In-House Cash - Internal Payments

This Business Scenario Map is designed to show you how three parties - a subsidiary A, a global treasury center, and a subsidiary B - use the business Internet to mutually clear payable and receivables. The map illustrates the benefits of collaboration. Information is shared quickly and easily between business partners. This reduces the communication effort. The result is a streamlined business process that saves time and money.

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Value Potentials	Business Benefits
Global2000 firms can save $73 billion*	No physical payments are made since the payments are processed via internal accounts
Global2000 enterprises can save $12 billion if they settle both inter-company and third-party payments more effectively*	Managing the accounts centrally eliminates any bank transfer charges
	Larger investments for the subsidiaries at attractive interest rates. Improvement in the interest revenue
	Liquid funds remain within the group without incurring any value-date losses

Subsidiary A

Global Treasury Center

Subsidiary B

Process customer invoice

Customer O/I clearing and reconciliation of interim account

Debiting/Crediting intercompany accounts

Create internal statement of account for the subsidiaries

Periodic sweeping of intercompany account

Process vendor invoice

Create internal vendor payment file

Reconcile and post internal statement of account

Source:
* Killen & Associates, Inc.

The value potentials shown in this table have been reported by selected SAP customers or independent third parties as referenced herein. However, there is no guarantee that such value potentials can be realized in any particular customer-specific business processes, and SAP does not make any representations and disclaims any liability as to the appropriateness of the referenced value potentials for any specific customer situation.
©SAP AG 2008

Business Benefits	Value Potentials
Free selection of payment conditions
Any surplus cash can be used for financing purposes within the group, thereby curbing the margin between debit and credit interest rates
Credit can be granted to subsidiaries in need of financial assistance.


In-House Cash - Internal Payments Internal Payments describes the process of the mutual clearing of payables and receivables of the affiliated companies. Example: Subsidiary A pays subsidiary B. Subsidiary A instructs the Global Treasury Center to make a payment to subsidiary B. The Global Treasury Center posts the activity to the relevant current accounts and then generates and sends bank statements to both subsidiaries. The subsidiaries' Global Treasury accounts hold these individual credit and debit turnover, which during end-of-day processing within the Global Treasury Center are then automatically aggregated and posted to the corresponding G/L accounts in financial accounting in this aggregated form. A typical feature of Internal Payments with SAP In-House Cash is that no physical payments are made since the payments are processed via internal accounts. This means that the liquid funds remain within the group without incurring any value-day losses. Centralizing the payment traffic in an internal bank gives the customer certain advantages as regards banking. The customer can save a lot of money by reducing the number of external banks he/she deals with for his/her accounts in various countries along with the interfaces he/she maintains with those banks. Furthermore, managing the accounts centrally eliminates any bank transfer charges.