Sap Cash Flow

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Cash Accounting and Cash Flow Planning with SAP Liquidity PlannerStephan Kerber, Dirk Warntje

Content

Introduction .............................................. 3

Structure of the Book ..................................... 3

Acknowledgments .......................................... 4

1 Business Overview .................................. 5

1.1 The Concept of Cash Accounting .......... 5

1.2 Tasks of Cash Accounting and

Liquidity Planning ................................. 6

1.3 Recipients and the Need for

Information .......................................... 7

1.4 Financial Accounting and

Cash Accounting ................................... 8

1.5 Differences to Cash Management ......... 9

1.6 Conclusion ........................................... 11

2 Case Scenario: Implementing Cash Accounting and Liquidity Planning .... 13

2.1 Conclusion ........................................... 15

3 SAP Liquidity Planner: Liquidity Analysis Using SAP Actual Calculation ................................................. 17

3.1 Overall Process and System

Integration ............................................ 17

3.2 Technical Settings in SAP Actual

Calculation ........................................... 17

3.3 SAP Actual Calculation

(Cash Accounting) ................................ 19

Data Model and Master Data ............... 19

Functionality—Overview ..................... 21

Customizing SAP Actual Calculation ... 21

Tools .................................................... 26

Tables ................................................... 27

3.4 Cash Accounting Processes ................... 28

Information Acquisition from

Assignment Mechanisms ...................... 28


Bank Statement Information ................ 29


Financial Accounting ............................ 31

Manual Assignment and Manual

Transfer Posting ................................... 36

Analysis Reports ................................... 36

3.5 Conclusion ........................................... 37

4 SAP Liquidity Planner: Liquidity Planning and Reporting Using SAP BW/SEM ............................... 39

4.1 Modeling in SAP BW/SEM .................... 40

SAP Business Content ......................... 40

Master Data ......................................... 45

Characteristics ..................................... 53

Planning Layout in

SAP SEM-BPS/BW-BPS ........................ 54

4.2 The Liquidity Planning Process .............. 63

4.3 Extracting Actual Data .......................... 64

4.4 Reporting in SAP BW ............................ 67

4.5 Conclusion ........................................... 69

5 Liquidity Planning and Reporting Without SAP BW/SEM .......................... 71

5.1 Overview .............................................. 71

5.2 Customizing .......................................... 71

5.3 Master Data and Actual Data ................ 75

5.4 Planning ............................................... 76

5.5 Reporting ............................................. 77

5.6 Conclusion ........................................... 78

2 © Galileo Press 2006. All rights reserved.

Content

6 Outlook ...................................................... 79

Appendix .................................................... 81

Lee Iacocca and Cash Flow ............................. 81

Indirect Cash Flow .......................................... 81

Plug-in ........................................................... 81

Case Scenario ................................................. 82

Bibliography .............................................. 83

Index ........................................................... 85

www.sap-press.com 3

Introduction

This book is about money. Where does money come

from and where does it go? Because liquidity is one of the

critical success factors for a company, it is integral to run-

ning a business. The most important aspects of liquidity

are the ability to ensure solvency and generate payment

surpluses. In this context, companies constantly try to an-

alyze and plan their cash flow. Unfortunately, established

applications such as Accounting or Cash Management

don’t provide the necessary information on cash flow re-

quired by companies; however, SAP Liquidity Planner af-

fords you with the much needed relief in this area, as

shown by its first implementations in both nationally and

internationally operating companies. The complex re-

quirements placed on a retrograde liquidity analysis, a

decentral planning tool, and an efficient reporting were

met by the use of SAP Liquidity Planner.

SAP Liquidity Planner is a component that consists of

two applications: Cash Accounting (SAP R/3) and Liquid-

ity Planning (prior to Release 3.5, it was part of SAP Stra-

tegic Enterprise Management (SAP SEM), from SAP Busi-

ness Information Warehouse (SAP BW) Release 3.5 on-

wards, it has been included in BW). Cash accounting

determines the cash flow either based on an electronic

bank statement or data from financial accounting. Liquid-

ity planning is carried out using the planning functionality

in SAP BW. Reporting is performed by SAP BW.

In the past, this component was part of Corporate Fi-

nance Management (CFM), and since the introduction of

mySAP Enterprise Resource Planning (mySAP ERP) in 2004,

it has been located in the Cash Management and Liquid-

ity Management area as part of Financial Supply Chain

Management (FSCM).

This SAP Press Essentials book outlines the concepts of

cash accounting and liquidity planning, as well as the re-

sulting requirements that a business software must be

able to meet. In this book, the authors demonstrate how

you can meet these requirements using SAP Liquidity

Planner and also, how you can implement this product.

Readers of this book should have a sound knowledge of

the accounting application in SAP R/3 as well as SAP BW

and SAP SEM.

Structure of the Book

Chapter 1 outlines the business principles and provides

clear definitions of the terms used in the context of cash

accounting and liquidity planning. In addition, the con-

cept of cash accounting is introduced, along with a de-

scription of its interdependencies with accounting. In the

final sections of this chapter, we clearly distinguish SAP

Liquidity Planner from SAP Cash Management.

Chapter 2 describes a case study that is referred to and

further developed throughout the book. We use this ex-

ample to help you understand the functionality and the

technical concept of SAP Liquidity Planner, but it should

also serve as an aide to you in implementing this compo-

nent.

Chapter 3 and Chapter 4 contain a detailed description

of SAP Liquidity Planner. They provide an insightful intro-

duction to the two main areas of the product: Chapter 3

describes Cash Accounting (SAP R/3), while Chapter 4

deals with Liquidity Planning (SAP BW). In both chapters,

you will also find detailed information on customizing

and the various functions of the application. Wherever

necessary, the case scenario is referred to, enhanced, and

completed.

Chapter 5 describes a workaround for simplified liquid-

ity planning and reporting in SAP R/3 without using SAP

BW.

Chapter 6 addresses possible developments and future

requirements of SAP Liquidity Planner. The Appendix con-

tains additional information.


Introduction

Acknowledgments

SAP is a registered trademark of SAP AG, Dietmar-Hopp-

Allee 16, D-69190 Walldorf. We would like to thank

SAP AG for its permission to use the trademark and the

materials provided in this book. Note that SAP AG, how-

ever, is not the publisher of this book nor is it responsible

for the contents of this book.

We would like to express our deepest gratitude to our

colleague Robert Bieber who supported us with numer-

ous tips and invaluable information.

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1 Business Overview

In this chapter, we will first define and differentiate cash

accounting and liquidity planning. This is a rather impor-

tant step in understanding these concepts as they are of-

ten used in a multitude of ways. Next, we‘ll describe the

tasks performed by cash accounting and liquidity plan-

ning. Because cash accounting and general accounting

are inherently interrelated, we should point out their in-

terrelationships. Lastly, we’ll describe the differences be-

tween cash accounting and SAP Cash Management.

1.1 The Concept of Cash Accounting

In business literature, you’ll find countless discussions

about the concept of cash accounting and its definition. In

these discussions, you’ll also encounter the following

terms: cash budget management, flow-of-funds analysis,

and cash flow statement, as well as cash flow accounting.

Cash accounting records the changes of cash flows, cash

flows being incoming and outgoing payments of liquid

funds such as cash in hand and bank savings.

In accordance with national and international account-

ing standards such as FASB and IAS, we will use the term

“cash flow” in this book to describe the changes in the

means of payment. Liquidity is therefore referred to as a

financial accounting-related concept. Within a certain

period, cash accounting records transactions that have a

direct influence on the stock of liquid funds, regardless of

the period the payments refer to (see Geuppert 2003,

p. 8). This type of recording and displaying of cash flows

can be compared to fiscal accounting, which is used in

the public sector.

Therefore, cash accounting distinguishes itself from ac-

crual accounting and cost accounting. Figure 1.1 illustrates

Incoming/Outgoing Payments

Expenditure/Revenue

Expense/Profit

Costs/Benefits

Cost and Activity Accounting

Data Source(SAP)

CashAccounting

Accounting

Controlling

Cash Accounting

Profit and Loss StatementCash Basis Accounting

Figure 1.1 Cash Accounting in the Context of General Accounting (according to Baetge 1992, pp. 3)


1 Business Overview

the basic differences between the various types of ac-

counting.

In addition, it is now apparent that in business theory,

cash accounting always refers to several periods. This

concept is generally adopted by SAP Liquidity Planner.

Because the SAP Liquidity Planner component consists of

two applications (see Section 3.1), the first application,

SAP Actual Calculation, refers to past and current peri-

ods, while the other application, SAP Liquidity Planning

(SAP BW/SEM), considers future periods.

Cash Accounting Liquidity Planning

past futurecurrentperiod

t

Retrograde Determination Reciprocal Determination

Figure 1.2 Time-Based Delimitation of Cash Accounting and Liquidity Planning

1.2 Tasks of Cash Accounting and Liquidity Planning

The primary task of cash accounting is to provide infor-

mation on a company’s solvency and internal financing

potential. Apart from that, it serves as a basis for the cre-

ation of flow-of-funds analyses and plannings. Compared

to the balance sheet and the profit and loss statement,

cash accounting enables you to better assess the financial

situation of a company.

The ability to generate sufficient liquid funds from its

business activities and to secure these funds in future pe-

riods is one of the prerequisites for a company to survive

(static aspect) (Amen 1999, p. 4). Cash accounting sup-

ports a company in evaluating its solvency status as well

as its insolvency risk.

The comparison of profit and cash flow of the W. T.

Grant company, as shown in Figure 1.3, demonstrates the

importance of analyzing and determining the cash flow

situation. Even though the Grant company was profitable

up until one year before its insolvency, it wasn‘t able to

meet its payment obligations. However, cash flow had al-

ready been negative in earlier years.

Figure 1.3 Comparison of Profit and Cash Flow at W. T. Grant (Source: Largay/Stickney 1980, pp. 15)

The reason for such a discrepancy can be found in the dif-

ferent ways in which information is analyzed by account-

ing. For example, discrepancies can occur due to an in-

creased stocking up of a warehouse, an expansion strat-

egy that requires high investments, or by a bad overall

economic situation during which extended terms of pay-

ment are granted.

A classic example that personifies this state of affairs,

and is therefore frequently cited, is the situation at Chrys-

ler Corporation at the end of the 1970s when Lee Iacocca

assumed the position of CEO. At that time, Chrysler had

a high stock of automobiles, compounded by a low de-

mand for these vehicles. The cash flow situation was very

critical (see also the section in the Appendix, Lee Iacocca

and Cash Flow, or Iacocca 1984, pp. 200).

These two examples (i.e., W. T. Grant and Chrysler)

clearly show that in order to evaluate the degree of sol-

vency, cash flow is a far better indicator than the profit of

a company.

Usually a company‘s external financing potential, for

example, by acquiring external capital, is rather limited.

Due to the size of the company or its current situation

(for example, high debt-equity ratio), external financing

can become increasingly difficult. For this reason, the in-

ternal financing potential plays an increasingly important

role within the range of different financing possibilities

for a company (dynamic aspect) (Amen 1999, p. 4).

Internal financing potential means that a company can

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1.3 Recipients and the Need for Information

generate more revenue than expenditures from its activi-

ties. This potential is also referred to as internal financing

strength. If a company can continuously build up liquid-

ity, in addition to conducting its regular business activity,

this surplus is called strategic liquidity.

To obtain universally valid and comparable informa-

tion on the degree of solvency of a company, the internal

financing potential and the overall financial situation, na-

tional and international accounting principles require

flow-of-funds analyses or cash flow statements as proce-

dures and display formats. Here a distinction is made be-

tween indirect and direct procedures. In this book we

will only describe the direct procedure since cash ac-

counting doesn‘t support the indirect procedure. There-

fore, direct procedure will be a critical part of this book.

You can find an example of the indirect procedure, which

is supported by accounting (SAP FI), in the Indirect Cash

Flow section in the Appendix of this book.

According to national and international regulations,

the flow-of-funds analysis can be divided into three ar-

eas: Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities

According to IAS 7, the basic structure of a flow-of-funds

analysis could look as follows (Kütting/Weber 2001, pp.

467): Cash flow from operating activities

+ Incoming payments from customers

– Outgoing payments to suppliers

= Cash flow from operating activities (1) Cash flow from investing activities

+ Incoming payments from asset retirements

– Outgoing payments for asset acquisitions

+ Incoming payments from financial asset retirements

– Outgoing payments for investments in financial

assets

= Cash flow from investing activities (2) Cash flow from financing activities

+ Incoming payments from equity allocations

– Outgoing payments to company shareholders

+ Incoming payments from borrowings

– Outgoing payments for loans

= Cash flow from financing activities (3)

The total of the three areas represents the total cash flow

of the company. The cash flow statement is an essential

part of quarterly and annual reports since it meets the in-

formation needs of various recipients (see Section 1.3).

1.3 Recipients and the Need for Information

According to the Financial Accounting Standards Board

(FASB), the major recipients of cash accounting informa-

tion that is contained in a cash flow statement are the fol-

lowing groups (FASB 1978, para. 25): Investors, lenders, suppliers, employees

“To investors, lenders, suppliers, and employees, a busi-

ness enterprise is a source of cash in the form of divi-

dends or interests …, repayment of borrowing, pay-

ment for goods or services, or salaries or wages. They

invest cash, goods, or services … expect to obtain suffi-

cient cash in return …” Customers

“To customers, a business enterprise is a source of goods

or service, but only by obtaining sufficient cash to pay for

the resources it uses—and to meet its other obligations—

can the enterprise provide those goods or services.” Management

“To managers, the cash flows of a business enterprise are

a significant part of their management responsibilities,

including their accountability to directors and owners.”

Figure 1.4 illustrates the major important relationships

between a company and its business partners in terms of

activities and liquidity.

Due to the different kinds of business relationships,

each of the involved parties has a specific need for infor-

mation with regard to cash accounting. The following list

contains the most important items (Geuppert 2003, pp.

10, and FASB 1978, para. 24): For management

Ensuring solvency by optimizing cash flow based

on short-term and long-term liquidity planning Determining the internal financing potential,

building up strategic liquidity, and determining re-

quirements for external financing Determining financing requirements for planned

investments and integration in cash accounting

and liquidity planning


1 Business Overview

Ensuring creditworthiness, particularly with regard

to the requirements of rating agencies For investors and lenders (equity providers and pro-

viders of external capital)

Assessing the ability to pay dividends, interest, and

amortization For suppliers

Evaluating the creditworthiness and solvency and

forecasting the payment behavior based on these

evaluations For employees

Evaluating the creditworthiness, solvency, and future

existence of the company For customers

Assessing the delivery reliability and the consistency

of conditions

The different recipients—and therefore varying informa-

tion needs—demonstrate the importance of cash ac-

counting and liquidity planning.

1.4 Financial Accounting and Cash Accounting

The data source (see Figure 1.1) for cash accounting is the

posting material in financial accounting. In financial ac-

counting, cash accounts, balance sheet accounts, and

profit and loss accounts (P&L accounts) are interrelated;

therefore, we can also speak of a threefold accounting

system. This account-based integration1, as shown in Ta-

ble 1.1, enables you to determine the cash flow required

in cash accounting.

Chart of accounts

Cash accounts Balance sheet accounts

P&L accounts

Cash accounting Balance sheet Profit and loss statement

Reve-nues

Expen-ditures

Assets (without liquid funds)

Liabili-ties

ExpenseProfit

Cash balance P&L account

Table 1.1 The Three Parts of Accounting

Investors

Lenders Suppliers

Company

Employees Customers

Activity Cash Flow

Investment Dividends and Withdrawals

Payment of Activity

Payment of Activity

Payment of Activity

Amortization and Interest Payments

Loan

Figure 1.4 Cash Inflow and Cash Outflow from a Company‘s Perspective (according to Geuppert 2003, p. 10)

1 Accounting and consequently ERP systems are structured according to the principle of double-entry accounting. A triple-entry accounting sys-tem hasn’t been implemented yet.

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1.5 Differences to Cash Management

In addition, business transactions related to accounting

can be classified as affecting net income and not affecting

net income, and as having an effect on liquidity and having

no effect on liquidity (Gebhardt 1999, pp. 21). The pay-

ment of a dividend, for instance, is a transaction that af-

fects the net income and the liquidity; therefore, it is rel-

evant for both cash accounting and the profit and loss

statement. The depreciation of an asset merely affects the

net income, but not the liquidity. This distinction makes

it easier to determine the source of funds and their appli-

cation. Figure 1.5 illustrates the relationships between

the individual accounts in financial accounting.

Here you can see that there are 14 different account

assignment types available to post business transactions

in accounting. For each account assignment type, we

have provided an example (the following numbers corre-

spond to the posting example used in Figure 1.5):

1. Cash payment for office equipment

2. Revenue from cash sales

3. Depreciation of tangible assets

4. Posting of supplier invoice

5. Invoicing of an activity

6. Dissolving of provisions

7. Revenues from invoices

8. Borrowing

9. Payment of supplier invoices

10. Cash payment for material purchases

11. Accounting exchange on the assets side

12. Contribution in kind from shareholders

13. Clearing of receivables and payables

14. Accounting exchange on the liabilities side

It is apparent that the connection between two account

assignment types demonstrates the source or application

of funds. This is because the central task of cash account-

ing is the “What for” search: “What have funds been re-

ceived or paid for?” Let‘s try to clarify this with another

example.

In the accounting department of a company, a sup-

plier invoice (1) is posted. The posting displayed in Figure

1.5 affects the net income, but has no effect on liquidity.

This is further clarified by the posting example in Table

1.2.

Bank VendorOffice equipment

$ 100 (2) (2) $ 100 $ 100(1) (1) $ 100

Table 1.2 Vendor Payment

Then the open item is paid (2). According to Figure 1.6,

this transaction has an effect on the liquidity, but not on

the net income.

Only when these two postings haven been linked with

each other can you determine the cash flow according to

its application. One hundred dollars ($ 100) was used for

office equipment. This posting is a simple example of the

direct determination of a cash flow.

1.5 Differences to Cash Management

In this section, we’ll describe the primary differences

between Cash Management and Liquidity Planner. SAP

Cash Management is focused on short-term cash manage-

Figure 1.5 Accounting-Relevant Linking of Cash Accounts, Balance Sheet Accounts, and P&L Accounts


1 Business Overview

ment, whereas SAP Liquidity Planner considers medium

to long-term liquidity planning.

Cash Management provides information on the cur-

rent bank account status and it contains a liquidity fore-

cast regarding incoming and outgoing payments from the

perspective of payments for accounts receivables and for

accounts payables (or write: payments to customer and

to vendor). The bank accounts in the general ledger con-

stitute the data basis for the bank account status. If a

bank account shows a current status of $ 500, this status

is displayed in the bank account status in Cash Manage-

ment. The liquidity forecast uses accounts receivable and

accounts payable as a basis. It evaluates the open items

of suppliers and customers, and the terms of payment

stored with the respective documents, and displays this

information in the liquidity forecast. A cash flow is not

determined, because only the open items are evaluated

and displayed. In addition, the cash flows to be expected

can be displayed only with regard to specific customers

and customer groups, or suppliers and supplier groups

respectively. The only information that can be deter-

mined is “From whom” and “For whom.” What the funds

are paid for cannot be identified. Conversely, cash ac-

counting refers to real cash flow and the source and ap-

plication of funds can be identified. Unlike Cash Manage-

ment, cash accounting requires all general ledger ac-

counts that have an effect on liquidity, as described in

Section 1.4.

Moreover, cash accounting is part of an overall process

that consists of cash accounting and liquidity planning,

which will be described in further detail in Chapters 3

and 4.

Table 1.3 contains a list of the most important differ-

ences:

Cash Management Cash Accounting

No consideration of cash flow Real cash flow consideration

No identification of source and application of funds

Identification of source and application of funds


Customer Group XCustomer Group Y

Vendor Group XVendor Group Y

…

…

RevenueLiquid Tangible AssetsOther…

MaterialPersonnelTaxes…

Opening BalanceCash Management and

Forecast

Closing Balance Closing Balance

Revenues Revenues

Expenditures Expenditures

Figure 1.6 Distinction Between Cash Management and Cash Accounting

Table 1.3 Differences Between Cash Management and Cash Accounting

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1.6 Conclusion


Accounting as the data source, but only bank accounts and subledgers

All relevant accounts of cash accounting chart of accounts as data source

Liquidity forecast (based on open items)

Forecast of revenues and expen-ditures possible (based on open items)

View: Vendors and customers (groups) and bank account status

View: Revenue and expenditure items

No integration in planning process

Integrated planning process (SAP BW/SEM)

Table 1.3 Differences Between Cash Management and Cash Accounting (cont.)

1.6 Conclusion

In the following chapters, we define the concepts of

cash accounting and liquidity planning and introduce

them in the context of different accounting types.

Moreover, we describe the group of recipients and

their need for information regarding cash accounting,

and we highlight the interdependencies with account-

ing by clarifying how you can use the information from

accounting to determine your cash flow situation.

Finally, we describe the differences between SAP

Liquidity Planner and SAP Cash Management to out-

line the tasks performed by SAP Liquidity Planner

within the FSCM product portfolio.


2 Case Scenario: Implementing Cash Accounting and Liquidity Planning

Based on a specific real-life situation that we’ve encoun-

tered several times, we will build up a scenario for imple-

menting SAP Liquidity Planner. In the subsequent chap-

ters, this case scenario will be further developed in parts.

This example is used to support your understanding of

the functionality and the technical concept of SAP

Liquidity Planner, but it will also serve as an aide in help-

ing you to implement this component.

The initial situation looks as follows: We’ll consider an

international corporation, the IDES Group, which is struc-

tured as follows: The corporate headquarters is in Germany. The cen-

tral departments of corporate accounting and global

treasury are also located in Germany. Legally independent production sites exist in Ger-

many and Eastern Europe. The sales and distribution network stretches across

Europe and the US, with legally independent sales

companies in the respective countries. Research and development is located at corporate

headquarters in Germany. IDES uses SAP as its standard business software with

the currently implemented applications: SAP FI for accounting SAP CO for controlling SAP SD for sales and distribution SAP MM for materials management SAP PP for production

Concerning office applications, IDES uses a standard

off-the-shelf office software.

The current business situation of the IDES group can be

described as follows: Existing products have been introduced and distri-

buted throughout the markets and will continue to

be distributed at the same high level for the next two

or three years. However, the company expects a de-

crease in prices in the long run. This means that the

revenues from its core business will go down (cash

inflow reduction). At the same time, the company

forecasts a strong increase in raw material prices and

rising labor costs at the production sites. This will

lead to a situation in which the expenditures in pro-

duction will increase dramatically (increase in cash

outflow). Consequently, net cash flow will be strongly

reduced in the coming years. Furthermore, company management expects product

imitations to enter the market in two or three years,

which could lead to price wars and further aggravate

the situation. For this scenario, corporate manage-

ment expects an even stronger reduction of net cash

flow. In the preceding year, the company acquired a US-

based competitor in order to strengthen its market

position abroad. This acquisition was financed with a

large bank loan that will be amortized within the next

10 years. So, for a period of 10 years, there will be

payments for amortization and interest (increasing

cash outflow).

Corporate management realizes that a continued pursuit

of its existing strategy can quickly lead to a negative cash

flow situation; however, since the company is expected

to remain sound, the management decides to develop a

comprehensive strategy that should include the factors

mentioned above: Future competitors will be met with a product offen-

sive at an early stage. For this reason, investments

should be made for the research and development of

new products. At IDES, the development of a prod-

uct takes two years. To cover R&D for this period, the


2 Case Scenario: Implementing Cash Accounting and Liquidity Planning

company needs liquid funds (cash outflow for research

and development in the coming two years). The existing range of products will be introduced into

new markets, especially in Asia. For this expansion,

the company needs additional funds (cash outflow for

expansion to new markets). At the same time, man-

agement expects additional revenues from selling ex-

isting products to the new markets (cash inflow from

selling existing products to new markets). The company wants to maintain the production sites

in Germany. Therefore, corporate management will

develop new work and production models with its

personnel, which are intended to reduce costs and

expenditures (reduction of cash outflow in production

for the coming years). In addition, the company checks whether the existing

bank loan can be converted into a maturity loan. This

measure would lead to a reduced cash outflow for a

period of 10 years (reduction of cash outflow by re-

scheduling the existing loan).

Until now, liquidity planning has been conducted by the

global treasury department. The policy unit receives

spreadsheets from the individual subsidiaries and inte-

grates them into a central liquidity planning document.

This planning process proves to be too complicated,

time-consuming, and rigid.

A cash accounting based on value-date dependent

documents from SAP FI is not carried out because Cash

Accounting in SAP Liquidity Planner is currently not be-

ing used.2 The corporate accounting department merely

performs an indirect analysis of actual data (indirect cash

flow statement).

The company management wants to use a tool that

can measure (actual data) and plan (planned data) the in-

dividual cash flows. Based on the new strategy, corporate

management realizes that a powerful tool is required for

cash accounting and liquidity planning, but also for con-

trolling the corporation in general. In addition, the de-

centralized planning process will become more efficient

and less time-consuming. Furthermore, it must be possi-

ble to easily and quickly map the various planning sce-

narios. The tool should also be used as a central reporting

platform.

SAP Liquidity Planner is precisely the tool that meets

the company‘s requirements (see also Section 3.1). As

mentioned in the introduction, SAP Liquidity Planner

consists of two components: SAP Actual Calculation (cash accounting) SAP BW/SEM (planning application and reporting)

Cash accounting enables you to identify and evaluate the

cash flows in the company with regard to their value

dates. As SAP Actual Calculation accesses the data pro-

vided by SAP R/3 Accounting (cf. Section 1.4), manage-

ment can ensure the quality of the actual data because of

this integration. This data forms the basis for qualified

plan/actual analyses.

Since the planning and reporting functions in SAP Li-

quidity Planner are based on the functionalities of SAP

BW/SEM, the company can optimize the advantages of

this product.

Corporate management benefits from using SAP Li-

quidity Planner in the following ways: Direct determination of cash flows Quality of actual data by integrating SAP R/3 Ac-

counting Extraction from the SAP R/3 systems into SAP BW Flexible planning functionalities to map different

planning scenarios in SAP BW/SEM Successful implementation of an efficient corporate-

wide planning process due to the use of SAP BW/

SEM as a central planning platform (this is particularly

efficient for decentrally organized companies) Central reporting tool for all parts of the company Use of SAP BW/SEM for the planning aspects of SAP

Liquidity Planner; this enables you to establish a rela-

tionship with other plannings (for example, sales and

distribution plans, investment plans) and an integra-

tion with liquidity planning.

In various implementation projects, we’ve seen many

companies struggling to survive with ever-changing mar-

ket environments, similar to the initial situation described

above. The companies need reliable and up-to-date in-

formation, as well as the ability to run through various 2 As already described in Chapter 1, you cannot use the SAP Accounting module to directly determine your cash flow situation.


2.1 Conclusion

planning scenarios. Often, the focus was on improving

the planning process.

Our experience has shown that these or similar situa-

tions, carrying out cash accounting and liquidity planning

with SAP Liquidity Planner can be very useful. In the re-

mainder of the book, we’ll describe the functionality of

SAP Liquidity Planner and how you can implement it.

In the next two chapters, we’ll only marginally refer to

the above example and provide a detailed description of

the technology and functionalities of SAP Liquidity Plan-

ner.

When working in Chapters 3 and 4, you should use

the IDES system provided by SAP with the following

data: Company code 1000 for IDES AG, company code

2200 for IDES France, and company code 2600 for

IDES Italia. Use the international chart of accounts, INT.

Use the general ledger account, “100000 cash” as an

additional cash account. You should use the information and assignments pro-

vided in the following table (see Table 2.1).

2.1 Conclusion

SAP Liquidity Planner is the ideal tool for analyzing

and planning cash flows. By using this tool, you can

identify imminent bankruptcies due to insolvency and

counteract them with the appropriate measures.

Liquidity item (LI) Account number

Summarization item 100000 Cash flow from operating activities ------------

LI 110000 Revenues from product sales 800002

LI 120000 Revenues from services sales 800001

LI 130000 Raw materials 170000

Summarization item 140000 Personnel ------------

LI 141000 Payments of wages and salaries 449000 and 430000

LI 142000 Payments of social insurance contributions 440000

LI 150000 Payments for rents 471000

LI 160000 Payments for materials 476100; 476000

LI 170000 Payments for raw materials 300000

Summarization item 200000 Cash flow from investing activities ------------

LI 210000 Expenditures for financial assets 133000

LI 220000 Expenditures for tangible assets 11000

LI 230000 Revenues from enterprise transfers 11000

LI 240000 Capital gains 133000

Summarization item 300000 Cash flow from financing activities ------------

LI 310000 Revenues from borrowing 62110

LI 320000 Expenditures for loan amortization 62110

LI 330000 Revenues from interest 273100

LI 340000 Expenditures for interest payments 220000

Table 2.1 Case Scenario: Liquidity Item and Account Numbers


Index

AABAP editor 19

ABAP report 28

Account-based integration 8

Accounting 8, 11

Accounts receivable and accounts

payable accounting 26

Account assignment type 9

Accrual accounting 5

Actual account 22, 23

Actual Calculation 14, 17, 19, 21, 27, 35

Actual data 14, 41, 64, 75, 76

Administrator Workbench 41, 64

Allocating assignments from FI informa-

tion 22

Analysis report 36

Application menu 28

Application of funds 9

Assignment 23

from FI information 24

mechanism 21, 23, 28

BBank account 23

Bank statement 23, 30, 31

item 29

Basic InfoCube 44

Buffer item 35

Business Area 22

Business Content 40, 41, 42

Business transaction code 30

Business Transaction Events 18

CCase scenario 13, 15, 18, 19, 20, 21, 23,

26, 31, 34, 36, 45, 52, 54, 55, 56, 59

Cash flow 5, 6, 7, 10

accounting 5

statement 5, 7, 81

Cash account 15

Cash accounting 3, 5, 6, 8, 10, 14, 19,

22, 28, 75, 79

Cash Budget Management 5, 71, 72, 75,

77

Cash inflow 8, 13

Cash Management 5, 9, 10

Cash outflow 8, 13, 14

Characteristic 49, 50, 52, 53, 54, 56, 73

value 73

Chart of accounts 8

Clearing document 21, 28

Clearing transaction 25

Commitment item 72, 73, 74, 75, 76

Communications structure 51, 64

Company code 19, 72

Company structure 71, 76

Consistency check 37

Corporate accounting 13

Corporate Finance Management 28

Cost accounting 5

Creditworthiness 8

Crystal Reports 40

Customizing 18, 19, 21, 22, 24, 71

DDataSource 40

Data flow 45, 51

Data model 19, 28, 36

Data target 40

Default item 19, 22

Defining

actual accounts 21

query-relevant G/L accounts 22

query sequences 22, 26

Deletion process 26

Determinability 20

Direct determination 9

Document chain 21, 24, 31

Document update 75

Drilldown report 78

EElectronic bank statement 21

Element definition 73

External capital 6

Extraction 64, 66

Extractor 17

FFinancial accounting 8, 9, 19, 21, 31

Financial accounting-related liquidity 5

Financial management area 71, 72

Financing requirement 7

Fiscal year variant 72

FI Document Chains 37

Flow-of-funds analysis 5, 6, 7

Flow-of-funds planning 6

Flow data 26, 27

FM area 72, 75

From Bank Statement 23, 30

From Bank Statement Information 23, 29

From FI Information 24, 26, 27, 33, 34,

35, 37

From Invoices 26, 35

GG/L account 26, 32

G/L accounts list 37

Global treasury 13, 14

GR/IR clearing account 25

HHaving an effect on liquidity 9

Having no effect on liquidity 9


Index

Hierarchy 52

House bank 22, 30

IIAS 5

IDES 13

IDES system 15

Implementing SAP Liquidity Planner 13

Indirect cash flow statement 14

InfoCube 43, 44, 48, 52, 66

InfoObject 40, 43

InfoProvider 43

Information System 28, 36, 71

InfoSource 40, 64, 65

Insolvency 81

risk 6

Installing assignment mechanisms 22

Internal financing potential 6, 7

KKey figure 57

LLayout Builder 54

Lead column 73

structure 74

Line item 28

Line items table 27, 29, 36

Liquidity

analysis 25

forecast 10

item 15, 19, 20, 25, 30, 31, 32, 35

planning 3, 5, 6, 14, 39, 63, 71, 77

relationship 7

MManual transfer posting 19

Master data 19, 45, 46, 47, 49, 75

Modeling 40

Multi-planning area 54

MultiCube 41, 45

MultiProviders 43

mySAP ERP 71

NN:M Treatment 24

Net cash flow 13

New Formula 68

Number range 19, 36

object 20

OODS object 43

Online update 27, 28, 32

Overall process 21

PPartial reassignment 24

Plan/actual

analysis 14, 20

comparison 17, 71, 72

deviation 69

Planability 20

Planned data 14

Planning 76, 79

area 54, 55, 56, 61, 74

data 41, 44, 60

depth 20

function 54, 55, 61, 76

functionality 17

interval 53

layout 48, 53, 54, 59, 60, 73, 74

level 55, 56, 57

package 55, 58, 61

process 14, 15, 79

profile 74

screen 61

unit 53

value 74

workbench 55

Plan version 74, 75

Plug-in 17, 81

Posting data 25

Posting transaction 31

Profit 6

QQuery 32, 40, 67, 68, 69

sequence 23, 30, 37

RRebuild 27

Recipients 20

Release status 17

Reporting 14, 40, 43, 71, 77

platform 14

Report Painter 73

Retrograde determination 21

SSAP Actual Calculation see

Actual Calculation

SAP Business Content see

Business Content

SAP BW 14, 17, 39

SAP BW-BPS 54

SAP Liquidity Planner 6, 17, 39

SAP R/3 3, 14, 17, 65

SAP R/3 Enterprise 71

SAP SEM 3, 14, 17, 39

SAP SEM-BPS 48, 53, 54

Scheduler 66

Solvency 6, 7

Source of funds 9

Source symbol 36

Storing global data 21, 22

Strategic liquidity 7

System integration 17

System table 19

TTest run 28

Tools 26

Totals list 37

Totals table 27, 31, 36, 71

Total cash flow 7

Transactional InfoCube 44

Transaction Events 18

Transfer posting 36

Transfer rule 65

Transfer structure 51, 65

Treasury 71, 72, 73, 74, 76, 77

UUpdate rule 50


Index

VVariable 40

Version concept 17

WWeb Template 40

Sap Cash Flow

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