Sappress Financial Supply Chainm.de.En

8/4/2019 Sappress Financial Supply Chainm.de.En

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Donovan Pfaff, Bernd Skiera, Juergen Weiss

Financial Supply

Chain Management


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SAP PRESS: "Financial Supply Chain Manangement Extract"

Content

Preface

Preface

1

1.1

1.2

1.3

1.4

17

19

21

21

22

23

24

Introduction

Problem .................................................. .................................

Target

Target group .................................................. ..........................................

Construction .................................................. ................................................

2 Leverage the financial supply

Chain management

Introduction .................................................. ...........................................

Strategic lever .................................................. .............................2.2.1Kollaboration ............................................... ...........................2.2.2Verbesserte process design .............................................. ...2.2.3Anforderungen to the Auditing ............................................ ...

Technological levers .................................................. ........................2.3.1Offene architectures .............................................. .................

2.3.2Modularisierung ............................................... .......................2.3.3Integration ............................................... ...............................

Organizational Lever .................................................. ......................2.4.1Shared service organizations ........................................... .....2.4.2Virtuelle organizations .............................................. ............2.4.3Anforderungen to CFO ....................................

Conclusion

25

25

26262728

2930

3030

31313132

33

2.1

2.2

2.3

2.4

2.5

3 Integration of corporate

Software systems

Case Study .................................................. ............................................

35

353.1

Content 5


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3.2 Problems at the company's internal integration ..........................3.2.1Technische problems .............................................. ................3.2.2Probleme security ............................................. .............3.2.3Rechtliche problems .............................................. .................3.2.4Probleme the operation ............................................. .......

Approaches to solving the technical problems ....................................3.3.1Grundidee ............................................... ...............................3.3.2Integrationsebenen ............................................... ..................3.3.3Integrationstechnologien ............................................... ..........3.3.4Umsetzung ............................................... ...............................

Approaches to solving security problems .......................................3.4.1Grundidee ............................................... ...............................3.4.2Security Policy .............................................. ..........................3.4.3Umsetzung ............................................... ...............................

Approaches to solving the legal problems .....................................

Approaches to solving the problems of usability ...........................3.6.1Grundidee ............................................... ...............................3.6.2Umsetzung ............................................... ...............................

Conclusion

3536363737

3737373942

45454648

49

494950

50

3.3

3.4

3.5

3.6

3.7

4 Integration of non-corporateSoftware systems

Case Study .................................................. ...........................................

Problems at the company's external integration .........................4.2.1Technische problems .............................................. ................4.2.2Probleme security ............................................. .............4.2.3Rechtliche problems .............................................. .................4.2.4Probleme the operation ............................................. .......

Approaches to solving the technical problems ....................................4.3.1Grundidee ............................................... ...............................4.3.2Unternehmensexterner exchange ...........................................4.3.3Integrationstechnologien ............................................... ..........

Approaches to solving security problems .......................................

Representation of public-key method ................................................4.5.1Signieren ............................................. documents ........4.5.2Integrittsprfung ............................................... ....................4.5.3Authentizitt ............................................... ............................4.5.4Vertraulichkeit ............................................... .........................4.5.5Bewertung ............................................... ...............................

Approaches to solving the legal problems .....................................4.6.1Grundidee ............................................... ...............................4.6.2Umsetzung ............................................... ...............................

Approaches to solving the problems of usability ...........................

Conclusion

53

53

5354545555

55555657

59

596060616161

616264

65

65

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

6 Content


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5 Overview of the managementthe Financial Supply Chain

Processes of enablement Trade Financial ...........................................

Processes of the Trade Financial Settlements ............................................

Opportunities for analysis .................................................. .................

Improvement within the Financial Supply Chain ...........5.4.1Qualitt ............................................... ....................................5.4.2Qualittsanforderungen of financial processes ..............................5.4.3Zeit ............................................... ..........................................5.4.4Kosten ............................................... .....................................5.4.5Kostenarten and cost drivers in the supply chain ................. 5.4.6Kosten the integration of financial processes ............................

67

68

69

71

71727274787980

5.1

5.2

5.3

5.4

6

6.1

6.2

Representation of the qualification process

Case Study .................................................. ............................................

Problems qualification process ..................................................6.2.1Unternehmensinterne problems ..............................................6.2.2Unternehmensexterne problems .............................................

The basic idea .................................................. ..........................................6.3.16.3.26.3.3

Search and preselection ............................................... .............Authentication ................................................. ....................Credit check ................................................. ......................

81

81

818282

83838790

95

6.3

6.4 Conclusion

7

7.1

7.2

Presentation of the financing process

Case Study .................................................. ............................................

Problems with financing process ..................................................7.2.1Unternehmensinterne problems ..............................................7.2.2Unternehmensexterne problems .............................................

The basic idea .................................................. ..........................................

Funding opportunities .................................................. ...............7.4.1Handelskredite ............................................... .........................7.4.2Kredite of banks and banking-related institutions ..................7.4.3Kreditsubstitute ............................................... ........................7.4.4Neue Financial Products .............................................. ................7.4.5Vergleichende assessment .............................................. .........

97

97

979899

99

99100101103105107

7.3

7.4

7.5 Conclusion 108

Content 7


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8

8.1

8.2

Representation of the price discovery process 111

Case Study .................................................. ........................................... 111

Problems with price discovery process .................................................. 1118.2.1Unternehmensinterne problems ............................................. 1128.2.2Unternehmensexterne problems ............................................. 112

The basic idea .................................................. .......................................... 112

Price fixing .................................................. ................................. 1138.4.1Uniforme prices .............................................. ........................ 1138.4.2Differenzierte prices .............................................. .................. 113

Pricing .................................................. .......................................8.5.1Festpreise ............................................... ................................

8.5.2Preisverhandlung ............................................... .....................8.5.3Auktionsmodelle ............................................... ......................Auctions 8.5.4Umgekehrte .............................................. .............8.5.5Brsen ............................................... .....................................8.5.6Request for Offers ............................................. ......................8.5.7Aggregierte transaction models .............................................8.5.8Vergleichende assessment .............................................. ........

115115

116116117117118118118

8.3

8.4

8.5

8.6 Conclusion 119

9

9.1

9.2

Representation of the hedging process 121

Case Study .................................................. ........................................... 121

Problems with security process .................................................. . 1219.2.1Unternehmensinterne problems ............................................. 1229.2.2Unternehmensexterne problems ............................................. 122

The basic idea .................................................. .......................................... 122

Risks within the Financial Supply Chain ...................................... 123

9.4.1

9.4.29.4.39.4.49.4.59.4.69.4.79.4.8

Risk debtors ................................................. ......................

Country Risk ................................................. ............................Payment risk ................................................. ...........Transport Risk ................................................. .......................Acceptance and delivery risk .............................................. .Credit risks ................................................. ..........................Price risk ................................................. ...............Exchange rate risk ................................................. ..................

124

124124125125125127127

9.3

9.4

9.5 Hedging instruments and their integration ................................ 128

9.5.19.5.2

Selected hedging instruments ................................... 129Comparative assessment ................................................ ...... 132

9.6 Conclusion 132

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10

10.1

10.2

Representation of the invoicing process 135

Case Study .................................................. ............................................ 135

Problems with billing process .................................................. ..... 13510.2.1 In-house problems ............................................. . 13510.2.2 Corporate External Issues ............................................. 136

The basic idea .................................................. ..........................................10.3.1 Biller Direct Model .......................................... ......................10.3.2 Buyer Direct Model .......................................... .....................10.3.3 consolidator model ............................................ ...................10.3.4 Direct connection .............................................. ......................10.3.5 Comparative assessment ............................................. ..........

137138140143144144

10.3

10.4 Conclusion 147

11

11.1

11.2

Presentation of the audit process 149

Case Study .................................................. ............................................ 149

Problems with testing process .................................................. ........ 14911.2.1 In-house problems ............................................. . 15011.2.2 Corporate External Issues ............................................. 150

The basic idea .................................................. ..........................................

11.3.1 Electronic Billing Information ............................................. ...11.3.2 Access control .............................................. .......................11.3.3 Workflow support ............................................ .............Item 11.3.4 Matching ............................................ ............................

151

152152152153

11.3

11.4

11.5

11.6

Expiration .................................................. ................................................. 153

Comparative assessment .................................................. ................. 154

Conclusion 156

12

12.1

12.2

Presentation of the complaint process 157

Case Study .................................................. ............................................ 157

Problems with complaint process .................................................. . 15712.2.1 In-house problems ............................................. . 15812.2.2 Corporate External Issues ............................................. 159

The basic idea .................................................. .......................................... 159

Expiration of a complaint .................................................. ................... 160

Improvements in the complaints process ............................................ 16112.5.1 display of digital order confirmation .......................... 161

12.5.2 Requirements for Software Solutions ....................................... 162

Comparative assessment .................................................. ................. 164

Conclusion 165

12.3

12.4

12.5

12.6

12.7

Content 9


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13

13.1

13.2

Representation of the payment process 167

Case Study .................................................. ........................................... 167

Problems with the payment process .................................................. ........ 16713.2.1 In-house problems ............................................. 16813.2.2 Corporate External Issues ............................................. 168

The basic idea .................................................. .......................................... 168

Macro payments .................................................. ...................................13.4.1 Offline payment .............................................. ..........................13.4.2 Online Bill .............................................. ........................13.4.3 Credit Card-based Payment ............................................. .....13.4.4 direct debit (debit) ..........................................13.4.5 Evaluation of Macro Payments ............................................ ..

Micropayment .................................................. ...................................13.5.1 direct debit (collection) systems ........................................... ........13.5.2 credit-based systems ............................................. .........13.5.3 Mobile Payment ............................................. .........................13.5.4 Evaluation of Micropayment Methods ...............................

170170170171171171

173173173174175

13.3

13.4

13.5

13.6 Improve the payment process by aggregatingand settlement of payments .................................................. ....... 17613.6.1 Payment Service Provider as a Business Enabler ........................ 17613.6.2 Cash Management ............................................. ..................... 177

Conclusion 17913.7

14

14.1

14.2

Representation of the analysis process 181

Case Study .................................................. ........................................... 181

Problems analysis process .................................................. .......... 18114.2.1 In-house problems ............................................. 18214.2.2 Corporate External Issues ............................................. 183

The basic idea .................................................. .......................................... 183Analysis in the qualification process .................................................. ..... 185

Analysis in the funding process .................................................. ....... 185

Analysis in the pricing process .................................................. ....... 186

Analysis in the validation process .................................................. ....... 186

Analysis in the complaint process .................................................. ....... 186

Analysis in the payment process .................................................. .............. 186

14.314.4

14.5

14.6

14.7

14.8

14.9

14:10 cashflow forecasts .................................................. ....................... 187

14:11 Conclusion 187

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15

15.1

15.2

Interim Conclusion and outlook 189

Case Study .................................................. ............................................ 189

Effects of the dimensions to the process stepsthe Financial Supply Chain .................................................. .................15.2.1 Quality .............................................. .....................................15.2.2 Time .............................................. ...........................................15.2.3 Cost .............................................. ......................................

Improvement in the Financial Trade Enablement ....................15.3.1 Qualification .............................................. .............................15.3.2 Financing .............................................. ..............................15.3.3 Pricing .............................................. ..............................15.3.4 security .............................................. ..............................

Improvement within the Financial Trade Settlements ....15.4.1 statement .............................................. ..................................15.4.2 Examination .............................................. .....................................15.4.3 Complaints .............................................. ..............................15.4.4 payment .............................................. .....................................

189190190190

190191191191192

192193193193194

15.3

15.4

15.5

15.6

Improvements in the analysis ................................................ 194

Outlook .................................................. .............................................. 195

16

17

17.1

17.2

Overview of the Solution Map

Credit Management

197

199

Business idea .................................................. ..... 199

Credit rating .................................................. ............................. 19917.2.1 credit rating of customers ........................................ 19917.2.2 credit rating of existing customers ................................. 200

Credit limit setting .................................................. ......................... 200Credit Monitoring .................................................. ............................ 202

Analysis of credit data .................................................. .................... 203

Credit Limit Management & Control .................................................. .. 204

Credit Information .................................................. .............................. 20817.7.1 External Credit Information ............................................. ...... 209

Credit Rules Engine .................................................. ............................ 210

Credit Decision Support .................................................. ..................... 212

17.317.4

17.5

17.6

17.7

17.8

17.9

17:10 Credit Manager Portal .................................................. ........................ 213

17:11 Scenario application .................................................. ......................... 215

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18 Electronic Bill Presentmentand Payment (EBPP) 217

18.1

18.2

Business idea .................................................. ..... 217

Technical fundamentals of SAP Biller Direct ......................................18.2.1 Authentication and authorization of users ................18.2.2 Master data of the participants ............................................ .......18.2.3 Notification concepts in SAP Biller Direct .......................

Business processes within SAP Biller Direct ..............................18.3.1 Selection of open items ........................................... .......18.3.2 calculation screen .............................................. .....................18.3.3 Display of the billing and payment history .........................18.3.4 Full payment .............................................. ...............................

18.3.5 Partial payments .............................................. ............................18.3.6 Stopping payments ............................................ ..............18.3.7 Transfer of credits ............................................ ....18.3.8 display of balances ............................................ .....................18.3.9 Assignment of Open Items ........................................... ....18/03/10 Change of payment advice ............................................ .....3/18/11 connection to the SAP Cash Management ...............................18.3.12 Management of customer contacts .......................................18/03/13 Various Biller Direct Modes .......................................... ....18/03/14 logging of user actions .........................................

SAP Biller Consolidator .................................................. ......................18.4.1 Parties involved ............................................. ......................18.4.2 Thin and thick consolidator model ......................................18.4.3 Transactions .............................................. .......................18.4.4 Integration with the SAP system ......................................... ....18.4.5 booking and status information ........................................18.4.6 Archiving .............................................. .............................18.4.7 Master Data .............................................. .............................18.4.8 Authentication and Authorization ........................................18.4.9 Cross ............................................. Consolidation ...................4.18.10 Cost events ............................................. ................................

218220223226

227227228231232

233234234236237237238238239240

242242248248254255256257257258258

18.3

18.4

18.5 Application scenarios for Electronic Bill Presentment and Payment .. 258

19

19.1

19.2

Dispute Management 261

Business idea .................................................. ..... 261

Dispute cases .................................................. ......................................19.2.1 Attributes in the dispute case ............................................ .............19.2.2 Structure of the case file ............................................ ....................19.2.3 Other components of the dispute case ....................................19.2.4 dispute cases and actions ............................................ .........

262262264265266

19.3 Case Management Organizer .................................................. ............. 266

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19.4

19.5

Permissions and roles .................................................. ............... 267

Process of integration with Financial Accounting ....................................19.5.1 Overview .............................................. ..................................19.5.2 Supported transactions in Financial Accounting ..............

19.5.3 Automatic Data Transfer ............................................. .19.5.4 Change of clarification and display cases ...................................19.5.5 Deleting dispute cases ............................................ .........19.5.6 Close of dispute cases ............................................ .......19.5.7 compensation and cancellation procedures ........................................... ...19.5.8 Amounts in Dispute Case ............................................ ................19.5.9 escalation and automatic closing of dispute cases .....19/05/10 Planned impact on the dispute case

referenced objects in the financial sector .....................................

268268269

270271271272272274278

278

19.6

19.7

Analysis options .................................................. ................ 279

Application Scenario .................................................. ......................... 279

20

20.1

20.2

20.3

In-House Cash 281

Business idea .................................................. ..... 281

Organizational units .................................................. ...................... 282

In In-House Cash Center Detail .................................................. .........20.3.1 Functions of the management accounts ..........................................20.3.2 Master Data on the current account ............................................ ...

20.3.3 Definition of products ............................................ ............20.3.4 establishment of accounts ............................................ ...............20.3.5 Definition of Terms ............................................ .........20.3.6 Setting limits ............................................ ................

Business processes .................................................. ..............................20.4.1 automation of intercompany payments

through internal cash clearing .........................................20.4.2 Automation of the Group's external payments

by central figures ............................................... ..............20.4.3 Automation of incoming payments from central

Number of input ................................................. ............................

284284285

287288288290

291

291

294

295

20.4

20.5 The use of several in-house cash centers:Bank circular cross-Book .................................................. ....... 29720.5.1 Internal numbers over several in-house cash center ............... 29720.5.2 The central figures on several in-house cash center ............. 299

Currency exchange in In-House Cash Center .......................................... 301

Periodic .................................................. ..........................20.7.1 Cutoff for payments ................................20.7.2 Cash Concentration ............................................. ....................20.7.3 Statement of account .............................................. .........................

20.7.4 Interest compensation .............................................. .....................20.7.5 Accrued interest .............................................. .........................

302302303304

304304

20.6

20.7

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20.7.620.7.7

20.8

Balance Sheet Preparation ................................................. ................. 304General ledger transfer ................................................. .............. 305

Application Scenario .................................................. ......................... 305

21

21.1

21.2

Cash and Liquidity Management 307

Business idea .................................................. ..... 307

Input data .................................................. ...................................21.2.1 Statements .............................................. ...........................21.2.2 Underground statements ............................................. .........21.2.3 lockbox statements ............................................ ........................21.2.4 data from operational systems ........................................... ...

308308311311312

21.3 Liquidity planning .................................................. ............................. 31421.3.1 Plan items .............................................. ................................ 31421.3.2 Liquidity Planner ............................................. ........................ 314

Analysis21.4.121.4.221.4.321.4.421.4.5

and decision .................................................. .................Daily financial status ................................................. ...................Liquidity forecast ................................................. ................Analysis functions ................................................. .................Comparison and control functions .........................................Borrowing, investment and hedging transactions ...........

318318320321321322

21.4

21.5 Output data .................................................. .................................. 322

21.5.1 Outgoing Payments .............................................. ................... 32221.5.2 Clearing accounts and transfers ........................................ 324

Electronic bank communication .................................................. ....21.6.1 Electronic Statements ............................................. .......21.6.2 Electronic payments ............................................. ..21.6.3 Internet Banking .............................................. ........................

324324325326

21.6

21.7 Application Scenario .................................................. ......................... 326

22

22.1

22.2

Treasury and Risk Management 329

Business idea .................................................. ..... 329

Transaction Manager .................................................. .........................22.2.1 Trade .............................................. ......................................22.2.2 Processing .............................................. ...............................22.2.3 Accounting .............................................. ..............................

Market22.3.122.3.222.3.3

22.3.4

Risk Analyzer .................................................. .........................Present value calculation, sensitivity analysis and simulations ......Currency exposure and liquidity analysis ..............................Value at Risk ............................................... ............................

Flexible portfolio hierarchies ................................................ ....

330332332334

338339340341

342

22.3

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22.4 Credit Risk Analyzer .................................................. ........................... 34322.4.1 Formula catalog for counterparty risk ....................................... 34322.4.2 Limit Management .............................................. ..................... 345

Application Scenario .................................................. ......................... 34722.5

A

B

C

D

Glossary

Notes

Literature

Authors

Index

349

353

361

369

371

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Preface

Especially in times of weak economic growth have forced businessesgene to maintain profitability through increased efficiency or increase.This allows to avoid a negative impact on the share price and liquiditycan be secured medium and long term. Ensuring a sufficientLiquidity is increasingly complicated by the fact that banks in the allocation ofLoans have become more restrictive. Additionally, no longer the capital market asreadily as in the past equity.

This puts one in many companies neglected potential for optimization inthe fore: the efficient organization of financial flows - from credit-worthyImpact Assessments to receipt of payment - with the primary aim of shortening the Cash-to-cash cycle.

In many enterprises due to heterogeneous and poorly integratedSystem landscapes accurate predictions of future cash flows are difficult to create. But it is precisely the consequences of the introduction of Basel II and reduced borrowing costspitalvergabe of banks require accurate and timely statements about theCash flows and financial processes within companies.

The previous solutions for supply chain management have failed to evenfinancial flows in and between companies in the optimization einzubezie . hen Today, companies need to be competitive, a network of sup- suppliers, manufacturers, distributors and customers to control. The transparency in the

Business process and the dynamics in the company's overarching co-cooperation is always crucial. This also applies to the financial processes.

The financial supply chain describes the financial processes of the logistics chain and different- runs parallel to the physical supply chain of a company. As a financial valuechain it begins with the selection of business partners and under-based on cross-company transactions to process payments.The focus is on strategic management of financial flows. , SAP AG these early developments into account and delivers today already numerous che software solutions to optimize financial processes.

The path to an efficient financial supply chain resulting from the new tech-cal possibilities. So as to allow integration of existing technologies and Standards, an electronic exchange of business documents, and a trans-transparent view on the financial flows. Henceforth, the leaders in theCompanies decide exactly how the existing and future cashcurrents can best work for the company's success. The times in whichSuch cash flow forecasts were sketchy there are over. In the future are real-time data about the current status of individual items and the qualityDecision support significantly improved.

This book describes both the current conditions andConditions for optimizing financial processes. For this, firstthe individual process steps from a business perspective-defined and

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Starting explained. Secondly, building on the solutions of SAP AGFinancial Supply Chain Management in detail. The book provides acomprehensive overview of solutions for an efficient financial supplyChain.

The authors combine the insights of the practical research of the Chairfor Electronic Commerce at the Goethe University in Frankfurt am Main with the Expert knowledge of SAP AG.

I wish you as a reader, that you of the critical questions and suggestions Scientists from Frankfurt to benefit as much as from the expertise ofSAP AG. In addition, I wish you a successful implementation of the new findings results and good luck on the way to optimizing financial processes within and betweenTheir companies.

Walldorf, November 2003

Henning KagermannCEOSAP AG

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Preface

Dr. Lothar SteinebachMember of the BoardHenkel KGaA

Goals and strategies of the finance division of the Henkel Group are focused on our investors and customers: optimization of the value in the financial sector toMaximization of shareholder value, ensure corporate governance for the Henkel Group and the provision of efficient and effective financial servicesservices for our market-operative business sectors Laundry & Home Caretel, Cosmetics / Toiletries, Consumer and Craftsmen and artisans, and Hen-Article Technologies. Even with the performance of the financial sector, Henkel intends to use the

best be measured in its class.

The vision of an interconnected global markets and optimized infrastructure and a global resource control, the Henkel Group has moved to the Concept of shared services organizations (SSO) for the processes in the field of Finan-zen and accounting to implement. SSE stands for "Simplification", "Stan-dardization, "and" Optimimization "So on the one hand for combined and uniformLich structured management organizations and the other for simplified,standardized and streamlined processes within these units.

Here, the administrative processes order-to-Cash, Purchase to Pay, GeneralAccounting and Controlling restructured and harmonized the various administrativeconsolidated obligations. While there in 2000 with 37 administrations, each with 400 different accounting processes, again with 26 different ITSystems were intended, at the end of the restructuring measures only 8 countries-administrations with a single SAP system available.

The Financial Supply Chain Management extends this approach and leads him away.The financial supply chain describes the financial processes within the logistics chainand runs parallel to the physical supply chain of a company. The financial

Value chain starts with the customer contact and support the fol-following, even under cross-company transactions, pending completion ofPayment. The focus of the financial supply chain management, one can use the strategic management of financial flows and their optimization.

In this context, the integration of various IT systems and the Inter- action between the individual process steps, a necessary condition for theneed for transparency within the financial flows. This transparency is intended bytimely and accurate data for example on the outstanding debts or working capitalbe achieved. This makes it possible to predict trends and betterTo avoid unnecessary working capital tied.

Detailed financial information will help the company to the corporate strategynology continually adapt the current economic developments. The books can

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closed in a shorter time for the month or quarter end and theAccounts are prepared quickly, which makes for better communication with the capital markets more efficient use of working capital allows. Nextthese advantages, the transaction costs in finance and accounting,developed through a less integrated system landscape and non-harmonized processescan be reduced significantly.

This book is an ideal companion for business on the way to efficient cient and effective financial processes are used. After a description of the currentConditions and prerequisites for optimizing financial processesThe authors analyze in detail the individual steps within this processBuyer and seller perspective. It can be found in the book consecutively actionrecommendations and solutions for better management of financial supplyChain.

The author succeeds in this book is a combination of expert knowledge from the practical research of the Institute for Electronic Commerce at the Johann Wolf-gang Goethe University in Frankfurt am Main with the know how of SAP AG andthe users in the industry. The book thus offers a comprehensiveOverview of possible solutions to a targeted figure of the financialcurrents.

I wish you the reader an exciting and informative journey on the path to a more efficient financial supply chain.

Dsseldorf, November 2003

Lothar SteinebachMember of the BoardHenkel KGaA

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1 Introduction

The financial supply chain describes the financial flows in and betweenCompanies. Optimizing the financial supply chain - the FinancialSupply chain management - is a major improvement and savingspotential for companies dar.

1.1 Problem

The process-oriented view of business processes has proven to be man-ment approach have largely durchgesetzt.1 Many companies already supplyChain strategies derived from their corporate strategies and eingefhrt.2 Offthe successful implementation of supply chain management, the end-result

optimization and the generation of large potential savings, such as reducing theWarehousing, but also productivity and delivery performance within the Sup- ply chain. This enables companies, for example, customers with a different-Patched offer value for money and to increase competitivenessgain over the competition. Today's Supply Chain ManagementSolutions are concerned here primarily with the optimization of goods andInformation flows from suppliers to end customers.

Supply chain management encompasses not only the goods and informationflows, but also the financial flows. The length of a supply chain is through the

Cash-to-cash cycle bestimmt3, ie, each cycle is only with the receipt of paymentcompleted. Although current software solutions enable a company-mens cross, vertical integration of work processes across the entire Value chain, form the financial processes, however inadequately, the ab.4largely paper-based processing of financial processes holds significant inefficiencieszen, leading to long processing times.

The Financial Supply Chain Management is now to close the gap that the supplyChain management so far left open. The aim is to further process improvements and Savings through a seamless integration of financial processes, especially in

Business to Business to achieve. This is particularly the digitalization ofGeschftsbeziehungen5 be reached, a company-wide opti-optimization of financial processes between suppliers, manufacturers, customers and serviceallows service providers.

In practice, financial information is often still paper-based, ie paper-basedsent. Caused by the repeated detection of the resulting data high costs and increased potential for error. Seems surprising to note thatCompanies to optimize these flows have been neglected,although it is actually the exchange of electronic records andthus an optimization relatively easy compared to optimize the physical

Supply chain.

Introduction 21


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As the inter-company integration within a supply chain provides theThe integration processes within the company the opportunity to improvements. By the strategy of the Financial Supply Chain Managementincreasing cost and time pressure in the production of goods and servicesobligations are met. All the processes before the transaction (Financial Trade enablement), after the financial statements (Financial Trade Settlement) andAnalysis of the data generated from the liquidation process will be under theIntegrated financial supply chain management (see Figure 1.1).

Figure 1.1 Overview of the Financial Supply Chain

The financial supply chain describes all the activities of the qualification of Business partners (eg credit scoring) on the financing, pricingand securing the transaction to create and send out the invoices, checkand any complaint. The financial process ends with the receipt of paymentment. The data from the individual process steps are processed in the analysisand evaluated. This makes real-time analysis and optimization, eg an effi-efficient utilization of the payment terms in the Cash Management possible.

Analysts expect that the optimization of the financial supply chain futureTIG play an important role within the company. , Forecasts Kil-len & Associates for the year 2010 that all 2000 world leadersimplement a solution to optimize werden.6 expressed similar optimismcompanies, which plan, 13% of their IT budgets in the Financial Supply SolutionsChain management to investieren.7

1.2 Target

The aim of this book is to show the basis of current trends,conditions under which financial supply chain management is important forCompany. The reader is an idea for improvement

22 Introduction


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been given within the financial flows and it will be shown whichPrerequisites for the successful implementation must be met. This primaryThe aim of this book implies a detailed description of the following three prob-lembereiche:

Requirements for Financial Supply Chain ManagementIt is shown that conditions for efficient corporateand external enterprise integration must be created. It isdetail on the technical and legal problems and the problems of Security received and proposed solutions are developed. The problemsare each illustrated by examples. The economic implica-tions of these integration options are presented in detail.

Description of the Financial Supply Chain ManagementThe Financial Supply Chain Management is discussed and defined.

For this purpose, nine different process steps are described and their potentialpresented for improvements. Stands at the beginning of each descriptionone case study, the process step and included the prob-demonstrates. Is explained using the approaches and recommendations for improvementthis case study and it will be finally evaluated approaches to the measurement of Potential improvement described.

Solutions from SAP AG for the Financial Supply Chain ManagementDerBasis on the conditions and descriptions of the Financial Supply ChainManagement describes the solutions offered by SAP AG and explained. On-Building on the presentation of the basic idea of the respective solutions are

Functionality and interaction with other components shown.Subsequently, an application described, and the correspondingRevenue enhancement and cost savings presented.

1.3 Target group

The book contains valuable information for the following target groups:

Decision makers and employees in financial, IT, accounting and organizationaldepartments received a critical review of an efficient management

financial flows and its prerequisites.

Project in particular will find the essential aspects of integration and critical between success factors and approaches for the calculation of Return on Investmentsof software solutions in the area of financial supply chain management.

Scientists and students will receive a detailed businessOverview of the financial supply chain management and its optimizationpotential.

Consulting firms and accounting firms are hands-on accessin new solutions for the optimization of financial flows grants and technical

and explains legal requirements.

Target group 23


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1.4 Construction

The book is basically divided into two parts. The first part is abusiness description of the financial supply chain and the resulting follow- the management of financial flows. In the second part of the book are concrete Solutions of SAP to optimize the financial supply chain represented.

Detail, the book is structured as follows:

In Chapter 2 are the reasons for the introduction of the Financial Supply Chain Management presented. In Chapter 3 The integration of inter-companydescribed in various systems. Building on this is in Chapter 4 the company-cross-functional integration - collaboration - in the foreground. In Chapter 5 willThe economic implications of the new integration capabilities are-made. Chapter 6 provides an overview of the Financial Supply Chain Managementment before the next nine chapters (Chapters 7 to 15) the individual process

be illuminated by steps such as the invoice in detail.Chapter 16 completes the first part of the book with a summary and aFrom view.

The second part of the book begins in Chapter 17 with the presentation of SAP Solution Map for the financial supply chain management. In Chapter 18 briefly on the SAP Technology received before the next seven chapters, the SAP solutionsthe financial supply chain management are presented.

24 Introduction


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7 Presentation of the financing process

Good forms of financing by suppliers and their offers to createCompetitive advantages. The customers use these services as pro-can duktbndel on, because without financing of the transaction inusually no conclusion can be made.

7.1 Case Study

After the qualification phase, so the selection of suppliers and customers, completedis closed, Mr. Miller would like the company of Anton finance the deal,to extend the payment target. In this way he would like many outsiders

prompt payments of its customers to bridge. You now have the choice between a financing through a bank and a vendor loan of the company Berta.The latter is working on financing transactions very closely with their local bank men and offers to Mr. Smith, the appropriate documentation to this faxforward. A decision is within the next two working daysplanned. In addition, company checks Berta, whether the customer is a supplier's creditshould be offered. Therefore, first the records of pastBusiness picked out. Unfortunately, the documents are very buggyand a quick decision is not possible. After a day's work couldthe credit management department found that the bills in the past genheit were paid only very slowly. Therefore, the decision-Kreditmanager of the company Berta, made by Anton not to grant trade credit. On-

basis of these data also urges the credit manager for an immediate payment the bill, to avoid high sales outstanding days (Days Sales Outstanding)and thus ensure their own liquidity. After two days of the feedback the Bank, Mr. Miller that this would create a financing offer. Mr. Mueller represents the missing documents together and sends them toanother working day by fax to the bank. After examination of documents by the loan officer and the bank issuing the loan for another six Working days are now negotiating the financial settlement betweenbetween the company and Anton Berta occur through the purchase of laptops.

7.2 Problems with financing process

This example shows that the funding process for all involved - ie theCustomers, suppliers and potential lenders - major problemcan have fields. These result from the existing media and fracturesthe faulty database. A study shows that the funding phase through-average about 13 days dauert.116 apply for the funding process the same training

say like for the other process steps of the Financial Trade enablement. Problemsthe individual process steps affecting the overall process. Therefore, it can be different-

Presentation of the financing process 97


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delayed deliveries and thus bottlenecks, such as in production at the customer. come In addition, the part through the long process of funding sup- th the storage period is prolonged unnecessarily.

In addition, the increased requirements come on the lending by the introductiontion of Basel II The conditions for the award of credit by banks to sub- companies in Germany are verschrft.117 This tightening of investment banking in turn, has increased use of equity or increasedAllocation of supplier credit result. An analysis of 21 840 annual-mergers by German companies by the German Federal Bank makes clear thatthe ratio of short-term bank loans, supplier credits to about 3:1.Experts believe that this relationship further in the coming yearswill increase. An integration of innovative financing offers therefore allowsSuppliers, to gain a competitive advantage over their competitors. AsProblem areas of the financing process can be delays, qualitylosses and costs of call. Below again is a subdivision incompany-internal and external problems. Within these subdivisionsfurther distinction between the perspective of the customer and the supplier.

7.2.1 Internal company problems

The company's internal problems in the first step within this processLine selection decisions. The supplier must decide whether to the customerwants to grant trade credit. Most business transactions betweenCompanies are made on the basis of trade credit granted. It follows that the supplier to one in the corresponding measure must be refinanced, theothers need to be able to assess the creditworthiness of customers and their right. Thisare already described in Chapter 6 problems within the qualification proc-to observe processes. There is a trade-off between the profit potential of the additionalto find union business and the risk of credit loss. Risky creditloans, which can also be classified accordingly, be in the futureMarkup (eg increased interest) received.

For the customer there is some uncertainty in the environment of a buying decision

tion. So it is important to find a form of financing where the interest payable and will benefit from delayed payment of the correct ratio. The pricesdifferent forms of financing taking into account the need to own Liquidity will be compared. It is assumed that the customer's owneconomic situation is just as confident and reliable, the cost of financingmay determine. However, it is known that the other side only incompletehas incomplete information. This raises the question of how much the customer about hiseconomic conditions reveal. The better assessed the creditworthiness of customersmay be, the more favorable financing terms he can achieve.



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7.2.2 Corporate External Issues

The non-corporate issues have been the one already in the bonus-ttsbewertung business partners discussed. There was depth to the prob-lems with missing data received from external providers. Secondly, thenumerous media breaks and manual activities in communication andthe exchange of data between the parties (suppliers, customers and credit) lenders very error prone and costly. Communication, especially betweenbetween lenders and borrowers are often still in the mail. This leadsto time delays within the process step. These problems are for deliverysuppliers and customers are identical. The introduction of Basel II has also aincreased need for information on the part of lenders led and the needincreased speed for accurate and timely data.

7.3 The basic idea

The financing process step deals with the various forms of credit.This step plays an important role, because even if all other Circumstances of a business are clear, not a conclusion reached without funding who-the kann.118 This applies equally to the customer as the supplier of a Product. When choosing a form of financing both the financing tion determination are respected and the subsequent credit management.For not only production costs, but in particular the processing costs areto consider. The increased demands of financial institutions on a credit agreement task in the context of the introduction of Basel II led to an increase in trade loans. This in turn requires a careful and extensive qualification program

process (see Chapter 6). The financing is often an essential part of the selling the product (eg the car buying and leasing or electrical appliances andInstallment loans). This illustrates the need for an integrated offering.If the supplier helps its customers in financing and this in its In-has integrated offering, he can sell more products and possibly even ahigher price. It is clear that in future more certainCompanies compete, but whole supply chains. In Pro-the financing process step which means a built-in financing the pro-duktverkauf. A very good example of this is the used car portal, mobile.de the provider of credit financing, leasing and insurance companies integrated into the portalgrated, and thus has created an attractive network for its customers. Ideally,close their customer contracts directly with mobile.de. Behind this is then all-

However, the entire network of suppliers.

7.4 Funding opportunities

Certainly the easiest way to settle a trade financially, is thatthe customer the full purchase price paid immediately after receipt of delivery. In this case

is a search for debt financing instruments superfluous. For all otherCases the parties have to find some kind of financing that the circumstances

The basic idea 99


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is adapted to the specific situation. Financing options may be after aVariety of criteria can be distinguished. For the following consideration differentiated according to trade and bank loans as well as substitutes and new forms.

Figure 7.1 Forms of financing

7.4.1 Trade credits

With commercial loans are either the customer or the supplier of a loan vice versa. This is not a financial intermediary on. This results ina two-sided asymmetric information (customer and supplier) insteada three-sided (customer, supplier and lender), at the other fundingspecies vorliegt.119

Customer loans

One way of loan customers, is that the customer pays a deposit and e.g. come to test the goods to the supplier the balance lsst.120

Can the customer one on a deposit, he bears the risk that the supplier not as desired to meet its obligations. The customer should ideally-be used to check the creditworthiness of the supplier in the supplier evaluation.

In the classical industrial clearing a supplier is negotiating with financial needs with a purchaser with available cash and cash surplus of bringing forward (Lea-ding) regularly accruing fees. It wants the supplier as a financial center run-participants pay less interest than with a short-term borrowing at aBank and financial resources as the customer wants to earn more than donors with a short-term investment in the credit market. It follows from this initial state, theNegotiation of the bandwidth involved. The negotiated rates are directlyDiscounts converted.

Trade credit

The typical case is that the supplier is granted a loan. This purchase price deferralshall Supplier credit called. Here, the short-term capital needs of the customerbe met by the use of granted credit terms. ByGranting of discounts to offer the supplier the incentive offered by the suppliernot to take advantage of consumer credit, because they are interested in quick paymentssind.121 As a rule, as a deadline for payment of 30 or 60 days and aDiscount rate set at 3%. The reason for granting a Supplier credit is usually in the bargaining power of customers because of the sup-th this type of agreement is a means of promotion. Trade credit



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will increase further in the future, then this is an efficient Kreditma-management (eg monitoring, and granting of credit lines) is necessary.

Discount exploit?

Invoice amount from 45 000 EUR 15.08., 3% cash discount, discount period 14 days, ie until to 29.08., payable net to 14.09. 9.5% current account.

The company has no cash. For 14.09. is a payment received in Of 50 000 expected. Now, the entrepreneur must be between aUse of discounts and an overdraft line of credit by 16 days or a payment on 14.09. . decide

Use a discount would reduce the amount invoiced by 3% and over- , overdraft charges because no liquid funds are available, from 9.5% for 16 days (Difference between 29.08. And 14.09.) Cause. This results in a net amount43 837.40 EUR (45 000 minus discount, plus interest owed). TheEntrepreneurs could be achieved by exploiting the discount and a concomitantIts current account overdraft to save 1 162.60. A discount of3% for 14 days is equal to an annual rate of 78.2%.

7.4.2 Loans from banks and banking-related institutions

For loans is generally between Money loan and Kreditleihe distinguished. Flows

in the former, the company money to, for example in the form of loans or advance payments The claim that receives the second case, no money, but guarantees that the companycan be used for taking out loans.

Moneylending

The simplest form of money lending is the Overdraft (Current account). This isthus claimed that the holder of a current account over its account- moves. It is generally acknowledged by the bank with a current account credit.This is usually limited, revocable at any time and the grant is free.Exceeding the credit line to 25% is usually tolerated although,

However, at higher costs. The current account is the owner to cover its peak zenbelastungen and bank it as a valuable document in terms of creditworthiness of the company. Through the account, the bank's revenue andExpenditure survey, e.g. the current personnel and Umsatzsituation.122

A current account is relatively expensive and is, for example for medium-sized enterprises men 10 to 17% per annum, which interest only a pro rata basis, ie onlybe calculated for the actual use. For crossingLine of credit is also an overdraft fee of 3 to 4% per annum calculatednet. The amount of interest due mainly to the bank that the creditand overdraft lines must always be kept and therefore not otherwisecan be sold or otherwise assigned.

Funding opportunities 101


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In a Lombard credit debtor receives a credit against the pledge ofSecurities, commodities, bills, debts or precious metals from his possession.The LTV ratio is between 50 and 80%. Prerequisite for this pledging tion, the lasting value and viability of the deposit fast. The depositthe bank must be transferred and because of the lack Lagermglichkei-th a bench, taking in goods are often at a carrier or in a warehousestored. It is also possible that the customer remains the owner, the bank of all- However the owner is. Interest rates are set by the Lombard rate, which in the Usually 0.5 to 1% above the prime rate (4 to 8.25% pa) is located.

The Discount credit is a form of the loan change. A change is a paper withwhich the exhibitor agrees to pay the bill of exchange. If the off- facturer of the debtor, it is a promissory (Promissory notes), he isnot, by a bills of exchange (Draft) is spoken. When discount creditclears the bank through the purchase of trade bills for credit. The sequence

a loan discount is shown in Figure 7.2.

'-

- ! "

&-

# $%

Figure 7.2 Expiration of a discount loan

Even at discount credit must be added further costs: The bill chargesand Spread, a kind of processing fee. The spread is for good addresses about 3 / 8% and% for poor up to 3. Overall, the change of the discount creditbest credit in the banking market and costs about half of a current account loan. However, he is subject to certain conditions, since the change in bothmay be other banks as well as the Deutsche Bundesbank rediscounted.The German Federal Bank requires the fulfillment of a number of criteria. Must



27/53


the change in addition to meeting the formal requirements, eg at least three "Good" signatures carry and apply for a department store and a maximum Remaining maturity of 90 days haben.123

Kreditleihe

The most common type of Kreditleihe the acceptances. There is also the Aval-credit and the Akkreditiv.124

The Acceptances as the discount loan is a form of exchange loan. In thisCase the company is bringing a change to his bank, which accepted it. Thus although the company receives no cash, but it may change as the Use cash. The Bank expects that the company change the amount provides the due date. As cost is the sum of the interest andthe Akzeptprovision. The advantage of this type of loan is the low cost.However, it should be noted that an acceptance credits only customers with excellent credit ratings

is granted. In addition, the restrictions will apply again through the Wechselerforder-results, e.g. the 90-day period.

Due to the specific needs of foreign businesses Rem-bourskredit developed as a subspecies of acceptances. When this form of creditnot the customer of the principal debtor, but a customer's bank, the liabilitytakes over. This is especially useful if the customer is on the foreignMarket is not known and requires the counterparty to hedge.

In the case of a Guarantee loans The Bank accepts up to an agreed level oneGuarantee or a payment guarantee for the customer. The main difference between the Favor of the guarantee is the lack of accessory nature of the guarantee.

When Credit Is it the contract to a bank, a third party,the accredited, a certain amount of money under defined conditionspay off.

7.4.3 Credit substitutes

Besides the "classical" forms of credit and credit substitutes are of great importance

processing. One of the most important forms is the Factoring. Acquires in this case a factoringring the company claims arising from the sale of goods of an enterprise and over- does so under circumstances the so-called real factoring theAccounts receivable, invoicing, reminders, and especially theDefault risk. For this service, the company must factor the one Provi-pay Commission. When silent factoring this agreement is in contrast to the openFactoring is not communicating to the outside. The advantage of this credit substitutes is therapid conversion of orders into cash. But also the passing ofCredit risk can have a positive impact. Similarly, the outsourcing of accounts payable- renbuchhaltung be advantageous if the factoring company is more favorable than the alder-endings in your own company. However, factoring can be used as evidenceapply to business problems (eg liquidity problems). In addition, closing-need by many companies open their terms and conditions



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Factoring out by suppliers. In addition, problems may conflict withThe extended retention of title arising. The process of factoring is openshown in Figure 7.3.

-

Figure 7.3 Factoring in an open relationship

An overview of the leading factoring provider, covering more than 90% of German unite between factoring volume up, delivers the German Factoring Association (Www.factoring.de). This selection can be found for example new solutions, such as theInFoScore GmbH & Co KG (www.escore.de) that their services specifically forInternet-range offering.

The Forfaiting is a type of financing, especially in the foreign business toHas gained importance. These are non-recourse to the sale ofExport receivables to a specialized institution (forfaiter).

From the Forfaiting Factoring differs in that individual receivables ments can be sold and no services shall forfaiter(See Figure 7.4) If the claims are often for large sumsup to several hundred million euros, with mostly medium-term maturity. De factoSo does the forfaiter the default and currency risk. As a result a relatively high level of costs associated with less flexibility.

In forfaiting there as opposed to factoring, no clearSharing the market with a manageable number of service providers. In theBanks are the main suppliers. An initial overview provides a service ofING Group (www.exporterra.de). The benefits of this trade portal aree.g. global information on countries, companies, products, industries andMarkets, news, research in 34 leading databases, fundinginsurance and insurance services.



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!

-

-

-

-Figure 7.4 Settlement of a Forfaiting

Under Leasing In general, the rent of assets verstanden.125However, since over time a variety of shapes and configurations out-have formed, is a single definition is possible. Fundamental

however, that the property remains with the leasing company, the lesseethe right to use gets transferred to the cause and fixed for the contract term of a regular lease rate paid. After the specified lease term the lessee can return the object or predefined optionsenforce. Basically, because of the design contract OperateLeasing and Finance leases be distinguished. The main difference isis that in the former, the contract any time now or in compliance with a relatively short period may be terminated, while in the latter the contract during the leases is fixed tenure. Therefore bears the investment risk inFinance lease, the lessee and the operating lease, the lessor. TheOnline completion of a lease provides the e-lease AG (www.e-lease.de).There the conclusion of a leasing agreement in two to three days is possible.

Already in 1996 there were nearly 1000 leasing companies in Germany. The bestGives an overview of each provider is on the Federal Association of German leasingsing-Unternehmen eV (www.bdl-leasing-verband.de).

7.4.4 New financial products

Besides the classical form of the clearing industry itself also has a newer formemerged. Characteristic of this is that even companies that do not oper-rative maintain relationships to each other, large volumes of credit from five millionEuro in the short to medium term leave (one day to one year). Overall, these



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A cheap way of financing is highly flexible, because the partiesFirst come the usual bank interest rate, then a cheaper option to agree. However, this possibility exists for companies with doubtlesslycreditworthiness.

But trust services in the funding process may play a role. TheirFirst task is to review the contract between business partners.Thereafter, the escrow payment and receipt of the customers in different-anlasst then the supplier for delivery. If the goods are accepted by the customer and removed, can the trustee get the money to the supplier.This procedure is useful mainly as a confidence building measure orat checking goods to needy.

Under the escrow services provider has the Escrow (www.escrow.com) carriedsetzt.126 This works with a number of financial institutions and approximately 200-marketplaceszen together. One study estimates that this type of Geschftsabwick-ment about 50% of the time required savings over conventional processescan be.

The company Orbian (www.orbian.com) advertises a new type of financial product developed to have - an integrated financial solution for the preparation and handling. This It is a kind Kreditleihe with the involvement of an intermediary. The systemworks by the supplier sends an invoice to Orbian, the customer mustconfirmed and to pay Orbian instructs. Orbian is then immediately to the supplierOrbian one-credit available to convert to this either in cash, up toDue to its keep, or use themselves as payment for additional suppliers

can. The cost for this model are supported by sponsors, which areto banks, other financial institutions, e-commerce service provider, Handelskreditversi-insurances, trade associations and other organizations involved. On the recommendationSponsor at least one customer and supplier may be members of Orbian.

As shown in Figure 7.5, the supplier sends the invoice to his customertoo. The customer can now pay this bill with Orbian. He does not need it liquid, and can use the loan granted to him Orbian. It can range fromthe payment of Orbian (eg payment terms of 90 days) benefitand optimize its financial planning. The supplier receives the credit of OrbianCredits can and then submit these credits now before the due date for discount when payment treatment medium to pass or submit it to maturity. This sequence strongly resembles thean electronic exchange and a related discount loan. For theSuppliers is payment security and a certainty for the futureCash flows and payment processing. The payment will be direct andautomated via an SAP system.

This basic idea of this new form of financing is good. The use is, however, still very low. It remains to be seen whether the current business model to sponsor

sensors provides a sufficient incentive, their business future on-Orbian abzuwickeln.



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(

)

!

#

$

*

++

-

#

'

+

--

Figure 7.5 End of Orbian Credits

7.4.5 Comparative assessment

In addition to the qualification process for already established evaluation criteria is to evaluate the financing options of the evaluation criterion Manipulationsmglichkeit replaced by flexibility. Flexibility tells us how quicklyan instrument can be switched to another.

Criteria Hanels-

loans

Bankingkre-dite

Credit substitutes New financial products

Factoring

Expenditure

Earnings quality

Flexibility

Costs

Speed

Interfaces

System Quality

Trust / asym.Information

+ +

+

+ + +

+ + +

+ +

+ +

-

+

-

-

-

+

+

-

+

+

-

-

-

+

+

+

Forfai-tation

+

+

-

-

-

+

+

+

Lea-Singing

+

+ +

-

+

-

+

+

+ +

NewsIndustryclearing

+

+ +

+ + +

+

+

+

+

-

Scatteringmanualservices

+

+

+

+

+

-

+

+

Orbian

+

+

+ +

O

+ +

+ +

+

+

Table 7.1 Comparison of different financing instruments



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When choosing the type of financing there is more than the preceding-edies to the particular situation. Also included in the areas of business-to-Business (B2B) and business-to-Consumer (B2C) to differ. While the B2Cmore installment loans from affiliated financial institutions are used, there are B2B supplier credits. In the consumer business is the integration of financingtion service providers already very advanced. Each electric market already offersown forms of financing and implements a competitive advantage. ThisIt is also successfully implemented in the B2B. Seems e.g. Orbian for a supplieradvantageous, because he receives his money quickly, so it is not advantageous for the customer,as a trade credit for it offers far more financial benefits. If it is contrast to foreign business, they must separately because of their peculiarities be secured. If this is important and expensive goods betweennew business partners are exchanged, provides an escrow service when Security for both sides.

7.5 Conclusion

After the qualification phase, that is completed the customer and supplier selectionis closed, Mr. Miller of the company's business would now like Anton. finance There is a choice between financing through a bank and a supplier credit of the company Berta. Berta company first checks whether a sup-rantenkredit can be forgiven. The credit manager declines due to the different-past payment history from a credit immediately. The documents aretherefore forwarded electronically to the bank of the Lieferranten. This can

after one day create a financing offer Mr. Miller. Mr. Millerwould love to pay the debt over Orbian because it in 80 dayslarger sum of expected and then have the necessary liquidity can. HeOrbian is already customer. Mr. Miller tells Orbian, one of the company BertaOrbian issue credit on the appropriate sum. This will immediatelyand electronic causes. As a result, the goods are shipped. This resultsno unnecessary delays. Berta company can now accurately value.With the pla-NEN and decide whether the credits Orbian immediately redeemed for a discount, or until maturity in 90 days. This results in security planning.Both parties gain through the use of an improved financial planning, Orbiantion.

In this case study are the advantages of an improved financing process wellrecognizable. A quick settlement of the financing process and the direct inputbond financing in the form of a bundle of product andFinancing generate competitive advantages. The steady increase in Lieferantenkre-dite requires improving the interplay of internal and external data,which can lead to quality improvement. This is done in close cooperation

playing with the qualification process. By automating and a tightInteraction with lenders, the entire process can be accelerated.This leads also to a shortening of the storage period at the supplier and



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to a more rapid availability of the ordered goods to the customer. The automation privatization of financing can also process costs (eg for work or DoubleSave postage). Further, by merging the previously describedall data relevant to better decisions. Thus, the sup-supports rant when deciding whether to award a credit to additionalOrders received on. On the part of the customer so the current situation for its best financing to be determined. The use of new innovative financial productsMedia products can prevent fractures and the automation of the financingprocess increase.

Conclusion109


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22 Treasury and Risk Management

The Treasury and Risk Management within the company moves ina tension between liquidity, profitability and safety. Thefinancial resources of the company are used efficiently andsecured against the same financial risks of any kind.

22.1 Business idea

In addition to more operational tasks such as securing the willingness to pay orthe control and optimization of payment, the financial departments inMany companies also announced a strategic task. Depending on the size of the companymens, extent of liquid assets, financing or hedging needs of

planned investments or risks then varies the range of tasks. It ranges from the control and optimization of equity and to hedge receivablesand liabilities to capital market risk over the long-term financialplanning to asset management, ie managing the assets.

The daily life of many financial departments include the completion of financial transactions. In thePart of SAP Treasury and Risk Management provides the so-called TransactionManager provide a work environment that allows the user to financial trans-transactions and to collect all relevant data to the back office financial accountingtransfer. Here, the Treasurer, all kinds of shops - from the short-term financing to strategic, longer-term investment - within the same

Chen application handle.

In addition to the traditional financial management tasks such as treasury management, liquidity assurance and control of market risk management plays an important rolewithin the finance department. Among the various external risks to whichCompanies in international competition, form-Marktpreisnchanges (eg due to currency effects) are important factors influencing theCompany's success. Changes in market prices, the amount or the counter-significantly affect worth of cash flows. For a comprehensive risk-investigativement and control, it is essential for the finance department, all risk-relevantCompanies to merge operations. In no other area of riskmeasurement has been developed in recent years, such a comprehensive methodologyas the market risk management. Since the companies current market data andwhose history is available, they may risk their volumes precise quantitative Fizi and thus manage their risk better.

Modern risk management systems enable the finance department not only adetailed assessment of existing trading positions with regard to their price- provoking factors. The strategic, decision-support functiongaining in importance. Here, the risk management moves away from the down-

siege controlling instrument towards the value-creating corporate management. Inthe company's organization reflected this change in the immediateConnection to the management of risk control down.

Treasury and Risk Management 329


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The so-called Market Risk Analyzer offers as part of SAP Treasury and RiskComprehensive inventory management reports such as Mark-to-market valuationsgene of financial transactions. This refers to the publicly-open daily valuationNer positions for the detection of gains and losses due to market developmentsment of contracts. In addition to risk and performance metrics such asExposure (analysis of risk positions), Future Value (for a future datethe value of a bond portfolio, taking into account the future cash flows calculated), sensitivities (risk measures) and Value-at-Risk (the maximumpossible, potential losses caused by price changes of a trading position)be determined. Together with a high flexibility in the design of evaluationobligations of the Market Risk Analyzer is thus a reliable basis for market-risk control dar.

The tightening of prudential regulations, such as the 1998

Germany came into force on Control and Transparency in corporate(KonTraG) or the force from 2006 Capital Accord (Basel II) has prompted many companies, their risk control and in particular theAnalysis and to pay special attention to limiting the risk of insolvency. Theso-called Credit Risk Analyzer supported as a component of SAP Treasury andRisk Management, Measurement, analysis and control or limitof credit risks. The counterparty or credit risk includes the risk ofLoss or lost profits due to the insolvency of a business partners. The Treasurer may use the Credit Risk Analyzer-possible Wiedereindepackaging and settlement risks (for the fulfillment of financial transactions), resulting from the Financial and capital market activities of the company's research, early detectionand limit. At the same time through a system of targeted Limits

Dealer management possible.

22.2 Transaction Manager

The Transaction Manager helps financial departments here, an efficient liquiditydid establish, portfolio and risk management. In particular, it allows theManagement of financial transactions and stocks by trading through the settlementup for transfer to the general ledger. It automates the application

many business processes, providing the sense of a Straight-through pro-cessing (STP) is considerable potential for rationalization. Under STP refers to theAutomate the trading process from order to settlement.This should inter alia Avoid double counting of data and the time and cost can be saved. Furthermore, the Transaction Man

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