Cash Management and Liquidity Planning with BPC in S/4HANA Finance

Cash planning using S/4HANA Finance

Quick Overview of the Components of S/4HANA

Since SAP first introduced the early versions of S/4HANA in late 2013, the three major components remained the foundation of the continually evolving product. They are: SAP Accounting powered by SAP HANA; SAP Business Planning and Consolidation Optimized for HANA; and SAP Cash Management powered by SAP HANA. The newer version of S/4HANA, for example, includes Supply Chain Management and Project Management components as well. Let’s take a deeper dive into the financial components.

  1. SAP Accounting powered by SAP HANA – The big buzz was around SAP Accounting and its simplification of tables, business content and code. The elimination of summary tables and combination of FI and CO components resulted in numerous efficiencies.
  2. SAP Business Planning and Consolidation Optimized for HANA – Since this blog post is about liquidity planning, I will keep this short and try to focus on the very basics. Basically, this version of BPC is an embedded BPC NW with pre-delivered content. This content includes HANA views that take care of the real-time master and transaction data integration. User input templates and reports created using the Analysis Office Excel plug-in. It also includes all the BW technical content (multi-providers, aggregation levels, Bex queries, and planning functions) that is required for the previously mentioned templates to work.
  3. SAP Cash Management powered by SAP HANA – SAP Cash Management provides significant enhancements for the preceding ERP offering for Cash Management, Bank Account Management and Liquidity Management, as well as introduces new treasury capabilities like hedge accounting, commodity management, risk and portfolio analysis.

Financial components of S/4 HANA include Accounting, Business Planning and Consolidation, and Cash Management

The Cash Management Module

SAP Cash Management powered by SAP HANA leverages three components to deliver the expanded capabilities. The three components are: cash operations, bank account management and liquidity forecasting.

Financial components of S/4 HANA include Accounting, Business Planning and Consolidation, and Cash Management

Within the cash management module, a company can accomplish the following tasks:

  • View cash positions using daily financial statements
  • Analyze payment activity
  • Manage bank accounts across institutions
  • Create rolling liquidity plans and forecasts
  • Complete cash flow analysis

The cash management module is integrated with internal and external systems. For example, internal integration with debt and risk management. External integration points are with banking systems, financial market data providers and financial exchanges and markets.

Financial components of S/4 HANA include Accounting, Business Planning and Consolidation, and Cash Management

How is BPC Used in Liquidity Planning?

The liquidity planning module enables companies to create a timely and objective liquidity plan that can provide early indicators or steering tools for investment and borrowing decisions. It helps companies track and trace the liquidity planning cycle and helps analyze variances or provide predictive forecast results. It also provides extensive foreign currency capabilities such as conversion and creates a FX hedge plan, which impacts liquidity. Liquidity planning in S/4HANA models a five step planning process.

Financial components of S/4 HANA include Accounting, Business Planning and Consolidation, and Cash Management

Liquidity planning is based on BPC that is included with S/4HANA -BPC/O – with significant amount of delivered content similar to the financial planning solution. However, the delivered content is presented differently and uses different front-end solutions. The solution mainly relies on BPC business process flows (BPF) and Design Studio input templates. Neither one of these options are delivered out of the box in the financial planning scenarios. The functions are launched from the Fiori Launchpad, which brings the users to a BPC BPF. Most demos highlight the email notification functionality and planning functions, such as spreading and disaggregation of forecast values.

Financial components of S/4 HANA include Accounting, Business Planning and Consolidation, and Cash Management

Implementation

With such a comprehensive solution including so many components, one might wonder if the cash management module would introduce unnecessary complexity to their business and users. The good news is that clients don’t have to activate all of the business content. They can leverage only part of the solution from the pre-delivered content that fits their business needs. The pre-delivered business content also enables clients to start using the module faster. In a case when the pre-delivered business content doesn’t exactly meet the desired functionality, templates and process can also be personalized, especially in the liquidity planning module using BPC.

More Information

To learn more about SAP S/4HANA Cash Management, contact itelligence. Whether you are a new customer or looking at migration paths, we can lead the way.

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