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Cash Accounting and Cash Flow Planning with SAP Liquidity PlannerStephan Kerber, Dirk Warntje

Content Introduction .............................................. 3Structure of the Book ..................................... Acknowledgments .......................................... 3 4 3.4 Cash Accounting Processes ................... 28 Information Acquisition from Assignment Mechanisms ...................... 28 Information Acquisition from Bank Statement Information ................ 29 Information Acquisition from Financial Accounting ............................ 31 6 7 3.5 8 9 Manual Assignment and Manual Transfer Posting ................................... 36 Analysis Reports ................................... 36 Conclusion ........................................... 37

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Business Overview .................................. 51.1 1.2 1.3 1.4 1.5 1.6 The Concept of Cash Accounting .......... Tasks of Cash Accounting and Liquidity Planning ................................. Recipients and the Need for Information .......................................... Financial Accounting and Cash Accounting ................................... Differences to Cash Management ......... 5

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Conclusion ........................................... 11

SAP Liquidity Planner: Liquidity Planning and Reporting Using SAP BW/SEM ............................... 394.1 Modeling in SAP BW/SEM .................... 40 SAP Business Content ......................... 40 Master Data ......................................... 45 Characteristics ..................................... 53 Planning Layout in SAP SEM-BPS/BW-BPS ........................ 54 4.2 4.3 4.4 4.5 The Liquidity Planning Process .............. 63 Extracting Actual Data .......................... 64 Reporting in SAP BW ............................ 67 Conclusion ........................................... 69

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Case Scenario: Implementing Cash Accounting and Liquidity Planning .... 132.1 Conclusion ........................................... 15

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SAP Liquidity Planner: Liquidity Analysis Using SAP Actual Calculation ................................................. 173.1 3.2 3.3 Overall Process and System Integration ............................................ 17 Technical Settings in SAP Actual Calculation ........................................... 17 SAP Actual Calculation (Cash Accounting) ................................ 19 Data Model and Master Data ............... 19 FunctionalityOverview ..................... 21 Customizing SAP Actual Calculation ... 21 Tools .................................................... 26 Tables ................................................... 27

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Liquidity Planning and Reporting Without SAP BW/SEM .......................... 715.1 5.2 5.3 5.4 5.5 5.6 Overview .............................................. 71 Customizing .......................................... 71 Master Data and Actual Data ................ 75 Planning ............................................... 76 Reporting ............................................. 77 Conclusion ........................................... 78

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Content

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Outlook ...................................................... 79 Appendix .................................................... 81Lee Iacocca and Cash Flow ............................. 81 Indirect Cash Flow .......................................... 81 Plug-in ........................................................... 81 Case Scenario ................................................. 82

Bibliography .............................................. 83 Index ........................................................... 85

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Galileo Press 2006. All rights reserved.

Introduction

This book is about money. Where does money come from and where does it go? Because liquidity is one of the critical success factors for a company, it is integral to running a business. The most important aspects of liquidity are the ability to ensure solvency and generate payment surpluses. In this context, companies constantly try to analyze and plan their cash ow. Unfortunately, established applications such as Accounting or Cash Management dont provide the necessary information on cash ow required by companies; however, SAP Liquidity Planner affords you with the much needed relief in this area, as shown by its rst implementations in both nationally and internationally operating companies. The complex requirements placed on a retrograde liquidity analysis, a decentral planning tool, and an efcient reporting were met by the use of SAP Liquidity Planner. SAP Liquidity Planner is a component that consists of two applications: Cash Accounting (SAP R/3) and Liquidity Planning (prior to Release 3.5, it was part of SAP Strategic Enterprise Management (SAP SEM), from SAP Business Information Warehouse (SAP BW) Release 3.5 onwards, it has been included in BW). Cash accounting determines the cash ow either based on an electronic bank statement or data from nancial accounting. Liquidity planning is carried out using the planning functionality in SAP BW. Reporting is performed by SAP BW. In the past, this component was part of Corporate Finance Management (CFM), and since the introduction of mySAP Enterprise Resource Planning (mySAP ERP) in 2004, it has been located in the Cash Management and Liquidity Management area as part of Financial Supply Chain Management (FSCM). This SAP Press Essentials book outlines the concepts of cash accounting and liquidity planning, as well as the resulting requirements that a business software must be able to meet. In this book, the authors demonstrate how

you can meet these requirements using SAP Liquidity Planner and also, how you can implement this product. Readers of this book should have a sound knowledge of the accounting application in SAP R/3 as well as SAP BW and SAP SEM.

Structure of the BookChapter 1 outlines the business principles and provides clear denitions of the terms used in the context of cash accounting and liquidity planning. In addition, the concept of cash accounting is introduced, along with a description of its interdependencies with accounting. In the nal sections of this chapter, we clearly distinguish SAP Liquidity Planner from SAP Cash Management. Chapter 2 describes a case study that is referred to and further developed throughout the book. We use this example to help you understand the functionality and the technical concept of SAP Liquidity Planner, but it should also serve as an aide to you in implementing this component. Chapter 3 and Chapter 4 contain a detailed description of SAP Liquidity Planner. They provide an insightful introduction to the two main areas of the product: Chapter 3 describes Cash Accounting (SAP R/3), while Chapter 4 deals with Liquidity Planning (SAP BW). In both chapters, you will also nd detailed information on customizing and the various functions of the application. Wherever necessary, the case scenario is referred to, enhanced, and completed. Chapter 5 describes a workaround for simplied liquidity planning and reporting in SAP R/3 without using SAP BW. Chapter 6 addresses possible developments and future requirements of SAP Liquidity Planner. The Appendix contains additional information.

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Introduction

AcknowledgmentsSAP is a registered trademark of SAP AG, Dietmar-HoppAllee 16, D-69190 Walldorf. We would like to thank SAP AG for its permission to use the trademark and the materials provided in this book. Note that SAP AG, however, is not the publisher of this book nor is it responsible for the contents of this book. We would like to express our deepest gratitude to our colleague Robert Bieber who supported us with numerous tips and invaluable information.

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Galileo Press 2006. All rights reserved.

1 Business Overview

In this chapter, we will rst dene and differentiate cash accounting and liquidity planning. This is a rather important step in understanding these concepts as they are often used in a multitude of ways. Next, well describe the tasks performed by cash accounting and liquidity planning. Because cash accounting and general accounting are inherently interrelated, we should point out their interrelationships. Lastly, well describe the differences between cash accounting and SAP Cash Management.

Cash accounting records the changes of cash ows, cash ows being incoming and outgoing payments of liquid funds such as cash in hand and bank savings. In accordance with national and international accounting standards such as FASB and IAS, we will use the term cash ow in this book to describe the changes in the means of payment. Liquidity is therefore referred to as a nancial accounting-related concept. Within a certain period, cash accounting records transactions that have a direct inuence on the stock of liquid funds, regardless of the period the payments refer to (see Geuppert 2003, p. 8). This type of recording and displaying of cash ows can be compared to scal accounting, which is used in the public sector. Therefore, cash accounting distinguishes itself from accrual accounting and cost accounting. Figure 1.1 illustrates

1.1

The Concept of Cash Accounting

In business literature, youll nd countless discussions about the concept of cash accounting and its denition. In these discussions, youll also encounter the following terms: cash budget management, ow-of-funds analysis, and cash ow statement, as well as cash ow accounting.

Incoming/Outgoing PaymentsExpenditure/Revenue Expense/Profit Costs/BenefitsCash AccountingProfit and Loss Statement

Data Source (SAP) Cash Accounting Accounting

Controlling

Cash Basis Accounting

Cost and Activity A