Cash Management

This Business Scenario Map shows the collaboration between a company's departments within the Cash Management process. To forecast the liquidity status, the Cash Manager uses integrated data from Financial Accounting and from the operational departments of the company, such as Sales and Distribution or Materials Management. Depending on the liquidity status, decisions are made about cash concentration or treasury deals.

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Value Potentials	Business Benefits
Global2000 firms could close 45% of their bank accounts and manage the remaining bank accounts more efficiently. This would save them $36 billion out of $80 billion*	Efficient communication with banks
	Efficient bank statement processing and reduced internal costs due to automized reconciliation
	Integration of global ERP systems via ALE
	Concentration of know how allows better decisions for improve liquidity management
	Exact validation of expected cash flows due to the recording of customers' payment behaviours
	Central view on global liquidity situation
Global2000 firms could save $16 billion (at 8% cost of capital) by freeing up and effectively use $200 billion in excess cash sitting in bank accounts.*	Reduced borrowing costs
	Increased investment profits

Operational Departments

Cash Management

Financial Accounting

Treasury Department

Create sales & purchase orders

Create invoices and transfer to Financial Accounting

Receive & monitor incoming bank statements

Analyze liquidity position & adjust liquidity strategy

Cash forecast for sales & purchase orders

Cash forecast for sales & purchase orders and open items

Cash concentration, bank transfers

Receive & post invoices, create open items

Post and process bank statements

Execute payment program (basing on open items)

Make financial deals to reduce liquidity risk

Source:

* Killen & Associates, Inc., 2001

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
Efficient capture of market data via Datafeed, standard interface to external datafeed providers
Integration of global liquidity relevant information
Integration of liquidity relevant information from operational areas
Supports centralized and decentralized treasury organizations
Flexible completion of liquidity information with comfortable user interface for capture of further payment advices
Reduced transaction costs	Global2000 firms could unearth $160 billion by improving the operations efficiency of making payments including costs for FX services and for settlement*
Reduced hedging costs
Simplified cash concentration - automatic clearing proposal referring to standard preferences


Cash Management Cost-conscious companies do not miss any opportunity to optimize processes and thereby reduce costs. This is also the aim of Cash Managers. To do this, they need efficient tools for determining the liquidity of their company at any given time. They also take advantage of the size of their companies to practice global liquidity management thereby saving costs. Using the integrated operating systems, the current liquidity situation of the company can be determined and the future situation anticipated. Operational departments, such as Sales and Distribution or Purchasing, enter sales or purchase orders. The payments that are expected from these deals (orders) are automatically transferred to Cash Management. When the corresponding invoices are posted, the planning level of the expected cash flows changes in Cash Management. The consolidation of data from operational departments, from Financial Accounting, and from the banks (via bank statement) provides a complete and integrated view of the liquidity situation of the company. The Cash Manager can use liquidity overlaps and avoid liquidity shortages by initiating financial deals and by concentrating cash using predefined rules. Cash flows deriving from financial deals are posted in Financial Accounting and automatically update Cash Management. Integration with the operating systems is a prerequisite for an automated liquidity forecast that takes account of company-specific requirements. The integration of current market data that provides the Cash Manager with an up-to-date and correct calculation of the expected foreign currency payment flows is also automatic. A consolidated view of the individual company units or the whole company enables companies to minimize the number of bank accounts and bank transactions, thereby reducing transaction costs, financing costs, and hedging costs. Management and control of the remaining bank accounts takes place via electronic banking and is therefore very efficient.