08.12.2023
S/4 Cash Management Transformation to the Best of Breed Solution
You would like to introduce best-of-breed cash management as part of an S/4HANA transformation? Your initial situation may be that you are already using the cash management functions in your SAP ERP system for cash planning and the liquidity forecast as well as the functions in the SAP Liquidity Planner area for the actual liquidity analysis. Are you planning or implementing a changeover to S/4HANA and want to know how to carry out the changeover in these two areas and which points need to be considered? In this article, we provide you with some basic information.
Cash and Liquidity Management in SAP ERP is a standardised solution that has been delivered for years and supports a large number of our customers in planning and managing their cash flows. Functions such as the cash position, liquidity preview, automatic account clearing, account transfers using repetitive codes or the manual or automatic creation of payment advices / planned items are well-known basic functions that support the cash manager in their daily work. With cash management in S/4HANA Finance combined with the S/4 Cash Position & Liquidity Cockpit (S/4 CPC/LPC) from BDF, you now have an even more comprehensive, powerful, flexible and high-performance overall package at your disposal. Changes to the UI technology in particular mean that new Fiori apps provided by SAP offer new functionalities and analysis options. In addition to the SAP GUI UI, the S/4 CPC / LPC cockpits are also available as Fiori apps.
In the new S/4 Cash Management under S/4HANA, you have to choose between two options, i.e. whether you only want to use the basic range of functions familiar from ERP or whether you want to use the full range of functions. With the basic range of functions, the existing SAP Cash Management functions listed above will continue to be used and largely made available. The "full range of functions" offers new, advanced and workflow-based functions in the following areas:
- Bank Account Management incl. extended integration into SAP Advanced Payment Management (APM) and SAP Bank Communication Management (BCM)
- Cash operations with numerous apps for managing company-wide liquidity (end-to-end processes)
- Liquidity management with extended functions for liquidity planning and analysis.
The operational processes and online cash visibility are empowered by the cockpit support of S/4 CPC and S/4 LPC. The S/4 cockpits offer the following innovations and enhancements, which lead to a best-of-breed approach.
S/4 Cash Position Cockpit CPC:
- Expansion of integration with the aim of maximising integration and avoiding the recording of manual notifications
- Integration of intraday account statements CAMT 052 / MT942 (cash-in movements; cash-out movements for information purposes)
- Treasury integration with other product types: FX product types, completion of MM product types (drawings, fixed-term deposits, deposits at notice, loans, ...), facilities, lines,...
- CPC Interactive scheduling with direct integration into the booking and payment process:
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Drawings incl. current utilisations and overview of the product type BWA / termination benefit in the Cockpit;
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Direct booking and payments from the overdraft facility,...
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- Integration of cash flows from all ERP applications
- Planning process integration Daily Cash with short-term liquidity planning:
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Short-term planning CFS Cash Forecast Short rolling in LPC with automatic, value-based integration into the current CPC dispo day
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Bank account overview/cash flow analysis for the next few days
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Direct tapping of FI-AP (accounts payable) items
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Extended integration of FI-AR debtors incl. consideration of payment behaviour
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Automatic integration FI: for Bitburger this would be the integration of taxes / tax payments
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- Advanced bank transfer solutions (bank account clearing; use of key figures such as planned balance, minimum balance, etc. and associated transfer proposals)
- CPC actual invoice automatically: reconciliation of plan data from the previous day with actual data from the current account statements; items that have not been reconciled can be included in the overdraft reporting again.
- S/4 Reporting Cash Position.
S/4 Liquidity Planning Cockpit (LPC):
- Refinement/expansion of the planning functions. I.e. extension of planning based on actual values from the past to include the planning set of rules
- New process for short-term liquidity planning in LPC with
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CPC integration
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Integration MTP
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- Cash Forecast Short (CFS) with a focus on automatic integration to
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FI-AP: Accounts payable
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FI-AR: Accounts receivable incl. consideration of payment behaviour
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Taxes / tax payments
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- Extended liquidity (LPC) reporting (in addition to management report, e.g. plan-plan and plan-actual comparison).
This gives them the option of gradually adapting the new S/4 Cash Management to their requirements and processes. For example, at the start of a S/4HANA migration, you could initially only use the familiar and existing basic scope and then gradually introduce the new functionalities as required. In our projects, however, we have found that most customers see clear benefits from the new functionalities, including the cockpit, and are using the full range of functions with cockpit support from CPC and LPC as part of their digital transformation when migrating to S/4HANA.
A few more aspects of the data model:
- With the new features, the cash management data model has completely changed in S/4, both in terms of the basic function and the full range of functions (keyword: One Exposure Hub as a single source of truth), which also means that customer-specific functions and reports based on the old cash management tables must be adapted to this new data model.
- The concept of the flow type has also found its way into cash management. In addition to the liquidity position (familiar with the SAP Liquidity Planner application), the flow type enables a multidimensional view of cash flows over the entire life cycle within the full range of functions.
- If you have been using the SAP Liquidity Planner in your SAP ERP system (ECC) with the actual liquidity analysis functionality to classify your cash flows by source and application of funds and want to use this in S/4 as well, you must activate the full range of cash management functions. Familiar allocation transactions such as FLQAD or FLQAF are no longer available under S/4HANA. The basic logic of liquidity position determination changes here (online determination with probability levels instead of downstream allocation jobs).
- However, project experience shows that when switching to S/4, the assignment logic must be qualitatively revised and new queries defined. If you used the existing user exits or function module enhancements for your logic in the old ERP world, you can no longer use these 1:1 in S/4HANA and must transfer the solutions to the new options accordingly.
The SAP Analytics Cloud is also worth mentioning as a strategic tool for management reporting. In addition to the SAP standard reports, you can use the options for extended and customised cash & treasury reporting. The SAC provides real-time cash and liquidity management data with the most important KPIs within the Treasury Executive Dashboard. In this article, we can only give you an initial overview of some of the points to consider when converting to S/4HANA Cash Management. For a more in-depth exchange, we can organise an exchange of experience with you, in which we present our project experience from practical implementation and introduction projects in the new S/4 Cash Management and address your specific questions. We would be happy to share our expertise with you and provide you with optimal support on the path to digital transformation in SAP.
Your contact persons
Michael Völkl / Uwe Herrmann
