation (3) - G/L Accounting......................................................................................4-89
Liquidity Management in the Short and Medium Term: Limit Management..............................................4-90
Limit Management (1)...................................................................................................................................4-91
Limit Management (2)...................................................................................................................................4-92
Limit Management (3)...................................................................................................................................4-93
Liquidity Management in the Short and Medium Term: Unit Summary (1).................................................4-94
Liquidity Management in the Short and Medium Term: Unit Summary (2).................................................4-95
Data for the....................................................................................................................................................4-96
Liquidity Management in the Short and Medium Term Exercises.........................................................................................................................................4-98
Liquidity Management in the Short and Medium Term: Solutions.............................................................4-107
Financial Transactions in the Medium andLong Term........................................................................................5-1
Financial Transactions in the Medium and Long Term: Unit Objectives.......................................................5-2
Course Overview Diagram..............................................................................................................................5-3
Financial Transactions in the Medium and Long Term: Securities Management Scenario............................5-4
Treasury and Market Risk Management..........................................................................................................5-5
Treasury Management: Functions...................................................................................................................5-6
Product Categories - Product Types................................................................................................................5-7
Class Master Data: Product Types - General Data..........................................................................................5-8
Product Type - Conditions - Flows..................................................................................................................5-9
Financial Transactions in the Medium and Long Term: Scenario - Evaluating the Securities Position.......5-10
Standard Reports: Examples (Securities)......................................................................................................5-11
Reports...........................................................................................................................................................5-12
Sample Evaluation using Position Information.............................................................................................5-13
Securities: Position Overview Object List.....................................................................................................5-14
Financial Transactions in the Medium and Long Term: Concluding Securities Transactions......................5-15
Sample Evaluation.........................................................................................................................................5-16
Part Sale of Stocks.........................................................................................................................................5-17
Transaction and Position Management Process.............................................................................................5-18
Transaction Management: Prerequisites........................................................................................................5-19
Process View: Trading - Back Office - Accounting.....................................................................................5-20
Basic Principles of Transaction Management...............................................................................................5-21
Create Order: Initial Screen...........................................................................................................................5-22
Create Order...................................................................................................................................................5-23
Execute Order................................................................................................................................................5-24
Back Office: Overview..................................................................................................................................5-25
Collective Processing: List............................................................................................................................5-26
Securities Account Cash Flow.......................................................................................................................5-27
Post Transaction.............................................................................................................................................5-28
Position Management Posting Journal: View................................................................................................5-29
Exercise: Concluding Securities Transactions Integration to Cash Management.........................................5-30
Period-End Closing: Securities......................................................................................................................5-31
Financial Transactions in the Medium and Long Term: Create Class Master Data......................................5-32
Class Data Notation.......................................................................................................................................5-33
Class...............................................................................................................................................................5-34
Classes: Product Categories - Overview........................................................................................................5-35
Create Class: Bond.........................................................................................................................................5-36
Create Class: Bonds - Basic Data.................................................................................................................5-37
Create Class: Conditions................................................................................................................................5-38
Exercise: Creating Class Master Data...........................................................................................................5-39
Automatic Posting I.......................................................................................................................................5-40
Automatic Posting II with Incoming Payments.............................................................................................5-41
Defining Organizational Elements: Portfolios and Securities Accounts.......................................................5-42
Securities Account and Portfolio...................................................................................................................5-43
Define Portfolios............................................................................................................................................5-44
Securities Account Master Data....................................................................................................................5-45
Master Data: Position Indicator - Initial Screen............................................................................................5-46
Master Data: Position Indicator - Data..........................................................................................................5-47
Exercise: Defining Organizational Elements:Securities Accounts and Position Indicators..........................5-48
Financial Transactions in the Medium and Long Term: Accounting Functions: Valuation.........................5-49
Position Management Alternatives................................................................................................................5-50
Position Management and Valuation Categories...........................................................................................5-51
Valuation Principles (One-Step): Scenarios..................................................................................................5-52
Valuation Principles (One-Step)....................................................................................................................5-53
General Concept: Securities Position Management and Valuation...............................................................5-54
Securities Management: Overview................................................................................................................5-55
Financial Transactions in the Medium and Long Term: Scenario: Loans Taken..........................................5-56
Loans Given - Loans Taken...........................................................................................................................5-57
New Loan Transactions: Process Overview..................................................................................................5-58
Possible Procedures for Loan Processing......................................................................................................5-59
Loans Given/Taken and Posting....................................................................................................................5-60
General Posting Options I..............................................................................................................................5-61
General Posting Options II............................................................................................................................5-62
Transaction Process: Example.......................................................................................................................5-63
Contract - 4 Ways of Entering Contracts in the SAP System........................................................................5-64
Financial Transactions in the Medium and Long Term: Scenario: Create Contract.....................................5-65
Contract - Function Overview.......................................................................................................................5-66
Loan - Initial Screen......................................................................................................................................5-67
Contract - Basic Data.....................................................................................................................................5-68
Condition Header / Condition Items..............................................................................................................5-69
Contract - Condition Header..........................................................................................................................5-70
Contract - Condition Items............................................................................................................................5-71
Condition Items - Fields................................................................................................................................5-72
Condition Structure........................................................................................................................................5-73
Loans - Cash Flow.........................................................................................................................................5-74
Effective Interest Calculation........................................................................................................................5-75
Payment Schedule..........................................................................................................................................5-76
Exercise: Create Contract..............................................................................................................................5-77
Financial Transactions in the Medium and Long Term: Scenario: Disbursement........................................5-78
Contract: Disbursement.................................................................................................................................5-79
Disburse Contract: Incidental Costs..............................................................................................................5-80
Save / Post Disbursement..............................................................................................................................5-81
Integration with FI.........................................................................................................................................5-82
Disburse Contract: Posting............................................................................................................................5-83
Planned -> Actual Record..............................................................................................................................5-84
Integration with R/3 Financial Accounting / TR Cash Management............................................................5-85
Exercise: Disburse Contract...........................................................................................................................5-86
Payment Options............................................................................................................................................5-87
Incoming Bank Transfer: Example of Manual Bank Statement....................................................................5-88
Disbursement Payment (Bank Transfer): Posting.........................................................................................5-89
Financial Transactions in the Medium and Long Term: Scenario: Payments Due.......................................5-90
Automatic Posting: Post Planned Records.....................................................................................................5-91
Post Planned Records Due.............................................................................................................................5-92
Exercise: Post Amounts as.............................................................................................................................5-93
Payment Options............................................................................................................................................5-94
Outgoing Payments........................................................................................................................................5-95
Financial Transactions in the Medium and Long Term: Closing Operations / Special Cases......................5-96
Closing Operations / Special Cases...............................................................................................................5-97
Accrual/Deferral: Overview..........................................................................................................................5-98
Valuation: Position Valuation........................................................................................................................5-99
Loans - Cash Flow.......................................................................................................................................5-100
Cash Flow: Making Changes.......................................................................................................................5-101
Loans - Cash Flow: Display Variants..........................................................................................................5-102
Business Operations for a Contract.............................................................................................................5-103
Types of Business Operation.......................................................................................................................5-104
Enter Charges as Business Operation: Example..........................................................................................5-105
Transfer Postings: Overview.......................................................................................................................5-106
Loans: Release.............................................................................................................................................5-107
Financial Transactions in the Medium and Long Term: Unit Summary (1)...............................................5-108
Financial Transactions in the Medium and Long Term: Unit Summary (2)...............................................5-109
Data used in the Unit: Financial Transactions in the Medium and Long Term...........................................5-110
Financial Transactions in the medium and long term Exercises.......................................................................................................................................5-112
Financial Transactions in the Medium and Long Term Solutions...............................................................5-121
Market Risk Management and Managing Risk Positions....................................................................................6-1
Market Risk Management and Managing Risk Positions: Unit Objectives....................................................6-2
Course Overview Diagram..............................................................................................................................6-3
Market Risk Management and Managing Risk Positions: Business Scenario................................................6-4
Market Risk Management and Managing Risk Positions: Analysis and Simulation......................................6-5
Risk Categories................................................................................................................................................6-6
Risk Controlling in Treasury...........................................................................................................................6-7
Defining the Organizational Framework.........................................................................................................6-8
Investment and Risk Guidelines......................................................................................................................6-9
Selection of Financial Instruments................................................................................................................6-10
Hedging..........................................................................................................................................................6-11
Risk Process in Treasury................................................................................................................................6-12
Market Risk Management: Functions............................................................................................................6-13
Integration of Scenarios and Fictitious Transactions.....................................................................................6-14
Instruments in Currency and Interest Management.......................................................................................6-15
Financial Instruments and Influencing Factors..............................................................................................6-16
Market Risk Management and Managing Risk Positions: Mark-to-Market Valuation.................................6-17
Mark-to-Market Valuation.............................................................................................................................6-18
Mark-To-Market Valuation: Procedure.........................................................................................................6-19
Example: Valuation of Swaps........................................................................................................................6-20
Mark-to-Market Valuation - Calculation Base..............................................................................................6-21
Mark-to-Market Valuation - Details Log.......................................................................................................6-22
Exercise: Mark-to-Market..............................................................................................................................6-23
Storing OTC NPVs........................................................................................................................................6-24
Market Risk Management and Managing Risk Positions: Currency Risks...................................................6-25
Exposure Analysis.........................................................................................................................................6-26
Integration of a Company’s Cash Flows........................................................................................................6-27
Currency Exposure........................................................................................................................................6-28
Option Exposure............................................................................................................................................6-29
Currency Option............................................................................................................................................6-30
Create OTC Currency Option........................................................................................................................6-31
Currency Option: Option Price Calculator....................................................................................................6-32
Exercise: Currency Exposure.........................................................................................................................6-33
Market Risk Management and Managing Risk Positions: Interest Rate Risks.............................................6-34
Interest Rate Exposure...................................................................................................................................6-35
Interest Rate Exposure - Determine Basis Point Value................................................................................6-36
Forward Rate Agreement...............................................................................................................................6-37
Create FRA....................................................................................................................................................6-38
Swaps.............................................................................................................................................................6-39
Enter: Interest Rate Swap..............................................................................................................................6-40
Manual / Automatic Interest Rate Adjustment..............................................................................................6-41
Exercise: Interest Rate Exposure...................................................................................................................6-42
Analysis / Simulation - Key Figures............................................................................................................6-43
Analysis / Simulation - Evaluations...............................................................................................................6-44
Analysis / Simulation - Structure...................................................................................................................6-45
Exercise: Analysis and Simulation................................................................................................................6-46
Integrated Market Risk Management............................................................................................................6-47
Market Risk Management and Managing Risk Positions: Unit Summary....................................................6-48
SAP Treasury Overview................................................................................................................................6-49
Market Risk Management and Managing Risk Positions Exercises.........................................................................................................6-50
Market Risk Management and Managing Risk Positions Solutions..........................................................................................................6-56
0
SAP AG 1999
AC030 Treasury
SAP AG
AC030AC030
TreasuryTreasury
SAP R/3 System Release 4.6C Status: December 2000 Material number: 50041165
0.2
SAP AG 2001
Copyright 2001 SAP AG. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.
All rights reserved.
Copyright
Trademarks: Some software products marketed by SAP AG and its distributors contain proprietary software
components of other software vendors. Microsoft®, WINDOWS®, NT®, EXCEL®, Word®, PowerPoint® and SQL Server® are registered
trademarks of Microsoft Corporation. IBM®, DB2®, OS/2®, DB2/6000®, Parallel Sysplex®, MVS/ESA®, RS/6000®, AIX®, S/390®,
AS/400®, OS/390®, and OS/400® are registered trademarks of IBM Corporation. ORACLE® is a registered trademark of ORACLE Corporation. INFORMIX®-OnLine for SAP and INFORMIX® Dynamic ServerTM are registered trademarks of
Informix Software Incorporated. UNIX®, X/Open®, OSF/1®, and Motif® are registered trademarks of the Open Group. HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C®, World Wide
Web Consortium, Massachusetts Institute of Technology. JAVA® is a registered trademark of Sun Microsystems, Inc. JAVASCRIPT® is a registered trademark of Sun Microsystems, Inc., used under license for
technology invented and implemented by Netscape. SAP, SAP Logo, R/2, RIVA, R/3, ABAP, SAP ArchiveLink, SAP Business Workflow, WebFlow,
SAP EarlyWatch, BAPI, SAPPHIRE, Management Cockpit, mySAP.com Logo and mySAP.com are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other products mentioned are trademarks or registered trademarks of their respective companies.
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SAP AG 1999
Treasury
Treasury Overview
AC030 3 days
Level 2 Level 3
Financial Accounting and Reporting
AC010 5 days
Cash Budget Management
AC215 1 day
Basic Functions inTreasury Management
AC810 3 days
Cash Management
AC805 3 days
Money Market, Foreign Exchange and Derivatives
AC825 3 days
Loans Management for Financial Services
AC815 5 days
Loans Management forCorporates
AC816 3 days
Securities Management
AC820 4 days
Market Risk Management
AC830 3 days
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SAP AG 1999
Euro
I.Conversion of local currency
Treasury ManagementR/3R/3
II.Conversion of
position currency(for securities)
III.Conversion of transaction or
contract currency(usual module)
• The company itself triggers conversion
• Convert all flows on a key date after closed fiscal year
• Reconcile rounding differences, generate adjustment flows, and post to specific accounts
• No postings in closed fiscal year
• Notification from issuer triggers conversion• Convert nominal values, book values, and historical acquisition values
selectively• Reconcile rounding differences with the depository bank, generate
adjustment flows, and post to specific account• Adjust class data• Adjust nominal values using alternative means
• Business partners agree on conversion date - depends on term/due date of transactions/contracts
• Convert transactions/contracts selectively
• Reconcile rounding differences, generate adjustment flows, and post to specific accounts
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SAP AG 1999
Course Prerequisites
Required: You must already be familiar with the SAP R/3
System
Recommended:
We recommend that you attend the SAP20 - SAP R/3 Overview course
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SAP AG 1999
Target Group
Participants:
Project team
DP administrators
Duration: 3 days
Note These training materials are not designed as a self-study program. They are only complete when used
in conjunction with the instructor's explanations. Space is provided for your notes on these explanations.
1
SAP AG 1999
Course Overview
Course Goals
Course Objectives
Course Content
Course Overview Diagram
Main Business Scenario
Contents:
(C) SAP AG AC030 1
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Course Goals
This course will prepare you to:
Use all the options provided by the SAP R/3 Treasury module in order to ensure that your short-, medium-, and long-term cash flows and their related risks are managed efficiently.
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At the conclusion of this course, you will be able to:
Describe the relationships between the SAP Cash Management, Treasury Management, Loans Management, and Market Risk Management applications
Set up the structures required for managing short-, medium-, and long-term liquidity in your company
Explain the different ways of monitoring and controlling market risk
Define the system settings needed to control internal processing
Course Objectives
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Unit 5 Financial Transactions in the Medium and Long Term
Unit 6 Market Risk Managementand Managing Risk Positions
Unit 1 Course Overview
Unit 2 Introduction
Unit 3 SAP Treasury Overview
Unit 4 Liquidity Management in theShort and Medium Term
Preface
Appendix
Course Content
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Course Overview Diagram
SAP Treasury Overview
Liquidity Management in the Short and Medium Term
Introduction
Financial Transactions in the Medium and Long Term
Market Risk Management and Managing Risk Positions
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You are using (or have successfully installed) the SAP FI module. You now want to activate short-, medium-, and long-term liquidity management and use the Market Risk Management options.
Main Business Scenario
(C) SAP AG AC030 6
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Navigation in the system
User-specific settings
Navigation in the mySAP.com Workplace
Contents:
Navigation
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Identify the elements of a typical window
Navigate in the system
Personalize your user settings
Describe and use the mySAP.com Workplace
At the conclusion of this unit, you will be able to:
Navigation: Unit Objectives
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New users need to familiarize themselves with the screens in the system and define their personal default settings
Navigation: Business Scenario
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Logging On to the System
Client
User
Password
Language
New Password
SAP R/3SAP R/3
T70 (1) (000) iwdf5070 INS
User System Help
You can place your own text onthe initial screen: See SAP Note 205487
If you have problems logging on, contact Donna Moore, x486
SAP R/3 Systems are client systems. The client concept enables the parallel operation, in one system, of several enterprises that are independent of each other in business terms. The components SAP Business Information Warehouse (BW) and SAP Knowledge Warehouse (KW) are exceptions to this: in these cases only one client is used. During each user session you can only access the data of the client selected during logon.
A client is, in organizational terms, an independent unit in the system. Each client has its own data environment and therefore its own master data and transaction data, assigned user master records and charts of accounts, and specific Customizing parameters.
For a user to log on to the system, a master record must exist in the system for that user. To protect access, a password is required for logon. The password is hidden as you type (you only see asterisks).
SAP R/3 Systems are available in several languages. Use the Language input field to select the logon language for each session.
Multiple logons are always logged in the system beginning with SAP R/3 4.6. This is for security as well as licensing reasons. A warning message appears if the same user attempts to log on twice or more. This message offers three options: Continue with current logon and end any other logons of the same user in the system Continue with current logon without ending any other logons in the system (logged in system) Terminate current logon attempt
You can place your own text on the initial screen in a number of ways. For more information, see the SAP Note mentioned above. The GuiXT (covered at the end of this chapter) offers a further option.
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SAP Easy Access - Standard
SAPSAP EasyEasy AccessAccessOther Menu
Menu Edit Favorites Extras System Help
Create Role Assign User Documentation
FavoritesSAP Menu
OfficeLogisticsAccountingHuman ResourcesInformation SystemsTools
T70 (1) (400) iwdf5070 INS
You are greeted by your logo in the right-hand part of the window.
SAP Easy Access is the standard entry screen displayed after logon. You navigate through the system using a compact tree structure.
You can include an image on the right-hand side of the screen such as your company logo. This image can only be entered systemwide, and is a cross-client setting. Assuming you have the appropriate authorization, you can find a detailed description of the necessary settings by choosing Extras Administration Information. Note that this image is stored in the system and transported to the SAP Frontend every time it is called by SAP Easy Access. Although this transfer is compressed, the image for the initial screen should not be bigger than around 20 kB. You can prevent this image being called either by using the setting Low Speed Connection in the SAPLogon program (see SAP Note 161053), or by switching off the calling of the image under ExtrasSettings. See also User-Specific Personalization.
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Role-Based User Menu
SAPSAP EasyEasy Access Access -- Enjoy User MenuEnjoy User MenuOther Menu
Menu Edit Favorites Extras System Help
Create Role Assign User Documentation
T70 (1) (400) iwdf5070 INS
FavoritesGreat Transactions
SM50 - Prcoess OverviewVA01 - Create Sales Order
Interesting WWW PagesURL - The Herald TribuneURL - Time Magazine
Important FilesURL - Vacation Planning
Enjoy User MenuURL - SAP Notes (User / PW req.)Accounts Receivable
FD02 - Change Customer (Accountin
Favorites chosen by the userreduce navigation time
A role-based menu contains the activities that the user can execute based on the role assigned to the user in the system.
Sales and DsitributionTools
Materials Management
A Role describes a set of logically linked transactions in the system. These represent the range of functions users typically need for their work.
User roles (previously “activity groups”) have to be set up using the Profile Generator so that SAP R/3 System users can work with user-specific or position-related menus.
The authorizations for the activities listed in the menus are also assigned to the users using user roles. With Release 4.6, predefined user roles from all application areas are included in the standard system.
Users who have been assigned a user role can choose between the user menu and the SAP standard menu.
The above screen shows the role-based user menu for a user with the name "Enjoy". You can find roles that are supplied in the standard SAP R/3 System by choosing Other menu on the SAP Easy Access initial screen.
Every enduser can personalize the initial screen using Favorites. You can create your own Favorites list containing the transactions, reports, files, and Web addresses that you use most often.
You can add favorites either by choosing Favorites or by using the mouse to “drag & drop” items into the Favorites directory.
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Screen Elements
System System Function Function Name: Name: ActivityActivity
Menu Edit Favorites Extras System Help
Choose Save
Input field
Tick
Selection 1
Selection 4
Selection 2
Selection 3
Options
Option 1
Option 2
Option 3
Option 4
Option 5
Display Edit
Overview
Neutral
Positive
System Message T70 (1) (400) iwdf5070 INS Status Bar
Application Toolbar
Command Field Standard Toolbar
CheckboxesRadio ButtonsPushbuttons
Tab Page
This screen is made up of various screen elements. It does not match an actual
screen in the system.
Command field: You can use the command field to go to applications directly by entering the transaction code. You can find the transaction code either in the SAP Easy Access menu tree (see the page User-Specific Personalization) or in the appropriate application by choosing SystemStatus.
Standard toolbar: The icons in the standard toolbar are available on all SAP R/3 screens. Any icons that you cannot use on a particular screen are dimmed. If you leave the cursor on an icon for a moment, a QuickInfo appears with the name (or function) of that icon. You will also see the corresponding function key. The application toolbar shows you which functions are available in the current application.
Checkboxes: Checkboxes allow you to select several options simultaneously within a group. Radio buttons: Radio buttons allow you to select one option only. Tabs: Tabs provide a clearer overview of several information screens. Status bar: The status bar displays information on the current system status, for example, warnings
or error messages.Other elements are: Menu bar: The menus shown here depend on which application you are working in. These menus
contain cascading menu options. Title bar: The title bar displays your current position and activity in the system.
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Selecting Functions
Menu Edit Favorites Extras System Help
SAPSAP EasyEasy Access Access -- Enjoy User MenuEnjoy User Menu
Create session
End session
User profile
Services
Utilities
List
Services for object
Object history
Own spool requests
Own Jobs
Short Message
Status...
Log off
FavoritesEnjoy User Menu
URL - SAP Notes (User / PW req.)Accounts Receivable
FD02 -Change Customer (Account
Materials ManagementSales and DistributionTools
... using the transaction code in the command field
... using SAP Easy Access and Favorites
... using the menu path
You can select system functions in the following ways: Use the mouse to choose: Menu options, Favorites, and SAP Easy Access options Use the keyboard (ALT + the underlined letter of the relevant menu option) Enter a transaction code in the command field:
A transaction code is assigned to each function in SAP R/3 Systems. You can access the assigned transaction code from any screen in the system. For example, to display customer master data, enter /n and the appropriate transaction code (in this case /nfd03). You can find the transaction code for the function you are working in under the Status option of the System menu. Other possible entries:/n ends the current transaction. /i ends the current session./osm04 creates a new session and goes to the transaction specified (SM04).
You can also use the keyboard to go to the command field. Use the CTRL + TAB key combination to move the cursor from one (input) field group to the next. Use TAB to move between fields within a group.
By entering search_sap_menu in the command field, you can search for and display the menu path for an SAP transaction. You can also search for text strings.
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Field Help: F1 and F4
Display Display CustomerCustomer: Initial : Initial ScreenScreen
Customer Edit Goto Extras Environment System Help
Customer
Company Code
Restrictions
Company Code
Company Name
City
Currency
Restrict Number to
1000Customer
SAP A.G. Walldorf EUR
Co... Company Name City Cur...
Restrictions
IDES AG 1000 Frankfurt UNI
IDES Canada Toronto CAD
IDES AG Frankfurt UNI
Customer account number
A unique key is used to clearly identify the customer within the SAP
System.
Procedure
When creating a customer master record, the user either enters the
account number of the customer or has the system determine the
number when the record is saved, depending on the type of number
assignment used. The account group determines how numbers are
assigned.
F4 Help: Displays Possible Entries
F1 Help: Displays the Meaning ofFields and Technical Information
Entries Found
For help on fields, menus, functions, and messages, use F1. F1 help also provides technical information on the relevant field. This includes, for example, the
parameter ID, which you can use to assign values for your user to input fields , which have to refer to these parameter IDs.
For information on what values you can enter, use F4. You can also access F4 help for a selected field using the button immediately to the right of that field.
If input fields are marked with a small icon with a checkmark, then you can only continue in that application by entering a permitted value. You can mark many fields in an application as either required entry fields or optional entry fields. You can also hide fields and preassign values using transaction or screen variants or Customizing.
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Menus: System and Help
SAPSAP EasyEasy AccessAccessOther Menu
Menu Edit Favorites Extras System Help
Rolle anlegen Benutzer zuordnen Documentation
FavoritesSAP Menu
OfficeLogisticsAccountingPersonnelInformation SystemsTools
T70 (1) (400) iwdf5070 INS
Create Session
End Session
User profile
Services
Utilities
List
Services for object
Object history
Own spool requests
Own jobs
Short message
Status...
Log off
Application help
SAP Library
Glossary
Release Notes
SAPNet
Feedback
Settings...
Both of these menus are available on every screenand always offer exactly the same options.
The System menu contains, among others, the following options: Create/End Session: Allows you to create and end sessions. The maximum number of sessions can
be set to a number between 2 and 6 by the system administrator using the parameter rdisp/max_alt_modes.
User profile: This is where you can enter user-specific settings. For example, you can use Parameter IDs in Own Data, in order to set default values for specific user-dependent fields in the system (for example the company code field).
List: Contains important list functions, such as searching for character strings, saving in PC files, printing, and so on.
Status: Enables you to display important user and system data. Log off: Ends the R/3 session with a confirmation prompt.
The Help menu contains, among others, the following options: Context-sensitive Application Help Access to the SAP Library (see previous page) a Glossary ...
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SAP Library
SAP Library - SAP Library
SAPLibrary
Contents Index Search SAP LibraryRelease 4.6C, March 2000
IDES
Getting Started
Release Notes
Implementation Guide
Glossary
Copyright 2000 SAP AGAll rights reserved.
You can access the complete online
documentation for the system using the SAP
Library
SAP R/3 Systems provide comprehensive online help. You can display the help from any screen in the system. You can always request help using the Help menu or using the relevant icon (the yellow question mark).
You can access the SAP Library quickly and comfortably by using the SAP Service Marketplace. There you can find the SAP Help Portal under Knowledge and Training, where you can not only access Help in HTML format, but can also perform efficient full-text searches in the SAP Library. If you have the SAP Library installed, you also have, of course, these opportunities within your company.
You can access the Help Portal directly at http://help.sap.com
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User-Specific Personalization
SAPSAP EasyEasy AccessAccessOther Menu
Menu Edit Favorites Exrtas System Help
Rolle anlegen Benutzer zuordnen Dokumentation
FavoritesSAP Menu
OfficeLogisticsAccountingHuman ResourcesInformation SystemsTools
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Administration Information
Assign user
Display Documentation
Technical Details
Settings
Set Start Transaction
Ctrl+Shift+ F8
Shift+ F6
Shift+ F7
Shift+ F9
Ctrl+Shift+ F10
Display favorites at end of list
Settings
This is used to specify settings
Do not display menu, only display favoritesDo not display pictureDisplay technical names
Options ...
Generate Graphic
Create Shortcut ...
Activate GuiXT
Default Size
Hardcopy
Quick Cut and Paste
About...
Different Settings options make working with the system easier
The end user has many possibilities for personalizing the system. Some are described below: You can alter the layout of your initial screen under Extras Settings, for example by switching
off the image in the right-hand part of the window or by turning on the option to display the technical names (transaction codes) in the SAP Easy Access Menu.
Among other things, you can activate a quick cut and paste in the Options menu. Using Options you can change the reaction speed of the QuickInfo that is displayed when you hold your mouse cursor over an icon or a push button.
By following the path System User profile Own data, you can set personal standard values. You can choose the tabs Address, Defaults, and Parameters. As an example, the setting of Parameters is explained here:
Parameters: Here you can set defaults for frequently used input fields. In order to be able set a default value for a field, it must have been assigned a Parameter ID. Procedure for finding the Parameter ID: Go to the field for which you wish to set a default value. Select the F1 help, and then choose Technical Info. The system displays an information window that contains the relevant parameter ID under the heading Field Data (as long as the field has been assigned a Parameter ID).
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Personalizing the Frontend with GuiXT
FD03 with GuiXTFD03 without GuiXT
Example from http://www.guixt.com
SAP R/3 Systems offer numerous options for settings and adjustments: Define default values for input fields Hide screen elements Deactivate screen elements (dimmed)
You can do this by, for example, defining transaction variants. SAP offers GuiXT, as of SAP R/3 Release 4.6. In addition to all of the above functions, you can
now: Include graphics Convert fields and add pushbuttons and text Change input fields (or their F4 help results) into radio buttons
GuiXT scripts are stored on the Frontend. In accordance with local scripts (which can also be stored centrally), the GUIXT scripts determine how data sent from the application server is displayed. These scripts can be standard throughout a company, or they can be different for each Frontend.
NOTE: The GuiXT will support the mySAP.com Workplace only as of the end of the year 2000. This means that until then you should use either the SAP GUI for the Windows Environment and the GuiXT or the mySAP.com Workplace with the SAP GUI for HTML (or the SAP GUI for Java or the SAP GUI for Windows).
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Elements of the Workplace
mySAP.com-Marktplatz Aktualisieren Anpassen Getting Started Info
Willkommen Willi WorkplaceIn Use
Start Page
Workplace Favorites
RolesDemonstration Role
Web Search
Search in Start Search
WorkSpace (MiniApps, Transactions, & Web Pages)LaunchPad
Drag&Relate
Expand/Collapse LaunchPad Log off from the Workplace
The graphic above shows Release 2.11 of the mySAP.com Workplace. You call the mySAP.com Workplace by entering the relevant URL (Internet address) in a Web
Browser. Usually this is done by clicking a link (instead of being entered manually).The syntax for the URL of the Workplace is typically <protocol>://<webserver>[:<port>]/scripts/wgate/sapwp/!, for example: https://workplace.wdf.sap-ag.de:1042/scripts/wgate/sapwp/!The ! is an essential part of the call.
The browser window of the mySAP.com Workplace consists of three areas: When working with the mySAP.com Workplace, the roles containing the entries relevant to your
job appear in the LaunchPad. You can also add your own entries (Favorites) to the LaunchPad. When you log on to the mySAP.com Workplace, the list of MiniApps (for example: the
StockTicker, news, overview lists, or reports) that are assigned to your role appears in the WorkSpace on the right-hand side, as well as MiniApps that you have added yourself. If you start a particular transaction in the LaunchPad (for example, the transaction for booking invoices), this application is executed in the WorkSpace on the right-hand side.
Session handling in the Workplace allows you to hold several applications at the same time in channels. The individual channels are displayed as icons in the In Use folder. By clicking on the entries, you can switch between the different applications.
Using Drag&Relate you can link objects from one application with another with a simple mouse click and execute them from there.
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Active Applications (In Use)
mySAP.com Marketplace Update Personalize Getting Started Info
Welcome Julie ArmstrongIn Use
Start Page
Workplace Favorites
RolesDemonstration Role
Web Search
Search in Start Search
Optionen
Workplace Favorites Start Page General
Change Role Sequence
Standardsprache der Komponentensysteme
Allow More Than One Application in the Area “In Use“(Requires Restart of the Workplace)
Close Applications Without Confirmation
Display Dialog for Drag&Relate
Test
Language (for all Systems)
Client QW2/050
Logonlanguage
Logon language
OK Cancel
ActivateSession Handling
Initial Screen(MiniApps)
Personalize
The In Use area: You can manage multiple windows (Workplace Views) oin this folder in the LaunchPad. You can
switch from one Workspace View to another without affecting the applications that you are running. To be able to operate multiple Channels at the same time, you must change your personal settings for
the Workplace. Choose Personalize, and then the General tab. In the Options sections, check the option Allow More Than One Application in the Area “In Use”. After this is activated, multiple parallel channels are available.
In the example above, only the Start Page (“Home”) is shown in use, with an illustration of its assigned MiniApps.
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Workplace Favorites
mySAP.com Marketplace Update Personalize Getting Started Info
Welcome Julie ArmstrongIn Use
Start Page
Workplace Favorites
RolesDemonstration Role
Web Search
Search in Start Search
Delete
Apply
OK Cancel
Test
New FolderNew Web Address
Display in a separate browser window
Web Address http://help.sap.com
Name Online Documentation
Attributes Available in Roles
Favorite TransactionsWWW Addresses
Time MagazineInternational Herald Tribune
Workplace Favorites Start Page General
Workplace Favorites
Add Favorites using Drag&Drop or Personalize
Test Web Pages andAdd them to the Favorites List
You can personalize the LaunchPad using Favorites. By choosing Personalize (or by choosing the Personalize icon), you open a new window. You can
create and (re)name your own folders in the left-hand part of the tab page Favorites, as well as moving them and changing their grouping.
You can enter Web addresses (URLs) in the right-hand part. These are then available in the Favorites folder in the LaunchPad. You should test your favorites by choosing the Test button before you add them to your favorites list. A favorite that requires a complete browser window is not suitable for displaying in the WorkSpace of the mySAP.com Workplace.
You can see the entries in your LaunchPad that were assigned to you by your system administrator on the second tab page, Available in Roles. This contains, for example, transactions. If you use a transaction frequently, you can define this as a favorite. To do so, click the relevant transaction and choose Add.
You can also add to and edit your favorites directly form the LauchPad. Using Drag&Drop, you can add frequently used transactions to the Favorites folder.
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Personalizing MiniApps
mySAP.com Marketplace Update Personalize Getting Started Info
Welcome Julie ArmstrongIn Use
Start Page
Workplace Favorites
RolesDemonstration Role
Web Search
Search in Start Search
Workplace Favorites Start Page General
New MiniApp
LinesHeight
Test
Web Address http://www.sap.com/MiniApps
Name MiniApp Community
Attributes Available MiniApps
10 Minimized
OK Cancel
Apply
Displayed in Work Area
List View Layout Preview
Web Search
Reuters News
ZCALCULATOR
Hide
MiniApps are Web applications or documents that are simple and intuitive to operate. After you have started the mySAP.com Workplace, they offer you a quick overview and access to the functions that are most important to you on the initial screen.
You are assigned the MiniApps in the Workspace by your system administrator, but you can also add your own MiniApps.
By choosing the menu option Personalize (or alternatively by choosing the Personalize icon), you open a new window. You can add your own MiniApps on the right-hand side of the tab page Start Page under New MiniApps. Also enter the Web address (URL), a name for the MiniApp, and the height in lines. Test MiniApps before adding them. You can easily rename and reassign them later.
You can change and adjust the format of MiniApps. On the tab page MiniApps, you can change the order in which the MiniApps are displayed on the Workplace or choose your desired display format (minimized or expanded).
Take note of the address http://www.sap.com/miniapps. This is the homepage of the MiniApp community. Here, you can find current information about available MiniApps in SAP systems and about Internet services that you can add to those available in your Workplace.
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Workplace: Advantages
User-Friendliness Role-based access
Tailored to match your needs
Access from anywhere
Efficiency “Drag&Relate”
Uniform access
Log on only once
Openness Standard Internet user interface
Components from SAP and
other providers
Extendable role specifications
Low Total Costs No installation expenses at
the PC workstation
Standardization
Uncomplicated maintenance
Security Central administration
Controlled access
Productivity
User Enterprise
Both the user and the enterprise profit from the advantages of the mySAP.com Workplace.
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You are now able to:
Navigation: Unit Summary
Identify the elements of a typical window
Navigate in the system
Make personal system settings
Describe and use the mySAP.com Workplace
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2.20Navigation - Exercises
Unit: Navigation
Topic: Basic Functions
At the conclusion of this exercise, you will be able to:
Log on to an SAP R/3 System
Find transaction codes
Access the SAP Library
Use F1 help to find field information
Use F4 help to search for possible field entries
As a new user of an SAP R/3 System, you begin to navigate the system using the menu paths and transaction codes. You also begin to access the various types of online help.
All menu paths in the exercises refer to the SAP standard menu.
1-1 Logging on to the system
Select the appropriate system for this course. Use the client, user name, initial password and logon language specified by the instructor. The first time you log on, you will get a prompt in which you must enter your new password, which you choose yourself, twice. Make a note of the following:
Client: _ _ _ User: _ _ _ _ _ _ Password: ____________ Language: _ _.
1-2 What is the maximum number of sessions (windows in the SAP R/3 System) you can have open simultaneously? __
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1-3 Identify the functions and find the transaction codes that correspond to the following menu paths in the SAP standard menu.
1-3-1 Tools Administration Monitor System Monitoring User Overview
Name of function: ___________________________________________
Transaction: _________________________________________________
1-3-2 Accounting Financial Accounting Accounts Receivable
Master Records Display
Enter Customer 1000 and Company Code 1000 to go to the next screen.
Name of function: _____________________________________
Transaction: ___________________________________________
1-4 Help
1-4-1 If you choose Application help in the SAP Easy Access initial screen (System menu), which area of the SAP Library does it take you to?
_________________________________________________________
To answer the questions below, you will need to go to the Display Customer: Initial Screen.
1-4-2 Use F1 help on the Customer field. What is this field used for?Write a brief summary of the business-related information.
______________________________________________________
1-4-3 Use the F1 help on the Company code field. If you choose the Application help icon from the F1 help screen, which area of the SAP Library does it take you to?
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______________________________________________________
1-4-4 Which icon do you need to use on the F1 help screen to find the parameter ID for the Company code field?Hint: See the notes on the slide User-Specific Personalization
______________________________________________________
1-4-5 Use F4 help on the Customer field to find the customer number for Becker ##. To do this, use the Search term "Becker*" after calling the F4 help.
Note: ## corresponds to your assigned group number.
___________________________________________________
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Unit: Navigation
Topic: User-Specific Settings
At the conclusion of this exercise, you will be able to:
Set a user parameter for a field
Set user defaults
Maintain your favorites
Select a start transaction of your choice
You begin to set various user-specific settings.
Exercises marked * are optional.
2-1 Setting user parameters.
2-1-1 Assign a parameter value for the Company code field to your user profile.
Note: The instructor will tell you what parameter value to enter (for example 1000). For information about defaults, see the notes on the slide User-Specific Personalization.
Parameter ID: ___ ___ ___
Parameter value: ___ ___ ___ ___
2-2 Defining User-Specific Settings using System User profile Own Data
2-2-1 In your user profile, set your logon language to the value used for the course.
2-2-2 In your user profile, set the decimal notation and date format of your choice.
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2-3 Defining your favorites
2-3-1 Insert at least one new folder under the Favorites folder.
2-3-2 Add any two of your favorite transactions to the corresponding folders.
2-3-3 Add the Internet address http://www.sap.com with the text SAP Homepage.
2-4* Setting a start transaction using the Extras menu.
2-4-1 Enter a transaction of your choice as the initial transaction. You will then need to log off and on again for the change to take effect.
Note: If desired, you can change the initial transaction back to the default value simply by deleting the transaction code that you entered.
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2.21Navigation - Solutions
Unit: Navigation
Topic: Basic Functions
1-1 Log on to the system specified by the instructor and change your initial password.
1-2 To open and close sessions, choose System Create session (or use the appropriate icon) or System End session. The maximum number of sessions you can have open simultaneously is six (6), depending on your system settings.
1-3 To find the transaction code, choose System Status. These function names and transaction codes correspond to the menu paths:
1-3-1 Transaction: SM04 for Function Name: User list
1-3-2 Transaction: FD03 for Function Name: Display Customer: General Data
1-4 Help
1-4-1 The section of the unit Getting Started that deals with using SAP Easy Access is displayed.
1-4-2 Suggestion: The customer is a unique key (account number) used to clearly identify the customer within the system.
1-4-3 FI – Accounts Receivable and Accounts Payable
1-4-4 To find the Parameter ID: BUK, choose Technical Info
1-4-5 Customer ## (## corresponds to your assigned group number)
When you select F4 in the Customer field, the Restrict Value Range window appears. You can explore the various tabs to see the different search criteria available. Find a tab that includes the Search term field and enter the following:
Field Name Value
Search term Becker*
Choose Enter. A window appears listing the customer account numbers that match your search criteria. Select the line that corresponds to Becker ##, then choose Copy. This automatically copies the customer account number into the Customer field.
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Unit: Navigation
Topic: User-Specific Settings
2-1 Setting user parameters.
2-1-1 To assign a parameter value to a field you will need the parameter ID of the field. First you need to select a transaction that contains this field. For example, Company code can be found in transaction FD03. Next, place the cursor on that field (click it with the mouse). To display the required info, choose:
F1 Technical Info Parameter ID
gives you the required information. For the Company code field, the parameter ID is BUK.
Finally, enter the parameter ID and desired value in your user profile:
System User profile Own data
On the Parameter tab page you enter the parameter ID and value that you want to be entered into the field. Save your entries.
2-2 Setting user defaults.
2-2-1 To set the logon language, go to your user profile:
System User profile Own data
On the Defaults tab page, enter the language of your choice in the Logon language field.
2-2-2 To set the decimal notation and date format, remain on the Defaults tab in your user profile. Select the indicator adjacent to the notation and format you desire. Save your selections.
2-3 Defining favorites of your choice.
2-3-1 Favorites Insert folder
Type any name for the folder then select Enter. You can add as many folders as you desire. Once created, folders can be dragged and dropped to position them where you want.
2-3-2 To create favorites, select specific applications (transactions) that you need as favorites for your daily work from the menu tree of the SAP standard menu. Add them to your Favorites list by selecting them and choosing Favorites Add from the menu bar. Alternatively, use the mouse to drag & drop favorites to a folder. You can also use the menu path Favorites Insert transaction to add using a transaction code.. Finally, you can move existing favorites to different folders later by choosing Favorites Move or using drag & drop.
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2-3-3 Create Internet addresses by choosing Favorites Add Web address or file. When you select SAP Homepage from your favorites, an Internet browser will open and you will be connected to SAP’s homepage.
2-4 Setting a start transaction.
2-4-1 Extras Set start transaction
Enter a transaction of your choice then choose Enter. Notice the system message on the status bar indicates that your selected transaction has been set as the start transaction. The next time you log on, the system will go directly to your start transaction.
Note: To change back to SAP Easy Access as the initial screen, follow the menu path again, delete the transaction code and select Enter. The next time you log on, SAP Easy Access will be the initial screen.
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3
SAP AG 1999
SAP Treasury Overview
Contents:
SAP Treasury Overview
Defining the Organizational Framework
Selection of Financial Instruments
Identifying Treasury Processes
Treasury Management Functions
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SAP Treasury Overview: Unit Objectives
At the conclusion of this unit, you will be able to:
Provide an overview of SAP R/3 Treasury
Identify the relevant product types
Explain the various processes and standard functions of SAP Treasury
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SAP AG 1999
Course Overview Diagram
SAP Treasury OverviewSAP Treasury Overview
Liquidity Management in the Short and Medium Term
Introduction
Financial Transactions in the Medium and Long Term
Market Risk Management and Managing Risk Positions
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SAP Treasury Overview: Business Scenario
Before you begin your work in the project team, you want to gain an overview of SAP R/3 Treasury.
Which products and processes can be mapped using the new Treasury system? What functions are available?
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SAP Treasury Overview
Financial Accounting
Bank data
Businesspartner
Market data
DownloadMarket Risk Management:• Interest/currency
exposure• Sensitivities• Mark-to-market • Risk analysis/Simulation• Value at Risk
Cash Management:• Electronic banking• Liquidity status• Integrated operationalsystems
• Control functions
Transaction Management:• Management of financial transactions and positions
• Transfer to Financial Accounting
• Flexible reporting andportfolio analysis
• Datafeed interface
DD CC DD CC
100 100 100 100
TM TM
SecuritiesSecuritiesDerivativesDerivatives
Money market Money market ForexForexLoansLoans
Logistics
The objective of the SAP Treasury module is to ensure efficient liquidity, portfolio, and risk management.
SAP Treasury is subdivided into the following three areas:
Cash Management (CM) offers tools for efficient liquidity analysis.
Transaction Management (TM) supports the management of financial transactions and positions.
Market Risk Management (MRM) provides methods and procedures for assessing risk positions.
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Treasury inconjunction withother SAP modules(FI, MM, SD)
Electronic bankingCash Management
Money market Securities
Loans
Foreign exchangeDerivatives
SAP Support for Business Requirements
Data integration
Centraldecision-making
Several currencies
Automatic processes
Analysis of financial resources
Investment / borrowing
Data entry
Monitoring
Processing
Reporting
Risk management
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1. Definition of a means/end hierarchy
Define earnings and risk targets Establish investment and risk guidelines Implement in the form of operating targets
2. Definition of procedure
Identify the processes Company-specific modeling of work processes Break down into single activities and assign to groups Incorporate in an authorization and release concept
Defining the Organizational Framework
Management is responsible for defining the framework within which treasury transactions are executed. This is divided into three main areas:
Specifying the basic business principles, including: Trading strategies for the respective instruments The markets on which trading is allowed Transaction volume, organization (contract components), and documentation
Risk limitation, including: Procedures for measuring and controlling risk Value of the permitted risk positions according to instruments or organizational units Reaction to extreme market trends or exceeded limits Internal reporting
Organization, including: The areas of responsibility and functions of individual employees Division into function areas Human resources and technical equipment
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Investment and Risk Guidelines
Internal External
Revenuetargets
Risktargets
Investmentregulations
Riskregulations
LimitsRelevant
product typesHedging
strategiesReporting
system
Investment and risk guidelines
In the financial services area, there are countless statutory norms and controlling bodies that monitor entered risks to protect the investor.
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Selection of Financial Instruments
Mortgageloans
Borrower's note loans
Policy loans Other
loans
Fixed-termdeposits
Deposits atnotice
CommercialPaper
Product types
DerivativesForexLoansSecuritiesMoney market
Stocks Subscription
rights Investment
certificates Bonds Convertible
bonds Warrant bonds Warrants
Forexspotdeals
Forwardexchange deals
Forexswaps
Caps / Floors FRAs Swaps
- Interest rate- Interest rate curr.
OTC options- Currency- Interest rate- Security- Swaption
Futures
Hedginginstruments
Investment/Borrowinginstruments
In the short-term area, money market transactions and forex transactions allow you to bridge liquidity deficits or surpluses. In the medium to long-term area, investments and borrowings are additionally represented by securities transactions and loan transactions.
Derivative financial instruments, on the other hand, help you hedge against interest rate and currency risks.
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SAP AG 1999
Hedging
HedgingHedging
Hedgingstrategy
Hedgingrate
Hedgingobject
Overall position
Portfolio position
Single position
Macro hedge
Portfolio hedge
Micro hedge
Full hedge 100%
Partial hedge x%
* Release not yet specified
Hedging is a way of counteracting risk. It involves setting up an offsetting position, which develops in the opposite way to the underlying position.
Risk objects are either cash flows resulting from an operating business or from Treasury transactions/positions such as loans, securities, or money market transactions.
Exchange rates, interest rates and volatilities are all sources of risk. You can match risk and hedged items and hence determine hedged and non-hedged items using the
Market Risk Management component. Hedge transactions are usually forward transactions (symmetrical instruments) or options
(asymmetrical instruments) as well as combinations of these.
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Earnings/risk targets
Revision of planned targets
Feedback
Adjustments
Documentation and control functions
Analysis and trading process
Transaction and position management process
Analysis(planning)
Decision
FinancialFinancialtransactionstransactions
Identifying Treasury Processes
From a strategic point of view, the analysis and trading process is the starting point for the various Treasury processes. At this stage, you identify and analyze the liquidity and risk positions on the basis of the risk and earnings targets you have defined. SAP Treasury provides special tools and methods with which you can perform an integrated analysis of your company's financial and risk situation.
If you have decided to conclude certain financial transactions, you enter the trading processes for these transactions in SAP Transaction Management (TM). Transaction Management also supports functions for managing transactions and the related financial positions at later stages.
All Treasury activities are supported by common documentation and control functions. This ensures that analyses of specific instruments or of various instrument groupings can be performed at each stage of the Treasury process. This fulfills the various documentation and control requirements of both Financial Accounting and Treasury.
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SAP Treasury Overview: Unit Summary
The SAP Treasury component is divided into three main areas:- Cash Management, - Treasury Management / Loans Management - Market Risk Management.
You can represent financial transactions in Treasury Management using different processes
The SAP Treasury Management module includes functions that enable you to manage your financial transactions from the trading stage through back office processing to Financial Accounting
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Liquidity Management in the Short andMedium Term
Contents:
Cash Management
Money Market
Foreign Exchange
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Liquidity Management in the Short and Medium Term: Unit Objectives
At the conclusion of this unit, you will be able to:
Provide an overview of the entire liquidity management process in the short and medium term
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Course Overview Diagram
SAP Treasury Overview
Liquidity Management in the Short Liquidity Management in the Short and Medium Termand Medium Term
Introduction
Financial Transactions in the Medium and Long Term
Market Risk Management and Managing Risk Positions
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Cash Management Functions
Our model company has to deal with the integration of electronic banking into Cash Management before it is in a position to use the liquidity analysis options.The company has identified a liquidity surplus on its bank accounts for a particular value date in Cash Management.A series of examples show us how this liquidity surplus came about and how it can be interpreted.On the one hand, it is worth noting the business causes behind the individual cash flows, and on the other hand, their effect on the system. Different cash flow views in different areas provide information about the company's overall liquidity situation, andthe short-term liquidity on its bank accounts.
Liquidity Management in the Short and Medium Term: Cash Management Scenario
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InformationprocurementInformation
procurementTargetsTargets
Instruments Methods Measurements
Identification ofappropriate financial transactions
Simulation of alternative results
Select one alternative
Trading Back office Accounting Reporting
Internal: - Liquidity
status - Risk
position External:
Market data
Earnings/Earnings/risk targetsrisk targets
Assessmentof possiblesolutions
Assessmentof possiblesolutions
DecisionDecision Processingcontrol
Processingcontrol
Controlling
Analysis and Trading Process
From a strategic point of view, the analysis and trading process is the starting point for the various Treasury processes. At this stage, you identify and analyze the liquidity and risk positions on the basis of the risk and earnings targets you have defined. SAP Treasury provides special tools and methods with which you can perform an integrated analysis of your company's financial and risk situation.
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1) % of all companies surveyedSource: Price Waterhouse Top 500 Survey (Germany) 1994
1 Ensure liquidity 95
2 Optimize financing costs 92
3 Optimize yields on financial assets 74
4 Hedge costs (e.g. against possible exchange rate fluctuations) 61
5 Hedge sales (e.g. against possibleexchange rate fluctuations) 52
6 Contribute to profit through activemanagement of open items 30
1)Priority Target %1)%1)
Main Targets of Treasury
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11 Ensure liquidityEnsure liquidity
using SAPCash Management
Priority Target %
Liquidity Management
The main tasks of a cash management system are: To ensure the liquidity of a company To analyze the business activities in closed posting periods To recognize and map future trends in the financial planning as soon as possible.
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Comprehensive valuation of liquidity situation
Data from the operative systems: Financial Accounting, Logistics, and Treasury
Electronic banking functions
Cash position: Daily bank account balances by value date, payment advices
Cash concentration: Concentrated bank account balances
Cash pooling: Interest paid on bank accounts
Liquidity forecast: Expected inflows/outflows from customers and vendors, planned data
Monitoring value dates, payment advices, conditions, checks cashed ...
Cash Management: Functions
SAP Cash Management offers the following tools, designed to make cash flows clear: The cash position, which illustrates short-term movements in your bank accounts The liquidity forecast, which illustrates medium-term movements in the subledger accounts too.
The cash position shows you how your bank accounts will move in the next few days. In contrast, the liquidity forecast illustrates liquidity changes in the subledger accounts. The system also supports functions which you can use to obtain relevant information on expected payment flows. This information appears in the form of memo records in the cash position, or as planned items in the liquidity forecast.
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Aim: Simplify bank account management
Cashed checks
Electronic and manual account statements
...
Establishing most current bank account balances to determine daily cash position
Electronic Banking: Functions
SAP Cash Management has the same goals as conventional cash management systems, namely to:
Safeguard company liquidity so that payment obligations can be met
Monitor payment flows
SAP Cash Management uses the cash position to reflect movements in bank accounts, while movements in the subledger accounts are represented using the liquidity forecast.
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Dataadministration
lists
Subledgerdocuments
G/L documents
Inputdata
Manual orelectronic entry
Temporarydataset
Electronic Banking: General Process
External bank data is imported to the SAP System manually or electronically, and is initially stored in a temporary dataset for bank data. The system then generates the documents for the bank and/or subledger accounting in addition to various lists.
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Check deposit:
Entry of incoming checks Storage/correction of check deposit list Postings to G/L accounts and customer accounts Batch input sessions or online
12001200CheckCheckOne thousand two hundredOne thousand two hundred
Walldorf, Walldorf, 12/29/YY12/29/YY
11
11
22
22
Au
tom
ati
c
Cash mgmt and forecast $, UNI, ...
Check deposit list
Incoming check clearing
Customer account
BankAcct statement(only bank postings)
OP 100
100 100
100
100
Session 1
+1day
Session 2
11
11
Electronic Banking: Check Deposit
You can use the Check deposit facility in SAP Cash Management to enter checks received. The manual check deposit function is a fast entry tool that substantially reduces the amount of
manual work involved in entering checks. You only enter the checks received, not the posting records.
The system then automatically makes the postings to the bank clearing account and customer account, along with the payment clearing. You have two options here: Immediate posting Create a batch input session, then run it
Postprocessing differs, according to which of these options you choose. When you have finished entering checks, there are additional functions you can use to process them
further. For example, you can print out a check deposit list and give it to the bank along with the checks.
The check deposit list is written, but not posted, after the checks are saved to the database. You can make changes in the list while it has this status. Once the posting process has been initiated, no further changes are possible.
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Bankdata
ApplicationApplication--specificspecificprocessingprocessing
Manualaccount
statement
Cash position and liquidity forecast
Banks
Subledger
03/15
100
25
SWIFT MT940
MultiCash
Lockbox
BACS
ETEBAC
CODA
FIDES
CSB43
ZENGINKYO
EU
EU
USA
UK
F
BE
CH
E
JP
Czech Rep.
Sweden
Bankpostings
Subledgeraccounts
Link to payment program
Automatic/manual account statements
Various formats supported
Postings to G/L and customer/vendor accounts
Bank polling
Current bank information polled
Electronic Banking
Electronic bank statement processing in SAP Cash Management is based on the MultiCash format. Other formats are supported, such as SWIFT MT940 and BAI, but you are best advised to use MultiCash.
The system uses the bank data to create two files (STATE.TXT and ITEM.TXT), which are then imported into the SAP System, where more data is added. The system looks for the business transaction codes (BTC) and other information relevant to the posting (interpretation of the where-used fields).
As with other Cash Management objects, you can work with batch input sessions or make postings immediately. The postprocessing activities differ accordingly.
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Monitoring correct payments processingfor planning
Control Functions
Aim: Monitor bank account movements
Compare value dates
Reconcile payment advice and account/account statements
Analyze cashed checks
Account interest
Compare bank conditions
You use the value date comparison to compare the planned or agreed value date (for example, from the check deposit or the preliminary posting) with the value date posted by the bank in the bank statement. The program searches for the balance sheet account postings relating to all the cleared items in a bank clearing account. If there are any differences, the program lists both postings. If there is more than one clearing item for a posting, the program takes the first one it finds.
You can use the payment advice comparison to archive individual records which are no longer valid. This report selects payment advices from the selected planning period and compares them with the bank postings. If you work with the electronic bank statement and manual individual records, it is vital that you run the payment advice comparison.
Compare with AccountThis section shows the manual and automatic comparison of individual records with account postings.
Compare with Bank StatementThis section shows the manual and automatic comparison of individual records with bank data store information, and the selection of archived records.
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Banks 09/01 09/02 09/03
Grouping:
:
BANKA 90 130 60
Level: BANKA 09/01 09/02 09/03
F0 Subledger 40 80 20
B2 Incoming checks 60 60 60
B1 Outgoing checks 10- 10- 20-
Accounts: Subledger 09/01 09/02 09/03
Account 1 10 30 10-
Account 2 20 70 20-
Account 3 10 20- 50
BANKB 40- 20- 30-
Current bank account balances as per posting date and value (bank postings and payment advices)
Accounts managed in local/foreign currency
Time scale 0-2 days
Documentation and audit functions
Current liquidity position on bankaccounts per specific date
Cash Position
The cash position reproduces the activity in your bank accounts for the next few days, and is the result of the entry, by value date, of all the payments in a given, short time horizon.
It is fed by three sources:
FI postings to G/L accounts that are relevant to cash management
Memo records entered manually
Cash flows from business transactions managed with the Transaction Management component.
You use the grouping to set up the display. There are different presentation graphics in the cash position. For example, the chart displays the
relevant balance.
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The company code is an independent accounting unit.Legally required balance sheets and profit and loss statements are prepared at this level.
Levels describe the logical origin and significance of cash flows in business terms.
Accounts (cash position) and groups (liquidity forecast) describe how payments are allocated.Examples:
Account: DBGIRO describes the expected incoming/outgoing payments for a current account.
Groups: Domestic customers describes the expected incoming/outgoing payments within the group of domestic customers.
Structure/Views of Liquidity Analysis
The format of the cash position and the liquidity forecast is determined by two features: Both reports contain levels. These supply high-quality information on the commercial reasons for a
movement in an account - that is, they explain how the account opening and closing balances came about. For example, levels tell you whether a balance in a bank account is the result of a bank posting or of a memo record entered manually. They can also be classified according to how secure the receipt is - for example, by confirmed or unconfirmed memo record.
In the cash position, accounts (bank and bank clearing accounts) supply information on the current balance.
The total balance of a bank is subdivided according to Groups (= accounts) to which postings are made. These are listed mainly with their cash
management account name (Customizing).If the ‘Account instead of account name’ parameter is selected, the accounts are listed instead of the cash management account names.
Levels (= cause) of a bank/account movement. The liquidity forecast contains groups instead of accounts. Customers and vendors are assigned to a
planning group by means of an entry in the master records. Each group reflects certain features, procedures, or risks.
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External bank 4External bank 3
Company 2Company 2Company code 2Company code 2
External banks
External bank 2
Company 3Company 3Company code 3Company code 3
CentralCentral TreasuryTreasuryCompany codeCompany code 11
Company 4Company 4Company code 4Company code 4
Liquidity statusCompany codes 2+3
Liquidity statusCompany codes 1-4
internal financialtransactions
external financial transactions
external financialtransactions
Corporate Group Evaluations
Alongside the chart of accounts, the company code is the main element for integration to SAP Financial Accounting. A company code is the smallest organizational unit for which a set of accounts can be drawn up for external reporting purposes. This includes recording all the activities that require posting, and preparing all the legally-required documents, such as balance sheets and profit and loss statements.
If you use the company code as an evaluation unit, you can reproduce different corporate structures, and therefore reflect the different entities within a corporate group.
You can define each company division (e.g. subsidiary or central Treasury department) as a company code.
You can perform liquidity and risk analyses for each company code (that is, for each individual company) and also across all company codes (from a corporate group viewpoint).
This enables you to display the foreign currency exposure of a subsidiary and the overall group position. In other words, you can display a currency-specific total position for all the subsidiaries. However, this does not include settling receivables and payables for specific company codes.
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Status Status beforebefore concentrationconcentration afterafter concentrationconcentrationBank 1 1200 5Bank 2 100 5Bank 3 400 1337Bank 4 -350 3
1350 1350
Cash Concentration
Clearing proposal on the basis of selection criteria Interactive manual adjustment Credit transfers and correspondence
Concentrated bank accounts
Having established your liquidity situation from the cash position of the bank accounts, it is time to transfer any resulting deficits and surpluses to one account, for example, to the account you use for making financial investments. The aim of cash clearing is to concentrate the balances of various bank accounts in one target bank account, while also taking the defined minimum amounts into consideration. At the same time, the information in Cash Management has to be updated to generate the related payment advices automatically, and to initiate the necessary bank transfers.
If you use the Cash Management component throughout your corporate group, you can also use the cash concentration function for currency-related cash concentration across all subsidiaries. In this case, you can use the function for generating payment advices automatically to transfer the necessary payments between the subsidiaries.
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Liquidity Forecast
France (E4)
(E2) Bank collection (E1)
Payer of net amount
(E3)
FI =Posting/sales
FW =Bill of exchange
XA = Blocking reason 'A'
Groups:- Customers with similar payment history- Customers of particular interest
Groups:- Customers with similar payment history- Customers of particular interest
Levels:- Balances specified according to level
Levels:- Balances specified according to level
(E5)(E5)
Integrated data basis including customers, vendors, and planned items
Expected cash inflows/outflows over a time scaleof 1-24 weeks
Support for optimizing financial investments and borrowings
Monitoring liquidity situation
The liquidity forecast reproduces the liquidity movements in the subledger accounts. The incoming and outgoing payments per open item from accounts receivable and payable form the
basis of the liquidity forecast. Since planning and forecasting these payments is usually long term, the probability of payment being made on the planned day is less than the payment probability stated in the cash position.
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Exercise: Cash Management Functions
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Cash position Liquidity forecast
Bank accounts in currency:Account 1
:Account nTotal
Payment transactions in transition:- incoming- outgoing
Financial investments and borrowings
Subledgers:- A/R- A/P- Purchase orders- Orders
TRADINGCash
management decision
Market information
Cash Position and Liquidity Forecast
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Cash position Liquidity forecast
TRADINGCash
management decision
Market information
LogisticsFinancials
G/L G/L accountsaccounts
Customers/Customers/vendorsvendors
TreasuryTreasury MM/SDMM/SDFIFIFIFI
TRTR--TMTM OrdersOrders
Integration with Other SAP Modules
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Treasury Management Functions
This unit gives you an overview of the Treasury Management functions.It presents the general analysis and trading process used as a basis for concluding Treasury transactions. Managing Treasury transactions is the basis for the transaction and position management process. This consists of the following key phases:The “Trading” area includes functions for entering transactions and exercising rights, for supporting evaluations and calculating prices (e.g. option price calculator).In the “Back-office” area, you can complete the transactions (for example, with account assignment information and payment details).You can also use correspondence functions, such as automatic letters of confirmation. Position management functions for securities, for example, securities account transfers or corporate actions are also included here.The "Accounting" area includes tools for updating the general ledger, as well as flexible functions for handling payment transactions, and valuation and accrual/deferral procedures.
Liquidity Management in the Short and Medium Term: Treasury Management Scenario
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Market RiskManagement
Priority Priority TargetTarget
1 Ensure liquidity 95
2 Optimize financing costs 92
3 Optimize yields on financial assets 74
4 Hedge costs (e.g. againstpossible exchange rate fluctuations) 61
5 Hedge sales (e.g. againstpossible exchange rate fluctuations) 52
6 Contribute to profit through active management of open items 30
TreasuryManagement
%
Treasury and Market Risk Management
(C) SAP AG AC030 23
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SAP AG 1999
Earnings/risk targets
Revision of planned targets
Feedback
Adjustments
Documentation and control functions
Analysis andtrading process
Transaction and position management process
AnalysisAnalysis(planning)(planning)
DecisionDecision
FinancialFinancialtransactionstransactions
Identifying Treasury Processes
From a strategic point of view, the analysis and trading process is the starting point for the various Treasury processes. At this stage, you identify and analyze the liquidity and risk positions on the basis of the risk and earnings targets you have defined. SAP Treasury provides special tools and methods with which you can perform an integrated analysis of your company's financial and risk situation.
If you have decided to conclude certain financial transactions, you enter the trading processes for these transactions in SAP Transaction Management (TM). Transaction Management also supports functions for managing transactions and the related financial positions at later stages.
All Treasury activities are supported by common documentation and control functions. This ensures that analyses of specific instruments or of various instrument groupings can be performed at each stage of the Treasury process. This fulfills the various documentation and control requirements of both Financial Accounting and Treasury.
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SAP AG 1999
Create new offer/ order/contract
Exercise/expiration Notice Rollovers Exercise rights
User authorizationLimit management
Release
Settlement/control Interest rate adjustment Netting Referencing Confirmation letters Securities account transfers Corporate actions
TradingTrading Back officeBack office AccountingAccounting
Postings Payment transactions Reversals Accruals/deferrals Valuation
Transaction and Position Management Process
The basic structure of the trading and transaction management process is the same across the Treasury components. This forms the basis for integrating and processing transactions within the SAP System and provides the framework for adapting the way transactions are represented in the system to suit company-specific requirements.
You can grant user authorizations for the various activities in the transaction and position management process. The authorization concept is specifically designed to allow you to assign different authorization profiles to employees from different divisions. This enables you to separate trading, back office, and accounting functions as needed.
You can also define the release requirements for each processing step (such as further processing of securities transactions) and you specify the transaction amounts that fall within the release procedure. You can choose which release principle you want to use. In doing so, you specify for each product and transaction type whether a special posting release is required.
Besides enabling you to assign user authorizations to activity transitions, the limit management function enables you to assign a range of different amounts to different transactions.
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SAP AG 1999
Treasury Management: Functions
Complete financial transaction and position management
Support for trading and back-office functions
Functions to track, check, and release transactions
Data transfer to Financial Accounting(including accruals/deferrals and valuation)
Flexible settings to accommodate company-specific transaction and position management processes
Financial transactions assigned to portfolios and managed in securities accounts
Flexible reporting and portfolio analysis
Datafeed interface
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Active Liquidity Management using Money MarketTransactionsOn the basis of the liquidity situation established in Cash Management, your company decides to place a fixed-term deposit to shift the present excess cash flows to the future. In this example, you also see the various ways in which you can set up the transaction and position management processes for treasury transactions. The basic concepts, such as product types or business partner, are explained in detail on the basis of this fixed-term deposit. The example covers all the stages involved in the process - from entering the transaction in the trading area, to checking it in the back office area, through to transferring the data to Financial Accounting. From a process-oriented view, the interaction with Cash Management is extremely important: Treasury transactions are always viewed in the context of their current statuses, ensuring that the cash manager has the most up-to-date information at his fingertips. The example also outlines the typical reaction between the single phases of a financial transaction and Cash Management. By shifting the cash flows to a future period, the example demonstrates how to bridge over future anticipated liquidity shortfalls at the same time as smoothing out short-term liquidity gluts.
Liquidity Management in the Short and Medium Term: Money Market Scenario
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Fixed-termdeposits
Deposits atnotice
CommercialPaper
Product types
DerivativesForexLoansSecuritiesMoney market
Hedginginstruments
Investment/borrowinginstruments
Money Market: Product Types
Money market transactions are for short- to medium-term investments or borrowings. You can make cash management decisions in the Money Market area based on the surpluses or deficits calculated in Cash Management. In Cash Management, you can see the immediate impact your transactions have on your company's liquidity (by value date at the time of the investment/borrowing and on the due date).
The product types in the Money Market area are:- Fixed-term deposits (overnight deposits, time deposits)- Deposits at notice- Commercial Paper- Cash flow transaction
In the Money Market area, cash flow transactions allow you to represent a wide range of transactions flexibly by manually entering not just the term, but also the cash flow generated for the transaction as a result of position changes, expenses, earnings, payments, and so on.
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Transaction and Position Management Process: Example of a Fixed-Term Deposit
PostingsPayment transactionsAccruals/deferralsValuationReversals
Create new offer/contractRolloversReversalsTransaction history
Settlement/controlNettingConfirmation lettersReversalsTransaction history
User authorizationlimit management
Release
TradingTrading Back officeBack office AccountingAccounting
The sequence of events in Treasury transaction management can be divided into several stages: You can create a money market transaction as an offer or directly as a contract. The activity sequence is determined by the processing category you choose in Customizing
(with/without settlement). Within transaction management, you can branch from each application to the partner management
functions to create business partners, display them, change them, and maintain their payment details. Each activity within transaction management (such as contract) can be analyzed in the cash
management and forecast function. You can enter offers for fixed-term deposits and for spot exchange and forward exchange
transactions in the Money Market area. You can create simulated transactions with the activity category simulation for foreign exchange
transactions and fixed-term deposits.
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Trading: Entering a Fixed-Term Deposit
Financial transactions
are assigned to the related organizational unit (company code) within the entire company
various organizational structures are possible for corporate groups
are concluded with a business partner
internal and external (banks) business partners
are concluded for a specific product/transaction type
product type and transaction type are user-definable
can be created with different processing forms
The Trading area contains the important functions for entering and changing transaction data. To represent transactions efficiently in the system, you first have to enter the following basic data:
Which organizational entity (company code) is concluding the financial transaction? In cases where the organizational structure of a company is more complex (for example, in central Treasury management), this entry allows you to distinguish between different corporate divisions.
Which financial transaction is being concluded? Here, you specify the product type, transaction type, and the related processing rules.
With whom are you concluding the financial transaction? Each transaction is linked to a business partner. The data entered for the business partner offers considerable scope for rationalization. If, for example, you always use the same bank and payment details with a business partner, these can be linked to the transactions automatically. You can also restrict the range of product types that may be traded with a business partner.
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Creating Contract Data: Fixed-Term Deposit
Company code 1000 IDES AG
Product type
Transaction type
Partner
51A Fixed-term deposit EXTERN
100 Investment
Deuba Deutsche Bank
Specifications
Currency
External number assignment
Transaction
Portfolio
instead of currency of comp. code
Mast. agreement
The next section describes the following key terms and the related automatic functions in greater detail:- Company code- Product type- Transaction type- Business partner
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Organizational Units
Company codeCompany code
Controlling areaControlling area
Client Business areaBusiness area
SecuritiesSecuritiesaccountaccount
PortfolioPortfolio
The Treasury modules use the central SAP organizational structures. This ensures the integration of the Treasury system with the other SAP applications.
A client is a closed entity within an SAP System from a commercial, organizational, and technical viewpoint. It has separate master records and its own record of tables. Client data can be used by all company codes and all organizational structures. The client usually represents the corporate group.
A company code (FI) is the smallest organizational unit for which a complete set of accounts can be drawn up for external reporting purposes. The company code is the unit for which you record all the posting activities and generate all the statements for individual accounts (balance sheet, profit and loss account).A client can include several company codes, which enables you to manage the accounts for several independent companies at the same time.
Business areas (FI) are organizational units of internal financial accounting. You manage the payment transactions for G/L accounts here for internal evaluation purposes (internal balance sheet/P&L). You can define business areas across all company codes.
Controlling areas (CO) are organizational units within an enterprise for which you can perform comprehensive cost accounting.
You can make further subdivisions in SAP Treasury by defining Treasury-specific evaluation groups, such as portfolios and securities accounts. You can assign your own financial transactions to portfolios / securities accounts.
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Basic Principles of Transaction Management (1)
USER LEVEL
- Fixed-term deposit
- Forex- CAP/FLOOR- Interest rate swap- Currency swap
:
510 Fixed-termdeposit
600 Forex610 CAP/FLOOR620 SWAP
- Investment- Borrowing- Spot- Forward- Purchase- Sale- Swap
:
100 Investment200 Borrowing
:
10 Contract
11 Rollover:
1 Order-Contract-Settlement
2 Contract3 Contract-
Settlement
SYSTEM LEVEL
Product categoryProduct category Transaction categoryTransaction category Activity categoryActivity category Processing categoryProcessing category
Product typeProduct type Transaction typeTransaction type
Product categories cover the various basic categories of financial borrowing and investment transactions and are used to classify the financial instruments. Product categories are predefined in the system and apply for all company codes. They cannot be modified by the user. Product types represent a refinement of product categories at user level and, unlike the product categories, they are user-defined.
The financial transaction type is fundamental to the processing of financial transactions, since it determines the types of transactions that can be managed with a certain product type. User-specific values for financial transaction types are determined on the basis of predefined financial transaction categories. You can define your own values in the Money Market, Foreign Exchange, Derivatives, and Securities areas. In the Loans area, the transaction types are represented in the system internally.
When you process a transaction, it undergoes a series of activities that are indicated by the activity information. Activity categories are predefined in the system.
You can set up the processing sequence of a financial transaction using processing categories. Processing categories are also predefined in the system and describe the processing steps you have to follow - from entering a transaction through to processing it in accounting.
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Business Partner - Roles and Functions
BorrowerAgent/counterpartyLawyerSurveyor
Naturalperson
Organization
IssuerDepository bankTrusteePayer/payeeAssigning instituteGuarantor
Interested party
Treasury partner
Beneficiary
A business partner is eithera natural personan organization a group of people or an organization in which a business interest exists.
In Treasury, you conclude transactions with business partners. Banks, brokers, or central treasury departments are all examples of typical business partners.
You create a data master record for each business partner.
You can assign several roles/functions to each business partner.A role (= role category) is a specification of the characteristics a business partner must have before certain business transactions can be processed with that business partner. The functions of the business partner in the transaction are defined via business partner roles. Example: A business partner acts as a borrower or a Treasury partner.
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SAP AG 1999
Company code data
General roledata
Role overviewRole data
Credit standingTax data
Reporting dataControlBank
Account managementAccount interest
Autom. pmnt transact.Payment dataDunning data
Reporting dataControl
Relationships
Business partner
Central data
NameAddress overview
Bank detailsPersonal data
Employment dataLegal dataFiscal year
Additional dataRelationships
Business Partner - Data: Overview
The user interface for the business partner data was redesigned as part of the Enjoy project. The new screen layout that uses tab pages now means that you can navigate to the business partner between the individual views. You can still navigate as before using the menu.
The data you can maintain for business partners is divided into three areas: Central data
Data is available for every business partner, regardless of the partner role. General role data
Data is held centrally for all roles. Access to this data can vary according to the role category, depending on the settings in Customizing (role-view-assignment).
Company code-dependent data Data that only applies for a particular role category in a certain company code.
Each of these areas is divided into different views:Example: The "central data" area contains 9 views: Name, address overview, bank details, -...
The standing instructions relating to the payment details, correspondence, authorizations and derived flows are integrated in the master data of the business partner.
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Traderauthorization
Business partnerauthorizationTrader and business partner
AuthorizationTreasuryTreasury
Money marketMoney market
Fixed-term deposit
51 A Fixed-term deposit100 investment200 borrowing
Deposit at notice
52 A Deposit at notice 100 investment 200 borrowing
Authorization
Business Partner and Trader Authorization
You use transaction authorizations to control which transactions can be concluded with a particular business partner. Business partner authorizations automatically guarantee that financial transactions can only be concluded with business partners that have the necessary authorization. You can assign transaction authorizations at the following levels:
Contract type Product category Product type Transaction type You have to assign authorization explicitly to each business partner in each company code. When you assign transaction authorizations for traders, you can restrict the trading powers to certain
financial instruments (such as money market or foreign exchange), product categories, product types, or transaction types. A higher-level authorization means that a trader is allowed to create any transaction below this level. For example, a trader, who is authorized for the Money Market area, can automatically conclude a fixed-term deposit or a deposit at notice.
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Exercise: Creating a New Business Partner
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Company code IDES AG
Product type Fixed-term deposit EXTERN
Transaction type Investment
Business partner ...
Investment Term
Flow type Principle increase Start
Amount End
Interest structure
Percentage rate
Int. calc. meth.
...
Creating a Fixed-Term Deposit: Structure
Structure StatusManagement Other flows Payment details Cash flow Memos
1000
51A
100
1100
1M UNI -
08/10/YY
++2
2.6
act/360
Tab pages for navigation
When you create a financial transaction, the system automatically generates flows. For example, when you create a fixed-term deposit, the system generates principal increase, nominal interest, and final repayment flows.
The structure tab contains information that relates purely to the product types, such as the amount, term, and interest structure. Here, you can use various key codes for entering amounts and dates (for example, M = million, T = thousand, 0 = today, ++2 = 2 months).
From here, you can branch to the entry screens for general transaction management functions. Using the tab pages, you can navigate between the different screens.
Administration: Information on portfolio assignment, account assignment references for position postings.Other flows: You can add information to the flows generated automatically by the system on the other flows screen (such as charges, commissions).Status: Information on correspondence, activities, release status....
On the payment details tab, you enter the relevant payment details for this transaction. If you have maintained the payment methods as standing instructions, these appear as proposals that you can correct yourself.
As well as the the main flows you enter at the start of term or on the rollover date for fixed-term deposits and deposits at notice, you can enter other changes to the capital structure during the term.
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Entry and editing functions- Standing instructions- Copying functions- Shortcuts and tree structures- Fast entry- Collective/fast processing
Field selection control
Market dataPartner
Transaction partner Transaction partner managementmanagement
Standing instructions
Transaction authorizations Payment details Correspondence Derived flows
Automatic checks- Working day checks- Trader and business partner authorization
Valuation tools- NPV calculator- Option price calculator
Dealing slips Change documents
Optional: OfferOptionalOptional: : OfferOffer ContractContractContract
MarketMarketdatabasedatabase
Trading Support
Traders can use a whole range of practical functions to optimize trading. These include utilities, data entry monitoring functions, as well as other features to make trading easier, such as:
Fast entry screens for the most common transactions. Entry codes (for amounts and due dates) and default values for fields. Proposals for prices/rates and swaps, net present value calculator, multicurrency system. Notebook functions for the trading, back office, and accounting areas. Date check (to determine whether the requested due date falls on a working day). Securities area: option to branch directly to the securities account overview. Option price calculator to enable you to compare the option prices offered with your own
calculations based on market data. Using the field selection control, you can can access the majority of fields and determine which of
them you want to display. You can set up how the display screens for TR Transaction Management appear to suit the business conditions. You group the visible fields into field groups according to the business criteria. You can assign an attribute to each of the field groups available to determine what the user sees. This enables you to hide field groups, display them, or define them as required entries.
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Financial Transactions: Cash Flow
ACTUALACTUAL
Investment 4/1/YY 1m UNI made
Interest 7/1/YY 10,000 UNI anticipated
Repayment 7/1/YY 1 m UNI anticipated
Cash flow (example)Cash flow (example)
TransactionTransactionAmount
invested/borrowed
Amountinvested/borrowed
ConditionConditionPLANNEDPLANNED
Basis for
Updating Cash Management
Updating Financial Accounting using flexible account determination
Payment triggering
Item updating
Accrued/deferred interest
Foreign currency valuation
Yield calculation
The cash flow for financial transactions is used as the basis for all trading, transaction and position management processes, as well as for the evaluation activities within Treasury.
Financial mathematics are used to determine cash flows in Treasury. The system provides a range of formulas based on the "building block principle" that take into
account the flexible organization of the Treasury application. In Treasury Management, application-specific control programs are used to call up central financial
mathematical function modules, for example, to calculate the interest and repayment schedules. On the basis of the conditions belonging to a financial transaction and the specified calculation
period, these function modules for financial mathematics generate and, if required, calculate a series of payment flows for the transaction in the application (for example, stock purchase, swap). This series of flows is known as the cash flow.
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Financial Transaction Architecture
Product type
Transaction type
Business partner
Transfer flow
Valuation flow
Accrual/deferral flow
Flows describingstructure characteristics
Paymentinformation
Postinginformation
Calculationbases
Cur
renc
ies
Bal
. she
et a
cct
Gen. infoGen. info
Inte
rest
Rep
aym
ntConditionsConditions
Cas
h f
low
When you create a financial transaction, the system uses the structure characteristics of the transaction, the conditions types, and the flow types to determine the cash flow. This cash flow contains all the information that is relevant to the transaction in the form of flow records. For instance, the amount invested, the interest payments, or the repayment methods are concentrated in one or more flow records. The transaction cash flow is made up of flow records which can be generated in various ways:
Flows entered manually, such as disbursements or charges.Derived flows generated from the conditions (via the flow types assigned to the condition type) and from flows entered manually. These can be interest flows, repayment flows, accrued interest, or price/rate gains.Flows calculated by special programs. This category includes, for example, write-downs or interest accruals/deferrals.Accruals/deferrals of earnings and expenses generated from transaction expenditures and revenues.Valuation of transactions, for instance, to calculate price gains and losses from foreign currency transactions.
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Condition Types/Flow Types
USER LEVEL
AA - InflowTD - Dividend
InterestRepayment
:
AA - InflowTD - Dividend
Condition group 01: StockCondition group 02: Floater
- Expected dividend- Bonus paid- Variable interest- Repayment- Interest rate adjustment
- Repayment price:
1000 - Purchasesecurity
5013 - Dividend
SYSTEM LEVEL
Condition/Flow categoryCondition/Flow category CalculationCalculationcategorycategory
Flow typeFlow typeCondition typeCondition typeProduct typeProduct type
Transaction typeTransaction type
Condition groupCondition group
Product categoryProduct category
TransactionTransactioncategorycategory
Flow types explain the possible changes to the cash flows. Flows are the basis for generating the cash flow in financial mathematics and are used for valuing the cash flow, further processing, and posting. Typical flow types are fixed or floating interest, increases in nominal amounts, or commissions. Each flow type is assigned to exactly one flow category. However, several flow types can be assigned to the same flow category. For example, the flow types for fixed interest and floating interest are assigned to the flow category "interest".
Cash flows and postings are controlled by two indicators, which you have to assign to each flow type. The flow category controls the way the flow is processed for accounting purposes. The calculation category controls the cash flow processing.
Examples of flow categories include accounting flows, such as inflow (security purchase), outflow (repayment), expense or revenue. Flows relevant for generating the cash flow include security purchase/sale, interest, repayment, or charges.
Condition categories represent the financial mathematical basis of product types and the related financial transactions. They also represent a further classification of flows and conditions, and their related financial transactions. Condition categories are used to interpret the significance of conditions in business economic terms. Examples of condition types include principal increases, final repayments, nominal interest, or different premiums, such as option premiums. You can define your condition types on the basis of the condition categories, and assign them to the respective product type.
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Assign planning levels
IDES AG
10/02 10/03 10/03 later10/05
Cash Management: Display Levels
Le
BanksBanksDescription 10/02 10/03 10/04 later10/05
TB Time depositsTime deposits 132,323 xxx,xxx xxx,xxx xxx,xxxxxx,xxx
. . .. . . . . .. . .. . . . . . . . . . . .. . .
OBOB Currency optionsCurrency options xxx,xxx
. . .. . . . . .. . .
DBDB ForexForex
Balance
. . . . . . . . . . . .. . .
1000
Fixed-term deposit51A
Time deposits - banksTB
Contract10
xxx,xxx xxx,xxx xxx,xxx xxx,xxx
xxx,xxx xxx,xxx xxx,xxx xxx,xxx xxx,xxx
xxx,xxx xxx,xxx xxx,xxx xxx,xxx xxx,xxx
Financial Transactions in Cash Management
Each activity (status) within a business transaction (contract, settlement, etc.) is displayed in Cash Management automatically (with the exception of orders). You can view and analyze the activity using a separate level, if required.
When you enter a transaction, the cash flows generated by the transactions (irrespective of whether they have already been posted) can be seen immediately in Cash Management and can be used for planning purposes.
In Customizing, you have to maintain the planning levels at which you want to display your information for G/L accounts and/or subledger accounts. You do this for each of the relevant product types and activity categories (statuses).
If you want to compare the operational data with the Treasury transactions in the context of MRM evaluations (for example, in exposure reports), you must create groupings that do not contain any Treasury transactions.
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Exercise: Integrating Trading Functions toCash Management
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Cash Flows in Cash Management
Cash flow: Treasury Management
Sept 01 1000- Fixed-term deposit 1,000Oct 01 1120+ Final repayment 1,000Oct 01 1200+ Nominal interest 200
E2 Domestic customers + UNI DB GIRUN- UNI DB GIRUN
Subledger accounts Sept 01 Oct 01 Bank accountsTB Bank deposits/loans - 1000 + 1200 TB Bank deposits/loans
E2 Domestic customers DBGIRUN
Alternative 1
Payment details not known
Alternative 1
Payment details not known
Alternative 2
Payment details known
Alternative 2
Payment details known
Business partnerPlanning groups
Business partner / Financial transactionPayment details and house banks
When you update financial transactions in Cash Management, you have two options:
Alternative 1: If no payment details have been maintained in the transaction, in other words, the bank accounts are not known, you cannot display the cash flow for a bank (clearing) account. However, to enable you to display the cash flow in CM, the system displays the amount relating to the subledger accounts. The system takes the planning group entered in the master record for the business partner.
Alternative 2: If the payment details for a transaction are known, in other words, the bank accounts are known, the cash flow is displayed in CM at the level that is assigned to the corresponding bank (clearing) account.
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Collective Processing: Money Market
Overview of money market transactions that correspond to the selection criteria entered
Process the relevant transaction
Create Change Display Roll over Give notice Settle Reverse History
Branch directly to the individual transaction
Connection to the SAP List Viewer
The collective processing function helps you to manage your transactions systematically by displaying a list of all the transactions with common selection criteria. The list includes key information about each transaction as well as a range of processing functions.
From this processing list, you can branch to the individual transactions. The link to the SAP List Viewer provides you with a whole range of display options. You can
structure your list by column or row, sort the list, and display totals. You can save these display variants and use them later on.
When you have finished processing a transaction, a processing indicator is set.
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Transaction Management: Worklist and Collective Processing
Processing financial transactions for all product categories
Managing financial transactions for specific users
Selecting and displaying Treasury transactions
Branching to individual processing for transactions
Displaying transactions using the SAP List Viewer
You can process financial transactions for all the following product categories: Fixed-term deposits and deposits at notice Commercial Paper Cash flow transactions Spot/forward exchange transactions Interest derivatives OTC options Futures Securities
You can store any number of selections as variants and manage them in collective processing in a tree view for specific users or for all users.
The layout controls how the list is structured. You can store the following information in one layout: Column layout Sort criteria
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Money Market - Fast Processing
Deuba UNI
1000 1
1,000.000 2.700 03/24/YY Payment Deutsche Bank
51A 100 Fix.-term
Deuba UNI
1000 2
10,000,000 2.900 03/25/YY Deutsche Bank
Deuba UNI
1000 3
5,500,000 2.800 03/25/YY Deutsche Bank
51A 100 Fix.-term
51A 100 Fix.-term
Total amount Int. rate End of term Int./Rollover Cap. Partner
New New New New New PTyp TTyp Name
Fixed-term deposits invested
Deposits at notice invested . . .
Partner Currency
CoCd Transaction
Payment
Payment
When you use the Fast processing function, which lists a short overview of fixed-term deposits and deposits at notice, you can add amount data, the interest rate, and the new end of term.
This function enables traders to process the transactions they want to roll over or give notice on much more easily.
This Fast entry function is restricted to certain key fields. It helps you save time by enabling you to carry out the majority of the repetitive daily tasks on one screen.
The fast-processing function for time deposits enables you to select and process fixed-term deposits and deposits at notice for several company codes in one step.
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1. Specify release procedure
2. Define release conditions
3. Assign roles / users
SAP Business Workflow
To use the workflow to release transactions, you must define release procedures and conditions, as well as assign roles and users.
Which procedure you choose depends on the settings you have made in Customizing for the company code, the product type, and the transaction type. You define release procedures and conditions for this purpose.
In the release conditions screen, you enter the number of release steps and indicate whether a release is necessary for the particular activity category and activity.
The Release steps field determines how many people have to release the object to complete the release (for example: dual-control principle - 1 employee, 1 person responsible for release).
You are free to set up the release restrictions yourself (for example, you can specify whether processing is permitted during the release process).
You have to create the users in the system for the individual approvals. You have the option of creating several users/positions who should be notified in cases where deadlines have been missed.
You can also display a reporting overview that shows you which release was processed, when it was processed, and by whom, for each Treasury transaction.
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Transaction and Position Management Process: Example of a Fixed-Term Deposit
Create new offer/contractRolloversReversalsTransaction history
Settlement/controlNettingConfirmation lettersReversalsTransaction history
User authorizationLimit management
PostingsPayment transactionsAccruals/deferralsValuationReversals
Release
TradingTrading Back officeBack office AccountingAccounting
The back office area includes functions for controlling and changing transactions. When you settle a transaction, you also complete it and check it.
You settle a contract in the back office area and can add any information that is relevant for posting and payment.
When you save a settlement activity, the system changes the activity category of the transaction in order to record how it is monitored and processed in the back-office area.
If a transaction has the activity category "WITH settlement activities", you can only post the contract after it has been settled.
The characteristics for a specific company are based on modelling these types of activity chains, where the processing sequence of transactions is managed by activity categories or status transfers.
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Back Office
CorrespondenceCorrespondence
Accounting
Collective processing Netting Referencing Interest rate changes Securities account
transfers Capital change
activities
Confirmation management(incoming/ outgoing)
Payment details
Curr. Bank Acct
. . . . . . ...
Settlement/control Payment details
Back officeBack office
Confirmation Confirmation
ManagingManagingpositionspositions
TransactionTransactionprocessingprocessing
Depending on the structure of your company, you can transfer financial transactions you have entered in the Trading area to the Back office area. The back office area includes functions for controlling and changing transactions. The key aspects of postprocessing are as follows: Adding transaction data to include other data that is relevant for processing. Preparing postings and payments, for example, controlling the accounts that are used later in the
automated processes. This is your last opportunity to assign an account assignment reference and payment details to your transaction.You need this information to be able to post the Treasury flows to Financial Accounting (see account assignment reference).
Generating Correspondence in the form of dealing slips, confirmation letters, or confirmation files.
Position management tasks, such as securities account transfers.
When you save a settlement activity, the system changes the activity category of the transaction in order to record how it is monitored and processed in the back office area.
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Business Partners: Standing Instructions
Business partner ABusiness partner A
PaymentPaymentdetailsdetails
TransactionTransactionauthorizationsauthorizations
DerivedDerivedflowsflows
CorrespondenceCorrespondence
Standing instructions are general agreements made with a business partner for processing similar types of transactions. You can access the business partner standing instructions for payment details, correspondence, authorizations and derived flows using the tabs on the business partner maintenance screen. The integration of the standing instructions with the business partner data means that the release workflow for business partners can also be applied to the standing instructions. You can also access the standing instructions using a separate menu path.
Agreements can cover: Authorizations
Which financial transactions may be concluded with this partner? Payment details
For transactions with business partner A ==> The system proposes the payment details for business partner A in the transaction
CorrespondenceFor transactions with business partner A ==> Fixed setting: Which correspondence is
generated for which transactions? Derived flows
For transactions with business partner A ==> Fixed setting: If the transaction with business partner A contains flow X, add taxes amounting to y% of X.
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Correspondence
E.g. Confirmation letters, via fax, e-mail, SWIFT, IDOC
Fax
E.g. Dealing slips
External Internal
Confirmation Confirmation
Correspondence is a means of recording and matching the transactions you have concluded. You can define your correspondence using either internal (e.g. dealing slips) or external (e.g.
confirmations) correspondence types. This allows you to confirm all the transactions you have concluded with a business partner over a certain period of time in one correspondence run. You can either print out the data or send it directly from the system by telefax. You also have the option of sending the confirmation by e-mail or IDoc. To send e-mails, the communication interface SAPconnect must be set up. The correspondence function supports the generation of SWIFT files MT320 for fixed-term deposits and MT300 for foreign exchange transactions. With the help of a user exit, you can use FX match for outgoing confirmations.
You control the timing of the correspondence in Customizing for product types, transaction types, and activities. You can also specify whether you want the correspondence to be generated automatically when you create, change, or reverse a transaction, in other words, when you save it. Correspondence that has been generated is stored in the financial transaction data.
The confirmation status (that is, the information about the time, the activity, the processor, the form used, and the output medium for incoming and outgoing confirmations) is recorded in the transaction.
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Business Partner: Standing Instructions - Correspondence
Correspondence
Print Fax SWIFT ... Alt. addr. CConf.
BP ABP A
Correspondence type: external
Assign
TreasuryTreasury
Money marketMoney market
Fixed-term dep.
51 A Fixed-term dep.100 Investment200 Borrowing
Deposit at notice
52 A Deposit at notice100 Investment200 Borrowing
Additional standing instructions determine the handling of correspondence with a certain business partner. You can set up external correspondence types for a particular business partner using standing instructions for correspondence. You set up internal correspondence types for all business partners.
Correspondence is normally sent to the regular address of the business partner. If you correspondence to be sent to a different address, you must enter it in the ‘Alternative address’ field.
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Standing Standing instructionsinstructions
Current Paymentdetails ID
Payer/payee
Partnerbank ID
Pmntmeth.
Paymentactivity
Housebank
AcctID
UNI 01 2 UXBank1 GIRUN
USD 01 Bank1 GIRUS
COUNTER-PARTY
...... Paymentrequest
Individualpayment
Samedirection
Pmntmths
Groupdeterm.
Determinegrouping (text)
...... X X X EUS
X...... EUS
......
......
......
Business Partner - Payment Details (1)
The system uses the standing instructions to default to the payment details to be used. These include proposals for the house banks you want to use, to save you from having to enter them manually in the trading or back-office areas. They also include the triggering of automatic payment activities to ease your workload. The system either uses the business partner bank details you defined for the business partner, or you enter them manually in the transaction. In the same way, you can also enter the payment details for payers/payees if they are not the business partner. Using standing instructions, you can make other settings for the payment and posting logic (for customer accounts or G/L accounts).
You can define a number of possible payment details for each business partner and for each currency. The system identifies valid payment details using a Payment details ID that you are free to assign together with a currency.
In the House bank and Account ID fields, you enter your own house bank data. If the payment involves a payment activity or payment request, you enter the Payer/payee so that the
system can use the payment program to generate the corresponding payments. Otherwise the postings are made to the G/L accounts defined in the account determination. If you explicitly want to choose a bank account for the counterparty, you must specify a Partner bank ID here. You define this partner bank ID in the business partner master record.
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Business Partner - Payment Details (2)
Paymentdetails ID
Outgoing Incoming
TreasuryTreasury
Money marketMoney market
Fixed-term dep.
51 A Fixed-term dep.100 Investment200 Borrowing
Deposit at notice
01 01x x
Assign
Currency Paymentdetails ID
Housebank
AccountID
UNI 01 DB GIRUN
USD 01 DB GIRUS
......
......
......
Business partnerBusiness partner:: Standing instructionsStanding instructions -- Payment detailsPayment details
......
......
......
BPBP AA
......
......
......
Assignments are a means of controlling which payment details are valid for the respective transaction types. The assignment can differentiate between incoming or outgoing payments either at product category level, product type level, or transaction type level. Example: When you create a fixed-term deposit in UNI, the system uses the payment details 01.
The system uses the house bank and the account ID defined in the payment details for the business partner to determine the bank account to which the posting is being made.
It is vital that you assign payment details once you have created them. This means that you can manage different products and/or different directions in separate accounts. The system supports multi-level payment methods. By entering a bank chain, you can process
payments via several banks. You can use up to 3 intermediary banks.
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Transaction Settlement / Control
Account assignment reference
DB000001 Deutsche BankFixed-term deposit
G/L account: 113113
Zahlungs-verbindungs-ID
Regu-lierer
Partner-bank-ID
Zahl-weg
Zahlungs-vorgang
Haus-bank
Konto-ID
01 DB GIRO
01 DB USD
Company code 1000 Product type 51A Fixed-term depositTransaction type 100 Investment
D Curr. Effective FType HBank Acct ID Pmnt Pmnt req.
- UNI Deuba GIRUN + UNI Deuba GIRUN
Transaction: Payment details
Depending on the structure of your company, you can transfer financial transactions you have entered in the Trading area to the Back office area. The back office area includes functions for controlling and changing transactions. The key aspects of postprocessing are as follows:
Generating correspondence in the form of dealing slips, confirmation letters, or confirmation files.
Adding transaction data to include other data that is relevant for processing. Preparing postings and payments, for example, controlling the accounts that are used later in
the automated processes. This is your last opportunity to assign an account assignment reference and payment details to your transaction. You need this information to be able to post the Treasury flows to Financial Accounting (see account assignment reference).
When you save a settlement activity, the system changes the activity category of the transaction in order to record how it is monitored and processed in the back office area.
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Exercise: Confirmation Management and Control Functions in the Back Office Area
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Transaction and Position Management:Example of a Fixed-Term Deposit
Create new offer/contractRolloversReversalsTransaction history
Settlement/controlNettingConfirmation lettersReversalsTransaction history
User authorizationLimit management
PostingsPayment transactionsAccruals/deferralsValuationsReversals
Release
TradingTrading Back officeBack office AccountingAccounting
After you have entered your transactions at the Trading stage, and checked and completed them in the Back office, they are processed for accounting purposes. Accounting functions include the transfer of data to financial accounting (such as posting programs, or position management posting), where the Treasury component makes use of functions in SAP Financial Accounting. Financial transactions and positions in the closing activities must also be correctly handled. The accounting area includes functions such as the accrual/deferral of expenses and revenues for a particular accounting period, and valuation activities.
You can only post transactions that have reached either contract or settlement status (depending on the processing category) at internal level (system level).
If you do not want to post the flows for a particular transaction for the time being, you can block these flows for posting.
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Accounting
Fixed-term deposit 1 month 4.5
Financial AccountingFinancial Accounting
FI interfaceSelection of transactions and flows relevant for posting
Sept 01 1100 - Fixed-term deposit 1,000,000
Oct 01 1120 + Final repayment 1,000,000
Oct 01 1200 + Nominal interest 3,750
The Treasury information that is relevant for posting is transferred to Financial Accounting via an interface. The posting logic is based on the flow types generated and the account assignment reference that belongs to the transaction as well as the user-specific account determination.
As a rule, you can post the individual flows via G/L accounts or to customer accounts. If you want to actively trigger the payment activities, you can use the FI payment program on the basis of the postings to the customer accounts. You also have the option of using an extended payment program for payment requests via which active payments can be made on the basis of postings via non-customer accounts. In this case, payment requests are first generated in Treasury and are paid later either individually or jointly via the TR payment program. You have the following four posting options:1. G/L accounts without payment requests: Flows are posted to bank clearing accounts and cleared via manual or automatic bank statements. 2. Customer accounts without payment requests: Flows are posted to customer accounts and cleared by active payment triggering via the FI payment program. The bank clearing accounts to which postings have been made are cleared by the bank statement.3. G/L accounts with payment requests 4. Customer accounts with payment requests: A payment request is generated for each flow and posting is triggered by the payment requests clearing account or customer account. The subsequent payment run makes postings to the bank clearing accounts.
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Payment Transaction Handling
House bankDEUBA
IDES
Fixed-term deposit investment
Bank statement
... using clearing accounts
Fixed-term dep. account(Deuba)
House bank account(Deuba)
100 m 100 m
Fixed-termdepositinvestment
Bank clearing account
100 m 100 m
Physical payments are not generally made for financial transactions concluded with business partners who are also the company's house bank.
Instead, the corresponding flows are posted to the bank account by the business partner. The flows from Treasury Management that are 'preposted' via the bank clearing accounts are then cleared again by the electronic bank statement.
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Postings: Account Assignment Reference
Fixed-term deposit Date Sept 01
1,000,000.00 Term 1 monthNominal interest 3.5%Deutsche Bank
UNI
Acct ass.ref. Short text
DB000002 Deutsche Bank deposit at notice
DB000001 Deutsche Bank fixed-term deposit...
DetailsDetails
Business areaCost center
General ledger
.
.
113113
Company code 1000
The Account assignment reference controls the G/L account (balance sheet account) to which the current transaction should be posted. You can structure the balance sheet differently using different account assignment references.
Besides entering the account for managing your positions in the account assignment reference, you can also assign a cost center (only relevant for posting category 4) and a business area to the account assignment reference.
The account assignment reference function is part of the account determination function, which you can set up according to the currency and/or the account assignment reference. This flexibility enables you to structure postings in different ways. For example, in the account determination for revenue and expense postings in the Securities area, you can see (according to the account assignment reference) whether affiliated or non-affiliated companies issued the respective securities.
In the Money Market, Foreign Exchange, Derivatives, and Loans areas, you enter the account assignment directly in the relevant transaction. In the Securities area, you enter the account assignment reference in the respective position indicator.
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Customizing: Account Determination
M oney M arket
Functions
D efine SettingsC heck
A ccounting
A ccount D eterm ination
A pplication 0105 T reasury: M oney m arket
F low type Paym ent transactn1100 +
D irection - C om pD ebitC red itD ocum ent type
40 1 B alance50 3 B ank c learing
.S A Posting cat. 13
Posting specifications
A pplication 0105 T reasury: M oney m arket
C hart o f accts IN T Sam ple chart of accounts
A cct sym bol A cct assignm ent ref.C urrency G /L account
34.1 .14.1 .34.2 .24.2 .34.2 .4
++++++
++++++
++++++++++5273100220000479100465000465001
A ccount assignm ent
A ccounts Sym bols
C hart o f accounts
A cct sym bol D escription
...
3 B ank clearing
4.1 .1 In terest received
...
A ccount sym bols
You define the account determination for the relevant application in Customizing.
The account determination function specifies which accounts are used for posting activities. It includes the posting specifications, the account symbols used for these, and the accounts assigned to the symbols.
The following requirements must be met before you can post a transaction to Financial Accounting:
- You must have created all the accounts you need and set them up correctly.- The document types must appear in the document types table and allow the required account types to be posted.- The number range linked to the document type must have internal number assignment in Financial Accounting- The posting period must be open for posting.
(C) SAP AG AC030 63
4.64
SAP AG 1999
Fixed-term deposit 1 month 4.5% Acct assignment ref. DB000001
Sept 01 1100 - Fixed-term deposit 1,000,000
Oct 01 1120 + Final repayment 1,000,000
Oct 01 1200 + Nominal interest 3,750
Fix.-term dep.acct 113113
Deposit
Finalrepayment
D1,000,000
C
1,000,000
Balance sheet accountacc. to acct assignment reference
Interest earned 273100
Nominalinterest
D C3,750
Bank clearing acct 113105
FT depositNominal int.Finalrepayment
D C1,000,000
3,750
1,000,000
Deb.bal.sheet Credit bank
Debit bank Credit bal.sheet
Debit bank Credit int. earned
Flow type
Posting specifications
1100 -
1120 +
1200 +
Posting a Transaction: Summary
When you process financial transactions (money market, forex, derivatives, securities, loans), they become business transactions that have to be entered in the accounting system. These automatic postings and the related offsetting entries on FI accounts may be carried out online.
The posting specifications you enter determine how individual business transactions are posted. In the posting specifications you define the rules for posting and for account determination for each flow type when you configure the system.
The flow type determines the correct posting specifications for each flow to be posted. The document type and the posting keys for the debit and credit side of the posting included in the
posting specifications represent control information that is passed on directly to the financial accounting module. In addition, the posting category and the account symbols in the posting specifications contain the relevant information for determining the concrete G/L and subledger accounts via the Treasury posting interface.
From the display screen for an accounting document (for example, FI document), you can see where the posting originated in Treasury. To do this, choose Original document from the Environment menu (Display document, transaction FB03) on the display screen for the FI document in the general ledger. The system displays an overview of the flows in Treasury, which resulted in postings to FI.
(C) SAP AG AC030 64
4.65
SAP AG 1999
Treasury Management and Cash Management
Fixed-term depositFixed-term deposit Via activity atfixed-term deposit level
Via activity atfixed-term deposit level
Change toclearing accounts
Change toclearing accounts
Change tobank account level
Change tobank account level
Clearing entry viaaccount statementClearing entry viaaccount statement
Post flows toclearing account
Post flows toclearing account
The example above represents an ideal workflow describing how Treasury Management and Cash Management interact with each other and also showing how postings are made to Financial Accounting.
As a rule, payments are triggered by the business partner (bank) and processed further by electronic bank statements in Cash Management.
(C) SAP AG AC030 65
4.66
SAP AG 1999
Transfer to Financial Accounting -Logical Process
Assign planning levels
IDES AG1000
Fixed-term deposit51A
Time deposits - banksTB
Contract10
10/02 10/03 10/03 later10/05
Cash Management: Display Levels
Le
BanksBanksDescription 10/02 10/03 10/04 later10/05
TB Time deposits 150,000 xxx,xxx xxx,xxx xxx,xxxxxx,xxx
. . .. . . . . .. . .. . . . . . . . . . . .. . .
B5B5 ClearingClearing 150,000
. . .. . . . . .. . .
F0F0 BanksBanks
Balance
. . . . . . . . . . . .. . .
xxx,xxx xxx,xxx xxx,xxx xxx,xxx
150,000 xxx,xxx xxx,xxx xxx,xxx xxx,xxx
xxx,xxx xxx,xxx xxx,xxx xxx,xxx xxx,xxx
Each activity (status) within a business transaction (contract, settlement, etc.) is displayed in Cash Management automatically (with the exception of orders). You can view and analyze the activity using a separate level, if required.
When you enter a transaction, the cash flows generated by the transactions (irrespective of whether they have already been posted) can be seen immediately in Cash Management and can be used for planning purposes.
In Customizing, you have to maintain the planning levels at which you want to display your information for G/L accounts and/or subledger accounts. You do this for each of the relevant product types and activity categories (statuses).
Example: Concluded time deposits transaction: TB level - time deposits
(Pre)posted time deposits transaction: B5 level - bank clearing account
After receipt of bank statement: F0 level - bank account
(C) SAP AG AC030 66
4.67
SAP AG 1999
Exercise: Posting Due Flows to FI and Evaluating them in Cash Management
(C) SAP AG AC030 67
4.68
SAP AG 1999
Payment Transaction Handling
1st fixed-term deposit
2nd fixed-term deposit
...using a clearing account for payment requests
Fixed-term depositaccount (broker)
House bankaccount (Deuba)
100 m 150 m
Paymentorder
Payment requestclearing account Bank clearing account
150 m 150 m
50 m
100 m
50 m 150 m
Payment (trigger paymentrequest run)
Bank statement
Payment
Fixed-term deposit
IDES
House bankDEUBA
BrokerBroker
If you conclude transactions with a business partner with whom you do not have a house bank account, you can generate payment requests. This option applies in cases where the payment details of the business partner are known, but you do not want each transaction to result in a physical payment. This function also enables you to make joint payments for groups of transactions.
Examples of when to use the payment program:- You conclude several transactions with a business partner that is not a house bank;- When you post to the fixed-term deposit account, you generate payment requests at the same time- All transactions are managed on the payment request clearing account- Payments can be grouped together/netted- When payment is due, a payment run is triggered in accounting and the payment amount is transferred to the bank clearing account- At the same time, a payment medium is generated that is passed on to the house bank- When the bank statement is received, the payment amount is posted to the bank account the following day
(C) SAP AG AC030 68
4.69
SAP AG 1999
Posting using the Payment Program
Current parameters
Advicenote
Bank transfer
Eurocheck
Check
Proposal data setProposal data set
Print data setPrint data set
Paymentsummary
IDOC
Proposal runProposal runProposal run
Payment runPayment run
Edit proposal
Payment control
Documents
PaymentrequestMasterMaster
Print programPrint programPrint program
Together with the account determination function in the Treasury posting interface, you can control whether payment activities involve a flow of funds.
The payment program can do the following:
- Automatically select the requests to be paid- Create payment lists and logs- Create payment documents (customer / vendor / G/L accounts)- Create payment medium (forms / advice notes / disks).
As a rule, you first activate the payment proposal run. This creates a proposal data set, which you can check and process before you perform the actual run.
There are two different payment programs depending on the task you are performing: - The standard payment program from FI which settles open items from the accounts receivable/payable area. - The enhanced payment program which also allows you to make postings via G/L accounts, as well as via customer/vendor accounts.
(C) SAP AG AC030 69
4.70
SAP AG 1999
Pro rata temporis
Pro rata temporis withlinear discounting
Pro rata temporis
Pro rata temporis withlinear discounting
Difference procedure
Reset procedure
Difference procedure
Reset procedure
Accrual/deferral Accrual/deferral proceduresprocedures
Accrual/deferral Accrual/deferral methodsmethods
Accrual/Deferral Procedures and Methods
To reflect the earnings of a given period correctly in the balance sheet, they have to be assigned to the correct accounting period, irrespective of when they are due for payment. You use the accrual/deferral function to calculate the expenses (outgoings) and revenues (incomings) for a period on a certain key date/period-end closing (for example, at the end of a fiscal year).
The accrual/deferral method describes how the amount to be accrued/deferred is calculated.The accrual/deferral procedure, on the other hand, describes how the amount to be accrued/deferred is updated to the expenses and revenues accounts.
You use the difference procedure to transfer any expenses and revenues that have arisen since the last accrual/deferral run and the present accrual/deferral run from the accruals/deferrals accounts to the related income statement accounts.The reset or accumulation procedure adjusts the income statement accounts on the accrual/deferral key date by the amount of accrual or deferral calculated, and subsequently resets the adjustment.
(C) SAP AG AC030 70
4.71
SAP AG 1999
Interest Accruals/Deferrals: Customizing
When you define a flow type, you indicate whether a flow is relevant for accrual/deferral
You enter the accrual/deferral procedure (reset or difference) and the resulting flow types for each flow when you define accruals/deferrals
Difference procedure: Accrued/deferred interest remains the same
Reset procedure: Interest is accrued/deferred and the accrual/deferral is reset on the key date +1
You must define special accrual/deferral flow types (accrual/deferral and reset)
The accrual/deferral is based on the flows of the business transactions selected. The main variables for calculating the amount are the accrual/deferral period and the flow types that are indicated as being relevant for accrual/deferral.
Accrual: "A future income/expense, which is assigned to the accrual/deferral period on a pro rata basis". These types of income/expense may not legally appear as accruals/deferrals on the balance sheet (for example, receivables to income).
Deferral: "An already due income/expense, which is assigned to the accrual/deferral period on a pro rata basis". The amount is transferred from the expense/income account to the prepaid expenses/income account" (prepaid expenses to expense account and income account to prepaid income).
(C) SAP AG AC030 71
4.72
SAP AG 1999
Exercise: Interest Amount Accruals/Deferrals at Year End
(C) SAP AG AC030 72
4.73
SAP AG 1999
Transaction History
History: Activity sequenceHistory: Activity sequence
Activity Act. category Date Active status
SettlementSettlement
Administrative Data
CoCdPTypTTyp
000151a100
SAP AGTrans.ActivityAct.cat.Order
47111Basic Data
CoCdPTypTTyp
000151a100
SAP AG TransactionActivityAct.cat. Order
47111
Administrative Data
CoCdPTypTTyp
000151a100
SAP AG Trans.ActivityAct.cat.Contr.
47111Basic Data
CoCdPTypTTyp
000151a100
SAP AGTrans.ActivityAct.cat. Contr.
47111
Verwaltungsdaten
BukrPartGart
000151a100
SAP AG GeschäftVorgangVorg.Typ Prol.
47111Grunddaten
BukrPartGart
000151a100
SAP AG GeschäftVorgangVorg.Typ Prol.
47111
Verwaltungsdaten
BukrPartGart
000151a100
SAP AGGeschäftVorgangVorg.Typ Abrech.
47111Grunddaten
BukrPartGart
000151a100
SAP AGGeschäftVorgangVorg.Typ Abrech.
47111
10/01/YY
10/02/YY
10/31/YY
1
2
4
3
Order
Contract
Rollover
Settlement 10/02/YY
Replaced
Replaced
Replaced
5
Replaced
30.11.JJ
5 Settlement Active
. . .. . . . . . . . .
OrderOrder ContractContract RolloverRolloverSettlementSettlement
Administrative Data
CoCdPTypTTyp
000151a100
SAP AGTrans.ActivityAct.cat. Sttlmnt
47111Basic Data
CoCdPTypTTyp
000151a100
SAP AGTrans.ActivityAct.cat. Sttlmnt
47111
11/30/YY
Use the history function to display the activity sequence for a particular transaction. You see a list of activities, which are either active, reversed, or have been replaced by a follow-up activity.
The transaction history enables you to trace each activity (status) and the corresponding details.
The system also stores the main changes to transactions in change documents. This records which user changed/corrected the structure characteristics of a transaction at a particular time.
(C) SAP AG AC030 73
4.74
SAP AG 1999
Managing Currency Risks in Cash Management using Foreign Exchange Transactions
This unit focuses on analyzing the currency side of forex transactions, and displays the currency situation both in UNI and USD. The UNI and USD sides should be viewed both separately and jointly in Cash Management.Unlike the Market Risk Management evaluations described later, these analyses only include fixed cash flows. It is clear that the existing cash flows represent a risk if the USD exchange rate changes. Forward rate transactions are concluded to illustrate how these currency risks can be influenced. In this case too, the UNI and USD sides must be analyzed both separately and jointly.
Liquidity Management in the Short and Medium Term: Foreign Exchange Scenario (1)
(C) SAP AG AC030 74
4.75
SAP AG 1999
Liquidity Management in the Short and Medium Term: Foreign Exchange Scenario (2)
Managing Currency Risks in Cash Management using Foreign Exchange Transactions
In the example, the initial situation in Cash Management is outlined, the foreign exchange transactions are then concluded, and the impact on Cash Management is explained. To be able to draw up the balance sheet, your company needs to calculate the (un)realized gains and losses from foreign currency transactions. The procedure typically used for key date valuations and for determining the related unrealized gains/losses is described using forward exchange transactions as an example. Finally, you will learn how to calculate realized gains and losses after a forward exchange transaction has been concluded.
(C) SAP AG AC030 75
4.76
SAP AG 1999
Foreign Exchange: Product Types
Product types
DerivativesForexLoansSecuritiesMoney market
Forex spotdeals
Forwardexchangedeals
Forex swaps
Hedging instrumentsInvestment/borrowing
instruments
The integration of Cash-, Treasury, and Market Risk Management allows you to analyze the effects of forex trading on the liquidity situation of your company as well as the resulting currency risks. The current market data is supplied by means of realtime datafeed.
Forex trading incorporates the following product types:Spot exchange and forward transactionsForex swap transactionsOTC currency options
Currency options are handled in derivative financial transactions.
(C) SAP AG AC030 76
4.77
SAP AG 1999
Creating an Order: Forward Exchange Transaction
Purchase Sale
Currency Currency
Amount Amount
Rate/Value date
Rate Invers
Spot
Swap
Liquidity
Value date
Contract data
Contract date Trader
Contact person External ref.
1,000,000.00
USD UNI
1.82
++2
09/29/YYYY
Current rate !!
Company code1000 IDES AG
Product type60AForexEXTERN
Transactiontype102
Forwardtransaction
PartnerDeuba...
...
You enter the order data on this screen. The execute order activity assigns the contract status to the transaction.
(C) SAP AG AC030 77
4.78
SAP AG 1999
From To RatioITL UNI 1000 : 1
1 = Current rateM = Middle rateG = Bid rate
Currency Cal. IDCurrency Cal. ID
UNIUNI 0101
L curr. F curr.L curr. F curr.ITLITL UNIUNI
CURRENCYCURRENCY
Rate types
Translation ratios
CalendarCalendar
Leading Leading currenciescurrencies
Enterexchange rates
ExRT Frm To Dir.quot.M ITL UNI 1.20
Currency Master Data
You use the rate type to define exchange rates for different purposes on the same date in the system. The system uses rate type 'M' for currency translation when you post and clear documents. This rate type must be entered in the system.
The translation ratios indicate the units of measure in which you interpret the exchange rates entered.Example: A rate entry for ITL in UNI with the above translation ratio means:
1000 ITL costs x UNI costs x UNI When you enter exchange rates, the system uses the relevant Customizing tables when you choose
Environment - Market data - Manual market data entry in the application.To enter an exchange rate, you enter a rate type, a currency pair, and the valid-from date. In the example above, the middle rate is 1.20 Uni for 1000 Italian Lire.
Treasury-specific settings affect the calendar and the leading currencies:- Calendar: You assign a calendar to each currency. When you enter a transaction, the system carries out a working day check for the calendar assigned to the transaction currency.- When you enter an exchange rate in the transaction, for example "1.20", the system determines whether to read the rate as 1.20 Uni (following currency) for Italian lire or as Italian lire for Uni. It does this according to how you defined the leading currency and following currency.
(C) SAP AG AC030 78
4.79
SAP AG 1999
Datafeed Architecture
SAP R/3 Datafeed providers
selective refresh
request
req
ues
t
reply Internet/ RFC
TR applications
Informationsproviders
Externalinterfaceprogram Datafeed
LogDatafeedserver
Translation table
Marketrisk
mgmt.Securities Forex . . .
operativeSAP tables
reply
Marketdata
buffer
In Treasury, you can import data (such as security prices, exchange rates, interest rates, volatilities) to SAP tables or to the market data buffer using the datafeed function. The data you save in the market data buffer is overwritten when you call up the datafeed function again.
A translation table ensures that the SAP internal names are assigned to the notations used by the external data provider. A variety of tools support the automatic maintenance of this table.
You can call up data synchronously or asynchronously. When you call the data synchronously, you are connected to the data provider until the requested data is imported. If you call up the data asynchronously, the connection to the data provider is interrupted once the market data request has been sent. It is only reactivated when the data provider is ready to supply the requested information.
(C) SAP AG AC030 79
4.80
SAP AG 1999
Exercise: Managing Currency Risks in CashManagement using Forex Transactions
(C) SAP AG AC030 80
4.81
SAP AG 1999
Foreign Exchange in Cash Management
Assign planning levels
IDES AG IDES AG 1000
Foreign exchangeForeign exchange60A
Forex banksForex banksDB
ContractContract20
10/02 10/03 10/03 later10/05
Cash Management: Display Levels
Lev
Banks Banks
Description 10/02 10/03 10/04 later10/05
TB Time deposits xxx,xxx xxx,xxx xxx,xxx xxx,xxxxxx,xxx
. . .. . . . . .. . .. . . . . . . . . . . .. . .
OBOB Currency optionsCurrency options xxx,xxx
. . .. . . . . .. . .
DBDB ForexForex
Balance
. . . . . . . . . . . .. . .
xxx,xxx xxx,xxx xxx,xxx
123,456 xxx,xxx xxx,xxx xxx,xxx
xxx,xxx xxx,xxx xxx,xxx xxx,xxx xxx,xxx
E.g. forwardexchange transactionsE.g. forwardE.g. forwardexchange transactionsexchange transactions
Inflow in foreign currencyInflow in foreign currencyInflow in foreign currency
DBGiroDBGiro - 1.48 m UNI- 1.48 m UNI
Outflow in local currency Outflow in local currency Outflow in local currency
DBUS$DBUS$ +1.00 m USD+1.00 m USD
Display accountsDisplay accountsDisplay accounts
xxx,xxx
xxx,xxx
Each activity (status) within a business transaction (order, contract, settlement, etc.) is displayed in Cash Management automatically. You can view and analyze the activity using a separate level, if required.
Such a function is particularly useful for cash managers for planning purposes. They can view the cash flows from Treasury transactions whose value date is known, even if the flows have not yet been posted.
In Customizing, you have to enter the planning levels at which you want to display your information for the G/L accounts and/or subledger accounts. You do this for each of the relevant product types and activity categories (statuses). This enables you to display a contract, for example, at different levels depending on the particular activity.
When you display foreign exchange transactions, such as forward rate transactions, you have to make sure that there is an inflow on one currency side and an outflow on the other. If you first perform evaluations according to levels (for example, at forward exchange transaction level), you should only see the difference between the two currency amounts. You only see the incoming or outgoing cash flows on the individual currency accounts when you branch to the accounts.
(C) SAP AG AC030 81
4.82
SAP AG 1999
Netting and Payment Requests
Administrative Data
CoCdPTypeTType
000151a100
SAP AG TransactionActivityAct.cat. Contract
47111Basic Data
CoCdPTypeTType
000151a100
SAP AG TransactnActivityAct.cat. Contract
47111
Administrative Data
CoCdPTypeTType
000151a100
SAP AG TransactnActivityAct. cat. Sttlmnt
47111Basic Data
CoCdPTypeTType
000151a100
SAP AG TransactnActivityAct.cat. Sttlmnt
47111
NettingNetting
Create Netting Transaction: Data
Cat.No.Partn
KMP001DB
Netting
Deutsche BankVal.dte 01/01/YY
PostingPosting
Treasury: Posting of Flows
TestmandantWalldorf
Treasury: BuchungenProtokoll
TRTRTRTR
NettingNettingAccountsAccounts
FIFI PaymentPaymentrequestsrequests
FIFI
SettlementSettlementContractContract
TransactionsTransactions
Netting is a special form of joint payment of transactions. As a rule, all transactions can be paid jointly. Netting represents a specific part of these transactions.
The decision to create a netting transaction is not usually taken until shortly before the due date of cash flows. This normally takes place the day the transactions involved are posted. Only then do you know which transactions (e.g. forward exchange and spot exchange transactions) are suitable for net payment.
You can group flows together in netted transactions provided they have
the same company codethe same business partnerthe same payment datethe same payment methods
and other payment program criteria
(C) SAP AG AC030 82
4.83
SAP AG 1999
Exercise: Active Liquidity Management using Netted Money Market and Forex Transactions
(C) SAP AG AC030 83
4.84
SAP AG 1999
Valuation: Valuation Units
Macro view Micro view
Selection ofvaluationobjects
Global selectionoperativeunderlyingtransactionsTreasurytransactions
Valuationunit:
Hedgeunit*
ValuationAccountingvaluation:
E.g. Recognition ofloss principle
TRTR--MRMMRM
TRTR--TMTM
Valuationunit:
Portfolioposition*
Valuationunit:
Single transaction
Risk-/market-oriented valuationValue-at-RiskMark-to-market
The valuation requirements for accounting purposes are covered both in Financial Accounting and in Treasury Management on a single transaction basis.
* In development: Release not yet specified
(C) SAP AG AC030 84
4.85
SAP AG 1999
Foreign Currency Valuation (FCV Determination: 2)
Example: Forward exchange transactionExample: Forward exchange transactionForex transaction: USD/UNI
Contract date: 03/01/YY
Value date: 05/31/YY
USD purchase amount: 1,000,000 USD (forward rate)UNI sale amount: 1,700,000 UNI
Spot rate: 1.65Forward rate: 1.70
Valuations on 03/31/YY and 04/30/YYFinal valuation on 05/31/YY
Local currency = UNI
(C) SAP AG AC030 85
4.86
SAP AG 1999
Foreign Currency Valuation
1st valuation: 03/31/YY
2nd valuation: 04/30/YY
Final valuation: 05/31/YY
Forward rate: 1.70 Local currency = UNI
DateDate Fwrd rateFwrd rate UNIUNI Not realizedNot realized RealizedRealized
03/01/YY 1.70 1,700,00003/31/YY 1.65 1,650,000 - 50,00004/30/YY 1.72 1,720,000 + 20,00005/31/YY 1.69 1,690,000 - 10,000
Example: Forward exchange transactionExample: Forward exchange transaction
This example shows you how to create and reverse provisions, and how to disclose realized losses. The valuation on 04/30/YY shows an unrealized gain. According to German law, this does not have
to be disclosed.
(C) SAP AG AC030 86
4.87
SAP AG 1999
Foreign Currency Valuation (1) - G/L Accounting
Liability provisionsAsset provisions
UNI bank account
Balance sheet
P + L
1st valuation: 03/31/YY
Unrealized loss50T1
Clearing account
USD bank account
Realized loss Realized gain
Unrealized gain
Closing forwardrate: 1.70
Market forward rate: 1.65
50T 1
Create liability provisions and disclose unrealized loss
(C) SAP AG AC030 87
4.88
SAP AG 1999
Foreign Currency Valuation (2) - G/L Accounting
Liability provisionsAsset provisions
UNI bank account
Balance sheet
P + L
Unrealized loss
50T
Clearing account
USD bank account
Realized loss Realized gain
Unrealized gain1
20T
20T
2 50T 150T2
50T 2 2
Closing forwardrate: 1.70
Market forwardrate: 1.72
Reverse liability provisions, create asset provisions, and disclose unrealized gain
2nd valuation: 04/30/YY
(C) SAP AG AC030 88
4.89
SAP AG 1999
Foreign Currency Valuation (3) - G/L Accounting
Liability provisionsAsset provisions 20T
UNI bank account
Balance sheet
P + L
Final valuation: 05/31/YY (after posting transaction)
Unrealized loss50T
Clearing account
USD bank account
Realized loss Realized gain
Unrealized gain
3
1
50T20T
20T
2
2
2
1.70M UNI
1M USD
1.70M UNI 1M USD10T 3
10T3
50T 1
50T 2 20T3
Closing forwardrate: 1.70
Market spot rate: 1.69
The final valuation of the forward exchange transaction is carried out with the help of a currency clearing account. To do this, you update the transaction using the forward rate fixed in the transaction. You also translate the foreign currency amount at the market rate.
The difference amount (realized gain / loss) is calculated by the final valuation. It is entered as a valuation flow in Treasury and transferred in the posting run to the Financial Accounting department.
You have to post your transactions before the realized gains and losses can be calculated.
(C) SAP AG AC030 89
4.90
SAP AG 1999
Limit Management
As part of the end-of-day processing, you also want to check the limit utilization for money market and foreign exchange transactions. You particularly want to evaluate the business partner/counterparty limits and the trader limits.
Liquidity Management in the Short and Medium Term: Limit Management
(C) SAP AG AC030 90
4.91
SAP AG 1999
Limit Management (1)
Limits are updated on the basis of the following characteristics:
Company code
Trader
Business partner
Currency
Portfolio
Limit product group
Country key
Industry key
Rating indicator
Limit utilization
Business partner: Dt.
Limit amount: 100 m
Utilization: 30 m
Above/below: 70 m
As offline report
Limit management enables you to monitor transactions according to their different amounts by recording limit utilizations. Limits are determined according to volume, based on the position of the transactions on the key date. You specify limits/volumes on the basis of limit characteristics, which you can combine in any number of ways.
If you do not want all transactions to be included in a limit type, you can specify which product types or transaction types you want to include using the 'limit product group' characteristic. You are free to define your own limit product types and assign them to the product type/transaction type level for money market and foreign exchange transactions, currency options, loans, and bonds in the Securities area. This enables you to examine limits (risks) in greater detail.
You can therefore conclude fixed-term deposits up to a predetermined total volume with a specific business partner. You do this by assigning the product type/transaction type "fixed-term deposit" (lending or borrowing) to a limit product group and combining this group with business partner characteristics.
You also have to specify whether you want the limit utilizations for assets or liabilities transactions to be calculated separately, together, or whether you want to offset them against each other after clearing. You can call up an overview showing the current utilization amount of a limit and the amount still available.
You can assign limits according to time and use the SAP List Viewer when you display the limits and the limit utilizations. You can also branch from the limits to the limit utilizations.
(C) SAP AG AC030 91
4.92
SAP AG 1999
Limit Management (2)
Limit type:
Dres. bank
L1 : Limit characteristic: Business partner:
90 m
Dt. bank 100 m
Total FTD (Fixed-term deposit)Total FX (Foreign exchange)Total DE (Derivatives)
70 m50 m70 m
Limit type:
MM values Limits
FGDEVDV
40 m30 m50 m
Limit type: L3L3 : Limit characteristics: Partner / Limit product group
Dres. bank
FGDEVDV
50 m40 m60 m
Dt. bank
L1
Dres.90
Dt.100
L3
FTD40
FTD50
L270
L1
L2 : Limit characteristic: Limit product group
By combining any number of limit characteristics for which limits are defined, you can represent a whole range of limits.
Characteristic values are defined for each limit type for the characteristics assigned, and a limit amount is assigned to each of the values/value combinations.
Above examples:
L1: Limit type 1 - Business partner limitYou may conclude transactions (money market, spot exchange, forward exchange transactions and options) of up to 100 m UNI with the business partner Deutsche Bank
L2: Limit type 2 - Product-/Transaction type limitYou may conclude fixed-term deposits (total, across all partners) at 70 m UNI.
L3: Limit type 3 - Partner/Transaction limitYou may conclude fixed-term deposits at 50 UNI with the business partner Deutsche Bank.
(C) SAP AG AC030 92
4.93
SAP AG 1999
Limit Management (3)
- Edit limits for limit types:Limit type L3: BP LPG Amount
Dres. Bank FTD 40 m Dt. Bank FTD 50 mDres. Bank FX 30 m. . .
- Generate utilizations- Overview of utilizations
Customizing:
Define limit type: L3 Limit characteristics
- Characteristic 1: Business partner (BP)- Characteristic 2: Limit product group (LPG)
Before: 1. Define LPG 2. In product type/transactiontype: assign LPG
Application:
assign
Customizing:When you define the limit type, you have to specify the limits and limit utilizations to which the (combination) of limit characteristics relate.You also have to specify whether you want the limit utilizations for assets or liabilities transactions to be calculated separately, together, or whether you want to offset them against each other after clearing.
If you use the "limit product group" characteristic, you can restrict the number of transactions you include in a limit.
Application:You define the values for the combinations of characteristics for each limit type and assign the limits accordingly.
The report program "Generate Limit Utilizations" calculates the utilizations for all limit types on the key date. You can schedule this program as a job. The selection methods Risk of default and Foreign currency risk differ in the way they include the transactions from the Foreign Exchange area.
The report program "Overview of Limit Utilizations" displays a comparison of limits with the amount of the current limit utilization and the amounts still available. Any limits that have been exceeded are in color.
(C) SAP AG AC030 93
4.94
SAP AG 1999
Liquidity Management in the Short and Medium Term: Unit Summary (1)
Overview of Cash Management
Active liquidity management using money market transactions
Transaction management processes in Treasury Management
Trading and back-office functions and transfer to Financial Accounting
Interest accruals/deferrals using fixed-term deposits
(C) SAP AG AC030 94
4.95
SAP AG 1999
Liquidity Management in the Short and Medium Term: Unit Summary (2)
Risk management using foreign exchange transactions
Trading, back office, and transfer to Financial Accounting
Foreign currency valuation using forward exchange transactions as an example
Managing limit utilization
(C) SAP AG AC030 95
4.96Data for the "Liquidity Management in the Short and Medium Term" Unit
Explanation of the symbols in the exercises and solutions
Exercises
Solutions
Course objectives
Business scenario
Tips & tricks
Warning and caution
Data used in the exercises
Data Data in the training system Data in the IDES system
Company codes TR00 to TR20 1000
General ledger accounts 113100, 113105, 113113113913, 118888
113100, 113105, 113113118888
Treasury business partners
DEUBA – Deutsche BankCITI – Citibank broker
1000 – Deutsche Bank1002 – Citibank
(CM) groupings BANKEN (Bank account history Germany), BANK-IST (Status of available bank accounts), PERSONEN
BANKEN (Bank account history Germany), BANK-IST (Status of available bank accounts), PERSONEN
(C) SAP AG AC030 96
(Customers, vendors and clearing accounts), GESAMT (Total display)
(Customers, vendors and clearing accounts), GESAMT (Total display)
Notes on the exercises:
Create transactions in the following currencies: UNI, CHF or USD. Exchange rates are only maintained for these currencies.
Do not delete or change any of the existing Customizing entries. You are only allowed to add new data.
(C) SAP AG AC030 97
4.97Liquidity Management in the Short and Medium Term
Exercises
Unit: Liquidity Management in the Short and Medium Term
Cash Management functions
Liquidity analysis in your company is the basis for your investment or borrowing decisions. By analyzing the short-term liquidity and including the expected cash flows from logistics, you can identify the liquidity surpluses.
1-1 Analyze the total liquidity position of your company using the cash position and the liquidity forecast functions.To do this, use the ‘Total display’ grouping and only look at the cash flows in your company code TRXX.Save this setting as a variant.
1-2 What is the difference between levels and groups/accounts?To find this out, look at the cash position with the BANKEN grouping or the liquidity forecast with the PERSONEN grouping.
1-3 What does it mean to access a transaction via levels and then to switch to groups, or to start with groups/accounts and then switch to levels?
(C) SAP AG AC030 98
Unit: Liquidity Management in the Short and Medium Term
Creating a new business partner
To take full advantage of the excellent conditions offered by a new bank, use the bank as your new business partner for all Treasury transactions.
4.98
2-1 Create a business partner PartnerXX in the role of Treasury partner.
2-2 Authorize this partner for the following Treasury transactions:- Money market- Foreign exchange- Securities- Derivatives
2-3 Enter the following in the Company code data: – Reconciliation account 140 000– Planning group E2, domestic customers.
(C) SAP AG AC030 99
Unit: Liquidity Management in the Short and Medium
Term
Active liquidity management using money market transactions.Integration of trading functions into Cash Management
The new business partner offers you good conditions for a fixed-term deposit, which you want to enter in your trading department.
3-1 Fixed-term deposit
Create a fixed-term deposit.As you do this, check the cash flow and add other flows to your transaction (e.g. charges)
(Note: Do not enter an account assignment reference or payment details!
Make a note of your transaction number, You will need it later on for settlement and posting activities: _________
3-2 Display the cash inflows and outflows in Cash Management.
(C) SAP AG AC030 100
Unit: Liquidity Management in the Short and Medium
Term
Active liquidity management using money market transactions.Confirmation management and control functions in the back-office area.
After the trader has entered the fixed-term deposit, it is processed in the back office. You agree to send your partner a letter of confirmation about the financial transaction and your partner agrees to send counterconfirmation back to you. After this has been checked, the bank chains and the balance sheet accounts are checked and the transaction is then settled.
4-1 In the case of fixed-term deposits, you want the transactions to be confirmed and counterconfirmed. Use the standing instructions function to set up the correspondence media for your business partner (“PartnerXX”).
4-2 4-2-1 First check the account assignment reference again in the old transaction and check the payment details.
4-2-2 Now assign payment details to your business partner (PartnerXX) using the standing instructions.
4-2-3 Check the general ledger account again and the payment details in theold transaction. Has anything changed?
(C) SAP AG AC030 101
4-3 Create a new fixed-term deposit with your business partner. Check the payment details in the new transaction.(Note: For the second fixed-term deposit, select a start of term date that is later than that of the first transaction. This makes the impact on Cash Management much more noticeable.)
Transaction number (new transaction): ___________
4-4 4-4-1 Generate a letter of confirmation for the fixed-term deposit you have just created. Now check the correspondence status in the transaction.
4-4-2 Assume the counterconfirmation has been received. Enter this in thesystem and check the correspondence status again.
4-5 Use the collective processing function to settle the fixed-term deposit, and check the account assignment reference and the payment details. Then refresh the collective processing display.
4-6 Take a look in Cash Management. Have there been any changes compared with the previous exercise?If so, why?If now, why not?
4-7 When you define payment details for the business partner, how does this affect the way the (new) fixed-term deposit is displayed in Cash Management? Explain the difference.
(C) SAP AG AC030 102
Unit: Liquidity Management in the Short and Medium Term
Active liquidity management using money market transactions.Posting flows that are due to Financial Accounting and evaluating them in Cash Management
At the start of term, the posting run for all the flows that are due is triggered in Financial Accounting. This offsets the principal increase against the bank clearing account, which is later cleared when the bank statement is imported.
5-1 Fixed-term deposit
5-1-1 Look at the cash flow in your second fixed-term deposit.
5-1-2 Post the first flows (in other words, the principal increase) of yoursecond fixed-term deposit.In the posting log, click the flow to display the generated FIposting.
5-1-3 Notice the change to the posting status in the cash flow.
5-2 Take a look in Cash Management. Are there any changes?
(C) SAP AG AC030 103
Unit: Liquidity Management in the Short and Medium Term
Active liquidity management using money market transactions.Accrual/deferral of interest amounts at end of year
To carry out year-end tasks, you have to assign interest rate flows to the correct accounting period. You use the reset procedure to perform this accrual/deferral in your company.
4.99
6-1 Create another fixed-term deposit with a longer term that goes beyond the end of the year.
6-2 Post the deposit amount.Note: Before you post the transaction, you have to settle (or control) it in the back office.
6-3 Perform an interest accrual/deferral run for your fixed-term deposit for a date between the start and the end of the term. In this case on 12/31/YY.
4.100
(C) SAP AG AC030 104
Unit: Liquidity Management in the Short and Medium
Term
Managing currency risks in Cash Management using foreign exchange transactions
In your liquidity evaluations you discover a deficit of USD in three months. You transform the resulting foreign currency risk by a suitable forward exchange transaction; in other words, you purchase USD and sell UNI.
7-1 Make sure that the payment details for foreign exchange transactions are maintained for UNI and USD in the standing instructions for your business partner.
7-2 Create a forward exchange transaction with your business partner to purchase 100,000 USD in exchange for UNI with a value date in three months. Create and execute an order. Then settle and post it.
Display the impact of the transaction in the various Cash Management views.
(C) SAP AG AC030 105
Unit: Liquidity Management in the Short and Medium Term
Active liquidity management using netted money market and forex transactions
In order to meet your payment commitments in UNI, you set today’s fixed-term deposit and the forward exchange transaction. You should only pay the difference between the fixed-term deposit and the forward exchange transaction to the Citibank broker as a netted payment.
8-1 Create a fixed-term deposit and a forward rate transaction with the same value date with the Citibank broker (CITI).Make sure that the payment details for the UNI side of the transaction (particularly the house bank and house bank account) are the same.
Also make sure that you set the payment requests indicator when you enter the payment details and you enter the payer/payee and the partner bank.
Then settle the transactions.
8-2 Group both transactions together using the netting function. First display the proposal list, then assign the transactions and display the netting.
8-3 Then carry out the posting run and discuss the outcome.
(C) SAP AG AC030 106
4.101 Liquidity Management in the Short and Medium Term: Solutions
Unit: Liquidity Management in the Short and Medium Term
1-1 To create a variant, choose:
Accounting Treasury Cash Management Information System Reports for Cash Management Liquidity Analyses Liquidity Forecast
Enter the following data:
Field name or data type Values
Company code TRXX
(XX is the group number)
Cash position Set indicator here
Liquidity forecast Set indicator here
Grouping GESAMT
Delta display with balances Select (Button: All selections)
Goto Variants Save as variant or Click Save
Execute the variant
(C) SAP AG AC030 107
1-2 To differentiate between levels and groups:
a) Cash position ( “accounts”):
Accounting Treasury Cash Management Information System Reports for Cash ManagementLiquidity Analyses Cash Position
Enter the following data:
Field name or data type Values
Company code TRXX
Cash position Set indicator here
Grouping BANKEN
Delta display with balances Select (Button: All selections)
You see: Summarization: Deutsche
Accounts: DBGIRO
Levels: AB
(Prerequisite: A payment advice note has already been created)b) Liquidity forecast ( “Groups”)
Accounting
... Liquidity Forecast
Enter the following data:
Field name or data type Values
Company code TRXX
Liquidity forecast Set indicator here
Grouping PERSONEN
Delta display with balances Select (Button: All selections)
(C) SAP AG AC030 108
You see: Summarization: Revenues
Groups: E2 (domestic customers)
Levels: F1 cust./vendor
(Prerequisite: A customer invoice has already been created)
c) The (planning) accounts and groups show how payments are assigned. These are the names given to the bank accounts or customer/vendor groups, which are affected by this cash activity. The accounts and groups contain quantitative information.
(Example: Account “DBGIRO” groups together the inflows and outflows of the corresponding current account)
(C) SAP AG AC030 109
The (planning) levels tell you where the cash flows recorded in the accounts or groups have come from. They contain qualitative information.
(Example: The flows related to DBGIRO actually come from the (levels) “time deposits”, “Payment advice notes confirmed” ...)
d) Additional information:
View liquidity forecast w i t h bank accounts: Accounting ... Liquidity Forecast(Here, you set the “Cash position” and “Liquidity forecast” indicator!Grouping: Total display[This includes both the groupings “bank account history” and “customers/vendors and clearing accounts”])
You see: Summarization: 1. Bank account history
Groups: DBGIRO
Levels: AB
and
2. Personen (Customers/vendors and clearing accounts)
Groups: E2
Levels: F1 cust./vendor
1-3 Solution:
Case 1: Levels; Groups/accountsCase 2: Groups/accounts; levels
Both cases produce the same total balances.
Case 1 primarily allows you to draw overall conclusions about the underlying transactions. From there, you can branch down from the individual transactions into the relevant groups/accounts.
Case 2, on the other hand, first gives you an overview of the accounts/groups. It then tells you which transactions relate to these accounts.
(C) SAP AG AC030 110
Unit: Liquidity Management in the Short and Medium Term
2-1 To create a business partner:
Accounting Treasury Treasury Management Basic Functions Master Data Business Partner Create
Enter the following data:
Field name or data type Values
Business partner PartnerXX
Grouping TR02
Role category 1000 (Treasury partner)
Classification E.g. Choose an organization
Enter the relevant data ...
Save
Additional information: ... Business partner Change
Enter: PartnerXX (do not enter a role category).You see: Role overview. After selecting the role (double-click), you can enter the General data and the Company code data for the business partner by choosing Goto.
(C) SAP AG AC030 111
2-2 To enter authorizations for the business partner:
Accounting ... Business Partner Standing Instructions Transaction Authorizations
The standing instructions for the business partners for payment details, correspondence, authorizations and derived flows have been included in the maintenance functions for the business partner and can also be edited there.
2-3 To maintain the planning group/reconciliation account:
Accounting Treasury Treasury Management Basic Functions Master Data Business Partner Change
Field name or data type Values
Business partner PartnerXX
Role category 1000 (Treasury partner)
In the role overview: Role category 1000: Double-click; Goto Company code data Account managementor
In the role overview: Role category 1000: Double-click; Company code data button
Field name or data type Values
Reconciliation account 140000 (Trade receivables - domestic)
Planning group E2: (domestic customers)
(C) SAP AG AC030 112
Save
(C) SAP AG AC030 113
Unit: Liquidity Management in the Short and Medium Term
3-1 To create a fixed-term deposit for your business partner:
Accounting Treasury Treasury Management Money Market Trading Fixed-Term Deposit Create
Enter your data.
Tab page: Cash flow Tab page: Other flows; (enter data) Tab page: Status ( Note correspondence fields)
Save
(Ignore the messages “No account assignment reference in transaction/No payment details entered for transaction” by pressing “Enter”).
Transaction no. ________________
3-2 To analyze your data in Cash Management:
Accounting Treasury Cash Management Information System Reports for Cash Management Liquidity Analyses Liquidity Forecast
(C) SAP AG AC030 114
Field name or data type Values
Company code TRXX
Liquidity forecast Only set indicator here
Grouping PERSONEN (Customers/vendors and clearing accounts)
Delta display with balances (Click All selections button)
Execute
You see: Summarization: Revenues
Groups: E2
Levels: Time deposits
Double-click amount:Evaluation view of Treasury transactions to be triggered.
Additional Cash Management analysis:
Field name or data type Values
Company code TRXX
Cash position Set indicator
Liquidity forecast Set indicator
Grouping GESAMT (Total display)
Delta display with balances (Click All selections button)
Execute
You see: Summarization: Bank account history: No change
Cust./vend. & clearing accts: Groups: E2
Levels: Time deposits
(C) SAP AG AC030 115
Unit: Liquidity Management in the Short and Medium Term
4-1 To specify the correspondence type for your business partner:
Accounting Treasury Treasury Management Money Market Master Data Standing Instructions Correspondence
Enter your data ... (Money market: Set an indicator for ‘Print’ and ‘CConf’) Save
4-2 4-2-1 To check the general ledger account and the payment details (for the old transaction).
Accounting Treasury Treasury Management Money Market Back Office Fixed-Term Deposit Change
Enter your data ...
Check general ledger account:Tab page: Administration; The drop-down menu for the account assignment reference field is for information purposes; leave field blank
Check payment detailsTab page: Payment details (Note: No payment details have been assigned in the old transaction (which was created before payment details were assigned to the business partner!))
(C) SAP AG AC030 116
4-2-2 To define standing instructions for your business partner (partnerXX):
Accounting... Money Market Master Data Standing Instructions Payment Details
Enter your data ...
Field name or data type Values
Currency UNI
Payment details ID E.g. 01
House bank DB
Account ID GIRUN
Assign: Select row; Click: Assign (Money market, Securities, and Derivatives: Incoming; outgoing)
SaveNote: For simplification purposes, we assume that partner XX is the house bank.
4-2-3 To check general ledger account and payment details (for old transaction):
Path: see 4-2-1
Check general ledger account: No changes
Check payment details: No changes(This is because any payment details entered later (as standing instructions) for the business partner are not updated in the old transaction!)
(C) SAP AG AC030 117
4-3 To create a new fixed-term deposit:
Accounting Treasury Treasury Management Money Market Trading Fixed-Term Deposit Create
Enter data:- Account assignment reference:
Tab page: Administration: leave blank- Payment details;
Tab page: Payment detailsOmit entry since the payment details defined for the business partner (as standing instructions) appear automatically.
SaveTransaction no. ____________________
4-4 4-4-1 To generate letters of confirmation:
Accounting... Money Market Back Office Correspondence Outgoing Correspondence
Field name or data type Values
Company code TRXX
Transaction Your transaction number
Correspondence type 001
Select printer and print preview Execute
(C) SAP AG AC030 118
After the update run, you can now see the correspondence information in the transaction:
Accounting... Money Market Back Office (or Trading) Fixed-Term Deposit Display
Tab page: Status
Correspondence: “Confirmation executed”
4-4-2 To enter a counterconfirmation:
... Money Market Back Office Correspondence Incoming Confirmations
Enter: Exact data that you see on the letter of counterconfirmation from your business partner.
(Choose Enter: The transaction is displayed, assigned, and the confirmation status in the transaction is matched).
Save
Check correspondence status in the transaction: See the path above
4-5 To settle a fixed-term deposit:
Accounting ... Money Market Back Office Collective Processing Money Market
Here, you can make any selections you require. Execute
Select transaction Choose Settle
(C) SAP AG AC030 119
Check account assignment reference and general ledger account:Tab page: AdministrationDrop-down menu for “Account assignment reference” fieldYou see: Account assignment reference ‘DB000001’ with G/L account no.__________
Enter: Account assignment reference (DB000001) Save
If required: When you check the G/L account:
Accounting Financial Accounting General Ledger Master Records Individual Processing CentrallyEnter: General ledger account no.: see above (113113) Display
Check the payment details:Tab page: Payment details
The system automatically suggests the payment transactions via our house bank DB and the house bank account GIRUN for amounts in UNI.
Saving the transaction after you have checked it, triggers the activity transition Contract Contract settlement (you can also see this in Collective processing: Refresh)
Additional information: View history:
- When you are in the collective processing function: Select the transaction in the display screen; Choose: History.
Otherwise:
... Money Market Back Office or Trading Fixed-Term Deposit History
(C) SAP AG AC030 120
4-6/7 To analyze the impact on Cash Management:
Since payment details exist for the (new) fixed-term deposit, the cash flows are displayed as follows:
In the Liquidity forecast with bank data:
(“Cash position” and “Liquidity forecast” are selected; Grouping: Total display; Delta display with balances)
You see: Summarization: 1. Bank account history
Groups: DBGIRO
Levels: Time deposits
Here you see the new transaction
and
2. Customers/vendors and clearing accounts
Groups: E2
Levels: Time deposits
Here you see the old transaction
In the cash position: Grouping: Bank account history (Delta display with balances)
You see: Summarization: Deutsche
Accounts: DBGIRO
Levels: Time deposits
Here you (only) see the new transaction
In the Liquidity forecast: (Grouping: Customers/vendors and clearing accounts; Delta display with balances)
You see: Summarization: Revenues
Groups: E2 (domestic customers)
Levels: Time depositsHere you only see the old transaction
Summary:
If no payment details are assigned to the transaction (either as standing instructions with the business partner or when a transaction is created), money market transactions do not appear in the cash position, as this relates to the bank data. In this case (no payment details), you only see money market transactions in the liquidity status if a relevant financial planning group has been defined for the business partner.
(C) SAP AG AC030 121
(Example: old transaction; business partner has planning group: E2).
The transaction does not appear in Cash Management without the payment details or the planning group.
When you assign payment details to the transaction, the system can access bank data and display the money market transaction in the cash position.
(Example: new transaction)
(C) SAP AG AC030 122
Unit: Liquidity Management in the Short and Medium Term
5-1 Fixed-term deposit:
5-1-1 To look at the cash flow:
Accounting Treasury Treasury Management Money Market (Trading or) Back Office Fixed-Term Deposit DisplayTab page: Cash flow
You see: Posting status (PS): 1 - Flagged for posting(since transaction has been settled but not yet posted).
Also select the Posting view layout.
5-1-2 To post the first flows (the principal increase):
Accounting Treasury Treasury Management Money Market Accounting Posting Execute
(C) SAP AG AC030 123
Enter your data ...
Field name or data type Values
Company code TRXX
Transaction Transaction no. of new fixed-term deposit
Upto and including due date Day the time deposit is created
Execute
After the update run:
In the posting log: Single-click to call up the FI document.
FI document no.: _________________
Note: The date "upto and including the due date" refers to the dates of the flows for your transaction, which you now want to post.
Example:
Date of the investment amount:The investment amount is now posted.
Due date:The investment amount, the repayment amount, the interest and any other flows are now posted.
(C) SAP AG AC030 124
5-1-3 To see the posting status in the cash flow:
Path: see 5-1-1
You see: (Posting status (PS) 0 for flows created)Posting status (PS) 1 for settled flows Posting status (PS) 2 for posted flows
Also select the Posting view layout.
5-2 To look in Cash Management:
In the Liquidity forecast w i t h bank data:
("Cash position" and "Liquidity forecast" selected; Grouping: "Total display"; Delta display with balances)
You see: Summarization: 1. Banks
Groups: DBZWIBU
Levels: Int. postHere you see the new transaction
and (unchanged, as it is not yet posted)2. Customers/vendors and clearing accounts
Groups: E2Levels: Time deposits:
Here you see the old transaction.
When you post the fixed-term deposit, the display in Cash Management changes from the "DBGIRO" account ("Time deposits" level) to the "DBZWIBU" account ("Interim posting" level), in order to display the fixed-term deposit as a ‘fixed transaction’. At the same time the change of level shows that only the real bank posting is still outstanding. This is updated in the system when the bank statement has been received.
If the bank statement has been created - either manually or automatically - and hence the transaction has been posted to the current account, the outflow for the fixed-term deposit is displayed in Cash Management in the "DBGIRO" account ("FI banks" level).
(C) SAP AG AC030 125
Unit: Liquidity Management in the Short and Medium Term
6-1 To create a fixed-term deposit:
Accounting Treasury Treasury Management Money Market Trading Fixed-Term Deposit Create
Enter your data.
6-2 To post the investment amount:
First settle the transaction: Accounting Treasury Treasury Management Money Market Back Office Fixed-Term Deposit Settle
Enter: Data (for last transaction); check (do the account assignment reference and payment details exist?) Save
Now: post the flow: ... Money Market Accounting Posting ExecuteEnter your data
(C) SAP AG AC030 126
The "upto and including due date" field refers to the date up to which the remaining flows will be posted. (In this case, it is the date the fixed-term deposit was created)
6-3 To perform an accrual/deferral run on 12/31/YY:
... Money Market Accounting Accrual/Deferral Execute
Enter: Data ... (Key date: 12/31/YY ...); Execute
You see: Accrual/deferral log and posting logAfter the update run:Click the document numbers to display the relevantposting documents.
(C) SAP AG AC030 127
Unit: Liquidity Management in the Short and Medium Term
7-1 To check the standing instructions:
Accounting Treasury Treasury Management Foreign Exchange Master Data Standing Instructions Payment Details
Enter the following data:
a) Assign existing payment details "01" for UNI to foreign exchange: Select row; click the Assign button (Foreign exchange: Incoming; Outgoing)
b) For USD:
Field name or data type Values
Currency USD
Payment details ID E.g. 01US
House bank DB
Acct ID GIRUS
Select row; click the Assign button (Foreign exchange: Incoming; Outgoing)
c) Save
(C) SAP AG AC030 128
7-2 To create a forward rate transaction:
a) Create order (Trading)
Accounting Treasury Treasury Management Foreign Exchange Trading Spot/Forward Transaction Create
Enter your data ...(- Purchase currency, payment amount;- Sale currency;Rate; value date)
Note: Confirm your entries with "Enter". The system then calculates the offsetting amount (in this case, upon sale) automatically. Only then should you save the transaction.
- Cash Management: Accounting Treasury Cash Management Information System Reports for Cash Management Liquidity Analyses Cash Position
Enter: Data ... (Grouping: Banks; Click All selections: Delta Display with balances;)
You see: No change when you create an order.
(C) SAP AG AC030 129
b) Execute order (Trading):
... Foreign Exchange Trading Order ExecuteEnter your data ...; Save
- Cash Management: See the above path.
You see the foreign exchange purchase.
Summarization: Deutsche[In this case, you only see the difference between the value of the forward rate in UNI and foreign currency amount at the current exchange rate];
The individual amounts appear as follows:
Accounts: - DB-USD; Levels: Forex- DBGIRO; Levels: Forex
Note: The dollar amount is displayed in UNI and is calculated at the rate that is maintained in the rates table (in Customizing):
Foreign Exchange Environment Market Data Manual Market Data Entry Enter Exchange Rates
(C) SAP AG AC030 130
c) Settle contract (Back office):
... Foreign Exchange Back Office Spot/Forward Transaction SettleEnter your data ... (Check and save entry data).
- Cash Management: see above.
You see the foreign exchange purchase:
Summarization: Deutsche; Accounts: - DB-USD; Levels: Forex
- DBGIRO; Levels: Forex
d) Posting to FI (Accounting)
... Foreign Exchange Accounting Posting Execute
Enter your data.
- Cash Management: see above.
You see the foreign exchange purchase:Summarization: Deutsche;
Accounts: DBZWIBU Levels: Int. post
(C) SAP AG AC030 131
Unit: Liquidity Management in the Short and Medium Term
8-1 To create and settle fixed-term deposits and forward rate transactions: Compare previous solutions;Note: The payment details that are maintained for the business partner CITI. You have to generate payment requests for netting; set up the payment details accordingly.
8-2 To display the proposal list for netting and for assigning transactions:
Some prerequisites for possible nettings are:- Same business partner- Same value date- Same currency (compare slide on netting and payment requests
Accounting Treasury Treasury Management Money Market Back Office Netting Proposal List Execute
Select transactions for netting.
Click the Check button
Save
(C) SAP AG AC030 132
To display the netting: Accounting Treasury Treasury Management Money Market Back Office Netting Display
Field name or data type Values
Netting 1
Your company code TRXX
One of your transactions
Note the net amount calculated by the system. This is then paid in a later payment run in one record.
Relevant fields in the transactions are blocked against further changes.
8-3 To perform a posting run: Accounting Posting Execute
Enter and execute the transaction numbers of the money market and forward exchange transaction.The posting run triggers payment requests to the payments request clearing account. These are paid jointly via the payment run of the extended payment program (payment request).
(C) SAP AG AC030 133
5
SAP AG 1999
Financial Transactions in the Medium andLong Term
Contents:
Securities Management
Loans Management
(Loans taken)
(C) SAP AG AC030 1
5.2
SAP AG 1999
Financial Transactions in the Medium and Long Term: Unit Objectives
At the conclusion of this unit, you will be able to:
Provide an overview of the entire process for
- financial investments in the form of securitiestransactions
and
- procuring capital by taking out a loan
(C) SAP AG AC030 2
5.3
SAP AG 1999
SAP Treasury Overview
Liquidity Management in theShort and Medium Term
Introduction
Financial Transactions in the Medium and Long TermFinancial Transactions in the Medium and Long Term
Market Risk Management and ManagingRisk Positions
Course Overview Diagram
(C) SAP AG AC030 3
5.4
SAP AG 1999
Financial Transactions in the Medium and Long Term: Securities Management Scenario
Due to a change in the level of interest rates on the capital market, you want to restructure your securities position. Reduce your stock portfolio and invest in bonds.To purchase new securities, you have to enter the corresponding data. In other words, you maintain position indicator class data and securities account data, if required.During the course of the year you receive and post interest and dividends.At the end of the year, you perform an account-based valuation of your securities position.
Other means of long-term investment is procured by taking out a loan.
(C) SAP AG AC030 4
5.5
SAP AG 1999
Market RiskManagement
Treasury and Market Risk Management
Priority Priority TargetTarget
1 Ensure liquidity 95
2 Optimize financing costs 92
3 Optimize yields on financial assets 74
4 Hedge costs (e.g. againstpossible exchange rate fluctuations) 61
5 Hedge sales (e.g. againstpossible exchange rate fluctuations) 52
6 Contribute to profit through active management of open items 30
TRTR--TMTMTRTR--
MRMMRM
TreasuryManagement
%
(C) SAP AG AC030 5
5.6
SAP AG 1999
Treasury Management: Functions
Complete financial transaction and position management
Support for trading and back-office functions
Functions to track, check, and release transactions
Data transfer to Financial Accounting(including accruals/deferrals and valuation)
Flexible settings to accommodate company-specific transaction and position management processes
Financial transactions assigned to portfolios and managed in securities accounts
Flexible reporting and portfolio analysis
Datafeed interface
(C) SAP AG AC030 6
5.7
SAP AG 1999
Securities
Subscription rightsFixed-interest bonds
Variable rate bondsPerpetual bonds
Zero bondsUnit-quoted part. cert.
Perc.-quoted part. cert.Warrant bonds
Part. cert. with optionConvertible bonds
Index warrants
Equity warrantsCurrency warrants
Bond warrants
Perc.-quoted shareholdings
Domestic stocks
Investment certificates
Foreign stocks
Unit-quoted shareholdings
010 Stocks
020 Investment cert.
030 Subscr. rights
040 Bonds
060 Warrant bonds
070 Convert.bonds
160 Shareholdings
110 Warrants
Financial instruments Product categories Product types
Examples
Product Categories - Product Types
You use product types as a basis for creating financial transactions and managing positions.
In the SAP System, you classify the financial instrument "security" by assigning it to product categories that are predefined in the system. You use this classification as a basis for a more detailed structure by defining corresponding product types in accordance with specific company requirements.
The modular structure of financial instruments enables you to create different evaluations or determine processing sequences according to product type. For example, the product type "Fixed-interest bond" is different from the product type "Variable-rate bond" as far as the conditions are concerned. This difference is taken into account by product type-specific entry screens for creating master data, which simplify data entry and prevent inconsistencies.
(C) SAP AG AC030 7
5.8
SAP AG 1999
PTyp Text Prod. categ. Cond.gr
01A Stocks 10 10
02A Investment certificates 20 30
: : : :
04I Fixed-interest bonds 40 40
: : : :
DoubleDouble--click Detailsclick Details
Class Master Data: Product Types - General Data
Product types are user-defined values for predefined product categories, which is why when you define a product type, you must specify the product category to which you are assigning it. The system uses this internal key to process the objects defined in the product type.
You can usually differentiate between product types by means of different condition structures.For example, dividend and/or bonus conditions belong to the product type stock; nominal interest and repayment conditions belong to the product type bonds. By assigning the relevant conditions to the product type, you can ensure that you only have to enter the corresponding condition items when you create a security.
It is possible for several product types to have the same conditions, depending on the degree of detail in which you define the various product types. If, for example, you define the product types domestic stocks and foreign stocks, you can use the condition types dividend and bonus in both cases.
As a result, condition types (that belong together) are grouped to form condition groups. This simplifies the lengthy process of assigning multiple condition types. You assign the relevant condition group to the product type.
(C) SAP AG AC030 8
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SAP AG 1999
USER LEVEL
1104 Scheduled repayment
5000 Nominalinterest
5013 Dividend
010 Stock
040 Bond...
01 A Stock
04 H Variable-ratebonds
04 I Fixed-interest bonds...
10 Stocks40 Fixed-int. sec.(perc.-quot.)42 Float.-int. sec.(perc.-quot.)
A InflowTD DividendsTTEN Final repaymentTZ Nominal interest
Key : “ ” = is assigned to
111 Dividend113 Bonus100 Interest (perc.)263 Final
repayment...
Product Type Product Type -- Conditions Conditions -- FlowsFlows
Product categoryProduct category Flow categoryFlow category
Flow typeFlow typeCondition typeCondition typeProduct typeProduct type
Condition groupCondition group
A InflowTD DividendsTTEN Final repaymentTZ Nominal interest
Calculation cat.Calculation cat.
SYSTEM LEVEL
You assign a condition group, which represents a cluster of different condition types, to each product type.
The system represents cash flows created by conditions as flows that are generated automatically. This means you must assign flow types to condition types, when these flow types represent changes to the payment flows and are part of the cash flow.
Flow types defined at user level contain more detailed information about the flow categories predefined in the system.
(C) SAP AG AC030 9
5.10
SAP AG 1999
In our model company the treasurer uses position analysis to obtain an overview of the securities position. This describes the status (position of stocks and bonds) of the two securities accounts.
Financial Transactions in the Medium and Long Term: Scenario - Evaluating the Securities Position
(C) SAP AG AC030 10
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SAP AG 1999
Position overview*
Position trend list*
Capital recovery (revenue list)*
Securities account statement
Position information
Standard reports
Standard Reports: Examples (Securities)
Examples:
Position overview: Position evaluation for a specific key date (flexible data output) Position trend list: Lists the acquisition values, number of units/nominal values, book values on a
start and final date, and displays the relevant changes. Revenue list:Displays the capital flows relating to securities. You can select both the planned or
actual flows, e.g. to evaluate the realized earnings and anticipated earnings, such interest or price gains.
Securities account statement: Displays the position trend for specific securities accounts for each security, including the changes in the book value and the acquisition value.
Position information for securities: Tells you for which ID numbers and in which securities accounts position indicators exist for a specific key date. Detailed information such as average book value/acquisition value for each ID number in foreign currency and local currency.
Regulatory reporting: Evaluations of positions in accordance with reporting requirements and German State Central Bank requirements.
* You can use the data output options described later for these reports.
(C) SAP AG AC030 11
5.12
S A P A G 1 9 9 9
C l a s s i c a l d r i l l d o w n r e p o r t
A B C1 8 , 2 3 4 . 9 7 2 7 , 2 7 6 . 0 8 8 7 , 7 5 1 . 8 42 9 , 9 3 2 . 0 7 3 8 , 3 7 3 . 4 2 3 2 , 7 5 6 . 4 4
. . . . . . . . .
O b j e c t l i s t
G r a p h i c a l r e p o r t o u t p u t
0
2 0
4 0
6 0
8 0
1 0 0
A B C D
R e p o r t s
Many evaluations allow to choose between several forms of data output.
(C) SAP AG AC030 12
5.13
SAP AG 1999
Sample Evaluation using Position Information
Position overview: Flexible position information for a specific key date, e.g. per company code or per ID number
Evaluation of a portfolio comprising two securities accounts kept with different banks
The securities account is the unit generally used for position management and valuation (usually at a bank)
A portfolio is a grouping of financial transactions and positions used for aggregated position management or valuation purposes
You can perform valuations both at securities account level and portfolio level
(C) SAP AG AC030 13
5.14
SAP AG 1999
0SEPOSOVW SE Position overview From date MM/DD/YYYY
Display currency UNI Key date reference 4 position value date Key date MM/DD/YYCompany code TR00
Pos. ID number Sec.acct No. of sec. TotNomPC Price% Acq.c.un.PC Acq.c. PC Book value PC Book value LC Current value PC Current value LC
EUR 113495 Deuba Acc1 200,000.00 102.10 204,200.00 204,200.00 399,380.49 225,000.00 446,907.15
EUR 113501 150,000.00 95.00 142,500.00 142,500.00 278,705.78 166,755.00
UNI 270144 100,000.00 99.85 99,850.00 99,850.00 99,850.00 102,550.00
Deuba Acc1 450,000.00 777,936.27
EUR 519000 Deuba Acc2 5,000.00 27.30 136,500.00 124,250.00 243,011.88 134,250.00 262,570.18
UNI 555700 10,000.00 74.65 746,500.00 746,500.00 746,500.00 912,000.00 912,000.00
102,550.00
326,144.43
875,601.58
EUR 716463 500.00 398.57 199,285.00 199,285.00 389,767.58 206,275.00 403,438.83
Deuba Acc2 15,500.00 1,379,279.46 1,578,009.01
Securities: Position Overview Object List
You can use the ABAP List Viewer to set up the position overview as you wish according to certain predefined selection criteria. You can make your own adjustments to the report, depending on the information you want to display and the order in which you want to display it.
You can either mail or fax the list, and convert it to other formats (such as a word processing file, or spreadsheet).
(C) SAP AG AC030 14
5.15
SAP AG 1999
The treasurer in our model company decides to sell a particular stock.Taking account of the company's medium-term liquidity, the part-sale of this stock is represented, thus demonstrating the typical business process involved in buying and selling securities.This example shows the changes to the position and the impact on the portfolio and securities account structures.Once the transaction has been concluded, you can see both the impact of the stock on the cash flow and the updated incoming cash flows in Cash Management.
Financial Transactions in the Medium and Long Term: Concluding Securities Transactions
(C) SAP AG AC030 15
5.16
SAP AG 1999
SecAcct1
7.5 % 10-year federal bond6.25 % 10-year federal bond
10-year federal bond
Portfolio 1
Proportion of stocks too high
Shift to bonds
SecAcct2
Telekom stockBMW stockSAP stock
Sample Evaluation
(C) SAP AG AC030 16
5.17
SAP AG 1999
Due to portfolio restructuring, you should sell Telekom stocks ID number 5557XX to favor fixed-interest securities.
Part sale of ID number 5557XX from securities account 2
Settle and post transaction
Transaction status described by activity category
Control processing sequence using processing categories
View transaction in cash position
Part Sale of Stocks
(C) SAP AG AC030 17
5.18
SAP AG 1999
Postings Payment
transactions Reversals Accruals/deferrals Valuation
Create order/contract Exercise/expiration Exercise rights
User authorizationLimit management
Release
Settlement/control Interest rate adjustment Netting Reference Confirmation letters Securities account transfers Corporate actions
TradingTrading Back officeBack office AccountingAccounting
Transaction and Position Management Process
Transaction and position management processes are split into the following areas:
You use the trading area mainly for creating transactions and exercising rights.
In the back-office area, you settle the transactions you have entered, in other words, you control them. You also manage the processes relating to position management, such as securities account transfers. The accounting area includes posting activities. Examples of these are incoming payments postings (such as interest earned or dividends) or depreciation postings that result from a position valuation.
(C) SAP AG AC030 18
5.19
SAP AG 1999
Partner master data
Securities account master data
Position indicator per ID number and per securities account
Transaction management
Position management (if appropriate)Position management (if appropriate)
Transaction Management: Prerequisites
Class master data
Basic data Conditions Other data
You create master data for the following areas: Business partner: In addition to the minimum data entries (name and address) in the master
record, you have to define the role of the business partner. Class: You have to enter master data for each security managed in the position. This is a
prerequisite for any position changes in the trading and back office areas. Class master data contains all the general structure characteristics of securities as well as product-specific conditions. You can create links between securities by entering references. For example, you can define the relationship between old and new stock by entering a suitable reference.
Securities account: You manage and administer securities positions in securities accounts. Position indicator: You define the parameters for position management and valuation in the
company code for all securities for each specific securities account.
(C) SAP AG AC030 19
5.20
SAP AG 1999
SEC
III Create settlecontract
Trading Back office Accounting
II Create order execute
IV Createcontract
post
post
post
Process View: Trading - Back Office - Accounting
I Create order execute settle post
The transaction management function offers two main initial variants for entering transactions. The organizational process can be divided into several steps:
Creating an order (changing/adding to order data, if necessary) Executing an order or creating a contract Settling the executed order or contract Posting the transaction
You specify your preferred transaction entry process in Customizing.
(C) SAP AG AC030 20
5.21
SAP AG 1999
Basic Principles of Transaction Management Basic Principles of Transaction Management
USER LEVEL
Product typeProduct type
Product categoryProduct category
010 Stock:
040 Bond:
- Purchase- Sale- Forward purchase
- Forward sale:
Transaction typeTransaction type
Transaction cat.Transaction cat.
100 Purchase
200 Sale
Activity categoryActivity category
10 Order
20 Contract:
1 Order - Contract
2 Order - Contract -Settlement
Processing cat.Processing cat.
SYSTEM LEVEL
- Fully-paid stock- Partly-paid stock
:- Varios- Fixed-interest bond
:
Product categories cover the basic types of financial borrowing and investment transactions and represent a classification of financial transactions. Product categories are predefined in the system, apply to all company codes, and may not be modified by the user.Product types represent a refinement of the product categories at user level and, unlike the product categories, they can be defined by the user.
You set up the processing sequence of a financial transaction in the Securities area using processing categories.
Processing categories determine the sequence of the individual activities within a financial transaction. They describe the processing steps involved in the respective areas of the company - from entering a transaction in the trading area, via processing it in the back-office area, through to transferring the data to Financial Accounting.
As a result, you determine the company-specific chain of activities that a particular transaction has to pass through.
(C) SAP AG AC030 21
5.22
SAP AG 1999
Company code TR00
ID number
Transactn type
5557XX
200 Sale
Deuba Deutsche Bank
Dt. Telekom
Partner
Activity
Order O Contract
TransactionExternal number assignment
Create Order: Initial Screen
You go to the main menu for the Securities area by choosing Accounting => Treasury => Treasury Management => Securities.
When you create a security transaction, you are representing an order or a contract for the sale or purchase of securities. You specify the class and the business partner to/from which securities are to be bought or sold.
(C) SAP AG AC030 22
5.23
SAP AG 1999
Create Order
Structure
Stock swapBasic data
Securities acct
Order date
Deuba Acc2
No. of units
Stock swapLimit
Limit type
Limit date
Dmax,Pmin
01/31/YY
Limit price 90.00
Partner Deuba
Stock swapTrading
Trader Maier Stock swapContract data
Contact person Mr. Brown
01/20/YY
3,000.00
Company code
ID number
Transaction type
TR00
5557XX
200 Activity Order
Transaction data includes: Basic data:
Here, you enter the nominal amount for percentage-quoted securities and the number of units for unit-quoted securities. (You can find out whether a security is unit-quoted or percentage-quoted in the class master data of the relevant ID number).
The order date indicates when the order was issued/created.
Limit data: Here, for example, you can enter a suitable minimum/maximum price and a date up to which the order is effective.
(C) SAP AG AC030 23
5.24
SAP AG 1999
Execute Order
Structure
AktientauschPosition
Sec. account
Position excl.
Deuba Acc2
Position incl.
AktientauschDate details
Pos. value date
Calculation date
MM/22/YY
-1
Payment date 0
Partner Deuba
AktientauschAmounts
Number of units
10,000.00
7,000.00
Company code
ID number
Transaction type
TR00
5557XX
200 Activity Contract
UNI
UNI
UNI
3,000.00
Price 92.00
Payment amount UNI276,000.00
To execute an order after you have placed a purchase/sales order, you have to enter this change in the system.
To do this, you execute the order. You have to add to or change the existing order entries by entering the actual transaction data. For example, you enter the actual execution price.
Date details (in the sample data, the system assumes you want to execute the order the day the order is placed):- The position value date tells you when the position is available in the system (usually order date plus 2 days).- Calculation date: relevant for financial mathematics as regards the conditions. This date enables you to calculate, for example, the interest accrued for interest-bearing securities and indicates the last day the vendor is entitled to earn interest (usually order date plus 1 day).- When you execute an order, the payment date refers to the day you post the payment amount and update the transaction to Cash Management. (usually order date plus 2 days).
(C) SAP AG AC030 24
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SAP AG 1999
- Basic data- Other flows- Cash flow- Any payment details- Correspondence
Control:
(Any release that is necessary)
Back Office: Overview
You settle transactions in the back-office area. This settlement satisfies control purposes: The transaction data is checked, and data is added, if required.
(C) SAP AG AC030 25
5.26
SAP AG 1999
CoCd Transactn Activity cat. Trans.type Name ID number Short name Sec. account Unit PriceTR00 353 Contract 200 Sale 5557XX Telekom Deuba Acc2 3,000.00 92TR00 354 Order 100 Purchase 716463 SAP Deuba Acc2 1,000.00 510.1
Settle ReverseOrder expiration Cash flow History
Collective Processing: List
The collective processing function enables you to process transactions efficiently. From the collective processing list, you can branch to the relevant transaction, to the cash flow, or to
the history. You can also use a number of important processing functions: For example, you can change, settle, or reverse the transactions you have selected.
The collective processing function provides you with a flexible list display via the ABAP List Viewer. You can:
- Define and save your own display variants- Sort according to any field- Filter according to any values- Form group totals
(C) SAP AG AC030 26
5.27
SAP AG 1999
Company code TRXXID number 5557XXSecurities acct Deuba Acc1
Pos.val.date FType Name FStat No. units Curr. Sttlmnt amnt Sett.curr.
01/21/YYYY 1000 Purchase I 10,000.00 UNI 746,500.00 UNI
3012 Comm. not cap. I 0.00 UNI 1,000.00 UNI
05/16/YYYY 2000 Sale P 3,000.00 UNI 276,000.00 UNI
8114 Sec. price gain P 0.00 UNI 52,050.00 UNI
07/21/YYYY 5013 Dividend P 7,000.00 UNI 10,500.00 UNI
... ... ... ... ... ... ... ...
Double-click - details
Securities Account Cash Flow
The securities account cash flow reflects the cash flow for a company code for one ID number in a particular securities account. Double-click on any item to display more detailed information.
(C) SAP AG AC030 27
5.28
SAP AG 1999
Post Transaction
TransactionTransaction
postpostpost
Posting logPosting log
40 113105 276,000.00 UNI D40 113105 276,000.00 UNI D
5050 4504445044 276,000.00 UNI276,000.00 UNI CC
AccountingAccounting document created in FIdocument created in FI
113105
276,000.00
133020
276,000.00
When you post a transaction, the system generates a posting log showing you what the Financial Accounting document will look like.
You must ensure that the relevant accounts and the required document types already exist in Financial Accounting for the posting activities.
(C) SAP AG AC030 28
5.29
SAP AG 1999
Company code
ID number
Securities account....
Posting data
SEC posting doc. no.
Fl document number
to
to
to
to
...
....
...
...
TR00
execute
CoCd Daybk no. ID number SecAcc FType Name PC amnt Pos.curr.
TR00 000000056 5557XX Deuba 1 200 Sale 276,000.00 UNI
double-click to FI document
Pstg date Doc. no. PK Debit acct PK Credit acct
05/18/YY 100000132 40 113105 50 133020
General selections
5557XX
Position Management Posting Journal: View
The position management posting journal in the securities area gives you detailed information about all the flows that have been posted according to the selection criteria entered. Double-click the document number to branch directly to the FI document.
The posting journal offers you a flexible list display via the ABAP List Viewer. You can:
- Define and save your own display variants- Sort according to any field- Filter according to any values- Form group totals
(C) SAP AG AC030 29
5.30
SAP AG 1999
Exercise: Concluding Securities Transactions Integration to Cash Management
(C) SAP AG AC030 30
5.31
SAP AG 1999
Incorrect chronological orderPurchase stock100 units @ 230
IncorrectIncorrectprice lossprice loss
New price loss 6000 planned(60 x 100 units sold)
t
Price gain/loss determined as 6000 actualPrice gain/loss determined as 6000 actualNo further postings possible during this periodNo further postings possible during this period
Period-end closing
Purchase stock100 units @ 270
Sell stock100 units @ 190
Price loss 8000 planned (80 x 100 units sold)
New ave. price 250
Period-End Closing: Securities
Realized price gains/losses from sales of securities are initially kept in the system as planned records. This ensures that price gains/losses are always recalculated even if sales and purchases of securities are not entered in the system in chronological order.
Period-end closing concludes a period in the past, posts the current up-to-date price gains/losses, and ensures that no further purchases or sales are posted during this period.
(C) SAP AG AC030 31
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SAP AG 1999
Financial Transactions in the Medium and Long Term: Create Class Master Data
Having decided to invest the funds in a new bond, our model company now has to specify the class master data for this bond.After purchasing the bond using the funds available, it reviews the portfolio/securities account evaluations and the impact on Cash Management.
(C) SAP AG AC030 32
5.33
SAP AG 1999
Security ID number: 2132xx
Term: 10/21/YYYY - 10/20/YY+10
Interest rate: 5.25 %
Issue price: 100%
Class Data Notation
New bond with the following conditions:
(C) SAP AG AC030 33
5.34
SAP AG 1999
USER LEVEL
SYSTEM LEVEL
010 Stock:
040 Bond:
- Fully-paid stock- Partly-paid stock- Variable-rate bond
- Fixed-interest security . .
SAP comm.SAP pref.
Federal bond. . .
Class
Product typeProduct type ClassClass
Product categoryProduct category
Purchases and sales are the main types of transactions in the securities area. Each security traded on the capital market is described by its class. Class (master) data contains all the characteristic data of a security that stays the same regardless of the transaction.
Example 1: The nominal value, the stock type (common stock), or the stock form (old stock) are defined for class SAP common stock.
Example 2: The issue start, the due date, and the interest structure are defined for class 6 % Federal bond 1996II/2006.
(C) SAP AG AC030 34
5.35
SAP AG 1999
StockStock
Subscription rightSubscription right
Investment Investment certificatecertificate
Equity warrantsEquity warrants
Currency warrantsCurrency warrants
Bond warrantsBond warrants
Index warrantsIndex warrants
BondBond
Warrant bondWarrant bond
Convertible bondConvertible bond
Class
ShareholdingShareholding
Classes: Product Categories - Overview
You create each security with a specific ID number and assign it to a product type. Each product type is based on one of the product categories predefined in the system.
You can create class master data for each product type for the following product categories:Stocks, subscription rights, investment certificates, bonds, warrant bonds, convertible bonds, equity warrants, currency warrants, bond warrants, index warrants, and shareholdings.
(C) SAP AG AC030 35
5.36
SAP AG 1999
Create Class: Bond
ID number 2132XX
Names
Short name Fixed-interest bond 96/06
Search crit.
Fixed-interest bond 96/06
Classification...
Product category 040 Bond
Product type 041 Fixed-interest bonds
The class master data for bonds comprises basic data, conditions, and other data.
(C) SAP AG AC030 36
5.37
SAP AG 1999
Create Class: Bonds - Basic Data
Stock swap
ID number Fixed-interest bond 96/062132XX
Basic data
Issue
Issuer
Issue currency
West LB
UNI
Nominal value 1,000.00 Nominal per TU 1,000.00
Westdeutsche Landesbank
Structure
Quotation Perc.-quoted
Security type Bearer security
End of term
Issue rate 100.0000
Issue start 10/21/YYYY 10/21/YY+10
The class master data for bonds comprises basic data, conditions, and other data. Selected fields in the basic data screen for bonds are described below:
Nominal value: Nominal value per individual security.Nom.per trading unit: Minimum nominal value that can be traded Quotation: Percentage-quoted
Unit-quotedSecurity type: E.g. Bearer security
Registered securityRegistered security with limited transferability
(C) SAP AG AC030 37
5.38
SAP AG 1999
Create Class: Conditions
ID number 2132XX
Conditions
Stock swapInterest calculation
Int. calc. method Act/ActP
Calc. datePercentEff. fromCondition type text
Condition items
Interest 10/21/YYYY 5.25 10/20/YY+1 12
CR
1
Due date
10/21/YY+1
CR Frq
Fixed-interest bond 96/06
Stock swapRepayment
Repayment type Maturity
Curr.
UNI
Final repayment 10/21/YYYY 0.00 10/20/YY+10 0110/21/YY+10UNI
A condition item consists of several entries for a condition type. Selected fields in the conditions screen for bonds are described below:
Effective from: Date from which the condition is validPercent: Nominal interest rateCalculation date: Last day when interest is calculated in the current interest periodDue date: Day when the interest payment is dueCalendar rule (CR): The calendar rule allows you to shift the relevant date entries
to a working day, if required. Examples: 0 : No shift
1 : Following working day3 : Previous working day
Shifting the due date to a working day makes it easier to reconcile the accounts when interest payments are made. The calculation date is the basis for the financial mathematical activities. It is fixed and is usually managed by calendar rule "0". Frequency (Frq): Number of months in the interest-paying period
(C) SAP AG AC030 38
5.39
SAP AG 1999
Exercise: Creating Class Master Data
(C) SAP AG AC030 39
5.40
SAP AG 1999
Alternative I:
Bank account
Dividends Nominal interest P
Bank clearing account I
automatic posting
Account statement
Bank clearing to revenue
Bank to bank clearing
FI
Automatic Posting I
The automatic posting function enables you to automatically process flows that occur regularly whose dates and amounts are fixed in advance. It can be used, for instance, for posting interest, dividend or repayment flows, in other words, flows generated by the conditions.
Planned records must exist (such as planned records for interest received) before you can perform automatic posting. In principle, you can process flow types belonging to all flow categories here.
To use the automatic posting run, you first have to post all the flows that change the position for the ID numbers and securities accounts you have selected up to the due date you want the automatic posting to take place.
There are two procedures for processing regularly recurring flows:- Alternative I:When you use the one-step procedure, you post the flows directly to the bank clearing accounts. These are cleared in Financial Accounting when the account statement is imported.- Alternative II:When you use the two-step procedure, you first post the expected payments to receivables accounts.
After the account statement has been imported, the bank clearing accounts are cleared in subledger accounting and the incoming payment is triggered.
(C) SAP AG AC030 40
5.41
SAP AG 1999
1
1
IP
IP
F I
Dividend / Nominal interest P
automatic posting Receivables to income
Receivables account IBank clearing account P
Account statement Bank to bank clearing
Bank account
Incoming payment Bank clearing to Receivables
Bank clearing account I
Alternative II:
Automatic Posting II with Incoming Payments
Two-step procedure:
In the first step, you post the selected planned records as actual records in Treasury using the automatic posting function. The corresponding posting records are transferred automatically to G/L accounting in FI (in this case, via the interim receivables accounts).At the same time, the system generates the corresponding planned records for incoming payments.
[In G/L accounting in FI, a cash receipt triggers posting to the bank clearing account.]
In the second step, the incoming payments planned records that were generated by the automatic posting function are posted as actual records in Treasury. The corresponding posting records are transferred automatically to G/L accounting in FI. There, both the receivables account and the bank clearing account can be cleared.The incoming payments flows are generated in settlement currency and in position currency. This means that you can also represent interest payments for euro bonds in USD.
You use the incoming payments function to postprocess and post flows that were created using the automatic posting function. Whereas the automatic posting function posts several activities together, you can only process one activity at a time when you use the incoming payments function. The same also applies to manual posting as for the incoming payments function, in that you can only process flow types belonging to certain flow categories.
(C) SAP AG AC030 41
5.42
SAP AG 1999
As a result of the good conditions offered by one of the model company's house banks, the company opens another securities account with this bank.Having discussed the various position management options, the company decides to assign the new securities account to the existing portfolio and to manage positions at portfolio level. The company buys and sells the newly-issued bond again for this new securities account and focuses its attention on the updating of acquisition and book values relating to the portfolio.
Defining Organizational Elements:Portfolios and Securities Accounts
(C) SAP AG AC030 42
5.43
SAP AG 1999
Company codeCompany codepositionposition
PortfolioPortfolioposition 1position 1
Sec. acctposition 1
Sec. acctposition 2
Singleitems
PortfolioPortfolioposition 1position 1
Securities Account and Portfolio
Singleitems
Securities accounts are valuation and management units used for position management and valuation. They are needed for all financial transactions that require position management. This mainly applies to listed securities.
You can carry out typical functions such as securities account statements, position evaluations, and transfers on the basis of securities accounts. Securities accounts are usually linked to an existing securities account with a bank.
A portfolio is an organizational entity within a company code which allows you to group certain financial transactions and positions and to perform aggregated position evaluations. You can also use the portfolios as valuation units to calculate, for instance, the average price of the various purchase prices paid for securities (average cost price).
Portfolios also act as a risk management instrument for controlling and evaluating a company's risk positions.
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SAP AG 1999
Company code TR00
Portfolio Portfolio name
BESTAND_1 Securities portfolio 1
BESTAND_2 Securities portfolio 2
BOND Bond portfolio
FXPORT Forex portfolio
KREDIT Credit portfolio
MONEY_1 Money market portfolio 1
U_UMLAUF Current assets
V_ANLAGE Fixed assets
MONEY_2 Money market portfolio 2
Treasury: Portfolio
TR00
Define Portfolios
Portfolios are defined according to the company-specific requirements using the settings in Customizing. One possible example is a trader portfolio.
You assign financial transactions or positions to portfolios either directly via the entry for the transaction or indirectly via securities accounts.
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SAP AG 1999
Securities Account Master Data
Company code
Securities account
Sec. account name
Deuba Acc4
TRXX
Stock swap
Bank information
Depository bank
Sec. account no.
DEUBA
22224446
Clearing account 445556XX
Deuba Securities Account 4
Stock swap
House bank
House bank
House bank account
DB
GIRUN
Stock swap
Disposition block
Blocking type
Block flag until
Stock swapAssignments
Business area
Portfolio Portfolio 1
The securities accounts you create in the SAP System are usually linked to an existing securities account with a bank.
Below is a description of selected fields for the securities account master data:Depository bank: Partner ID of the bank where the securities account is kept. You must
first create the bank as a business partner in the role of "depository bank".Securities account no.: Number used to manage the securities account at the depository bank.Clearing account: Account number of the cash clearing account at the depository bank.House bank: Name of the bank at which the cash clearing account for the new
securities account is kept.House bank account: Name of the cash clearing account within the SAP System.Blocking type: You have to enter the blocking type if a restraint on disposal applies to the entire securities account. Block flag until: Date until which restraint on disposal applies to the securities account.Portfolio: Securities accounts are assigned to a portfolio.
You have to set the portfolio indicator in Customizing if you want this field to be displayed.Business area: The system uses the business area entered in the securities account master data when you post a transaction. If no entry is made, the system uses the entry for the account assignment reference.
You can delete securities account master data if no position indicator and no transactions exist/have existed.
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SAP AG 1999
Company code
ID number
TRXX
2132XX
Entering position management and valuation parameters:
Securities acct DEUBA ACC4
Master Data: Position Indicator - Initial Screen
The position indicator determines how the positions relating to a specific ID number are to be managed and valued. For one ID number you can define this for both the entire company code and for a specific securities account. To display the assignment for a securities account, you enter the corresponding securities account in the selection screen.
The position indicator is used mainly for assigning the account assignment reference (automatically, if required), and assigning the valuation and position management parameters.
(C) SAP AG AC030 46
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SAP AG 1999
Master Data: Position Indicator - Data
Company code
ID number
Securities account
TRXX
2132XX
SECACC4
Company code position data
Valuation class SEC FA
Exchange
Pos.mgt proc. Standard
Securities account position data
Valuation class SEC FA
Acct assign. ref. 42000000
Pos.mgt proc. Standard
Custody type
Frankfurt Stock Exchange
Valuation class: If portfolio valuation is not activated, you can set valuation parameters for this class that differ
from those defined in Customizing. You do this in the position indicator. Position management procedure:
The position management procedure determines whether price gains are calculated and amortization flows generated, and if so, how.
Exchange: Name of the exchange that is relevant for the securities valuation price.
Account assignment reference: Here, you define, for example, the securities balance sheet account.
You also define the data that is relevant for the German regulatory reporting. In the position indicator, you can either maintain data just for the company code position or for the
securities account position. In the latter case, the system calls up the data entered for the securities account. This means the securities account entries take preference.
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SAP AG 1999
Exercise: Defining Organizational Elements:Securities Accounts and Position Indicators
(C) SAP AG AC030 48
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SAP AG 1999
In addition to the position management options already dealt with, our model company needs to determine the (un)realized gains and losses from securities transactions before it can drawup its balance sheet. Using the example of the bonds bought and sold so far, the typical processes for valuation and calculation of the related (un)realized gains/losses are described.
Financial Transactions in the Medium and Long Term: Accounting Functions: Valuation
(C) SAP AG AC030 49
5.50
SAP AG 1999
Portfolio 1
SecAcct 1 SecAcct 2
SingleSingleitemsitems
SingleSingleitemsitems
for all securities accounts
at portfolio level
at securities account level
for single items
Position Management Alternatives
(C) SAP AG AC030 50
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SAP AG 1999
Position management Valuation categoriesUpdating acquisition values and book values
Portfolio 1
SecAcct 1 SecAcct 2
SingleSingleitemsitems
SingleSingleitemsitems
For all securities accountsValuation category 20
At portfolio levelValuation category 20 and portfolio indicator
At securities account levelValuation category 21
For single itemsValuation category 10
VC - Valuation category10 Zero bonds: Single analysis - manual allocation11 not supported ! Single analysis - Allocation via FIFO12 not supported ! Single analysis - Allocation via LIFO20 Position management for all sec. accts (and valuation)21 Position management for spec. sec.accts (and valuation)
Position Management and Valuation Categories
The position management function in the securities component is controlled by the assignment of valuation categories. You can manage positions for all securities accounts, at portfolio or securities account level, or per individual item.
The acquisition values and book values are calculated automatically when you assign valuation categories.
(C) SAP AG AC030 51
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SAP AG 1999
Notdisclosed
Disclosedup to
key date value
NotNotdiscloseddisclosed
Scenario 2
DisclosedDisclosedupup to max. to max.
acquisition valueacquisition value
Scenario 4
Disclosed Disclosed upup to to key date valuekey date value
Scenario 1
Gains
Losses
Scenario 3
Scenario 6
Scenario 5
Valuation Principles (One-Step): Scenarios
In the securities area, gains lead to write-ups, and losses write-downs. The general rules for creating write-ups/write-downs are defined by the valuation principles outlined
in Customizing. From the possible scenarios, the definitions are made in line with legal regulations.
(C) SAP AG AC030 52
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SAP AG 1999
Valuation principleName of valuation principle
Valuation method 1
Valuation loss
Valuation gain
101
Valuation loss up to key date value2
2 Valuation gain up to acquisition value
1-step valuation LC basis
Valuation loss0 No valuation loss2 Up to key date value
Valuation gain0 No valuation gain2 Up to acquisition value4 Up to key date value
Disclosedto max.
key date value
DisclosedDisclosedupup to max. to max.
acquisition valueacquisition valueScenario 4
Valuation Principles (One-Step)
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SAP AG 1999
Valuation classValuation class
Val.cl. VC VPr.Fixed 20 101Single 10 101Collect. 20 102Current 21 102
Val.cl. VC VPr.Fixed 20 101Single 10 101Collect. 20 102Current 21 102
Valuation areaValuation area
01 FinancialStatement
Tax balance sheetPortfolio viewBusiness view
01 FinancialStatement
Tax balance sheetPortfolio viewBusiness view
Valuation parameters per company code or sec. account position
Valuation parameters per company code or sec. account position
01 Financial StatementFixed assetsPortfolio valuation
02 Business viewCurrent assetsPortfolio valuation
01 Financial StatementFixed assetsPortfolio valuation
02 Business viewCurrent assetsPortfolio valuation
VPr - Valuation principle001 Valuation method, one-step:dependent on total amount in local currency
Valuation loss0 No valuation loss2 Up to key date valueValuation gain0 No valuation gain2 Up to acquisition value4 Up to key date value
002 Valuation method, two-step:split according to security price / exchange rate.......
VC - Valuation category10 Zero bonds: Single analysis - manual allocation11 not supported ! Single analysis - FIFO12 not supported ! Single analysis - LIFO 20 Position management for all sec. accts21 Position management for spec. sec. accts
General Concept: Securities Position Management and Valuation
Positions may be valued on any key date. You can also carry out simulation or test runs without generating postings.
The valuation class consists of a combination of the valuation principles and valuation methods. The valuation area restricts the area for which the valuation is valid. At present, it is planned to
support various valuation areas here. This will allow you to use several valuation classes for position valuation. Currently, only the financial statement is supported.
The valuation parameters consist of the valuation area and the valuation class. These parameters can be maintained for the entire company code position (as default values) or for a single securities account (by defining the position indicator). You can also define in these settings whether you want to perform valuation at portfolio level.
(C) SAP AG AC030 54
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SAP AG 1999
Evaluation reports in the Information System
Integration to R/Integration to R/33 FFinancialinancial AccountingAccounting
Master dataMaster data
Master dataMaster dataBusiness partnerClass master dataSecurities account
master dataPosition indicator
Exchange ratesSecurities pricesOthers
Transaction Transaction managementmanagement
Purchases/sales
Exercise rights ...
PositionPositionmanagementmanagement
Valuation
Corporate actions
Transfer postings ...
Securities Management: Overview
The securities management module enables you to manage securities transactions and positions. The resulting posting activities are transferred to the Financial Accounting module automatically.
To use the management processes, you must first create master data. For example, you have to create a security as a class with its relevant structure and condition characteristics, before you can represent the purchase (or sale) of this security in the system.
In the information system, you have the option of generating evaluations both using master data and transactions and positions.
(C) SAP AG AC030 55
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SAP AG 1999
Loans Taken
Our model company has long-term financing requirements.We have decided to finance our activities by taking out a loan with our house bank.
Financial Transactions in the Medium and Long Term: Scenario: Loans Taken
(C) SAP AG AC030 56
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SAP AG 1999
LoansManagement
Borrower's note loans
General loans
Policy loans
Mortgage loans
Loans Given - Loans Taken
General loans
Mortgage loans
Loans taken=
Loans received
Loans given=
Loans granted
The SAP Loans Management module supports various loan forms:Mortgage loans:Loans that are linked to a lien upon real property (encumbrance).Borrower's note loans:Loans based on a borrower's note. Policy loans:Loans related to a policy (such as a life insurance policy).General loans:You choose this option for all other forms of loan (for example, loans to employees).
Loans given: All loan forms are supported Loans taken: "Mortgage loans" and "General loans" are supported
(C) SAP AG AC030 57
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SAP AG 1999
Integration with R/3 Financial Accounting / TR Cash Management
Master dataMaster data
Business partnerCredit standing checkNew business tablesFiled documentsCollateralObject master dataCollateral values
Transaction mgmtTransaction mgmt
Inquiry by interested party
Application
Offer
Contract
Rollover
Process management
Transfer postings
. . .
Position mgmtPosition mgmt
Evaluation Reports - Information System
New Loan Transactions: Process Overview
The Loans Management component takes a process-oriented view. You can manage loans at each stage and link them to different master data.
Numerous position management functions are available for loans that have been entered in the system.
The transactions in Loans Management are integrated with the R/3 Financial Accounting and TR Cash Management components.
Several programs are available for running evaluations according to different criteria.
(C) SAP AG AC030 58
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SAP AG 1999
Evaluation Reports - Information System
Integration with R/3 Financial Accounting / TR Cash Management
ContractContractContract offerContract offerInterested partyInterested party ApplicationApplication ContractContract
• Mortgage loans • Mortgage loans• General loans
• Mortgage loans• General loans
• Mortgage loans• General loans
Possible Procedures for Loan Processing
There are separate menus for each type of loan. These contain the possible steps in the loan process. The process is most complex for mortgage loans. All loan forms are integrated with R/3 FI and TR-CM, and can be evaluated according to various
criteria.
(C) SAP AG AC030 59
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SAP AG 1999
Loans Given/Taken and Posting
Loans given
Posted to customeraccounts
- Yes- No payment details
(PD)- Use of FI payment program
- Yes- PD can be used- Payment program for
payment requests can be used
- No
- Yes- PD can be used- Payment program for
payment requests can be used
Loans taken
Not posted to customeraccounts
If a product type is not managed on the basis of customer accounts, you can permit the user to enter payment details in the transaction by activating the corresponding indicator in the detail screen for the product type in Customizing. The following functions are then available: Maintenance of payment details for the loan/borrower's note order; possible to let the system
default to data from the business partner standing instructions. Update in Cash Management using the house bank and house bank account specified in the
payment details. Use of the replacement rule in account determination for the house bank account that is specified
in the payment details. Generation of payment requests. Netting with other payments processed using payment requests.
(C) SAP AG AC030 60
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SAP AG 1999
1. Disbursement: a) "Preliminary posting": Bank clearing to Balance sheet
b) Bank statement: Bank to Bank clearing
2. Debit position: a) "Preliminary posting": Balance sheet to Bank clearingInterest expense
b) Bank statement: Bank clearing to Bank
I. Without customer account
General Posting Options I
If the loan is not managed on the basis of customer accounts, the postings are made directly to G/L accounts (I).
If you do not use customer accounts, the functions for entering payment details are available for payment processing.
(C) SAP AG AC030 61
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SAP AG 1999
General Posting Options II
1. Disbursement: a) "Preliminary posting": PR clearing to Balance sheet
b) Payment progr. for PR: Bank clearing to PR clearing
c) Bank statement: Bank to Bank clearing
2. Debit position: a) "Preliminary posting": Balance sheet to PR clearingInterest expense
b1) We pay by direct debit:
Bank statement: PR clearing to Bank clearing
Bank clearing to Bankorb2) We pay by bank transfer:
b) Payment progr. for PR: PR clearing to Bank clearing
Bank statement: Bank clearing to Bank
II. Without customer account, using payment program for payment requests (PR)
If you do not use customer accounts, the functions for entering payment details are available for payment processing. In this case, you can either make a "direct" posting (see I), or use a payment request (see II).
If you use payment requests, the posting logic is the same as for loans managed on the basis of customer accounts, except that the customer account is replaced by a clearing account for payment requests. This account can then be cleared by a payment program (SAPF111).
(C) SAP AG AC030 62
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SAP AG 1999
(Current account) bank statement
Post interest payments/repayments due
Payment program and/or bank statement
Transaction Process: Example
(Application / Offer) / Contract
Contract disbursement
(C) SAP AG AC030 63
5.64
SAP AG 1999
Application Transfer to contract
Offer Transfer tocontract
Application Transfer to Transfer tooffer contract
or:
Decision-making
3
2
1
4Application Transfer to
contract
Createcontract
Transfer to contract
Transfer to contract
Transfer to offer
Application
Offer
Contract - 4 Ways of Entering Contracts in the SAP System
Once you have entered a contract and posted the disbursement, the system creates a corresponding loan position in the balance sheet.
You can also map the process leading up to conclusion of the legally binding contract, and enter initial loan data in the form of an application. Further details can be added during the offer phase, or when you draw up the final version of the contract.
The stages through which a loan must (or can) progress (application, offer, contract) depend on your Customizing settings.
(C) SAP AG AC030 64
5.65
SAP AG 1999
Financial Transactions in the Medium and Long Term: Scenario: Create Contract
Create contract
The legally binding loan contract with our house bank has been signed.
(C) SAP AG AC030 65
5.66
SAP AG 1999
ContractContract
ChangeChange
DisburseDisburse
WaiveWaive Full waiver
Partial waiver
DisplayDisplayCreateCreate
ReactivateReactivate
Contract - Function Overview
(C) SAP AG AC030 66
5.67
SAP AG 1999
Create Contract: Initial ScreenCreate Contract: Initial Screen
Company code
Loan number
Product type
0001
/internal/
33A
E N T E R
Business partner selectionRole category: Main loan partner
Loan - Initial Screen
As the borrower, you enter your business partner. You can specify a business partner that has already been defined in the system or create a new partner.
(C) SAP AG AC030 67
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SAP AG 1999
Basic dataBasic data ConditionsConditions CollateralCollateral CorrespondenceCorrespondence
Loan type
Loan class (standard loan, interim loan) ...)
Contract currency (UNI, EUR, USD ...)
Commitment date
Purpose of loan (personal loan, building loan, ...)
Term (term < 1 year ...)
Contract - Basic Data
Uses of basic data:
- Data for information purposes- Data for reporting evaluations- Values for determining the account assignment reference automatically
The following short forms help to speed up data entry:
Date entries: 0 : today+n : today + n days-n: today - n days++n: today + n months+++n: today + n years
Amounts: T or t for thousands, M or m for millions(You can rename the abbreviations T/t and M/m in Customizing.)
(C) SAP AG AC030 68
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SAP AG 1999
Loan contractLoan contractLoan contract
Annuity repmntfrom 05/01/YY4.0%
Condition items
Condition header
Interestfrom 05/01/YY6.0%
Interestfrom 05/01/YY+35.5%
Fixed periodfrom 05/01/YY
04/30/YY+3
Fixed periodfrom 05/01/YY+3
04/30/YY+6
Chargesfrom 05/01/YYUSD 100
Condition Header / Condition Items
The combination of the condition header and the condition items provides a high degree of flexibility when you set up the loan conditions.
The condition header contains date details (such as Fixed until) as well as information relevant for all items (such as Disbursement rate, Effective interest rate or Effective interest method).
Each condition item contains information relating to that particular condition type (such as nominal interest). You assign an effective period to each individual condition. This allows you to represent a condition structure in which the conditions change within the fixed period (example: an interest rate that changes annually for a fixed period lasting several years).
(C) SAP AG AC030 69
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SAP AG 1999
Basic dataBasic data ConditionsConditions CollateralCollateral CorrespondenceCorrespondence
Condition header:
- Commitment capital
- Disbursement rate
- Repayment type (instalments, annuity, full repayment upon maturity)
- Start of term / end of term
- Fixed from / fixed to
- Effective interest method (PAngV, Braess ...)
- ...
Contract - Condition Header
The condition header contains the basic condition data for the loan, including:
- Start of term / end of term: Term of the loan- Fixed from / fixed to: The period for which the first set of conditions applies. The fixed from / fixed to period can be the same as or shorter than the loan term.
(C) SAP AG AC030 70
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SAP AG 1999
Basic dataBasic data ConditionsConditions CollateralCollateral CorrespondenceCorrespondence
Condition items:
For each condition type (fixed nominal interest / instalment
repayment / charge ...):
- Effective from
- Percentage rate or amount
- Calculation date
- Due date
- Exact payment form
- ...
Contract - Condition Items
You enter the individual conditions as condition items.
The calculation date relates to the calculations in financial mathematics. In the case of an interest condition, for instance, this would be the last interest date for the corresponding interest period.
The due date is the date on which payment is due.
The "exact payment form" (PE - Payment form with adjustment days) is the combination of the payment form (at the start of the period, mid-period, at the end of the period) and the frequency in months (monthly, quarterly, six-monthly ...). It tells you exactly up to when the amounts have been calculated and when they are due.
You can enter all the data for the condition items manually, or enter certain "initial values" and let the system fill the remaining fields. To use the latter option, you must specify the commitment capital, the effective period for the condition, the percentage rate or amount, and the exact payment form (or payment form and frequency).
(C) SAP AG AC030 71
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SAP AG 1999
Condition Items - Fields
Condition items
Cond.type text
Nominal int.
Inst. repaymnt
Eff.from Percent Amnt Curr. Lvl IS PF PE Frq Due on ED Calc.date MC CR
05/01/YY 6.0000 UNI 3 VN 3 06/30/YY 06/30/YY
305/01/YY 2,000 UNI VN 3 06/30/YY 06/30/YY
... ... ... ... ... ... ...... ... ... ...
Explanation of field names:
Lvl: Level number of condition items for recurring condition types
IS: Immediate settlement
PF: Payment form (at start of period, mid-period, at end of period)
Frq: Number of months in period
PE: Payment form - exact day (with adjustment days)
ED: End-of-month indicator for due date
MC: End-of-month indicator for calculation date
CR: Calendar rule. You can use the calendar rule to shift a public holiday, Saturday or Sunday to a working day. This is not usually applied to the calculation date (the interest calculation does not
depend on whether the day is a working day), but is relevant for the due date (payments can only be made on a working day). Example: Due date 01/01/YY (relevant for calculating the capital amounts) is shifted using the calendar rule to the next working day 01/03/YY, and referred to as the payment date (relevant for processing in accounting).
(C) SAP AG AC030 72
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SAP AG 1999
Basic loan dataBasic loan data
Condition header
Cash flowCash flow
Condition items
Planned records
------------------------------------------------------
Condition Structure
The condition structure in Loans Management is based on the central condition concept.
(C) SAP AG AC030 73
5.74
SAP AG 1999
Calculate cash flowCalculate cash flow
Basic dataBasic data ConditionsConditions CollateralCollateral ObjectsObjects Correspon-dence
Correspon-dence
Loans - Cash Flow
Due on
05/01/YY06/30/YY06/30/YY09/30/YY09/30/YY12/31/YY12/31/YY03/31/YY+103/31/YY+106/30/YY+106/30/YY+109/30/YY+109/30/YY+112/31/YY+112/31/YY+103/31/YY+203/31/YY+2
Settlement amnt
100,000.001,166.671,333.331,726.672,000.001,691.672,000.001,656.672,000.001,621.672,000.001,551.672,000.001,516.672,000.001,481.672,000.00
Curr.
UNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNI
Bezeichnung P
SPPPPPPPPPPPPPPPP
FType
10011110112011101120111011201110112011101120111011201110112011101120
L_Loan disbursem.L_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payable
On the basis of the conditions belonging to a financial transaction and the specified calculation period, the function modules for financial mathematics for the relevant application (such as stock purchase, swap, loan contract) calculate a series of payment flows for the transaction. This series of flows is referred to as the cash flow.
The cash flow for financial transactions is used as the basis for all trading, transaction management and position management processes, as well as for the evaluation activities within Treasury.Processes based on the cash flow include:- Effective interest calculation- Posting- Accrual and deferral of expenses and revenues
The cash flow display is linked to the ABAP List Viewer. Flow types explain the different changes to the cash flows. Together, all the flows of a transaction
form the basis for generating the cash flow, and for further processing, such as posting. The cash flow contains all the flow records in chronological order and is used as a basis for updating the transaction data in Financial Accounting, Cash Management, and Market Risk Management.Typical flow types are fixed or floating interest, increases in nominal amounts, or commission.
(C) SAP AG AC030 74
5.75
SAP AG 1999
IDES AG
AIBD/ISMA Braeß Moosm. PAngV
Scaling period 05/01/YY to 04/30/YY+5
Contract no.: 10000000
Effective rate: 7.79600
Page 1
% PANGV
Value date
05/01/YY06/30/YY06/30/YY09/30/YY09/30/YY12/31/YY12/31/YY03/31/YY+103/31/YY+105/01/YY+106/30/YY+106/30/YY+1
Activity
L_DisbursementL_Instalment repmtL_Interest payableL_Instalment repmtL_Interest payableL_Instalment repmtL_Interest payableL_Instalment repmtL_Interest payableInterest capitalizationL_Instalment repmtL_Interest payable
Amount
100,000.00 1,333.33-1,166.67-2,000.00-1,726.67-2,000.00-1,691.67-2,000.00-1,656.67-6,777.93 2,000.00-1,621.67-
Balance
100,000.0098,666.6797,500.0095,500.0093,773.3391,773.3390,081.6688,081.6686,424.9993,202.9291,202.9289,581.25
Days
59
90
91
90
3059
90
Interest
1,179.34
1,754.03
1,705.73
1,620.57
518.261,099.18
1,611.57
Effective Interest Calculation
The system uses both planned and actual records to calculate the yield. The key flow information is derived from the condition items.A special feature in Loans Management is that the yield is calculated on the basis of the cash flow. This avoids the disadvantages of a conventional solution with mathematical formulas. It also allows you to include any of the various price components or flows (for example, insurance premiums) in the yield calculation. You can switch between different yield calculation methods and compare the results.
(C) SAP AG AC030 75
5.76
SAP AG 1999
PAYMENT SCHEDULE Loan no. 10000000 05/01/YY
Mortgage loan
UNI 150,000.00
Universal currency
Loan type:
Commitment capital:
Display currency:
Conditions
L_Nominal int.
L_Instalm. rep.
Pmnt date
05/01/YY
06/30/YY
09/30/YY
12/31/YY
03/31/YY+1
Eff. from
05/01/YY
05/01/YY
Payment
2,500.00
3,726.67
3,691.67
3,656.67
Percent
7.00000 %
Interest
1,166.67
1,726.67
1,691.67
1,656.67
Amount
2,000.00
Frequency
Quarterly
Quarterly
Repayment
1,333.33
2,000.00
2,000.00
2,000.00
Calculation from:
Calculation to:
Start of term:
End of term:
Fixed period end:
05/01/YY
04/30/YY+5
05/01/YY
04/30/YY+10
04/30/YY+5
First
06/30/YY
06/30/YY
Other
IntCalcMth
360/360
360/360 Imm. settlem.
100,000.00
98,666.68
96,666.67
94,666.67
92,666.67
Remaining bal.
Payment Schedule
The system generates a payment schedule on the basis of the planned records in the cash flow. The payment schedule contains general loan data as well as the individual condition items. It lists all the payments for the fixed period, divided into interest payments and repayments, with the corresponding outstanding balance.
(C) SAP AG AC030 76
5.77
SAP AG 1999
Exercise: Create Contract
(C) SAP AG AC030 77
5.78
SAP AG 1999
Financial Transactions in the Medium and Long Term: Scenario: Disbursement
Disbursement received
Our house bank will credit the loan amount to our current account.We want to post the expected incoming payment in advance.The bank statement will tell us when the loan amount is actually credited.
(C) SAP AG AC030 78
5.79
SAP AG 1999
Create Disbursement: Basic DataCreate Disbursement: Basic Data
Disbursement basic data
CoCd
Loan
Flow typeTextPayment dateIntValDateWithhold. up toPosting control
House bankAccount ID
L_Loan disbursement receivable
Capital dataCurrent contr. cap.Nominal capitalDisbursement in %Gross pmnt amountNet pmnt amount
Disbursement rate
General loan
Loan partner 00
0001
40000000
33B
1001
05/01/YY05/01/YY05/01/YY
100,000.00 UNI0.00
100.0000100,000.00 UNI
100.00000
99,900.00
Automatic debit position
Incl.
Contract: Disbursement
DBGIRUN
The entries for the disbursement have the following effects:- Payment date: Disbursement date that is transferred to FI and Cash Management- Interest value date inclusive/exclusive: Interest for the disbursement amount is calculated for the
disbursement date / is not calculated for the disbursement date- House bank: The system defaults to the house bank defined in the standing instructions (payment
details). - Disbursement in %: Full disbursement or partial disbursement- Net/Gross payment amount: If you have partial disbursements with incidental costs, you must
decide whether the incidental costs reduce the disbursement amount (net) or increase the disbursement amount counted towards the calculation capital (gross). (Gross: value-dated amount; net: payment flow)
Example: Capital 100,000 UNI. First partial disbursement 40%. Incidental costs 2,000 UNI. Case 1: Gross pmnt amount 40,000 --> net pmnt amount 38,000, or Case 2: Gross pmnt amount 42,000 --> net pmnt amount 40,000. Last partial disbursement 60%, no incidental costs: Gross/net Case 1: 60,000; Case 2: 58,000.
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Disburse Contract: Incidental Costs
Create Disbursement: Incidental CostsCreate Disbursement: Incidental Costs
Capital amounts
Available capital Value-dated capital
Flows
Flow Name
Company code
Loan0001 33B
40000000
Due on WithheldSettlementamount
Pmt meth.
100,000.00 100,000.00
6145 05/01/YY 100.00 XProcessing charges
......
If you want to make charges for (one-time) incidental costs, you must enter these charges here. You define which flow types are permitted in Customizing.The incidental costs you enter here can be withheld from the disbursement amount (flag: W/H). Alternatively, you can post the incidental costs separately (W/H flag not set). If you want to trigger the payment yourself later on, you must enter a payment method for processing with the payment program.
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Save / Post Disbursement
Disbursement
Save Post (manually)
P
Manual posting Automatic posting
"Automaticdebit position"
or"Manual
debit position"
"Automaticdebit position"
I I
I
Prerequisite: Field "Posting control":
Prerequisite: Field "Posting control":
You can either post the disbursement immediately (I = actual record), or save it first (P = planned record) and post it later.
The planned record for a disbursement you have saved can be posted in two ways: By calling up the disbursement data for the loan, you can post the individual record manually. Alternatively, you can let the system post the flow automatically with the mass processing function Post Planned Records.The entry you make in the Posting control field for the disbursement determines the type of posting permitted - manual posting only, or both manual and automatic posting.
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Selection of financialtransactions/flows to beposted
Loan contract: Cash flowLoan contract: Cash flow
05/01//YY 150,000.00 Loan disbursement 1001
06/30/YY 1,720.83 Interest payable 1110
06/30/YY 639.05 Annuity rep. payable 1125
05/01//YY 150,000.00 Loan disbursement 1001
06/30/YY 1,720.83 Interest payable 1110
06/30/YY 639.05 Annuity rep. payable 1125
FI interface
Financial Accounting
Integration with FI
When you post the disbursement, the system calls up the interface to Financial Accounting. Before the disbursement posting, no loan data is transferred to FI.
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Balance sheet account46020
Bank clearing account113105
1) 100,000 100 2)
Other expenses204000
2) 100
1) 100,000
4) 99,900
Technical clearing acct194200
100 3)4) 100
1) Loan disbursement2) Credit position incidental costs3) Incidental costs withheld: Outgoing payment4) Incidental costs withheld: Reduction of disbursement (only posted in FI)
Disburse Contract: Posting
3) 100 100,000 4)
Example: Disbursement of a loan with incidental costs
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Cash flow in contract
Post disbursement
Cash flow in contract
Payment date Settlement amnt Name P FType
05/01/YY 100,000.00 Loan disbursem. P 1001
Payment date Settlement amnt Name P FType
05/01/YY 100,000.00 Loan disbursem. I 1001
'Plannedrecord'
'Actualrecord'
Planned -> Actual Record
Flows that have been entered, but not yet posted, are displayed in the cash flow as P - planned records. Posted flows are displayed as I - actual records.
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Liquidity forecast / cash position
05/01/YY 146,500.00
L o a n d i s b u r s e m e n t
TR-CM interface FI interface
Disbursement postedDisbursement savedDisbursement posted
Integration with R/3 Financial Accounting / TR Cash Management
Financial Accounting
When you save a disbursement, the system generates planned records and writes them to the database. These records can already be used as a basis for the integration with Cash Management.
If you post the disbursement immediately, the records are also integrated with Financial Accounting. You can then display the corresponding FI document.
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Exercise: Disburse Contract
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Payment Options
Payment received from lender
By bank transferor
By check
Bank statement
BANK FileNote to payee
~~~~~~~~~~
BANK
Automatic bank statement Manual bank statement/
If the lender pays by bank transfer, we receive the money and the bank statement from our house bank with the corresponding information.
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Bank statement
Manual entry
Interimdataset
G/L accountingdocuments
Postdirectly
Incoming Bank Transfer: Example of Manual Bank Statement
Once the payment appears in the bank statement, the flows for the corresponding account are updated in the system. On the basis of the data entered, the system generates an interim dataset, which then has to be posted. The flows can either be posted directly, or at a later stage using batch input.
The postings always affect the general ledger (bank account and bank clearing account).
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Disbursement Payment (Bank Transfer): Posting
5) Bank statement
99,900 5)
Bank account113100
Balance sheet account46020
Bank clearing account113105
1) 100,000 100,000 4)
Other expenses204000
2) 100
1) 100,000
4) 99,900
Technical clearing acct194200
100 3)4) 100
5) 99,900
3) 100 100 2)
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Financial Transactions in the Medium and Long Term: Scenario: Payments Due
Payments due
We want to make the repayments and pay the interest on the agreed due date.The corresponding amounts must be posted as due.
We have arranged to make the payment to the borrower by bank transfer.This payment needs to be triggered in the system.
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Automatic Posting: Post Planned Records
?
to
to
to
to
0001
40000000
Company code
Contract number
Partner
Product type
Upto and incl. due date
x Test run
x Log
40 46020 UNIOther loans
1,333.33 D
40 UNIInterest expenses220000 1,166.67 D
50 113105Bank clearing account
UNI 2,500.00 C
Selection of planned records
Posting control
The future flows that have been calculated for a loan must be posted as "due" on the respective dates.
The Post Planned Records function allows you to generate the postings in a mass processing run. For the loans you have selected, it posts all the planned records that have a due date less than or equal to the value entered in the field Upto and including due date.
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6) Post planned records: Post (interest and repayment) amounts due ( P--->I)
Post Planned Records Due
99,900 5)
Bank account113100
Balance sheet account46020
Bank clearing account113105
1) 100,000 100,000 4)
Other expenses204000
2) 100
1) 100,000
4) 99,900
Technical clearing acct194200
100 3)4) 100
5) 99,900
6) 1,333
Interest expenses220000
6) 1,167
1,333 6)
1,167 6)
100 2) 3) 100
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Exercise: Post Amounts as "Due"
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Outgoing payment to lender
Payment Options
Bank statement Payment program for payment requests
Bank statement
By bank transferorBy check
By direct debit
The processing steps for paying the amounts due depend on the payment option we choose:
If we opt for direct debit, the lender debits the money from our account, and we receive the debit information with the bank statement from our house bank.
If we pay by check or bank transfer, we trigger the payment using the payment run for payment requests. The money is transferred using the payment media generated by the payment program. The bank statement then informs us of the outgoing payment.
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7) Outgoing payment for the due amounts, for example by direct debit
2,500 7)
Outgoing Payments
Bank account113100
Balance sheet account46020
1) 100,000
Other expenses204000
2) 100
Technical clearing acct194200
100 3)4) 100
6) 99,900
6) 1,333
Interest expenses220000
6) 1,167
99,900 5)
Bank clearing account113105
100 2)1) 100,000
4) 99,9001,333 6)1,167 6)
7) 2,500
3) 100
100,000 4)
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Financial Transactions in the Medium and Long Term: Closing Operations / Special Cases
Closing operations / special cases
To carry out the month-end closing activities, we want to gain an overview of the procedure for accrual/deferral and valuation.
We also want to know how to treat special cases.
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Closing Operations / Special Cases
Special cases:
- Change cash flow
- Business operations
- Transfer postings
- Release
Closing operations:
- Accrual/deferral (interest, premium/discount)
- (Foreign currency) valuation
- Information system
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Accrual/Deferral: Overview
Accrual/deferral:- Reset procedure (for interest and similar flows, for discount)
- Difference procedure (for discount)
Reverse accrual/deferral
Reset accrual/deferral(for reset procedure)
To assign receipts and outgoings to the correct accounting period, you carry out accruals/deferrals. The accrual/deferral procedure determines how the expense and revenue accounts are updated.
The accrual/deferral run is based on the flows up to the accrual/deferral key date for the transaction activities you have selected. For each flow that is relevant for accrual/deferral, the system calculates the accrual/deferral amount and generates corresponding accrual/deferral flows.You can carry out the accrual/deferral run as a test run (accrual/deferral log), or as an update run that makes the actual accrual/deferral postings (accrual/deferral log and posting log).
If you are using the reset procedure, you reset the accrual/deferral by choosing Reset Accrual/Deferral.
You can use the Reverse Accrual/Deferral function to reverse posted accruals/deferrals and the reset postings. If both accrual/deferral and reset postings have been made, you must first reverse the reset posting before you can reverse the accrual/deferral posting.If you want to reverse several discount deferrals, you work backwards in chronological order.
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Valuation: Position Valuation
Maintain exchange rateValuation logPosting log
Foreign currencyloansPosition valuation
When you produce your financial statements at the end of the month or year, you must value any foreign currency loans. You can value loan positions at any key date. This key date valuation uses the exchange rate for the key date to value the positions for accounting purposes.
You define the valuation parameters in Customizing.
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Calculate cash flowCalculate cash flow
Basic dataBasic data ConditionsConditions CollateralCollateral ObjectsObjects Correspon-dence
Correspon-dence
Loans - Cash Flow
Due on
05/01/YY06/30/YY06/30/YY09/30/YY09/30/YY12/31/YY12/31/YY03/31/YY+103/31/YY+106/30/YY+106/30/YY+109/30/YY+109/30/YY+112/31/YY+112/31/YY+103/31/YY+203/31/YY+2
Settlement amnt
100,000.001,166.671,333.331,726.672,000.001,691.672,000.001,656.672,000.001,621.672,000.001,551.672,000.001,516.672,000.001,481.672,000.00
Curr.
UNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNI
Name P
SPPPPPPPPPPPPPPPP
FType
10011110112011101120111011201110112011101120111011201110112011101120
L_Loan disbursem.L_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payable
Flow types explain the different changes to the cash flows. Together, all the flows of a transaction form the basis for generating the cash flow, and for further processing, such as posting. The cash flow contains all the flow records in chronological order and is used as a basis for updating the transaction data in Financial Accounting, Cash Management, and Market Risk Management.Typical flow types are fixed or floating interest, or commission.
The cash flow display is linked to the ABAP List Viewer.
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Contract --> Change --> Cash flow --> Select flow record --> Extras --> Change flow
Manual changes to flows in the cash flow
12/31/YY 12/31/YY 5,000.00 1120 L_Instalm. rep.
Due date Payment date Amount Flow type Text
Icon for change
Icon for fixing
Cash Flow: Making Changes
In some cases, it is useful to be able to make changes to the planned records quickly and simply, especially for loans taken.
Prerequisite:The conditions must be changeable. This is the case when a disbursement has been posted (full or partial disbursement), and not just saved.
Flows that can be changed:- Only condition-based flows- Only planned flows for the current fixed period
Data that can be changed:- Due date- Payment date- Settlement date for alternative settlement- Amount- Payment data (partner, partner bank type, payment method, dunning area, dunning block)
You can change flows manually. If you want the system to take these changes into account when the cash flow is recalculated, you must fix the changes.A calendar icon appears if you fix the due date/payment date.A lock icon appears if you fix the data for the whole flow.
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Calculate cash flowCalculate cash flow Basic view
Due date view
Calculation view
Posting view
View for manual changes
......
Loans - Cash Flow: Display Variants
Due on
05/01/YY06/30/YY06/30/YY09/30/YY09/30/YY12/31/YY12/31/YY03/31/YY+103/31/YY+106/30/YY+106/30/YY+109/30/YY+109/30/YY+112/31/YY+112/31/YY+103/31/YY+203/31/YY+2
Settlement amnt
100,000.001,166.671,333.331,726.672,000.001,691.675,000.001,656.672,000.001,621.672,000.001,551.672,000.001,516.672,000.001,481.672,000.00
Curr.
UNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNIUNI
Name P
SPPPPPPPPPPPPPPPP
FType
10011110112011101120111011201110112011101120111011201110112011101120
L_Loan disbursem.L_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payableL_Interest payableL_Inst. rep. payable
The cash flow display is linked to the ABAP List Viewer.You can use the display variants to focus on different information. For example, one of the predefined display variants gives you the data for manual changes.
The cash flow is regenerated on the basis of the fixed changes. Should the changes result in new annuity or instalment amounts, or a reduction in the term, these flows must be calculated separately to take effect.
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What is a business operation (BO)?
An activity relating to a loan, which generates one or several flow records (unscheduled repayment, charge).
These flows are not posted using the automatic debit position function. Instead, the posting must be triggered specifically for this activity.
Business Operations for a Contract
A business operation (BO) can pass through three statuses. It is first entered, then activated, and then posted. - Entered business operations are included as simulated records in the (simulated) cash flow
calculation (within BO processing). If you delete the business operation, you cannot trace the history.
- Activated business operations contain fixed flows that can no longer be changed. These flows are
saved to the database as planned records. If you delete an active business operation, you can still
trace the history.- Posted business operations cannot be deleted. They have to be reversed.
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Types of Business Operation
Enter Charges Individually
- Entry of one or several business operations
- Each business operation consists of one flow record
Enter Charges as Business Operation Unscheduled Repayment
- Entry of one or several business operations
- Each business operation can consist of several flow records
Each of the above functions allows you to enter one or several business operations. You use the functions Enter Charges as Business Operation and Unscheduled Repayment to enter one or several more complex business operations, which can also involve derived flows (such as rate gains or accrual/deferral flows) or incidental costs.
You post the flows generated by a business operation using the business operation function.Flows entered using the function Enter Charges Individually can also be posted using the Post Individual Records function.
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Enter Charges as Business Operation: Example
CoCdLoan
BO status Name First entered by First entered on
Entered Special charge Assistant, Mark MM/DD/YYYYActivated Posting charge Assistant, Mark MM/DD/YYYY
Flows for business operation
Activate Post Create Details
FTyp Amount Curr. Pmnt date Name Pmnt transact. PC
6145 100 UNI MM/DD/YY Special charge x 21
6146 50 UNI MM/DD/YY Extra charge x 216147 10 UNI MM/DD/YY Process. charge x 21
100000060001
The overview contains all the business operations of this BO type for the contract that have not yet been posted.
You define the flows the user is permitted to enter for each business operation in Customizing. The system automatically enters the value "21" (manual debit position) in the Posting control field.
The setting for the Payment transaction indicator depends on the Customizing settings.
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Position: Account 2
Position: Account 1
Capital position 1
Capital position 2
Capital position n
Capital position x
Capital position 1
Capital position a
Capital position b
Capital position y
Transfer Postings: Overview
Balance sheet transferBalance sheet transfer
Capital transfer:Capital transfer:Group contractsGroup contracts
Capital transfer:Capital transfer:Split contractSplit contract
You can use the Balance Sheet Transfer function to transfer loan positions relating to a contract between different G/L accounts in Financial Accounting. In this case, the transfer only affects the FI general ledger.
The Capital Transfer functions allow you to transfer positions between different contracts. This affects both the loans subledger and the FI general ledger.
Grouping contracts usually involves transferring capital amounts from several contracts to one target contract. Splitting a contract usually involves transferring the capital amounts from one contract to several contracts.
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Data Further processing
- Loan master data- Business partners- Objects- Business operations- Capital transfers- Reversals- Disbursements
Loans: Release
Release
The release reports have been replaced by the release workflow:Step-by-step release procedure according to the multiple control principle for the main functions affecting master data and flow data.
Release objects :1. Flow data: Business operations*, capital transfers, reversals, disbursements 2. Central master data: Loan master data, business partners, objects*(3 release objects: Enter charges individually, enter charges as business operation, unscheduled repayment)
Generic workflow functions:- Define maximum time period for work items: Pick up task, processing, throughput- Create attachments- Forward- ResubmissionUser-specific adjustments to the workflow, for example:- Throughput times- Set up agent control to direct the work items to the correct agents (users) - find user on the basis
of the release object, company code, release level, and product type (also refer to the documentation in the SAP Library under BC-Basis -> SAP Business Workflow).
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Financial Transactions in the Medium and Long Term: Unit Summary (1)
Securities Management
Overview of evaluation options
Transaction management process:- Buying / selling- Posting incoming revenues
Master data: Classes, securities accounts, position indicators
Position management process:Valuation
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Financial Transactions in the Medium and Long Term: Unit Summary (2)
Loans Management
Overview of loan forms
Transaction management process:- Create contract- Process disbursement received- Integration with CM and FI
Position management process:- Post payments as due- Make payments due
Closing operations / special cases
(C) SAP AG AC030 109
5.110Data used in the Unit: Financial Transactions in the Medium and Long Term
Explanation of the symbols in the exercises and solutions
Exercises
Solutions
Unit objectives
Business scenario
Tips & tricks
Warning and caution
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Data used in the exercises
Data Data in the training system
Data in the IDES system
Company codes TR00 to TR20 1000
ID numbers 555700 to 555720716463519000270144113495113501
1002
1000
Securities accounts DEUBA ACC1DEUBA ACC2
1000
Issuer DEUBA
WEST LB
1000
Depository bank DEUBA 1000
Counterparty DEUBA 1000
Lender DEUBA 1000
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5.111Financial Transactions in the medium and long term Exercises
Unit: Financial Transactions in the Medium and Long Term
Concluding securities transactions.Integrating transaction management into Cash Management
Due to changes in the level of interest rates on the capital market, you want to reduce your stock portfolio. You place an order with your house bank to sell 3000 units of Telekom stocks. The bank later notifies you that the sale has been executed at 92 UNI (value date: 2 days later).
1-1 Check the position on your two securities accounts (DEUBA ACC1 and DEUBA ACC2). To do this, call up the position overview and enter the following selection criteria in the report:
- Company code: TRxx- Key date: Current date- Key date reference: Position value date
Choose the object list as the output type.
Make a note of the number of units and the securities account of the Telekom stock.
_____________ _____________________ _______________Securities account ID number No. units
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1-2 Make a part-sale of 3,000 units of your Telekom stocks.
1-2-1 To do this, create an order. Your partner is the DEUBA.1-2-2 Execute this at 92 UNI.1-2-3 Settle the transaction.1-2-4 Post the transaction.
As you do this, check the impact on the cash flow and on Cash Management for each activity category!
You can only display the cash flow after you have executed the order/contract.
(C) SAP AG AC030 113
Unit: Financial Transactions in the Medium and Long Term
Creating class master data
You invest the money you receive from the sale of your stocks in bonds. A bond issued by the West LB offers you very favorable conditions. To represent the purchase of this new security, you must first enter the class master data.
2-1 Create the Westdeutsche Landesbank bond as a class.
Enter the following transaction data: ID number: 213 2XX Nominal value: 1000 Nominal trading unit: 1000 Issue currency: UNI Term: 10/21/98 – 10/20/2008 Issue rate: 100 Maturity Annual interest payment: 5.25% Exchange: Frankfurt/Main
Look at the cash flow.
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2-2 Securities purchaseFor your securities account DEUBA ACC1, purchase this bond for a nominal value of 200,000 UNI (value date: 2 days later).
2-2-1 To do this, create an order2-2-2 Execute it at 105 %. 2-2-3 Then settle it using the collective processing function.2-2-4 Post the transaction.
Ignore the warning when you create the order.Let the position indicator be created automatically when you execute the order.
For each activity category, look at both the cash flow and the effects on the bank or clearing bank accounts in Cash Management (cash position).
(C) SAP AG AC030 115
Unit: Financial Transactions in the Medium and Long Term
Defining organizational elements: Portfolios and securities accounts
As a result of favorable conditions at our house bank, we open another securities account.
3-1 Your company opens a new securities account at the Deutsche Bank. This securities account serves as clearing account no. 444556XX for processing the payments resulting from securities transactions.
Create the securities account in the system:
Securities account: DEUBA Acc4 Securities account no.: 22224446 Securities account name: DEUBA Securities Account 4 Depository bank: DEUBA House bank: DB House bank account: GIRUN Portfolio 1
3-2 Create the position indicator for the new bond for your new securities account. Valuation class: SEC FA Account assignment reference: 42000000
3-3 Conclude a securities transaction (bond) for your new securities account.
(C) SAP AG AC030 116
Unit: Financial Transactions in the Medium and Long Term
Creating a loan contract
We want to finance various long-term investments by taking out a loan with our house bank.
4 Create a loan granted by our house bank DEUBA.
Contract data:
Loan purpose: choose one of the alternatives Maturity: 10 years Repayment: in installments Commitment capital: 50,000 UNI Disbursement rate: 100 % Interest calculation method: 360E/360
Nominal interest:
Exact payment form: (PE): every six months, at the end of the period (HN) (Payment form: at end of period; frequency: 06)
4 % fixed
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Repayment:
Exact payment form: (PE): every six months, at the end of the period Immediate repayment settlement You want the system to calculate the repayment instalment.
Execute the calculation for these values.
Administration charge: 250 UNI to be paid annually at the end of each yearCheck your condition entries by looking at the cash flow.
Once you have entered all the condition data, let the system calculate the effective interest rate.Have the effective interest rate calculated according to PAngV.
Save your loan and make a note of the loan number.
(C) SAP AG AC030 118
Unit: Financial Transactions in the Medium and Long Term
Posting the disbursement amount
Our house bank has credited the loan amount to our current account. We want to post the expected incoming payment.
5-1 Enter the disbursement you are going to receive. The bank charges 100 UNI for processing the disbursement (one-time fee). This charge will be withheld from the disbursement amount.
Post the disbursement, and check the disbursement log.
5-2 What changes can you see in the cash flow after posting the disbursement?
5-3 Check how the loan data is integrated in Cash Management. To do this, call up the liquidity forecast in Cash Management. Use the grouping GESAMT "Total display".
(C) SAP AG AC030 119
Unit: Financial Transactions in the Medium and Long Term
Posting interest and repayment amounts as due
We want to make the interest payments and repayments on the due date agreed with the lender. To do this, we must post the amounts as due in the system.
6-1 Call up the Post Planned Records function. Restrict the selection to your loan contract in your company code. In the Upto and including due date field, enter the date up to which the planned records should be posted as due.
Check the posting log.
6-2 What changes can you see in the cash flow after the next interest payment and repayment items have been posted as due?
(C) SAP AG AC030 120
5.112 Financial Transactions in the Medium and Long Term Solutions
Unit: Financial Transactions in the Medium and Long Term
Entering a transaction
Integration with Cash Management
1-1 To check the positions:
Accounting Treasury Treasury Management Securities Information System Position/Position Trend Position Overview
Select the “Object list” output type
1-2 Solution for entering your transaction
1-2-1 To create an order:
Accounting Treasury Treasury Management Securities Trading Transaction Create
Create the transaction as an order.
Cash flow: Only exists after the order has been executed.
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Cash Management:
Accounting Treasury Cash Management Information System Reports for Cash Management Liquidity Analyses Liquidity Forecast
Field name or data type Value
Grouping GESAMT (Total display)
Display as of one day before value date
Display in UNI
Select the delta display
You see: No change when you create an order.
1-2-2 To execute an order/contract:
Accounting Treasury Treasury Management Securities Trading Transaction Execute
Field name or data type Value
Position value date Today plus 2 days
Payment date Today plus 2 days
Cash flow:
(C) SAP AG AC030 122
You see the amounts for the outflow and the price gains/losses as planned records (P).
Cash Management: see above.
You see the stock sale:
Summarization: DeutscheAccount: DBGIROLevel: Securities
1-2-3 To settle the transaction:
Back Office Transaction Settle
Cash flow:
Sales amount as actual record (I);Price gains/losses still shown as a planned record (P).
Cash Management: see above.
No change of level
1-2-4 To post the transaction:
Accounting Transaction Post
Cash Management: see above.
You see:
Summarization: Bank account historyAccounts: DBZWIUNILevel: Int. post
(C) SAP AG AC030 123
Unit: Financial Transactions in the Medium and Long Term
Creating class master data
2-1 Create class
Accounting Treasury Treasury Management Securities Master Data Class
Field name or data type Value
ID number 2132xx
Product type 04I
To call up the details for the conditions, double-click one of the entry fields in the conditions section.
Cash flow:
When you create class data, the system simulates calculating the cash flow automatically using a hypothetical value of 100,000 UNI.
2-2 Solution for entering your transaction
(C) SAP AG AC030 124
2-2-1 To create an order:
Accounting Treasury Treasury Management Securities Trading Transaction Create
Ignore the warning message “Securities account position indicator not yet created” by pressing ‘enter’.
Cash flow: only exists in trading after the order has been executed.
2-2-2 To execute the order/contract
Accounting Treasury Treasury Management Securities Trading Transaction Execute
Field name or data type Value
Price 105
Position value date Today plus 2 days
Calculation date: Today plus 1 day
Payment date Today plus 2 days
Cash flow:
(You see the amounts for the inflow and the price gains/losses as planned records (P)).
Cash Management: see above.
You see the bond purchase:
Summarization: Deutsche
(C) SAP AG AC030 125
Account: DBGIROLevel: Securities
2-2-3 To settle the transaction:
Back Office Transaction Settle
Cash flow:
You see: Purchase amount as actual record (I);Price gains/losses still shown as a planned record (P).
Cash Management: see above.
No change of level
2-2-4 To post the transaction:
AccountingTransaction Post
Cash Management: see above.
You see:
Summarization: Bank account historyAccounts: DBZWIUNILevel: Int. post
(C) SAP AG AC030 126
Unit: Financial Transactions in the Medium and Long Term
Defining organizational elements: Portfolios and securities accounts
3-1 To create a securities account:
Accounting Treasury Treasury Management Securities Master Data Securities Account Create
3-2 To create a position indicator:
Master Data Position Indicator Securities Account Position Indicator Create
3-3 Security purchase
See previous solutions
(C) SAP AG AC030 127
Unit: Financial Transactions in the Medium and Long Term
Creating a loan contract
4 To create a contract:
AccountingTreasury Loans Transaction Management General Loan Contract Create
Field name or data type Value
Company code TRXX
Loan number Assigned by the system
Product type 33B
Field name or data type Value
Partner Deuba
Role type A102
Basic data: Data
Conditions:
Field name or data type Value
Percent 4
PE HN
(C) SAP AG AC030 128
- Set the IS indicator to active in order to have the repayments settled immediately.
- To add the administration charge, choose the button Insert additional items.
(C) SAP AG AC030 129
Unit: Financial Transactions in the Medium and Long Term
5-1 To disburse a loan contract:
Loans Transaction Management General Loan Contract Disburse
Entries: DataButton: Incidental costs; data entry (withheld!)
Post
5-2 To look at the changes in the cash flow:
Loans Portfolio Contract Display
(Alternative: Loans -> Transaction Management -> General Loan -> Contract -> Display)
Button: Cash flow
The disbursement and the processing charges appear as actual records in the cash flow of the transaction.
5-3 To see how the loans area is integrated with Cash Management:
Treasury Cash Management Information System Reports for Cash Management Liquidity Analyses Liquidity Forecast (or Cash Position)
Entries:
Grouping: GESAMT "Total display" (or BANKEN "Bank account history")Display currency: UNI
(C) SAP AG AC030 130
Note: Choose "Level B5 - Int. posts" (other interim postings).Group/Account: DBZWIBU
When you disburse the contract, the disbursement amount appears in Cash Management.
(C) SAP AG AC030 131
Unit: Financial Transactions in the Medium and Long Term
6-1 To post planned records automatically:
Loans Accounting Execute Posting: Mass Processing Post Planned Records
Entries:
Company codeContract number"Upto and including due date"Posting date
6-2 Changes in the cash flow:
The cash flow now includes the posted interest and repayment flows as actual records.
(C) SAP AG AC030 132
6
SAP AG 1999
Market Risk Management and Managing Risk Positions
Contents:
Derivative Instruments
Market Risk Management
(C) SAP AG AC030 1
6.2
SAP AG 1999
Market Risk Management and Managing Risk Positions: Unit Objectives
At the conclusion of this unit, you will be able to:
Describe the main functions of Market Risk Management
Use the MRM functions for analyzing interest and currency risks
(C) SAP AG AC030 2
6.3
SAP AG 1999
Course Overview Diagram
SAP Treasury Overview
Liquidity Management in theShort and Medium Term
Introduction
Financial Transactions in the Medium and Long Term
Market Risk Management and ManagingMarket Risk Management and ManagingRisk PositionsRisk Positions
(C) SAP AG AC030 3
6.4
SAP AG 1999
Market Risk Management and Managing Risk Positions: Business Scenario
Market Risk Management
Risks arise from your operational transactions as well as from your financial transactions. They are the result of changes to the market parameters, for example, from interest and exchange rates.The Market Risk Management function enables you to analyze interest and currency risks and identify suitable hedge transactions in order to hedge against open items.
You can use mark-to-market valuation to determine the fair market prices of your transactions. You can also simulate potential changes in value to your positions which can result from changes to market data.
(C) SAP AG AC030 4
6.5
SAP AG 1999
Market Risk Management and Managing Risk Positions: Analysis and Simulation
In addition to using actual market data for valuation, you would like to analyze the effects that possible changes to the market might have.Using scenarios you depict the most varied trends ("best case" or "worst case" scenarios) and integrate these into your evaluations.
You use fictitious transactions to identify suitable instruments to hedge your positions before the transaction is actually concluded.
(C) SAP AG AC030 5
6.6
SAP AG 1999
Risk
Otherrisks
Liquidity riskCredit riskMarket risk
Exchange raterisk
Interest raterisk
Volatilityrisk ...
Risk Categories
Market risks are a small subset of the various risk categories an enterprise has to contend with. Market risk can be broken down further based on the various sources of risk: interest rate risk,
exchange rate risk, price risk and index risk, spread risk, and basic risk. Credit risks include creditor risk and country risk. Other risks covers all internal risks, such as organizational risk or legal risk.
(C) SAP AG AC030 6
6.7
SAP AG 1999
Risk Controlling in Treasury
Risk Controlling
Limitchecking
Specification of measuring
methods
Monitoringof
risk policy
Setting upthe reporting
system
To make the company’s
risk positions transparentAim:
Risk Controlling in Treasury is part of a risk management system that covers all areas of a company. It involves measuring, controlling, and monitoring the relevant risk categories. Setting up the reporting system and creating a link to feed data to management, are key factors when it comes to making the risk positions your company has entered more transparent.
(C) SAP AG AC030 7
6.8
SAP AG 1999
Defining the Organizational Framework
1. Establish a Target-Method Hierarchy
Define your revenue and risk targets Formulate investment and risk guidelines for your company Translate these into operational specifications
2. Establish a Process Structure
Identify the processes Create a model of the process flows in your company Break this down into individual activities and assign
these to jobs Use this information to create an authorization and
release concept
Management is responsible for defining the framework within which treasury transactions are executed. There are three main task areas here:
Specifying the basic business principles, including: Trading strategies for the respective instruments The markets on which trading is allowed Transaction volume, organization (contract components), and documentation.
Risk limitation, including: Procedures for measuring and controlling risk Value of the permitted risk positions according to instruments or organizational units Reaction to extreme market trends or exceeded limits Internal reporting system
Organization, including: The areas of responsibility and functions of individual employees Division into function areas Human resources and technical equipment.
(C) SAP AG AC030 8
6.9
SAP AG 1999
Investment and Risk Guidelines
Internal External
Revenuetargets
Risktargets
Investmentregulations
Riskregulations
LimitsRelevant
product typesHedging
strategiesReporting
system
Investment and risk guidelines
In the financial services area, there are countless statutory norms and controlling bodies that monitor entered risks to protect the investor.
(C) SAP AG AC030 9
6.10
SAP AG 1999
Selection of Financial Instruments
Mortgageloans
Borrower's note loans
Policy loans Other
loans
Fixed-termdeposits
Deposits atnotice
CommercialPaper
Product types
DerivativesForexLoansSecuritiesMoney market
Stocks Subscription
rights Investment
certificates Bonds Convertible
bonds Warrant bonds Warrants
Forexspotdeals
Forwardexchange deals
Forexswaps
Caps / Floors FRAs Swaps
- Interest rate- Interest rate curr.
OTC options- Currency- Interest rate- Security- Swaption
Futures
Hedginginstruments
Investment/Borrowinginstruments
In the short-term area, money market transactions and forex transactions allow you to bridge liquidity deficits or surpluses. In the medium to long-term area, investments and borrowings are additionally represented by securities transactions and loan transactions.
Derivative financial instruments, on the other hand, help you hedge against interest rate and currency risks.
(C) SAP AG AC030 10
6.11
SAP AG 1999
Hedging
HedgingHedging
Hedgingstrategy
Hedgingrate
Hedgingobject
Overall position
Portfolio position
Single position
Macro hedge
Portfolio hedge
Micro hedge
Full hedge 100%
Partial hedge x%
* Release not yet specified
Hedging is a way of counteracting risk. It involves setting up an offsetting position, which develops in the opposite way to the underlying position.
Risk objects are either cash flows resulting from an operating business or from Treasury transactions/positions such as loans, securities, or money market transactions.
Exchange rates, interest rates and volatilities are all sources of risk. You can match risk and hedged items and hence determine hedged and non-hedged items using the
Market Risk Management component. Hedge transactions are usually forward transactions (symmetrical instruments) or options
(asymmetrical instruments) as well as combinations of these.
(C) SAP AG AC030 11
6.12
SAP AG 1999
Risk Process in Treasury
Minimum balancesMinimumyields/MaximumfundingratesDefinition oflimitsHedgingrates
Portfolio generation using real and fictitious transactions with reference to thetarget valuesValuation on the
basis of market data (actual data) and scenario data (planning data)
Determination of control indicators
Selection ofconcrete investment and borrowing transactions or hedging alternatives
Trading
Liquidity statusCashpositionLiquidityforecast
Portfolio positionPosition analysis
ExposureCash mgmtfor forexexposureGap analysis forinterest exposure
Market dataDatafeed
Targets Informationprocurement
Assessment of possible solutions
ProcessingMonitoringDecision
ProcessingAccountingReporting
Risk Monitoring and Control
Revenue/Risk
targets
(C) SAP AG AC030 12
6.13
SAP AG 1999
Market Risk Management: Functions
Comprehensive risk valuation and control
Procuring information
Interest and currency exposure
Mark-to-market, effective rate, effective interest rate
Sensitivities, cash flow analyses
Value at risk
Evaluating alternative solutions
Simulations
What-if analyses
Crash scenarios
Transforming risks using Treasury Management
(C) SAP AG AC030 13
6.14
SAP AG 1999
Integration of Scenarios and Fictitious Transactions
Methods
Cash flowsMarket data Calculation
MarketdatabaseMarket
database
ScenariodatabaseScenariodatabase
ActualpositionActual
position
Fictitioustransactions
Fictitioustransactions
Key figures(IRR, NPV, Option
premium, exposure,...)
Key figures(IRR, NPV, Option
premium, exposure,...)
Evaluation
(graphic, list,...)
Buffer
Portfolio determination
through selection
IRR = Internal Rate of Return (effective interest rate) NPV = Net Present Value
(C) SAP AG AC030 14
6.15
SAP AG 1999
Interest
Underlying trans.:
Operational cash flows fromCash ManagementMoney Market, Loans, Securities
Hedging transactions:
Forward Rate Agreement
Swap (series of FRAs)
Interest rate options
- Floor (series of options)- Cap (series of options)(other forex and derivativetransactions)
Instruments in Currency and Interest Management
Currency
Underlying trans.:
Operational cash flows fromCash Management
Hedging transactions:
Forward exchange transaction
Currency option- put- call
(other TR transactions)
TRTR--CMCM TRTR--CMCM
TRTR--TMTM TRTR--TMTM
TRTR--TMTM
Operational cash flows are drawn from Cash Management by means of special groupings. Financial transactions are selected directly from Treasury Management. There are numerous
selection criteria available which help you to choose precisely the transactions you want.
(C) SAP AG AC030 15
6.16
SAP AG 1999
Financial Instruments and Influencing Factors
Moneymarketintrst
Capitalmarketintrst
Int.ratevolat.
Exch.rates
Exch.ratevolat.
Instruments
Forward exchangetransactions Currency options(European, American,Barrier, Digital)Bonds, LoansMoney market trans.
Forward Rate AgreementsInterest Rate GuaranteesInt.rate, int.rate curr.swaps(incl.structures such as roller-coaster, LIBOR-in-arrears ...)
SwaptionsCaps, Floors
Bond optionsFutures, Optionson futures
Source: Sal. Oppenheim jr. & Cie.
In the SAP System, money and capital market instruments are not explicitly separated. The interest value that acts as the price-determining factor for an instrument depends on the reference interest rates or yield curves defined in the evaluation type.
You can use hedging instruments which react to the same risk factors to hedge underlying transactions.
(C) SAP AG AC030 16
6.17
SAP AG 1999
Market Risk Management and Managing Risk Positions: Mark-to-Market Valuation
Mark-to-Market Valuation
In addition to valuing your transactions for accounting purposes in accordance with the statutory accounting requirements, you now wish to value your transactions with their market value. To determine market values, you calculate the net present value of all the cash flows generated from the transactions. The mark-to-market methodology provides the basis for all analysis reports in Market Risk Management.
(C) SAP AG AC030 17
6.18
SAP AG 1999
Mark-to-Market Valuation
Mark-to-market valuation is available for all Treasury transactions and for:
any points in time
any horizons
various scenarios
You can also display:
the calculation base
a detailed log to check the individual calculation steps
the interest rate sensitivities
Marking to market means valuing a position at the price which can currently be achieved on the market: “What price will I achieve if I close out the position?”
For long positions this means determining the disposal price that could be achieved. For short positions it means determining the repurchase value. You can use the NPV method to determine and compare the market prices of various instruments. You also have the option of including simulated money market and forex transactions in the
valuations and analyzing their effect on the market value of the positions.
(C) SAP AG AC030 18
6.19
SAP AG 1999
Mark-To-Market Valuation: Procedure
Mark-to-Market Valuation
Deterministic instruments Option-related instruments
Fixed cash flows
Discounting tovaluation dates withthe relevant yieldcurve:- Bid / Ask- Rating
Variable cash flows
1. Determination of forwardrates from the relevantyield curve2.Calculation of futurecash flows3. Discounting
Uncertain cash flows
Option price formulas- Black & Scholes- Binomial- Garman/Kolhagen
Standard bonds
Fixed-rate loans
Money market
Floating rate notesVariable-rate loans
Caps / FloorsFX optionsSwaptions
(C) SAP AG AC030 19
6.20
SAP AG 1999
Example: Valuation of Swaps
Fixed interestcash flow
Interest cash flows basedon swap rate and forward rates
Variable interest cash flow(from forward rates)
Cash flow
NPV
Zero bonddiscounting factors
You can trace the individual processing steps involved in the NPV calculation in the details log of the mark-to-market valuation. With interest rate swaps, the first step the system undertakes is to separate the fixed cash flows from the variable cash flows. The variable cash flows are then assigned values from the forward rates with the help of the yield curve used. This determines the timing of the cash flows (payment dates based on the transaction) as well as the payment amounts of all the cash flows.
These cash flows are discounted to the horizon using the zero bond discounting factors. The negative and positive NPVs of the individual payments are then displayed separately. The
NPV of the interest rate swap is equivalent to the difference between these negative and positive cash flows.
The NPV displays the market value of the interest rate swap at the horizon date on the basis of the market data read on the “evaluation per” date.
(C) SAP AG AC030 20
6.21
SAP AG 1999
Mark-to-Market Valuation - Calculation Base
Yield curvesPercent
Days
9.0
8.1
7.2
6.3
5.4
4.5
3.6
2.7
1.8
0.9
0.0
0.0 304.3 608.7 913.0 1217.3 1521.7 1826.0 2130.3 2434.7 2739.0 3043.3 3347.7 3652.0
All the market data used for the valuation is listed in the calculation base. Yield curves can be represented graphically.
You can display the calculation base from within any MRM report. This allows you to check the market data used for the valuation and, in the case of interest rates,
display the data in graphic form.
(C) SAP AG AC030 21
6.22
SAP AG 1999
Mark-to-Market Valuation - Details Log
Valuation parameters
Basic data of the transaction
04/18 04/17/YY 000360 000360 4.5600000 10,000,000.00 456,000.00 EUR
NPV calculation: positive cash flows
Date04/20/YY04/19/YY04/18/YY04/18/YY
Amount456,000.00456,000.00456,000.00456,000.00
Interp.int.rate3.32751373.78450824.33263014.8125205
Disc.factor0.9674420920.9278544900.8794129040.826289916
NPV441,153.59423,101.65401,012.28376,788.20
Curr.EUREUREUREUR
NPV calculation: negative cash flows
Date04/18/YY10/18/YY04/19/YY10/18/YY04/18/YY10/18/YY
Amount279,348.04-256,757.22-214,868.94-301,167.89-320,116.89-351,022.53
Interp.int.rate4.23263013.95800553.68450824.47328774.71252054.9431507
Disc.factor0.8819715310.9065540230.9296593940.8560674160.8294982080.801302453
NPV246,377.02-232,764.29-199,754.93-257,820.02-265,536.39-281,275.21-
Curr.EUREUREUREUREUREUR
NPV incoming side:NPV Curr. Rate NPV in displ.curr.
1,992,802.36 EUR 1.00000 1,992,802.36
NPV outgoing side:
2,266,087.67- EUR 1.00000 2,266,087.67-
273,285.31- EUR 1.00000 273,285.31-
NPV Curr. Rate NPV in displ.curr.
NPV Curr. Rate NPV in displ.curr.
In the details log you can monitor the calculations for individual transactions. Each step of the calculation process is logged and displayed for that specific instrument.
(C) SAP AG AC030 22
6.23
SAP AG 1999
Exercise: Mark-to-Market
(C) SAP AG AC030 23
6.24
SAP AG 1999
Storing OTCNPVs
Mark-to-market
2
4
6
8
10
1M
2Y
4Y
6Y
8Y
10Y
EUR USD GBP
TRTR--MRMMRM
Storage Valuation
TRTR--TMTM FIFI
Money marketForex
Derivatives
NPVs
Financial accounting
In the tools area, you can store NPVs determined with the mark-to-market valuation in the OTC NPV table.
These NPVs can then be accessed for the (accounting) key date valuation of the derivative financial instruments within Treasury Management. Note that at present only the valuation of options with product category 760 is supported.
In the key date valuation, the system translates the NPVs in display currency into the premium currency and forms write-ups/write-downs or provisions on the basis of the corresponding local currency amount.
(C) SAP AG AC030 24
6.25
SAP AG 1999
Managing Currency Risks
Risks arise from your operative transactions in foreign currency, which are the result of changes in the exchange rates. You use Market Risk Management to identify your open currency positions and conclude transactions in order to hedge against these.
You use a currency option as a hedge instrument and control the effect of the option on the exposure.
Market Risk Management and Managing Risk Positions: Currency Risks
(C) SAP AG AC030 25
6.26
SAP AG 1999
Exposure Analysis
Exposure analysis is used to measure open risk positions.
To establish the currency risk, operational information from Cash Management (about underlying transactions) is compared with Treasury information (about hedging transactions). The system measures the value directly affected by currency changes (the reaction value).
To establish the interest rate risk, the system represents the interest rate sensitivity of the operational cash flows and the various Treasury transactions (security, loan, money market, forex, and derivative transactions). The interest rate exposure is measured either in basis points or in terms of the value affected by interest rate changes.
(C) SAP AG AC030 26
6.27
SAP AG 1999
Integration of a Company’s Cash Flows
PurchasingA/P
account-ing
Purchaseorder
Delivery
Invoice
Out-payment
Bankstatement
Cash Management
Liquidityforecast
Liquidityforecast
Cash positionCash position
Delivery date and payment terms
Updatedpayment history
Payment at agreed due date
value date
A/Raccount-
ingSales
Invoice
In-payment
Bankstatement
Salesorder
Delivery
Market Risk Managemente.g. currency exposure,
VaR
MRM
CM
For an industrial enterprise, cash flows from operational business are the underlying transactions for risk control. In MRM, the necessary integration is achieved by accessing the liquidity information in Cash Management. The operational cash flows are available for: analysis/simulation (with underlying transactions/forex) the currency exposure the interest rate exposure the cash flow global evaluation the value-at-risk evaluations
(C) SAP AG AC030 27
6.28
SAP AG 1999
Currency Exposure
Term from to
Underlying transaction
Hedging transaction
Open position
TRTR--MRMMRM Currency
exposure
TRTR--CMCM TRTR--TMTM
MM
SDFI
Term view
Single transaction view
Transaction Transaction TransactionDocument Document Document
The exposures of all selected currencies are displayed. The division into term intervals is determined when the currency selection is made. The currency exposure is displayed separately per currency and also by term interval, if required.
The underlying transactions are the operational transactions transferred from Cash Management. The “From” date determines the start, the “To” date the end of the period from which the Cash Management data is taken. These underlying transactions are compared with all Treasury transactions available in the corresponding currencies (hedging transactions). The open position is calculated by adding together the underlying transactions and the hedging transactions (which usually have an inverse value).
In order to precisely compare the operational transactions with the financial transactions, you can discount the payments from Cash Management to the horizon.
From the total exposure view per currency, you can branch into the term view (details based on the term intervals previously defined) or the single transaction view. If cash flows from various financial transactions fall in the same term interval, they are displayed separately in the single transaction view.
From the underlying transactions you can branch to Cash Management via the respective term interval in order to execute an individual analysis of the operational cash flows.
From the hedging transactions you can branch directly into Treasury Management’s single transaction display.
(C) SAP AG AC030 28
6.29
SAP AG 1999
Option Exposure
Slope of premium curve with changing spot rate
Spot rate1.02 1.04 1.06 1.08 1.10 1.12 1.14 1.16 1.18
0.02
0.04
0.06
0.08
0.10
Premium
What is option exposure and how is it determined? Exposure: The foreign currency volume that is directly affected by a change in the exchange rate. The graph above shows that there is no linear relationship between the price development of the
instrument underlying an option (here the spot exchange rate) and the value of the option (expressed in terms of the premium to be paid). Note that only the option value which is actually affected by a change in the underlying exchange rate counts as exposure. The relationship between the option price and the underlying price is determined with the help of the delta factor:
Delta: Factor expressing the degree to which the option price reacts to a change in the exchange rate ==> Sensitivity factor (delta) multiplied by volume = exposure of option
(C) SAP AG AC030 29
6.30
SAP AG 1999
Currency Option
• The buyer has the right (the seller is obliged) to buy (deliver)or sell (take delivery of) an option:
- on a certain date (European option) or within a certain period (American option)
- for a certain foreign currency amount (underlying)- at a certain price (strike price)
• For this right, the buyer pays the seller an option premium• The seller of the option then has the obligation to deliver
(or take delivery of) the currency amount
• Calls: Buyer has the right to buy (seller must deliver)• Puts: Buyer has the right to sell (seller must buy)• Cash settlement or physical settlement (delivery / take delivery)
Example of a call: With a USD/UNI call, strike price 1.80, the buyer has the right to purchase a certain USD amount from the seller at the strike price. The buyer will only exercise this right if the market price lies above the strike price on the exercise date or within the exercise period. If this is the case, the buyer can use the option to acquire the foreign currency amount at a lower price than that offered on the market.
Example of a put: With a USD/UNI put, strike price 1.80, the buyer acquires the right to sell a certain USD amount to the seller at the strike price. The buyer will only exercise this right if the market price lies below the strike price on the exercise date or within the exercise period. If this is the case, the buyer can use the option to sell the foreign currency amount at a higher price than that offered on the market.
Background: The buyer of a call is looking for protection against rising prices, the buyer of a put for protection against falling prices. The seller reckons with the opposite price development and wants to improve his or her position by collecting the option premium.
There are two categories of barrier options - knock-in options and knock-out options. With knock-in options, the option right only comes into effect when the market price falls below (Down & In) or rises above (Up & In) the barrier. With knock-out options the option right expires as soon as the market price falls below (Down & Out) or rises above (Up & Out) the barrier.
(C) SAP AG AC030 30
6.31
SAP AG 1999
Create OTC Currency Option
++2USD UNIUSD 5,000,000.00
European Physical exercise
100076A100
1
UNI 300,000.00
09/29/YYYY
1.82 Invers
Contract data
Cross-rate calculator Option price calculatorCompany code IDES AG TransactionProduct type OTC curr. option Activity ContractTransactn type Purchase...Option
Exercise period Exercise Settlmnt.Currency pairUnderlying curr. Call Put Strike Value date
PremiumPnt quoted Perc.quoted
PointsPayment date Curr. Amnt
Contract date ......
When you create a currency option, you record the intention to buy or sell a currency option. On the initial screen, you enter the transaction type (purchase/sale) for the product type currency option and the business partner.
On the subsequent screen, you enter the term, the exercise and purchase premium for the option, in addition to the transaction data for the underlying spot or forward transaction.
You have the option of branching to the entry screens for the general transaction data. You can use the tabs to navigate between the various screens (structure, administration, other flows, payment details, cash flow, memos, status).
To calculate the option premium, you can branch to the option price calculator.
(C) SAP AG AC030 31
6.32
SAP AG 1999
Currency Option: Option Price Calculator
Curr.pair
Premium Calculation for Standard Options
Sensitivities
Market data
SpotSwapForward
1.04950 / 1.057500.00692 / 0.007431.05642 / 1.06493
Int. 1st currencyInt. 2nd currencyVolatility
2.8563 / 2.90525.5618 / 5.68689.8500 / 9.8500
Premiums
Put 1Put 2Put 3
1.04000/
0.01076 / 0.01361/
Strike European
/0.01116 / 0.01407
/
American
Call 1Call 2Call 3
1.04000/
0.02960 / 0.03512/
/0.02967 / 0.03516
/
Implied volat.Market data Swap/Forward Premiums List
EUR USD From To Days
Value date Value date
While entering the option data, traders can use the direct link to the option price calculator to calculate the accounting par value of the option premium. The option price calculator also supplies information about the major sensitivities of the respective option. You can enter the option premium either as a percentage of the underlying transaction (in points) or as a fixed amount. The premium is calculated on the basis of the spot price, the strike price, the term, the risk-free interest rates in both currencies, the option category, and the volatility of the exchange rate.
Click the Market data pushbutton to load the current market data: Spot rates, swap rates (are always calculated using the yield curves), interest rates for currency 1 and 2, and exchange rate volatility.
You can enter alternative strike prices (for up to 3 put options and 3 call options) for the underlying forex transaction.
You can calculate premiums for European and American standard options as well as European currency barrier options (exotic options).
When you position your cursor on a premium and select the Sensitivities pushbutton, the system calculates and displays the option sensitivities (greeks). You can also display a list of the ratios for all the calculated options.
If you specify an option premium, you can use the option price calculator to calculate the other way and determine the underlying volatility (implied volatility).
(C) SAP AG AC030 32
6.33
SAP AG 1999
Exercise: Currency Exposure
(C) SAP AG AC030 33
6.34
SAP AG 1999
Managing Interest Rate Risks
You conclude money market, securities, or loans transactions to manage your liquidity. The market value of these transactions like the market value of the operative cash flows is subject to changes in the market interest rates. To protect yourself from value losses, you analyze the interest rate risks and use hedge transactions that are suitable for reducing your interest exposure.
Market Risk Management and Managing Risk Positions: Interest Rate Risks
(C) SAP AG AC030 34
6.35
SAP AG 1999
Interest Rate Exposure
Term
from to
Underlying
transaction
MnyMrkt/Sec./
Loans
Forex/
Derivatives
Open
position
TRTR--MRMMRM Interest rate
exposure
TRTR--CMCM TRTR--TMTMSDFI
Transaction Transaction Transaction
Drill-down
Term view
Singletransaction view
Document Document Document
MM
The interest rate exposure is divided into three columns: Operational transactions (underlying transactions) from Cash Management Money market transactions, security transactions, and loan transactions, which are typically
undertaken for liquidity reasons. Hedging transactions from the foreign exchange and derivatives areas.
As with the currency exposure, when you are in the overview screen, you can branch to the term view (details based on the term intervals previously defined) or the single transaction view. If cash flows from various financial transactions fall in the same term interval, they are displayed separately in the single transaction view.
From the underlying transactions, you can branch to Cash Management via the respective term interval in order to execute an individual analysis of the operational cash flows.
From the hedging transactions you can branch directly into Treasury Management’s single transaction display.
(C) SAP AG AC030 35
6.36
S A P A G 1999
In teres t R a te E xp o su re - D eterm in e B as is P o in t V a lu e
S tep 1 :N e t p re s e n t va lu e c a lc u la tio n o f fu tu re c a s h flo w s w ith c u rre n t yie ld c u rve s
S tep 3 :R e c a lc u la tio n o f n e t p re s e n t va lu e
C a s h flo w
D is counting w ith i
D is counting w ith i + 1 B P
B P V
N P V
T im e
12
34
S tep 2 :S h ift o f c u rre n t yie ld c u rve s b y 1 b a s is p o in t
S tep 4 :C a lc u la tio n o f n e t p re se n t va lu e d iffe re n c e(= B a s is p o in t va lu e )
Yield curves euro
2
4.5
Term in months
Inte
rest
rate
in
per
cent
age
Euro
Euro + 1BP
2
In the interest exposure report, you can choose to display either the value of x basis points or the volume. When the basis point value (BPV) is calculated, the NPVs of the individual cash flows in the future are calculated and added together on the basis of their currency- and term-specific interest rates. In a second step, the interest rates are increased or reduced by one (or a multiple of one) basis point (0.01%). The NPVs are then calculated again. The BPV is the difference between these two NPVs. It represents the value losses or increases the analyzed financial instruments show when the interest rates are increased or reduced by one (or a multiple of one) basis point.
The volume display is another way of displaying the interest rate exposure: The exposure is displayed as a quotient of the NPV difference and the number of basis points by which the curve was shifted.
On the selection screen (display type of the exposure), you can choose between these procedures.
(C) SAP AG AC030 36
6.37
SAP AG 1999
Forward Rate Agreement
• Agreement between two parties (a buyer and a seller)- upon a certain interest rate (FRA rate)- for a deposit or a loan- for a period in the future
• Aim: To fix an interest rate today for a period in the future
• Term: 3-24 months• Quotation: 3:9; 6:12; 12:24; (future period: total term)• Reference interest rate e.g. 3-month LIBOR, 6-month LIBOR• Interest rate comparison (fixed rate against reference interest rate)after waiting period and calculation of settlement amount due
• Interest netting in the form of cash settlement, no exchange of nominalamounts
Background: The buyer of a FRA anticipates higher interest rates for the reference period, while the seller anticipates lower interest rates
Example: FRA 3:9; nominal amount 10 m UNI
FRA rate 5% (=> in 3 months for 6 months) Reference interest rate 6 months LIBOR Interest rate comparison in 3 months, hedging period 6 months
6-month LIBOR in 3 months = 6% => Settlement payment to buyer= Interest rate difference x nominal amount x days in hedging period 360 x discounting factor If the LIBOR rate were below the FRA rate, the buyer would have to make the settlement payment.
(C) SAP AG AC030 37
6.38
SAP AG 1999
Create FRA
Structure ...... ... ... ... ...
10/07/YYYY++8++11
10,000,000.00 UNI5.0LIB_3_UNIact/3602-
10/05/YYYY
63A200
11000Company code IDES AG Transaction
Product type FRA Activity ContractTransactn type Sale
...Term
Start of termStart of hedge periodEnd of hedge period Inclusive No. interest days
Interest structureExercise amountInterest rateRef. int. rateInt. rate methodFixing
Business calendar ...Contract data
Contract date ...
Forward Rate Agreements are financial instruments with which buyers and sellers specify a fixed interest rate today for a future period. Both parties of the contract are free to choose the amounts, currencies, and terms; the interest rate reflects the forward yield curve.
A fictitious money market transaction underlies the FRA whose capital amount is used simply as a calculation amount. An "8 against 11" FRA has a contract period of 3 months starting in 8 months. At this time, the contract is also settled and paid out. The buyer of a FRA is looking for protection against rising interest rates, whereas the seller wants to protect against sinking interest rates. You enter FRAs in the system according to the trading conventions represented.
(C) SAP AG AC030 38
6.39
SAP AG 1999
Swaps
• A swap is an exchange of cash flows over a fixed period of time
• You define the cash flows when you conclude the swap,but their absolute value may depend on events in the future(e.g. interest payments at variable interest rates which are dependent on future reference interest rates)
• Depending on the type of cash flows to be exchanged,swaps can either be:
- interest rate swaps- currency swaps (cross-currency interest rate swaps)
Possible variants for interest payment swaps:PAYER: Outgoing interest payments fixed, incoming variableRECEIVER: Incoming interest payments fixed, outgoing variableBASIS: Variable against variable interest paymentsFIX TO FIX: Fixed against fixed interest payments
In the case of an interest rate swap, each counterparty agrees to exchange cash flows in one currency during a certain period for a specified capital amount, without exchanging the said capital amount. Possible variations:- Payer- Receiver- Basis
A currency swap has the following characteristics:- Mutual exchange of funds at an agreed exchange rate in different currencies.- Exchange of interest payments on the basis of the agreed total capital and the agreed interest rate.- The original amount of the swap is reversed at maturity at the original exchange rate.Possible variations:- Payer - Receiver- Basis - Fix to fix
Swaps offer comparative cost advantages; two partners use their different positions (credit standing) in different financial market segments to achieve cost advantages that they would not benefit from individually.
(C) SAP AG AC030 39
6.40
SAP AG 1999
Enter: Interest Rate Swap
...
...
62A300
11000
10/15/YYYY10/15/YY+5
10M10/15/YYYY++124.6
360/360
UNI
12
10M10/15/YYYY++6
Lib_6_UNIact/360
6
10/13/YYYY
Int. Int. rate adj. Int. Int. rate adj.
Company code IDES AG TransactionProduct type Int.rate swap (IRS) Activity Contract Transact type Payer
Term Business calendarStart Calendar 1 End Inclusive Calendar 2
Outgoing interest Incoming interestNominal amnt Nominal amntEffective from Effective from1st due date Freq.mth 1st due date Freq. mthFixed rate Fixed rateVariable int. Variable int.Int. calc. meth. Int. calc. meth.
Contract dataContract date
You enter the transaction data for the partner, the contract data, the term, and the actual trading object data (such as amount, currency, interest structure).
You can also branch to the other entry screens to enter more detailed information. Condition overview screens allow you to display the incoming and outgoing side and the condition
details for each transaction. You can also change the nominal amounts and specify the interest rate adjustment methods.
On the Conditions in Detail: Interest rate adjustment screen, you can specify the frequency in which you want the variable interest rate to be recalculated and the date on which the value of the underlying reference interest rate should be determined. An interest rate adjustment can take place, for example, at the start of the period, regularly, or on individual dates.
To start the interest rate adjustment automatically, choose Back office -> Interest rate adjustment -> Automatic.
By choosing Extras, you can go to the net present value calculator for swaps.
(C) SAP AG AC030 40
6.41
SAP AG 1999
Manual / Automatic Interest Rate Adjustment
Treasury:Treasury: Due Date ProcessingDue Date Processing
Automaticinterest rate adjustment
Determine Reference Interest RateDetermine Reference Interest Rate
Manualinterest rate adjustment
Planned fixing date MM/DD/YY
Reference Int. rate Act.fix.dte RtFxTmeLIB_3_UNI
Copy Cancel
Treasury: Due Date Processing
Transactn Status ProdTyp TType Text
400000 0002 63A 200 Int. rate adjust. on ...
The amount of the interest payments that can result from the derivative interest rate instruments is usually determined by a variable index (reference interest rate). Examples of these are the reference interest rates Libor_6_months, Libor_12_months. Today, for example, these may be worth 4.75 and 5.23 percent, but their future values are not yet known. A vanilla swap with variable and fixed interest rates is an example of a derivative financial instrument: Libor_6 against 5.5%, 20 year term with interest payments every 6 months.
Within the Derivatives application, you can generate flows for the fixed-interest side and the variable-interest side of the contract when you create a swap. The payment amounts of the fixed-interest side can be calculated using financial mathematical rules as soon as you create the swap. The future amounts of the variable interest rates are unknown, since the future percentage value of a reference interest rate is unknown when the transaction is created. As a result, the activity "Interest rate adjustment" is necessary, since it changes a planned record (a record whose payment amount is unknown) into an actual record (payment amount is known). This activity takes place when the interest rate is fixed.
Interest rate adjustment is usually set up to take place in a daily batch process. This function determines which planned records must be converted to actual records on these days (using the fixing date entered at record level). It then calculates the interest rate values for each reference interest rate, calculates the amounts, and writes the actual record to the database. Once the interest rate has been adjusted, the corresponding planned record no longer appears in the transaction. The interest rate adjustment function therefore fixes the interest rate of the planned record and generates a planned record.
(C) SAP AG AC030 41
6.42
SAP AG 1999
Exercise: Interest Rate Exposure
(C) SAP AG AC030 42
6.43
SAP AG 1999
Analysis / Simulation - Key Figures
The aim of analysis/simulation is to simulate the impact of hedge transactions in various market data scenarios.
The following key figures are available for analysis/simulation:
Evaluation of Treasury transactions in the interest area
NPV calculation
Effective interest rate calculation
Total return
Evaluation of the Treasury transactions in the forex area
NVP calculation
Evaluation of the underlying transactions and Treasury transactions in the forex area
NPV calculation
Effective rate calculation
(C) SAP AG AC030 43
6.44
SAP AG 1999
Analysis / Simulation - Evaluations
The analysis/simulation function enables you to branch directly to:
Interest area:
Single transaction NPVs with transaction display
Representation of the differences (comparison with the current NPV)
Interest rate exposure (basis point value)
Cash flow display
Currency area:
Single transaction NPVs with transaction display
Representation of the differences (comparison with the current NPV)
Currency exposure (excluding/including fictitious transactions)
Cash flow display
Cash Management
(C) SAP AG AC030 44
6.45
S A P A G 1 9 9 9
A n a l y s i s / S i m u l a t i o n - S t r u c t u r e
R e a lt r a n s a c t i o n s
R e a lt r a n s a c t i o n s +
F i c t i t i o u s 1
R e a lt r a n s a c t i o n s +
F i c t i t i o u s 2C u r r e n t m a r k e t d a t aS c e n a r i o 1S c e n a r i o 2S c e n a r i o 3
E n t r y o f f i c t i t i o u s t r a n s a c t i o n s A l l o c a t i o n t o t h e c o l u m n s r e a l + f i c t i t i o u s 1 / 2
N a v i g a t i o n
H e a d e r d a t a
O r g a n i z a t i o n a l u n i t s f o r f i n a n c i a l t r a n s a c t i o n s O p e r a t i o n a l c a s h f l o w s w i t h s u m m a r i z a t i o n d a t a
T RT R -- T MT M
T RT R -- C MC M
O u t p u t m a t r i xf o r k e y f i g u r e s
N P V
E f f e c t i v e i n t e r e s t r a t e( i n t e r e s t r a t e a n a l y s i s )
T o t a l r e t u r n( i n t e r e s t r a t e a n a l y s i s )
E f f e c t i v e r a t e( f o r e x a n a l y s i s )
S c e n a r i o d a t a
The analysis/simulation structure comprises various sections. The output matrix for key figures is located centrally. The vertical axis of the matrix contains the various market data environments (current market data and scenarios). The horizontal axis displays the operational cash flows (only applies to forex analysis with underlying transactions), the selected financial transactions, and the fictitious transactions.
The header section displays information about the organizational elements (financial transactions) or the operational cash flows (only forex analysis with underlying transactions), together with the grouping, amount, direction, and summarization date. The selected review period, the current calculation day, and the current NPV are also displayed.
The lower section contains the input fields for the fictitious transactions. You can enter them using the fast entry option, or by means of the input screens in Treasury Management (only applies for interest rate risk analysis).
There are various navigation tools located above the header section. These allow you to branch into various standard reports in order to continue your analysis of the selected positions.
You can interactively call up new scenarios in the evaluations (or replace old scenarios), and move the horizon for alternative calculations.
(C) SAP AG AC030 45
6.46
SAP AG 1999
Exercise: Analysis and Simulation
(C) SAP AG AC030 46
6.47
SAP AG 1999
Integrated Market Risk Management
ResultsData inflow
Mark-to-marketvaluation
Mark-to-marketvaluation
Key ratios/values
Key ratios/values
Fictitious cash managementupdate
Fictitious cash managementupdate
ExposureHedging rate
ExposureHedging rate
Actual / Scenariomarket data
Actual / Scenariomarket data
Actual transactionsActual transactions
Cash ManagementCash Management
Control panel
Integrates all incoming data and resulting data relevant
for risk
(C) SAP AG AC030 47
6.48
SAP AG 1999
Market Risk Management and Managing Risk Positions: Unit Summary
This unit has given you an overview of the procedures and methods used in Market Risk Management and introduced you to the main evaluation methods:
Mark-to-market valuation to calculate fair market prices for your financial transactions
Forex and interest exposure reports to identify open positions in the currency and interest areas and to monitor the effects of hedge transactions
Planning and simulation options to anticipate potential market developments and determine possible hedging alternatives
(C) SAP AG AC030 48
6.49
SAP AG 1999
SAP Treasury Overview
Financial Accounting
Bank data
Businesspartner
Market data
DownloadMarket Risk Management:• Interest/currency
exposure• Sensitivities• Mark-to-market • Risk analysis/Simulation• Value at Risk
Cash Management:• Electronic banking• Liquidity status• Integrated operationalsystems
• Control functions
Transaction Management:• Management of financial transactions and positions
• Transfer to Financial Accounting
• Flexible reporting andportfolio analysis
• Datafeed interface
DD CC DD CC
100 100 100 100
TM TM
SecuritiesSecuritiesDerivativesDerivatives
Money market Money market ForexForexLoansLoans
Logistics
The objective of the SAP Treasury module is to ensure efficient liquidity, portfolio, and risk management.
SAP Treasury is subdivided into the following three areas:
Cash Management (CM) offers tools for efficient liquidity analysis.
Transaction Management (TM) supports the management of financial transactions and positions.
Market Risk Management (MRM) provides methods and procedures for assessing risk positions.
(C) SAP AG AC030 49
6.50 Market Risk Management and Managing Risk Positions
Exercises
Unit: Market Risk Management and Managing
Risk Positions
Mark-to-market valuation
Fair market valuation of financial instruments
In addition to valuing your transactions for accounting purposes to comply with the statutory accounting requirements, you now wish to value your transactions at their market value. The system determines the market values by calculating the net present values of all the cash flows generated from the transactions. The mark-to-market methodology provides the basis for all analysis reports in Market Risk Management.
1-1 Run a mark-to-market valuation for the transactions in your company code.
1-2 Look at the calculation bases and display the yield curves in graphical form.
1-3 Branch to the detail log, and navigate to one of the fixed-term deposits you have created to look at the valuation steps.
(C) SAP AG AC030 50
Unit: Market Risk Management and Managing
Risk Positions
Managing currency risks using currency options
Using Market Risk Management to analyze exchange rate risks
You have operative transactions in foreign currency, which are exposed to the risk of changing exchange rates. You use Market Risk Management to identify your open currency positions and conclude appropriate hedge transactions.
2-1 Call up the currency exposure for the transactions in your company code (select securities, loans, foreign exchange, money market, and derivatives) and the operative payment flows from Cash Management. Use the grouping "MRM".
Choose a display period from today up to a year from today, with monthly intervals. Discount the cash flows from Cash Management.
Save your settings as a variant.
2-2 Branch to the term view and the view showing the individual transactions. You can drill down to the display in Cash Management (underlying transactions) or Treasury Management (hedge transactions).
2-3 Discuss the effect of the cash management groupings. How should you organize the groupings?
(C) SAP AG AC030 51
Unit: Market Risk Management and Managing
Risk Positions
Managing currency risks using currency options
Identifying suitable hedge transactions, entering transactions and monitoring risk
You enter a currency option to hedge against currency risks you have identified, and check the effect of the option on the exposure.
3-1 Enter a currency option that changes the currency exposure for the interval you have selected:
Conclude the option as a contract with the Deutsche Bank to hedge one of the open items from the last exercise.
(Note: The exercise date of the option must fall within the time interval for the open position.)
3-2 Use the variant you have defined to look at the new currency exposure, and discuss the effect of the currency option. (in the exposure view, select the grouping "MRM").
When the exposure is calculated, what amount is taken into account for the option?
(C) SAP AG AC030 52
6.51
Unit: Market Risk Management and Managing
Risk Positions
Managing interest rate risks using derivatives
Analyzing interest rate exposure
Creating a hedge transaction
After assessing your currency risks, you now want to analyze your interest rate risks. Interest rate risks arise from operative payment flows from Cash Management, as well as from transactions in the money market, securities and loans areas. These are listed alongside hedge transactions from the foreign exchange and derivatives areas.
4-1 Look at the interest rate exposure for the operative payment flows (Cash Management tab, Grouping "MRM") and financial transactions in your company code.
Define a variant for the time period for which you want to display the interest exposure (for example, from today to today + 2 years). Set the Display type for exposure indicator to display the exposure in terms of basis point value. Choose monthly time intervals.
Save your settings as a variant.
4-2 Enter an interest rate swap that changes the interest exposure for the term you have selected.
(C) SAP AG AC030 53
4-3 Select the variant you have already defined and include the interest rate swap. To isolate the effects of your swap, restrict your selection to derivatives and enter your transaction number in the selection screen.
4-4 Discuss the effect on your interest exposure and interpret the values displayed.
(C) SAP AG AC030 54
Unit: Market Risk Management and Managing
Risk Positions
Analysis and simulation
Analyzing your positions using scenarios and fictitious transactions
Analysis report (Example: Foreign exchange)
In addition to using actual market data for valuation, you would like to analyze the effects of possible market changes (scenarios). You use fictitious transactions to identify suitable instruments to hedge your positions before concluding actual transactions.
5-1 Check the USD cash flows in your company code (TRXX) with the grouping "MRM" for the next two months. To begin with, do not include any financial transactions in the analysis. The summarization date simulates the flow of all operative cash flows on this date (simplified assumption in order to plan hedge transactions for this date).
5-2 Analyze your positions using the "High" and "Low" scenarios (these each represent high or low interest rate levels and exchange rates).
5-3 Discuss the differences in the net present values.
5-4 Enter a forward rate transaction and an option as fictitious transactions and check the effects on the net present values and the effective rate.
(C) SAP AG AC030 55
6.52 Market Risk Management and Managing Risk Positions
Solutions
Unit: Market Risk Management and Managing
Risk Positions
1-1 To run a mark-to-market valuation for the transactions in your company code:
Accounting Treasury Market Risk Information System Mark-to-Market Mark-to-Market Position Evaluation
Entries: Data; Suggestion:
- Display currency: UNI- Evaluation type: 0001- Evaluation per = today- Horizon = today
Note: Market Risk Management always displays the market value for stocks.
1-2 To display the calculation basis:
From the report, you can display the market data that has been used by choosing Calculation basis (button). To view the yield curves in graphical form, press the graphics symbol. You can then choose (select) a yield curve, or select all the yield curves using the symbols below the yield curve list. Press the graphics symbol again to see the graphical display.
1-3 To display the detail log:
Choose Detailed log (button) to display the individual calculation steps. Using the product type and transaction number as a basis, navigate to one of the fixed-term deposit transactions you have created. If the horizon for the mark-to-market valuation is after the first position flow (investment/borrowing), the system displays and discounts the cash flows for repayments and interest. The overall net present value for the transaction is calculated by totaling the net present values for the individual cash flows.
If the horizon is before the first position flow (but after the contract date of the transaction), this position flow is also included in the valuation.
(C) SAP AG AC030 56
Unit: Market Risk Management and Managing
Risk Positions
2-1 To look at the currency exposure:
Accounting Treasury Market Risk Information System Exposure Currency Exposure
Entries: Data; Suggestion:
- Evaluation type: 0001
- Evaluation per = today
- Horizon = today
- Date from = today
- Date to = today + 1 year
- On the Cash Management tab, enter "MRM" in the Grouping field, and set the Discount underlyings indicator.
- On the Output controller tab, choose monthly time intervals.
Save your settings as a variant (Save icon).
2-2 To navigate in the exposure display:
You can branch to the term view, or the view showing the individual transactions using the corresponding buttons. If you double-click an individual item in the Underlying or Hedge transaction columns, the system branches to Cash Management or the detail transaction view.
(C) SAP AG AC030 57
2-3 Structure of Cash Management groupings:
The Cash Management groupings you use should be structured as follows:
- They should not contain Treasury levels (Treasury transactions can be selected directly in MRM).
- They should cover the levels/groups that you want to set against Treasury transactions.
(C) SAP AG AC030 58
Unit: Market Risk Management and Managing
Risk Positions
3-1 To purchase a currency option:
Accounting Treasury Treasury Management Foreign Exchange Trading Standard Option Create
Entries: Data
Note: Support for working out the option price:
Button: Option price calculatorEvaluation type: 0001 (Standard evaluation)Entries: Data (enter directly, or use market data button)Button: Premiums
3-2 To look at the changed currency exposure:
Accounting Treasury Market Risk Information System Exposure Call up currency exposure using a variant
Goto Variants Get
(C) SAP AG AC030 59
The system displays the hedge transaction next to the corresponding position. Even if a position has been fully hedged (nominally), the system still shows an open position if the delta of the option < 1. The option value considered for exposure calculation is delta-weighted (nominal value x delta factor).
(You can see this when you view the option transaction. Choose Extras Option Price Calculator Button: Sensitivities.)
(C) SAP AG AC030 60
Unit: Market Risk Management and Managing
Risk Positions
4-1 To look at the interest rate exposure:
Accounting Treasury Market Risk Information System Exposure Interest Exposure
Entries: Data; Suggestion:
- Evaluation type: 0001
- Evaluation per = today
- Horizon = today
- Yield curve shift: 1 basis point
- Date from = today
- Date to = today +2 years
- On the Cash Management tab, enter the grouping "MRM"
- On the Valuation parameters tab, set the Display type for exposure indicator to display the exposure in terms of basis point value.
- On the Output controller tab, choose monthly time intervals.
Save your settings as a variant (Save icon).
(C) SAP AG AC030 61
4-2 To create an interest rate swap:
Accounting Treasury Treasury Management Derivatives Trading OTC Interest Rate Instrument Create
Entries: Data; Example: Receiver swap
Field name or data type Values
Contract date Today
Term start Today + 2 days
Term end +++5
Outgoing interest
Nominal amount 5,000,000.00 UNI
Effective from Today + 2 days
1st due date ++6
Freq. month 6
Var. interest LIB_6_UNI
Int. calc. method Act/360
Incoming interest
Nominal amount 5,000,000.00
Effective from Today + 2 days
1st due date ++12
Freq. month 12
Fix. rate 5
Int. calc. method 360/360
(C) SAP AG AC030 62
4-3 To look at your interest rate exposure:
Accounting ... Exposure Interest Exposure
Variants Get
4-4 In the basis point value display, the values in the interest exposure show the difference in the net present values of the cash flows for the respective periods (in other words, a net present value gain or loss), which would result from a change of 0.01% (equivalent of one basis point) in the interest rate level. If the open position is very small, this means that a high proportion of the interest rate risk has been hedged.
(C) SAP AG AC030 63
Unit: Market Risk Management and Managing
Risk Positions
5-1 To analyze/simulate positions for USD cash flows:
Accounting
Market Risk
Analysis/Simulation
With Underlyings
Currency Risk
Entries: Data; Suggestion:
- Evaluation type: 0001
- Transaction currency: USD
- Base currency: UNI
- Evaluation per = today
- Horizon = today
- Date from = today
- Date to = today +2 months
- On the Cash Management tab, enter the grouping "MRM"
Start the report
5-2 To incorporate scenarios:Enter "high" and "low" scenarios on the report screen, and choose Calculate.
(C) SAP AG AC030 64
5-3 Changes to the net present values:
In the case of outgoing payments, a lower net present value is an advantage (in other words, a lower dollar amount would have to be entered today to meet your payment commitments on the summarization date). By contrast, a higher net present value is an advantage in the case of an incoming payment.
5-4 To enter fictitious transactions:
Forward transaction: Enter 60A/102, amount, inflow (+) or outflow (-), strike (= rate of the forward transaction) and due date, choose Calculate.
Option: (Select “Fk2” to display the option transaction next to the forward transaction), enter 76A/100, amount, purchase call = inflow (+) or purchase put = outflow (-), strike and due date. You can enter the premium manually or let it be calculated automatically by choosing Calculate.
As a rule, an option allows you to participate in a positive market trend, whereas a forward transaction only serves as a hedging instrument, since both parties are under an obligation. The advantage of the forward transaction is that it is a cheaper alternative if the market trend is negative.
(C) SAP AG AC030 65