Treasury Management Overview

AC810 Basic Functions in Treasury Management AC810

R/3 System Release 46C 04/05/2001

0

AC810 Basic Functions in Treasury Management........................................................................................................0-1

Copyright ..................................................................................................................................................................0-2

Treasury ................................................................................................................................................................0-4

Course Prerequisites..............................................................................................................................................0-5

Target Group.........................................................................................................................................................0-6

Course Overview.......................................................................................................................................................1-1

Course Goals .........................................................................................................................................................1-2

Course Objectives .................................................................................................................................................1-3

Course Content......................................................................................................................................................1-4

Course Overview Diagram....................................................................................................................................1-5

Main Business Scenario ........................................................................................................................................1-6

Overview of Treasury Management..........................................................................................................................2-1

Overview of Treasury Management: Unit Objectives...........................................................................................2-2


Overview of Treasury Management: Business Scenario.......................................................................................2-4

Overview of SAP Treasury ...................................................................................................................................2-5

Main Targets of Treasury......................................................................................................................................2-6

SAP Support for Business Requirements..............................................................................................................2-7

Selection of Relevant Product Types ....................................................................................................................2-8

Identifying Treasury Processes .............................................................................................................................2-9

Analysis and Trading Process .............................................................................................................................2-10

Transaction and Position Management Process ..................................................................................................2-11

Short-Term Financial Instruments ......................................................................................................................2-12

Medium- to Long-Term Financial Instruments...................................................................................................2-13

Hedging Instruments ...........................................................................................................................................2-14

Treasury Management: Functions.......................................................................................................................2-15

Basic Functions of Treasury Management..........................................................................................................2-16

Overview of Treasury Management: Unit Summary ..........................................................................................2-17

Data Used in the Exercises..................................................................................................................................2-18

Overview of Treasury Management Solutions....................................................................................................2-21

Organizational Units .................................................................................................................................................3-1

Organizational Units: Unit Objectives ..................................................................................................................3-2


Organizational Units: Business Scenario ..............................................................................................................3-4

SAP R/3 in Your Company...................................................................................................................................3-5

Customizing and Application................................................................................................................................3-6

Organizational Units .............................................................................................................................................3-7

Position Management Options ..............................................................................................................................3-8

Securities Account and Portfolio...........................................................................................................................3-9

Define Portfolios .................................................................................................................................................3-10

Securities Account Master Data..........................................................................................................................3-11

Defining Trader and User Data ...........................................................................................................................3-12

Traders: Trader Authorizations ...........................................................................................................................3-13

Organizational Units: Unit Summary..................................................................................................................3-14

Organizational Units Exercises ...........................................................................................................................3-15

Organizational Units Solutions ...........................................................................................................................3-16

Business Partners ......................................................................................................................................................4-1

Business Partners: Unit Objectives .......................................................................................................................4-2


Business Partners: Business Scenario ...................................................................................................................4-4

Business Partners - Overview ...............................................................................................................................4-5

Roles and Functions ..............................................................................................................................................4-6

Business Partner Data: Overview..........................................................................................................................4-7

Creating a Business Partner ..................................................................................................................................4-8

Customizing and Application................................................................................................................................4-9

Grouping .............................................................................................................................................................4-10

Define Role Types / Role-View Assignment ......................................................................................................4-11

Field Modification...............................................................................................................................................4-12

Business Partners: Relationships.........................................................................................................................4-13

Business Partners: Relationship Types ...............................................................................................................4-14

General Customizing Settings.............................................................................................................................4-15

Business Partners: Data Maintenance .................................................................................................................4-16

Release Control ...................................................................................................................................................4-17

Business Partner Authorizations .........................................................................................................................4-18

Business Partners: Standing Instructions ............................................................................................................4-19

Creating a Business Partner with an FI Customer...............................................................................................4-20

Business Partners: Unit Summary.......................................................................................................................4-21

Business Partners Exercises ................................................................................................................................4-22

Business Partners Solutions ................................................................................................................................4-25

Banks ........................................................................................................................................................................5-1

Banks: Unit Objectives .........................................................................................................................................5-2


Banks: Business Scenario .....................................................................................................................................5-4

Transaction: Payment Details................................................................................................................................5-5

Banks - General: Master Data ...............................................................................................................................5-6

Business Partners: Central Data - Bank Details ....................................................................................................5-7

House Banks: Master Data....................................................................................................................................5-8

House Banks: Create Master Data ........................................................................................................................5-9

General Ledger Accounts....................................................................................................................................5-10

Transaction: Payment Details - Data...................................................................................................................5-11

Define Cash Management Account Name ..........................................................................................................5-12

Banks: Unit Summary .........................................................................................................................................5-13

Banks Exercises ..................................................................................................................................................5-14

Banks Solutions...................................................................................................................................................5-16

Transaction and Position Management: Preparation.................................................................................................6-1

Transaction and Position Management: Preparation: Unit Objectives..................................................................6-2


Transaction and Position Management: Preparation: Business Scenario..............................................................6-4

Standing Instructions: Overview...........................................................................................................................6-5

Business Partner Standing Instructions:Payment Details......................................................................................6-6

Standing Instructions: Payment Details ................................................................................................................6-7

Transaction: Correspondence................................................................................................................................6-8

Correspondence: Customizing ..............................................................................................................................6-9

Business Partner Standing Instructions: Correspondence ...................................................................................6-10

Transaction: Derived Flows ................................................................................................................................6-11

Derived Flows: Customizing...............................................................................................................................6-12

Business Partner Standing Instructions:Derived Flows ......................................................................................6-13

Currency Master Data .........................................................................................................................................6-14

Reasons for Reversal...........................................................................................................................................6-15

Limit Management ..............................................................................................................................................6-16

Limit Management: Examples ............................................................................................................................6-17

Limit Management: Overview ............................................................................................................................6-18

Transaction and Position Management: Preparation: Unit Objectives................................................................6-19

Transaction and Position Management: PreparationExercises............................................................................6-20

Transaction and Position Management: Preparation Solutions...........................................................................6-24

Transaction and Position Management: Structure.....................................................................................................7-1

Transaction and Position Management: Structure - Unit Objectives ....................................................................7-2


Transaction and Position Management: Structure - Business Scenario ................................................................7-4

Financial Transaction and Business Partner..........................................................................................................7-5

Example: Create Financial Transaction ................................................................................................................7-6

Customizing Structure:Money Market/ Forex/Derivatives ...................................................................................7-7

Product Categories - Product Types......................................................................................................................7-8

Product Categories - Product Types: Examples ....................................................................................................7-9

Define Product Type: Example - Forex ..............................................................................................................7-10

Define Product Type: Example - Currency Option.............................................................................................7-11

Financial Transaction Types ...............................................................................................................................7-12

Customizing: Financial Transactions ..................................................................................................................7-13

Number Ranges for Transactions........................................................................................................................7-14

Activity Categories .............................................................................................................................................7-15

Transaction Types - Activity Categories: History...............................................................................................7-16

Processing Categories .........................................................................................................................................7-17

Customizing: Transaction Types - Processing Categories ..................................................................................7-18

Flow Types..........................................................................................................................................................7-19

Customizing: Flow Types ...................................................................................................................................7-20

Assign Flow Types to Transaction Types ...........................................................................................................7-21

Condition Types..................................................................................................................................................7-22

Customizing: Condition Types ...........................................................................................................................7-23

Assign Condition Types to Transaction Types ...................................................................................................7-24

Financial Product ................................................................................................................................................7-25

Financial Transaction Architecture .....................................................................................................................7-26

Financial Transactions: Cash Flow .....................................................................................................................7-27

SAP Financial Mathematics in Treasury Management: Process Flow................................................................7-28

Transaction and Position Management:Structure - Unit Summary.....................................................................7-29

Transaction and Position Management: Structure Exercises ..............................................................................7-30

Transaction and Position Management- Structure Solutions ..............................................................................7-36

Transaction and Position Management: Process .......................................................................................................8-1

Transaction and Position Management: Process: Unit Objectives ........................................................................8-2


Transaction and Position Management: Process - Business Scenario...................................................................8-4

Financial Transaction - Overview .........................................................................................................................8-5

Transaction and Position Management Process:Trading Functions.....................................................................8-6

Trading..................................................................................................................................................................8-7

Example: Creating Transactions ...........................................................................................................................8-8

Offers for Fixed-Term Deposits and Foreign Exchange .......................................................................................8-9

Simulation of Fixed-Term Deposits/Forex Transactions ....................................................................................8-10

Financial Transactions in Cash Management......................................................................................................8-11

Trading: Transaction Data...................................................................................................................................8-12

Interest Calculation Methods ..............................................................................................................................8-13

Conditions of a Financial Transaction ................................................................................................................8-14

Fixed-Term Deposits and Deposits at Notice: Changes in Capital Structure......................................................8-15

Effective Interest Rate Calculation and Update ..................................................................................................8-16

Roll Over Contract: Fixed-Term Deposit............................................................................................................8-17

Transaction History.............................................................................................................................................8-18

Collective Processing: Money Market ................................................................................................................8-19

Transaction Management: Worklist and Collective Processing..........................................................................8-20

Cash Flows in Cash Management .......................................................................................................................8-21

Transaction and Position Management Process:Back-Office Functions............................................................8-22

Back Office .........................................................................................................................................................8-23

Transaction Settlement........................................................................................................................................8-24

Correspondence: Confirmation Management .....................................................................................................8-25

Confirmation Letters ...........................................................................................................................................8-26

Transaction and Position Management Process:Accounting Functions.............................................................8-27

Automatic / Manual Posting Release ..................................................................................................................8-28

Release Workflow - Overview Graphic ..............................................................................................................8-29

Release Workflow - Customizing I .....................................................................................................................8-30

Release Workflow - Customizing II....................................................................................................................8-31

Accounting..........................................................................................................................................................8-32

Transaction: Posting............................................................................................................................................8-33

Posting a Transaction: Overview ........................................................................................................................8-34

Posting: Account Assignment Reference ............................................................................................................8-35

Determining the Account Assignment Reference: Overview .............................................................................8-36

Account Assignment Reference Determination: Characteristics/Values ............................................................8-37

Determine Account Assignment Reference: Allocation .....................................................................................8-38

Customizing: Account Determination.................................................................................................................8-39

Account Determination: Posting Specifications (1) ............................................................................................8-40

Account Determination: Posting Specifications (2) ............................................................................................8-41

Account Determination : (Account) Symbols .....................................................................................................8-42

Account Determination: Accounts (Allocation)..................................................................................................8-43

Posting a Transaction: Summary.........................................................................................................................8-44

Cash Flows in Cash Management .......................................................................................................................8-45

Financial Transactions and Cash Management ...................................................................................................8-46

Treasury Management and Cash Management ...................................................................................................8-47

Basic Principles of Archiving .............................................................................................................................8-48

Archiving Money Market / Forex / and Derivatives Transactions ......................................................................8-49

Process-Oriented Archiving Checks ...................................................................................................................8-50

Transaction and Position Management: Process - Unit Summary ......................................................................8-51

Transaction and Position Management: Process Exercises.................................................................................8-52

Transaction and Position Management: Process Solutions .................................................................................8-58

Payment Program for Payment Requests ..................................................................................................................9-1

Payment Program for Payment Requests: Unit Objectives ...................................................................................9-2


Payment Program for Payment Requests: Business Scenario ...............................................................................9-4

Processing Payment Transactions .........................................................................................................................9-5

Processing Payment Transactions: Overview .......................................................................................................9-6

1) Posting to G/L Accounts...................................................................................................................................9-7

1) Posting... ...........................................................................................................................................................9-8

3) Posting to Customer Accounts..........................................................................................................................9-9

3) Processing Payment Transactions... ................................................................................................................9-10

3) Automatic Payment: FI Payment Program .....................................................................................................9-11

2) + 4) Automatic Payment: Payment Program for PR.......................................................................................9-12

Processing Payment Transactions .......................................................................................................................9-13

2) + 4) Automatic Payment: Payment Program for PR.......................................................................................9-14

Payment Program for Payment Requests ............................................................................................................9-15

Payment Requests: Customizing.........................................................................................................................9-16

Payment Program: Parameters ............................................................................................................................9-17

Origin Indicator...................................................................................................................................................9-18

Payment Program: Field Selection Control.........................................................................................................9-19

Customizing: Origin Indicator ............................................................................................................................9-20

Payment Program: Other New Features..............................................................................................................9-21

Netting - General Information.............................................................................................................................9-22

Netting - Process .................................................................................................................................................9-23

Netting and Payment Requests............................................................................................................................9-24

Payment Program for Payment Requests: Unit Summary...................................................................................9-25

Payment Program for Payment Requests Exercises............................................................................................9-26

Payment Program for Payment Requests Solutions ............................................................................................9-28

Market Data Management.......................................................................................................................................10-1

Market Data Management: Unit Objectives........................................................................................................10-2

Course Overview Diagram..................................................................................................................................10-3

Market Data Management: Business Scenario....................................................................................................10-4

Market Data: Overview.......................................................................................................................................10-5

Market Data: Current Exchange Rates................................................................................................................10-6

Market Data: Current Reference Interest Rates...................................................................................................10-7

Market Data File Interface ..................................................................................................................................10-8

Market Data File: Generate Request List ............................................................................................................10-9

Market Data File: Import File ...........................................................................................................................10-10

Market Data File: Customizing .........................................................................................................................10-11

Datafeed Architecture .......................................................................................................................................10-12

Datafeed Interface .............................................................................................................................................10-13

Datafeed: Customizing......................................................................................................................................10-14

Define Datafeed Name......................................................................................................................................10-15

Define RFC Destination....................................................................................................................................10-16

Synchronous Communication ...........................................................................................................................10-17

Asynchronous (Transactional) Communication................................................................................................10-18

Conversion Tables / Translation Table .............................................................................................................10-19

Datafeed: Conversion Tables ............................................................................................................................10-20

Datafeed: Translation Table ..............................................................................................................................10-21

Fill Translation Table Automatically (= Copy Master Data) ............................................................................10-22

Maintain Translation Table: Securities .............................................................................................................10-23

Import Securities Information from Datafeed Provider ....................................................................................10-24

Check Translation Table ...................................................................................................................................10-25

File Interface / Datafeed: Market Data Monitoring...........................................................................................10-26

Market Data Management: Unit Summary .......................................................................................................10-27

Information System.................................................................................................................................................11-1

Information System: Unit Objectives..................................................................................................................11-2

Course Overview Diagram..................................................................................................................................11-3

Information System: Business Scenario..............................................................................................................11-4

Information System Structure: Example - Journal ..............................................................................................11-5

Money Market: Journal .......................................................................................................................................11-6

Payment Schedule ...............................................................................................................................................11-7

Money Market - Position List .............................................................................................................................11-8

Drilldown Reporting Principle ............................................................................................................................11-9

Drilldown Reporting Principle ..........................................................................................................................11-10

Functions of Drilldown Reporting ....................................................................................................................11-11

Form Report ......................................................................................................................................................11-12

Drilldown Reporting: Overview........................................................................................................................11-13

Information System: Unit Summary .................................................................................................................11-14

SAP AG 1999

AC810 Basic Functions in Treasury Management

AC810AC810

Basic Functions in Basic Functions in Treasury ManagementTreasury Management

R/3 Release: 4.6B May 2000 Material number: 5003 6036

SAP AG 1999

Copyright 2000 SAP AG. All rights reserved.

Neither this training manual nor any part thereof maybe copied or reproduced in any form or by any means,or translated into another language, without the priorconsent of SAP AG. The information contained in thisdocument is subject to change and supplement without prior notice.

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SAP AG 1999

Treasury

Treasury Overview

AC030 3 days

Level 2 Level 3

Financial Accounting and Reporting

AC010 5 days

Cash Budget Management

AC215 1 day

Basic Functions inTreasury Management

AC810 3 days

Cash Management

AC805 3 days

Money Market, Foreign Exchange and Derivatives

AC825 3 days

Loans Management for Financial Services

AC815 5 days

Loans Management forCorporates

AC816 3 days

Securities Management

AC820 4 days

Market Risk Management

AC830 3 days

SAP AG 1999

Course Prerequisites

z Recommended:

AC030 - Overview of Treasury

SAP AG 1999

Target Group

z Audience: Members of the project team

System staff

Organization staff

z Duration: 3 days

Notes to the user: The training materials are not teach-yourself programs. They complement the course instructor's

explanations. On the sheets there is space for you to write down additional information.

(C) SAP AG AC810 1-1

SAP AG 1999

z Course goalsz Course objectivesz Course contentz Course overview diagramz Main business scenario

Contents:

Course Overview


SAP AG 1999

Course Goals

This course will prepare you to:

z Identify the basic Treasury Management functions that are common to all the subcomponents

z Configure banks and business partners and recognize the concepts behind transaction and position management in SAP Treasury


SAP AG 1999

Course Objectives

At the conclusion of this course, you will be able to:

z Set up organizational units in the SAP Systemz Create and configure banks and business partnersz Make the system settings needed to control internal

processing

z Describe and configure the payment program for payment requests


SAP AG 1999

Course Content

Unit 7 Transaction and PositionManagement - Structure

Unit 8 Transaction and PositionManagement - Process

Unit 9 Payment Program for Payment Requests

Unit 10 Market Data Management

Unit 11 Information System

Unit 1 Course Overview

Unit 2 Overview of TreasuryManagement

Unit 3 Organizational Units

Unit 4 Business Partners

Unit 5 Banks

Unit 6 Transaction and PositionManagement - Preparation

Preface


SAP AG 1999

Course Overview Diagram

Organizational Units

Business Partners

Overview of Treasury Management

Banks

Transaction and Position Management - Preparation

Transaction and Position Management - Structure

Payment Program for Payment Requests

Market Data Management

Information System

Transaction and Position Management - Process


SAP AG 1999

Main Business Scenario

z You are using (or have successfully installed) the SAP Financial Accounting (FI) module, and want to implement SAP TreasuryManagement.

z You begin by making the basic settings in SAPTreasury Management.

You are a member of a project team. Your task is to make the basic settings for the SAP Treasury module.


SAP AG 1999


Contents:

z Overview of SAP Treasuryz Main targets of Treasuryz Overview of the product typesz SAP Treasury processesz SAP Treasury functionsz Overview of the basic functions in Treasury Management

Course AC810 deals with the basic functions in Treasury Management which are common to all subcomponents (money market, foreign exchange, securities, loans and derivatives). The course centers on general concepts related to transaction and position management and the corresponding Customizing options.


SAP AG 1999

Overview of Treasury Management: Unit Objectives

At the conclusion of this unit, you will be able to:

z Provide an overview of the SAP Treasury systemz State the relevant product typesz Explain the various processes and basic functions in

Treasury Management


SAP AG 1999



Business Partners


Banks





Information System



SAP AG 1999

Overview of Treasury Management: Business Scenario

z Before you begin your work in the project team, you want to gain an overview of SAP Treasury.

z Which products and processes can be mapped using the new Treasury system? What functions are available?

z Which functions form the basis for mapping financial transactions?



SAP AG 1999

Overview of SAP Treasury

Financial Accounting

Bank data

Businesspartner

Market data

DownloadMarket Risk Management: Interest/currency

exposure Sensitivities Mark-to-market Risk analysis/simulation Value at risk

Cash Management: Electronic banking Liquidity status Integrated operationalsystems

Control functions

Transaction Management Management of financial transactions and positions

Transfer to Financial Accounting

Flexible reporting and portfolio analysis

Datafeed interface

DD CC DD CC100 100 100 100

TMTM

SecuritiesSecuritiesDerivativesDerivatives

Money Mkt ForexMoney Mkt ForexLoansLoans

Logistics

The objective of SAP Treasury is to ensure efficient liquidity, portfolio and risk management.

SAP Treasury is subdivided into the following areas: Cash Management (CM) offers tools for efficient liquidity analysis. Treasury Management (TM) and Loans Management (LO) support financial transaction and position management. Market Risk Management (MRM) provides methods and procedures for assessing risk positions.


SAP AG 1999

Main Targets of Treasury

1) % of all companies surveyed Source: Top 500 Survey (Germany) conducted in 1994 by Price Waterhouse

Priority Target %1)

1 Ensure liquidity 95

2 Optimize financing costs 92

3 Optimize yields on financial assets 744 Hedge costs (e.g. against possible

exchange rate fluctuations) 61

5 Hedge sales (e.g. against possibleexchange rate fluctuations) 52

6 Contribute to profit through active management of open positions 30


SAP AG 1999

SAP Support for Business Requirements

Treasury inconjunction withother SAP modules(FI, MM, SD)

Electronic bankingCash Management

Money Market Securities

Loans

Foreign ExchangeDerivatives

Data integrationCentral decision-makingSeveral currenciesAutomatic processesAnalysis of financial resourcesInvestment / borrowing

Data entryMonitoringBack officeReporting

Risk management


SAP AG 1999

Selection of Relevant Product Types

Mortgageloans

Borrower'snote loans

Policyloans

Otherloans

Fixed-termdeposits

Deposits atnotice

CommercialPaper

Product types

DerivativesForexLoansSecuritiesMoney market

Stocks Subscription

rights Investment

certificates Bonds Convertible

bonds Warrant

bonds Warrants

Forex spotdeals

Forwardexchangedeals

Forex swaps

Caps / Floors FRAs Swaps

- Interest rate- Cross-currency

interest rate OTC options

- Currency- Interest rate- Securities- Swaption, IRG

Futures

Hedging instrumentsInvestment/borrowing

instruments

You can smooth out short-term liquidity deficits and surpluses using money market or foreign exchange transactions. The system also maps securities and loans transactions for borrowing and investing in the medium to long term.

Derivative financial instruments allow you to hedge against interest rate and currency risks.


SAP AG 1999

Identifying Treasury Processes

Earnings/risk targets

Revision of planned targets

Feedback

Adjustments

Documentation and control functions

Analysis andtrading process

Transaction and position management process

Analysis(planning)

Decision

FinancialFinancialtransactionstransactions

From a strategic point of view, the analysis and trading process is the starting point for the various Treasury processes. At this stage, you identify and analyze the liquidity and risk positions on the basis of the risk and earnings targets you have defined. SAP Treasury provides special tools and methods with which you can perform an integrated analysis of your company's financial and risk situation.

Once you have decided to conclude certain financial transactions, you enter the trading processes for these transactions in SAP Treasury Management (TM/LO). Treasury Management also supports functions for managing transactions and the related financial positions at later stages.

A range of documentation and control functions are available for all Treasury activities. They allow you to perform evaluations for specific instruments or groups of instruments at each stage of the Treasury process. This fulfills the various documentation and control requirements of both Financial Accounting and Treasury.

(C) SAP AG AC810 2-10

SAP AG 1999

Analysis and Trading Process

InformationprocurementTargets

Instruments Methods Measurements

Identificationof appropriatefinancialtransactions

Simulationof alternativeresults

Select onealternative

Trading Back office Accounting Reporting

Internal:- Liquidity status- Risk position

External:- Market data

Earnings/Earnings/risk targetsrisk targets

Assessment of possiblesolutions

Decision ProcessingControl

Controlling

From a strategic point of view, the analysis and trading process is the starting point for the various Treasury processes. At this stage, you identify and analyze the liquidity and risk positions on the basis of the risk and earnings targets you have defined. SAP Treasury provides special tools and methods with which you can perform an integrated analysis of your company's financial and risk situation.

(C) SAP AG AC810 2-11

SAP AG 1999

Transaction and Position Management Process

Postings Payment

transactions Reversals Accruals/deferrals Valuation

Create new offer/order/contract

Exercise/expiration Terminations Rollovers Exercising rights

User authorizationLimit management

Release

Settlement/control Interest rate adjustment Netting Referencing Confirmation letters Securities account transfers Corporate actions

Trading Back office Accounting

The transaction and position management processes are divided into the following areas: The trading area comprises functions for entering transactions and exercising rights. In the back office area, the transactions are settled (checked). The back office also covers processes related to position management, such as securities account transfers. In the accounting area, you make the postings for the various activities to the subledger. From here, the posting information is transferred to the FI general ledger.

The basic structure of the trading and transaction management processes is the same for all the Treasury Management components. This forms the basis for integrating and processing transactions within the SAP System and provides the framework for adapting the way transactions are represented in the system to suit company-specific requirements.

You can authorize different users for different activities in the transaction and position management process. This allows you to separate trading, back office and accounting functions by employee. In addition, the limit management function enables you to assign a range of different limit amounts to different transactions.

You can configure the system to require transactions to be released for posting by one or several (different) person(s).

(C) SAP AG AC810 2-12

SAP AG 1999

Short-Term Financial Instruments

SurplusSurplus

DeficitDeficit

ShortShort--termterm LongLong--termterm

InvestmentInvestmentMoney marketMoney market

Foreign Foreign exchangeexchange

InvestmentSecurities

Loans

BorrowingBorrowingMoney marketMoney market

Foreign exchangeForeign exchange

BorrowingLoans

Money marketinstruments:

- Fixed-term deposits- Deposits at notice- Commercial Paper- Cash flow

transactions

TRTR--TMTM

TRTR--TMTM

Forexinstruments:

- Spot transactions- Fwd transactions- Currency swaps

Planning horizon

Liqu

idity

pos

ition

In the Money Market area, cash flow transactions allow you to represent a wide range of transactions flexibly by manually entering not just the term, but also the cash flow generated for the transaction as a result of position changes, expenses, earnings, revenues, payments, and so on.

(C) SAP AG AC810 2-13

SAP AG 1999

Medium- to Long-Term Financial Instruments

SurplusSurplus

DeficitDeficit


InvestmentMoney market

Foreign exchange

BorrowingMoney market

Foreign exchange

Securities:- Stock- Bond- ...

Loans:- Mortgage loan- Borrower's note loan- Financing loan- Policy loan- ...

TRTR--TMTM

TRTR--TMTM

BorrowingBorrowingLoansLoans

InvestmentInvestmentSecuritiesSecurities

LoansLoans

Planning horizon

Liqu

idity

pos

ition

(C) SAP AG AC810 2-14

SAP AG 1999

Hedging Instruments

Interest Interest rate riskrate risk

CurrencyCurrencyriskrisk


Ris

k si

tuat

ion Derivative

instruments:- Interest rate swap- Cap- Floor- ...

TRTR--TMTM

Derivative financial instrumentsDerivative financial instruments

Planning horizon

(C) SAP AG AC810 2-15

SAP AG 1999

Treasury Management: Functions

z Complete financial transaction and position management Support of trading and back office functions

Functions to monitor, check and release transactions

Data transfer to Financial Accounting(including accrual/deferral and valuation)

z Flexible settings for company-specific transaction and position management processes

z Financial transactions assigned to portfolios or managed in securities accounts

z Flexible reporting and portfolio analysisz Datafeed interface

(C) SAP AG AC810 2-16

SAP AG 1999

Basic Functions of Treasury Management

Central functionsExamples: Traders/users, currencies, correspondence,

financial mathematics, posting logic, payment transactions, workflow, archiving, market data, information system

FIFI

FinancialAccounting

AMAM

Asset Accounting

COCO

Controlling

Structure of financial transactions

Central dataExamples: Business partners, banks

Securities

Loans

Money market

Derivatives

Foreign exchange

(C) SAP AG AC810 2-17

SAP AG 1999

Overview of Treasury Management: Unit Summary

z SAP Treasury is subdivided into three areas:

Cash Management Treasury Management / Loans Management Market Risk Management

z You can represent financial transactions in Treasury Management using different processes

z The SAP Treasury Management functions span the complete transaction management process, from the trading stage through back-office processing to Financial Accounting

(C) SAP AG AC810 2-18

Data Used in the Exercises

Explanation of the symbols used in the exercises and solutions

Exercises

Solutions

Unit objectives

Business scenario

Tips & tricks

Warning or caution

Data used in the exercises Data Data in the training

system Data in the IDES system

Company codes TR00 through TR20 1000

G/L accounts 113100, 113105, 113113 113913, 118888

113100, 113105, 113113 118888

Treasury business partner

DEUBA Deutsche Bank CITI Citibank broker

1000 Deutsche Bank

CM groupings BANKEN (Bank account history) BANK-IST (Status of available bank

BANKEN (Bank account history) BANK-IST (Status of available bank

(C) SAP AG AC810 2-19

accounts) PERSONEN (Customers, vendors and clearing accounts) GESAMT (Total display)

accounts) PERSONEN (Customers, vendors and clearing accounts) GESAMT (Total display)

Notes to the exercises:

Create your transactions in UNI, CHF, or USD. Exchange rates have only been maintained for these currencies.

Do not delete any existing Customizing entries. You should only add new entries.

(C) SAP AG AC810 2-20

Overview of Treasury Management Exercises

Unit: Overview of Treasury Management

SAP R/3 Treasury applications Relevant product types

You want to gain an overview of the SAP R/3 Treasury module.

1-1 Log on to the system with your User "TREA-XX". "XX" = Your group ID number = Your PC number

1-2 Browse through the various menu items in the Treasury application to get an overview of the different functions.

1-3 Familiarize yourself with the structure of the Customizing settings.

(C) SAP AG AC810 2-21

Overview of Treasury Management Solutions

Unit: Overview of Treasury Management

1-1 Log on to the system with your User "TREA-XX". Your instructor will tell you which system to use. Make sure that you use the correct client, and inform the other person in your group of the new password.

1-2 Overview of the various functions Accounting Treasury Treasury Management Basic Functions / Money Market / Foreign Exchange / Derivatives / Securities / Market Risk Management

1-3 Overview of Customizing

Tools AcceleratedSAP Customizing Project Management Button: SAP Reference IMG Treasury Treasury Management ...


SAP AG 1999

Contents:

z SAP R/3 in your companyz Client and company codez Portfolio and securities accountz Users and traders



SAP AG 1999

Organizational Units: Unit Objectives


z Explain the relationship between the Customizing settings and the application

z Identify the organizational units in SAP Treasuryz Configure trader and user data


SAP AG 1999



Business Partners


Banks





Information System



SAP AG 1999

Organizational Units: Business Scenario

z You want to gain an overview of the organizational units in SAP Treasury and answer the following questions:

z How do the Customizing settings affect how I work in the productive system?

z What options are available for managing financial positions

z How can I ensure that the trader data is assigned to the correct users and stored with the individual financial transactions?



SAP AG 1999

SAP R/3 in Your Company

R/3Customizing

Requirements

CompanyApplication

Customizing is the term used to describe the process of adapting the standard settings delivered with the system to suit company-specific requirements.

Customizing settings determine the options in the application. For example, you may only want to permit certain entries, or allow users to perform specific activities.

You usually customize the system once when you go live with the SAP system. You can make any Customizing settings you require for day-to-day business (but which are not vital to system operations) using application functions.


SAP AG 1999

Customizing and Application

Treasury ManagementBasic Functions

Industry

Business Partners

-

Change Business PartnerChange Business Partner

Partner Deuba

Industry

Possible entriesF4

Industry Description0001 Banks0002 Insurance0003 . . .

Industry Description0001 Banks0002 Insurance0003 . . .

IMGIMG

The Implementation Guide (IMG) lists all the activities that can be customized for each application. Customizing settings determine the options in the application. For example, you may only want to

permit certain entries, or allow users to perform specific activities.


SAP AG 1999


Company code

Controlling area

Client Business areaSecurities Securities accountaccount

PortfolioPortfolio

The Treasury modules use the central SAP organizational structures. This ensures that the Treasury system is integrated with the other SAP applications.

The client is a self-contained unit within the SAP system (commercially, organizationally, and technically) with separate master records and its own set of tables. Client data applies for all company codes and organizational structures. The client usually represents the corporate group level.

A company code (FI) is the smallest organizational unit for which a complete, self-contained set of accounts can be drawn up for external reporting. The company code is the unit for which you record all the posting activities and generate all the documents for financial statements (balance sheet, profit and loss account). A client can have several company codes, which enables you to manage the accounts for several independent companies at the same time.

Business areas (FI) are organizational units for internal financial accounting. They are used to group G/L transaction figures for internal evaluations (internal balance sheet/P&L). You can define business areas across several company codes.

Controlling areas (CO) are organizational units within an enterprise for which you can perform comprehensive cost accounting.

You can make further subdivisions in SAP Treasury by defining Treasury-specific evaluation groups, such as portfolios and securities accounts.


SAP AG 1999

Position Management Options

For single items

At securities account level

At portfolio level

For several securities accounts

Company code position

The level at which you manage your financial positions is of fundamental importance. Position management is the basis for valuation.

In the money market, foreign exchange, derivatives and loans areas, you manage transactions as single items. You can manage securities positions for a securities account, portfolio, for several securities accounts, and in some cases, as single items.


SAP AG 1999

Securities Account and Portfolio

Company codeCompany codepositionposition

PortfolioPortfolioposition 1position 1

Sec. acctposition 1

Sec. acctposition 2

PortfolioPortfolioposition 2position 2

Singleitems

Singleitems

You can create several portfolios within a company code. You can assign several securities accounts to a portfolio.

(You can only assign a securities account to one portfolio.) You use securities accounts to manage and value your positions. You need them for all transactions that

require position management. This primarily applies for listed securities. You can use securities accounts as a basis for generating securities account statements, evaluating positions, and performing securities account transfers. A securities account in the system usually relates to an existing securities account at a bank. Securities accounts ensure that the legal framework and the related administrative rules can be observed.

A portfolio is an evaluation unit in the company code, to which you can assign securities accounts (securities area) or financial transactions (money market, forex, derivatives, borrower's note loans). You can use portfolios to run an aggregated evaluation of different financial products. A portfolio also acts as a risk management instrument for controlling and evaluating a your company's risk positions. In the securities area, you can value positions for accounting purposes at portfolio level.

(C) SAP AG AC810 3-10

SAP AG 1999

Define Portfolios

Company code

Portfolio Portfolio nameSEC_1 Securities portfolio 1SEC_2 Securities portfolio 2BOND Bond portfolioFXPORT Forex portfolio CREDIT Credit portfolio MONEY_1 Money market portfolio 1

C_ASSETS Current assetsF_ASSETS Fixed assetsMONEY_2 Money market portfolio 2

Treasury: Portfolio position

1000

To evaluate and value positions at portfolio level, you first have to define the portfolios. You define your company-specific portfolios in Customizing. An example of a possible entry would be a

trader portfolio.

(C) SAP AG AC810 3-11

SAP AG 1999

Securities Account Master Data

Company codeSecurities accountSec. acct name

1000Account++

Bank information

Depository bankSec. acct number Clearing account

: : Portfolio

House bank

House bankHouse bank acct

1000

1000

?

DEUBA

22224446

87575733

The securities accounts you create in the system usually represent existing securities accounts at a bank.

Meaning of selected fields in the securities account master data: - Depository bank: Partner ID of the bank where the securities account is kept. You first create the

bank as a business partner in the role of "depository bank". - Securities account number: Number used to manage the securities account at the depository bank. - Clearing account: Account number of the cash clearing account at the depository bank. - Internal bank account: Account number of the cash clearing account in SAP Financial Accounting. - Blocking type: If a restraint on disposal applies to the entire securities account, you must specify

the blocking type. - Block flag until: Date until which the restraint on disposal applies for the securities account. - Portfolio: Assignment of the securities account to a portfolio. This field is displayed if the Portfolio

indicator is set in Customizing. - Business area: When you post a transaction, the system uses the business area defined in the

securities account master data. If there is no entry in the securities account master data, the system uses the entry in the account assignment reference.

(C) SAP AG AC810 3-12

SAP AG 1999

Defining Trader and User Data

Trader 01Trader 02Trader 03

User M T WDC REC TraderBrown M T 1 Trader 01

1000Company code

You define traders per company code. If a trader is active in several company codes, you have to make the relevant settings in each company code.

You can define trader-specific input rules as user data. For example, M = million, T = thousand. WDC enables you to carry out a working day check, and REC a rate entry check.

Once you have created the trader (and assigned a user name), you must assign this person authorizations for the transactions he or she is allowed to conclude.

(C) SAP AG AC810 3-13

SAP AG 1999

Traders: Trader Authorizations

Assign

Trader01

TraderTraderauthorizationauthorization

Authorization

X

TreasuryMoney market

Fixed-term deposit

51 A Fixed-term deposit100 Investment200 Borrowing

Deposit at notice

52 A Call money 100 Investment200 Borrowing

When you assign transaction authorizations for traders, you can restrict the trading powers to certain financial instruments (such as money market), product categories, product types, or transaction types. A higher-level authorization means that a trader is allowed to create any transaction below this level. For example, a trader authorized for the Money Market area automatically has authorization to conclude a fixed-term deposit or a deposit at notice. Similarly, authorization for a product category automatically includes the product type and transaction type levels below it.

Before you can assign trader authorizations, you must define the trader in Customizing. To run evaluations that concentrate on the transactions or positions of a trader, you can store the name of

the trader in the transaction. You can enter the trader name manually when you conclude the transaction, or let the system propose the trader name automatically on the basis of the user name. You can assign specific user data to your traders. This speeds up data entry, and allows you to use automatic checks for working days and rates/prices (on the basis of defined deviation intervals).

The logic for assigning authorizations is the same as for business partner authorizations.

(C) SAP AG AC810 3-14

SAP AG 1999

Organizational Units: Unit Summary

z The entry and selection options in the application depend on the settings made in Customizing.

z The Treasury modules make use of the central SAP organizational structures. There are also Treasury-specific portfolios and securities accounts.

z If you want to record trader data with your financial transactions, you set up corresponding traders in Customizing and assign authorizations to them in the application.

(C) SAP AG AC810 3-15

Organizational Units Exercises

Unit: Organizational Units Topic: Defining Organizational Units

Organizational units in SAP Treasury Configuring trader and user data

You first want to gain an overview of the organizational units used in SAP Treasury. You then want to assign corresponding trader data to the system users.

1-1 Create the following portfolio for your company code TRXX in Customizing: Portf-XX.

1-2 Create your own trader in Customizing using the name "T-XX", overwriting the entry "TREASURERXX". Assign your user name TREA-XX to this trader.

1-3 The trader is authorized to conclude money market, foreign exchange, derivatives and securities transactions. Define the corresponding authorizations for your trader.

(C) SAP AG AC810 3-16

Organizational Units Solutions

Unit: Organizational Units Topic: Defining Organizational Units

1-1 Create portfolio Customizing: Treasury Treasury Management Basic Functions Organization Define Portfolio Enter your company code TRXX and choose New entries (button). Save your entries.

1-2 Create trader and assign user name Customizing: Treasury Treasury Management Basic Functions Organization Define Trader Enter your company code TRXX and choose New entries (button). Save your entries. Treasury Treasury Management Basic Functions Organization Define User Data Find your user and overwrite TREASURERXX with your new trader T-XX. Save your entries.

(C) SAP AG AC810 3-17

1-3 Create user authorizations Application: Accounting Treasury Treasury Management Basic Functions Master Data Trader Authorization Enter your trader T-XX and your company code TRXX, and choose Enter. Set the indicators and save your entries.


SAP AG 1999

Contents:

z Role category / role typez Dataz Classificationz Grouping / number rangesz Views / Field modificationz Relationshipsz Releasez Transaction authorizationsz Standing instructions

Business Partners


SAP AG 1999

Business Partners: Unit Objectives


z Fully configure business partners and assign authorizations

z Define standing instructions


SAP AG 1999



Business Partners


Banks





Information System



SAP AG 1999

Business Partners: Business Scenario

z Before you can conclude financial transactions with a business partner, you must create the partner in the Basic Functions area of the application. To do this, you must first make the corresponding settings in Customizing.

z You only want to authorize your business partners for certain transactions.

z When you create transactions with a business partner, you want the system to default to certain settings you have defined for that partner. What options are available?



SAP AG 1999

Business Partners - Overview

Creating financial transactionsCreating financial transactions

Creating business partnersCreating business partners

Customizing

Prerequisitefor

Prerequisitefor

Controldata

Roles Relationships General

Depending on your liquidity situation (CM), your risk situation (MRM), and the revenue and risk targets you have set, you conclude certain financial transactions with your business partners. Example: You have a liquidity surplus, and invest this surplus amount with the business partner "Bank A" as a fixed-term deposit.

The functions for entering transactions are based on the Customizing settings for the transaction architecture (product types, transaction types, ...), and certain application data, such as business partner information (address, bank details, ).

In SAP Treasury, enter each financial transaction with a (specific) business partner. The business partner data must be available before you enter the transaction. The settings that have been made for business partners in Customizing determine the options available for creating business partners in the application.


SAP AG 1999

Roles and Functions

Naturalperson

Organization

Interested partyTreasury partner

Beneficiary

BorrowerAgent/counterpartyLawyerSurveyor

IssuerDepository bankTrusteePayer/payeeAssigning institutionGuarantor

A business partner is one of the following: - A natural person - An organization - A group of people or organizations in which you have a business interest

In the SAP Treasury system, you conclude transactions with business partners. Banks or central treasury departments are typical partners.

You create a master record for each business partner. You can assign several roles or functions to one business partner.

A role (= role category) specifies the characteristics a business partner must have before you can perform certain transaction activities with that partner. The business partner roles are used to record the functions of a business partner in a particular transaction. Example: A business partner acting as a borrower or a treasury partner.


SAP AG 1999

Business Partner Data: Overview

Central data GeneraldataCompany code

data

Businesspartner

NameAddress overview

Bank detailsPersonal data

Employment dataLegal data

Fiscal yearsAdditional dataRelationships

Role overviewRole data

Credit standingTax data

Reg. reporting dataControl data

Bank

Account informationAccount interest

Autom. pmnt transact.Payment dataDunning data

Reg. reporting dataControl data

Relationships

The user interface for the business partner data was redesigned as part of the Enjoy project. The new screen layout uses tabstrips that let you navigate between the individual business partner views. You can still navigate as before using the menu.

The data you can maintain for business partners is divided into three areas: - Central data

This data is available for every business partner, regardless of the partner role. - General data

General data is held centrally for all roles. Access to this data can vary according to the role category, depending on the settings in Customizing (role-view-assignment).

- Company code-dependent data Data that only applies for a particular role category in the respective company code.

Each of these areas is divided into different views.


SAP AG 1999

Creating a Business Partner

??

Business partnerGroupingRole category

Classification Organization Natural person Collective partner

Application levelApplication level

System level

When you create a business partner in the system, you must specify the classification and the grouping in the initial screen. You can assign a role (= role category) when you create the partner, or at a later date.

The classification options and role categories are predefined in the system. You define the grouping in Customizing, and use it to classify the business partners according to your

own criteria.


SAP AG 1999

Customizing and Application

Classification

Grouping

Role category

Views

Relationship categories

Role type

Number ranges

Relationship types

Field modifications

Customizing

ApplicationData entered

Business partnerauthorization

Standinginstructions

Classification: You create a business partner either as an "organization" or a "natural" person. The classification affects the data you enter (for example, legal form for an organization, marital status for a natural person).

The grouping lets you classify business partners according to your own criteria. Examples: Grouping1: Partners for money market, forex, and derivatives transactions Grouping 2: Partners for loan transactions ... The business partner roles (role categories) are used to record the functions of a business partner in a particular transaction. The role category determines which application functions are permitted or excluded.

You can use the field modification functions to define which fields in the respective business partner views are required, optional, or suppressed.

You can link business partners using relationships. The data the user enters is divided into central data, general data, and company code data. You have to authorize the business partner for the permitted transactions. Standing instructions are general agreements made with a business partner for processing similar types

of transactions.

(C) SAP AG AC810 4-10

SAP AG 1999

Grouping

CreateCreatebusinessbusinesspartnerpartner

FI

CreateCreatecustomercustomer

Customizing:

Grp. NR Acct group Descr. of grp.

TR01 01 CUST TR partner (int.)TR02 02 CUST TR partner (ext.)

No. Fr. no. To no. Curr. no. Ext.

01 000001 000099 502 AAAAAA ZZZZZZ X

BP grouping

Number ranges

created automatically

TR

You define the number range for the business partner via the business partner grouping. This number range controls whether the business partner key is assigned internally by the system, or externally by the user. It also determines whether the key must be numeric or alphanumeric.

In addition, you use the business partner grouping to create the link to Financial Accounting by assigning a corresponding customer account group. If you create a partner and call up views that are relevant for processing on the basis of customer accounts, the system automatically creates an FI customer. Customer-based views: Bank details; tax data; control data; account information; account interest; automatic payment transactions; payment data; dunning data.

To map payment flows in Cash Management, you assign a planning group to the business partner (Company code data -> Account information). This ensures that payment flows are included in Cash Management, even if the payment details are missing in the transaction.

(C) SAP AG AC810 4-11

SAP AG 1999

Define Role Types / Role-View Assignment

RoleC Name of role type RType Name of role category

A001A002

10001000

Treasury partnerTreasury partner

Domestic treasury partnerForeign treasury partner

RoleC Name of role category View Description

10001000

01000190

General: Credit standingCoCd: Control

Treasury partnerTreasury partner

The functions of the business partner in the transaction are defined using business partner roles (role categories). You can refine the role categories predefined in the system by defining role types in Customizing. Example: You could vary the standard address according to role category.

In Customizing you can define which data views can be accessed for each role category. Example: If you do not assign the "Dunning data" view to the role category "Issuer", the user cannot call up dunning data for a partner in the role of issuer in the application. You can use role-view assignment to assign views from the general data and company code data areas to roles. Central data can be called up for all role categories.

(C) SAP AG AC810 4-12

SAP AG 1999

Field Modification

... for activities ... for role categories

?? Field modification

. . .

010203

CreateChangeDisplay

Act. Short text Role Name of role categoryBorrower:Treasury partner

0100:1000

382 Industry o o o o...

Fld gr. Hide Required Opt.field Display110 Credit standing o o o oX

X

You can configure the individual entry fields in the views using the field selection options in Customizing. The following options are available for data fields: - Required - Optional - Display only - Hidden (suppressed)

You can use field selection to configure fields according to activity (create/change/display business partner) or role category. (You have to maintain role-view assignment in order to modify the fields for the role category.)

(C) SAP AG AC810 4-13

SAP AG 1999

Business Partners: Relationships

Relationship

Relationship categoryRelationship category

Relationship typesRelationship types

Example:Parent company

Example:Subsidiary

Depends upon classification

Outgoing relationship

"Group subsidiary of"

The selection of relationship categories is predefined in the system and depends on how the business partner is classified. Example: "Group subsidiary of ..." for an organization, "Wife of ..." for a natural person.

You can differentiate within the given relationship categories by defining your own relationship types.

(C) SAP AG AC810 4-14

SAP AG 1999

Business Partners: Relationship Types

RelTyp Description RelCat Description

SUB2 Important groupsubsidiary of

0050 Group subsidiary of

You define relationship types to refine the relationship categories predefined in the system.

Documents

Treasury Management Overview