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Adoption Methods for SAP S/4HANA Finance for Cash Management

by Gaurav Agarwal, Principal Consultant, SAP S/4HANA Finance, Infosys Limited

May 15, 2017

Various organizations have started their assessment journeys to embrace SAP S/4HANA and are curious to know the options for implementing various functionalities. Cash management is one such area. In recent SAP S/4HANA Finance versions SAP has made classical cash management obsolete and has come up with new functionality called SAP S/4HANA Finance for cash management. See how it affects organizations that are using cash management, planning to use cash management, or continuing without cash management.

Is managing and projecting cash flows a major challenge in your organization? Are you looking for ways to handle bank accounts more effectively in your SAP system? SAP S/4HANA Finance has simplified and reimagined the cash management and introduced a component called SAP S/4HANA Finance for cash management. 

In this article, I compare various options for adopting the cash management features in SAP S/4HANA versions for cash management. I also list where SAP Fiori applications are necessary to perform business transactions in SAP S/4HANA Finance for cash management. For organizations continuing without cash management, SAP Bank Communication Management Lite is applicable as they can manage bank accounts using this without implementing cash management operations. I walk you through the various functions offered by SAP S/4HANA Finance for cash management, describe the prerequisites, and explain how to go about adopting cash management according to your organization’s need. 

(Note: I use the term SAP S/4HANA and SAP S/4HANA Finance interchangeably with the finance functions in SAP S/4HANA Enterprise Management (EM) version, unless I specifically mention otherwise in this article. Also SAP Cash Management has been renamed as SAP S/4HANA Finance for cash management.) 

Overview of the Functionalities Offered by SAP S/4HANA Finance for Cash Management

In a classical SAP ERP Central Component (ECC) system, the Cash and Liquidity Management component (CLM) is used to handle electronic bank statements, cash positions, liquidity management, and bank account management. In the SAP S/4HANA Finance system cash position, liquidity management, and bank account management have been shifted to the SAP S/4HANA Finance for cash management component and enhanced and reimagined with SAP S/4HANA capabilities. Figure 1 shows the functionalities offered by SAP S/4HANA Finance for cash management.


Figure 1
Overview of functionalities offered by SAP S/4HANA Finance for cash management

(Note: SAP S/4HANA Finance has pre-delivered various SAP Fiori applications to use to perform many cash management transactions and activities and to define key performance indicator (KPI) cockpits in the SAP Fiori platform. Even for activities such as bank account management, SAP Fiori applications are mandatory. SAP S/4HANA Finance for cash management is also integrated with FI, SAP Treasury and Risk Management, SAP Bank Communication Management, Financial Services Network (FSN), and the In-House Cash components of SAP.)

A Comparison of Different Levels of Activation for SAP S/4HANA Finance for Cash Management Functionalities

SAP S/4HANA Finance for cash management is a licensed version over and above the SAP S/4HANA core license. Thus, whether to buy such a license depends on what functionalities your organization is planning to use from SAP S/4HANA Finance for cash management. You can implement full SAP S/4HANA Finance for cash management features, the SAP Bank Account Management Lite version, or the basic cash management features. Let’s compare various SAP S/4HANA Finance for cash management implementation options on the basis of the functionalities explained in Table 1

Functionalities/

prerequisites

Basic

Lite

Full

Basic Cash Management (Core)

Bank Account Management (BAM) Lite

SAP S/4HANA Finance for cash management

Technical aspects

1.      Licensing need

No separate license needed. It is part of a standard SAP S/4HANA license.

No separate license needed. It is part of a standard SAP S/4HANA license.

An additional license is needed to use the full features of SAP S/4HANA Finance for cash management.

2. Version availability

It is available from SAP S/4HANA on-premise edition 1610 onward.

It is available from SAP S/4HANA on-premise edition 1511 onward.

It is available from SAP S/4HANA on-premise edition 1511 onward.

3.      SAP Fiori applications

Needed

Needed

Needed

4. Business function activation needed?

No

No

Yes, business function FIN_FSCM_CLM needs to be activated.

Bank Account Management

1. Control of master data with business users instead of IT people

Yes

Yes

Yes

2. Manage Banks and Bank Accounts

Available (only as a subset of available fields in banks and bank accounts master data that are needed for enabling payment process in financial accounting)

Available (only as a subset of available fields in banks and bank accounts master data that are needed for enabling payment process in financial accounting)

Available (all fields in banks and bank accounts master data available for processing)

3. Bank accounts display in bank hierarchy list view and fuzzy search capability

Available

Not available

Available

4. Import and export of bank accounts

Available

Not available

Available

5. Centralized Bank Account Management

Not available

Not available

Available (from SAP S/4HANA Enterprise Management on-premise 1610 version)

6. Defining payment approval processes using signatories

Not available

Not available

Available

7. Managing overdraft limits for bank accounts

Not available

Not available

Available

8. Creating user-defined views using bank account groups

Not available

Not available

Available

9. Using workflows in opening, modifying, closing, and reviewing bank accounts

Not available

Not available

Available

10. Integrating with bank accounts in remote systems

Not available

Not available

Available

11. Improved bank life cycle management with connectivity paths

Not available

Not available

Available

12. Import bank accounts via Excel

Not available

Not available

Available

13. Uploading file or hyperlink attachments

Not available

Not available

Available

Cash Operations

1. Cash position

Available (transaction code FF7AN)

Not applicable

Monitoring cash positions SAP Fiori app available

2. Manage memo records

Available (transaction codes FF63 and FF65)

Not applicable

Available

3. Cash concentration

Available via payment advice (transaction code FF73)

Not applicable

Available via SAP Fiori application with various intuitive features such as cash pool

4. Make, track, and approve bank transfers

Not available

Not applicable

Available

5. Bank Statement Monitor

Not available

Not applicable

Available

6. Bank Risk

Not available

Not applicable

Available

7. Deficit Cash Pool

Not available

Not applicable

Available

8. Analyze actual cash flows with various dimensions

Not available

Not applicable

Available

Liquidity Planning

1. Liquidity forecast

Available (transaction code FF7BN)

Not applicable

Available via SAP Fiori application with various intuitive features. Also SAP Analysis for Office can be used to do liquidity forecast analysis or you can use SAP BW queries.

2. Actual cash flow analysis with various dimensions

Not available

Not applicable

Available

3. Embedded rolling liquidity planning

Not available

Not applicable

Available

4. Extraction, transformation, and loading (ETL) needed for transaction and master data for liquidity planning

Via SAP Business Planning and Consolidation (BPC) or SAP BW Integrated Planning (BW IP) in a separate system causing mandatory ETL for master and transactional data.

Not applicable

Embedded liquidity plan can be created using planning features of SAP BPC
Optimized for SAP S/4HANA. It has integrated automated liquidity forecast feature and no ETL is needed in this integrated scenario.

One Exposure from Operations: One exposure is the foundation building block for other new cash management features. It integrates business processes and supporting transaction data from various connected systems to build the base data for cash flow and liquidity forecast analysis.

1. Facilitate Funds Planning and Risk Management

Not available

Not applicable

Available

2. Business Intelligence (BI) integration

Not available

Not applicable

It can use predefined local BI content to extract cash management data for analytical purposes

3. SAP Bank Communication Management integration

Not available

Not applicable

Available

4. Biller Direct integration

Not available

Not applicable

Available (from SAP S/4HANA  Enterprise Management on-premise 1610 version)

5. Data source from memo records

Available

Not applicable

Available

6. Data source from financial operations

Available

Not applicable

Available

7. Data source from Treasury and Risk Management

Available

Not applicable

Available

8. Data source from Consumer and Mortgage Loans

Available

Not applicable

Available

9. Data source from Contract Accounts Receivable and Payable

Available

Not applicable

Available

10. Data source from sales and distribution

Available

Not applicable

Available (from SAP S/4HANA Enterprise Management on-premise 1610 version)

11. Data source from materials management

Available

Not applicable

Available (From SAP S/4HANA Enterprise Management on-premise 1610 version)

12. Data source from classic Cash Management

Not applicable

Not applicable

Available

13. Data source from Manual Entry of Bank Cash Balances

Not available

Not applicable

Available

14. Data source from SAP Liquidity Planner

Not available

Not applicable

Available

15. Data source from Flexible Real Estate Management

Not available

Not applicable

Available

16. Data source from Distributed Cash

Remote Contract Lifecycle Management (CLM) data can be loaded via IDocs

Not applicable

One Exposure functionality supports remote CLM data

Table 1
A comparison of various cash management adoption options 

As you can see in Table 1, an organization can implement the basic version and SAP Bank Account Management Lite version together to achieve the benefits of both (provided that you are satisfied with the SAP S/4HANA 1610 version). If you are on the SAP S/4HANA 1511 version, you can implement only SAP Bank Account Management Lite and not the basic SAP S/4HANA Finance for cash management version). So Bank Account Management Lite is suitable for those organizations that are not using cash management functionalities and are just managing bank accounts for financial operations. 

Further, SAP Fiori is a mandatory component for using various cash management features, such as managing bank accounts and making bank transfers. SAP Fiori comes with the SAP S/4HANA license, so it has to be installed by your Basis team before you can start using cash management features. 

Now let’s see how to activate these three different options in an SAP S/4HANA environment. 

How to Activate Basic SAP S/4HANA Finance for Cash Management Functionalities

You can implement the basic SAP S/4HANA Finance for cash management functionalities to continue using the cash management features offered by classical ECC system without any additional license of SAP S/4HANA Finance for cash management. Refer to SAP Note 2376432 “How to Implement Basic Cash Management in SAP S/4HANA On-premise Edition 1610” (https://launchpad.support.sap.com/#/notes/0002376432). Basic SAP Cash Management has integration to memo records, financial operations, SAP Treasury and Risk Management, Contract Accounts AP/AR, SD, MM, and Consumer/Mortgage Loans data sources.  

Key activities listed in SAP Note 2376432 for such basic cash management activation include:

  • Ensure scope items J77 and J78 are activated in Solution Builder (transaction code /n/SMB/bbi) in your SAP S/4HANA system
  • Activate basic cash management in customization transaction code S_ERW_11000326  

To do this follow menu path SPRO > Financial Supply Chain Management > Cash and Liquidity Management > General Settings > Define Basic Settings. This path takes you to Figure 2. As shown in Figure 2, click the New Entries button. 


Figure 2
Create an entry for cash management basic settings

This action opens the screen as shown in Figure 3. In the Cash Management Scope field select 01 Basic Cash from the drop-down list of options and click the save icon.


Figure 3
Activate basic cash management

(Note: In Figure 3, the other setting, BAM: Signatory Change Request Grouping, is applicable for bank account management. It is used to define how many change approval workflows are generated if payment signatories are changed on bank accounts. For my example, you are activating basic cash management, so you select the 00 Into a Single Change Request option from the drop-down list shown in Figure 4.)


Figure 4
Signatory change request grouping settings for Bank Account Management

Other activities listed in SAP Note 2376432 for basic cash management activation are: 

  • Delete the reservation for cross-payment run payment media from customization transaction code OBPM5
  • Define grouping for cash management and maintain heading in customization transaction code OT18
  • Maintain grouping structure for cash management in customization transaction code OT17
  • Define cash management account name in customization transaction code OT16 

With this basic cash management activation, you can use the following activities in SAP S/4HANA Finance:

  • Manage banks and manage bank accounts (up to the details needed to manage payment processes)
  • Bank accounts display in list view and maintain bank accounts master data
  • Import and export of bank accounts via Excel
  • Basic cash position report (transaction code FF7AN)
  • Basic liquidity forecast report (transaction code FF7BN)
  • Edit and display memo records (transaction code FF63 and FF65)
  • Payment advice for cash concentration (transaction code FF73) 
How to Activate SAP Bank Account Management Lite Functionalities

Activating SAP Bank Account Management Lite functionalities is easy as it does not require any additional component configuration. As soon as your SAP S/4HANA system is installed and SAP Fiori applications are activated, users can start using SAP Bank Account Management (BAM) lite features, such as creating bank accounts and linking to house banks. For more information, read SAP Note 2165520 Feature Scope Differences Between Bank Account Management and Bank Account Management Lite. 

How to Activate Full SAP S/4HANA Finance for Cash Management Functionalities

Full SAP S/4HANA Finance for cash management is a licensed version, and after getting a license, you need to activate it in SAP S/4HANA Finance via business function FIN_FSCM_CLM. To compete this step, execute transaction code SFW5. This action opens the screen in Figure 5.


Figure 5
Business function FIN_FSCM_CLM activated

Select the row in which FIN_FSCM_CLM appears and click the activate changes icon (This icon appears only if the business function selected is not already activated. In my example in Figure 5, the business function is already activated.) After FIN_FSCM_CLM is activated, the cash management component in your system is enabled. This activation is indicated by the following message: Business func. (Reversible) will remain activated. This is a reversible business function, so if at any point you do not want to use the SAP S/4HANA Finance for cash management features, then this can be de-implemented. 

You also need to activate the 02 Full Cash option in the basic settings for cash and liquidity management configuration. To do this follow the instructions in the “How to Activate Basic SAP S/4HANA Finance for Cash Management Functionalities” section (Figures 2 and 3) for details on this configuration activity.  

You can follow the relevant sections from SAP S/4HANA Finance for cash management configuration guide based on your organizational needs. Here is a link for SAP S/4HANA Finance for cash management configuration guides:

https://uacp.hana.ondemand.com/http.svc/rc/PRODUCTION/dd5b6556f2441d58e10000000a4450e5/1610%20000/en-US/frameset.htm. 

By now you should understand the different functionalities offered by various SAP S/4HANA versions and the ways to activate those. Based on your organization’s need and scope of cash management activities, you can decide what you want to activate—basic cash management features with SAP Bank Account Management Lite features or the full-fledged cash management features with an additional license.

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Gaurav Agarwal

Gaurav Agarwal (gka2707@gmail.com) is a seasoned SAP certified professional in SAP S/4HANA Finance (on-premise versions of SAP S/4HANA 1709 and 1610), SAP S/4HANA Cloud, SAP Activate, and SAP Financials in SAP ERP Central (SAP ECC) 6.0. He has approximately 13 years of SAP system experience and is a Chartered Accountant with All India level ranks. He holds a Bachelor of Commerce degree.



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