Financial And Treasury Management - Cdn.ymaws
Financial and Treasury management SAP S/4HANA Treasury
Agenda 1. Introduction to PwC 2. Technology in Treasury 3. S/4 HANA Treasury Management 4. Implementation timeline PwC Financial and Treasury management 2
1 Introduction
With you today Karsten Kohl Anjali Shah Principal - Cloud & Digital Treasury San Jose, CA Director - Cloud & Digital Treasury Dallas, TX Karsten leads PwC’s SAP Treasury practice and has 20 years of experience in delivering large corporate treasury and commodity trading transformation programs at multinational corporates. He has successfully delivered 70 Treasury projects. Delivered the largest end-to-end S/4HANA Treasury implementation to date for 400 entities globally including Bank Account Management, Cash Management, Treasury & Risk Management and In-House Cash on a standalone Treasury instance linked with regional SAP ECC instances. Led the first oil and gas implementation for SAP’s Commodity Management solution, designing and developing custom solutions for physical commodities, derivatives, exposure, and P&L based on underlying functionality in Treasury & Risk Management as well as SAP Supply Chain Management. PwC Financial and Treasury management Anjali is a director in PwC’s SAP Treasury practice. She has 20 years of consulting and industry experience in treasury technology transformation initiatives, corporate treasury, and other financial disciplines. She has implemented SAP at various large and mid-sized corporates across multiple industries. Currently leading a global migration of ECC to S/4 HANA and implementation of all Treasury modules at an oil and gas company. Led a global migration of ECC to S/4 HANA Treasury modules at an agricultural equipment company. Led a global implementation of S/4HANA Treasury at a software company; modules included Advanced Cash Management, BAM, BCM, TRM, Hedge Management, InHouse Cash. 4
Who we are Territory network info Our global Treasury network US Treasury network SAP Treasury network 700 100 100 Treasury professionals worldwide Treasury professionals in the US SAP Treasury professionals 736 158 7 20 Office locations Country locations Treasury partners in the US Years of SAP Treasury experience One firm PwC Financial and Treasury management 5
Our team 5 4 Seasoned professionals from industry, financial institutions and technology vendors including the original development team of SAP Treasury 2 Access to objective, leading practices through deep market knowledge and extensive engagement experience 3 An extensive history collaborating with SAP in solution design, development and implementation 4 Proven track record of delivering better client outcomes and results 5 A global network of assurance, tax, and advisory professionals focused on all aspects of financial and Treasury management, including Treasury strategy, governance, operations, financial risk management, regulation, accounting, data and technology, process design and controls. 1 Global network Successful project experience 1 Foremost market expertise PwC Treasury Leading practice knowledge 2 SAP partnership 3 We are an Award winning team – We have been voted the number 1 Treasury Consulting Team by the over 18’000 worldwide readers of Treasury Management International (TMI) for over 15 years – undisputed leaders in the field, as well as numerous project awards. PwC Financial and Treasury management 6
2 Technology in Treasury
The Treasury operating model framework will support a set of detailed strategy and design discussions in determining an optimal future state setup External Environment Internal Environment Company Strategy & Objectives Cash & Liquidity Management Bank relationship management Internal funding In-house banking & netting Payments & collections Cash forecasting Cash positioning Investment management Financial Risk Management Interest rate risk Foreign exchange risk Commodity risk Credit risk Exposure management Corporate Finance Capital structure Financing strategy Debt management Other Supply chain Finance Trade Finance M&A Working capital management Pensions Insurance Investor relations Accounting Processes IT Business Units Tax/Legal Treasury Vision, Mandate and Objectives Treasury Vision, Mandate and Objectives A/R - A/P Organization & Geographies Technology, Data, & Reporting Culture Banking Partners HR Governance & Risk (DOA, POA, P&P, Limits) Treasury IT Partner(s) Training & Career (Treasury) Consultants Rating Agencies Communication Financial Markets Performance Measurement Trading Counterparties Regulators Rewards Tax Jurisdictions Customers & Vendors PwC Financial and Treasury management 8
Leading treasury organizations use technology as the path to implement leading practices and solutions across elements of the treasury operating model to achieve their strategic objectives Examples of Best-In-Class Treasury Organizations Strategic Efficiency Control & Value Focus on value added activities within Treasury AI Optimize liquidity, financial risk, & WACC Strategic bank relationship management Cost efficient funding Performance oriented Blockchain Providing data, information, & analytics so Treasury can draw insights and make more informed decisions Market insight, e.g., economic, interest rate Value Enhancing APIs RPA Tactical Optimize cash efficiency across company Financing alternatives to drives sales or improve supplier relationships Utilize business insight to drive forecasts & cash flow improvements Decision support for business units Drive optimal B/S management to support the business Focus on executing & processing transactions Emerging Technologies Focus on value added activities outside of Treasury Daily cash management Transaction execution- Cash, Payments, Debt, Investments Mostly mechanical without dynamically considering cost/benefit Bank administration Cash conversion cycle process is considered holistically in process design & technology enablement Treasury defines & maintains optimal WC levels with monthly visibility into levels & performance Cash Forecasting methods are aligned across the organization and horizons & frequency align with decision purpose Optimize all payments via payment factory, increasing control and reducing costs and risk Streamlined bank account structure & # of banks with automated reporting Capital structure optimizes cost of capital consistent with company growth & investment opportunities Performance metrics and reporting clearly measure results against targets and risks Capabilities & Automation PwC Financial and Treasury management 9
While a TMS provides a considerable amount of functionality, additional bolt-on technologies may be needed in order to execute all types of transaction lifecycle Specialist Systems management Treasury corporate systems System cost ION Reval ION WallStreet Quantum Suite ION City Financials Cash Forecasting CashForce Cash Analytics Market trading interfaces Bloomberg 360T FXall (Thomson Reuters) ICD Portal FX management & Hedge Accounting Atlas FIREapps Enterprise Visual Risk Chatham Financial HedgeTrackers Market Data Bloomberg Reuters Bank connectivity APIs SWIFT Service bureaus Direct host-to-host Working Capital Taulia C2FO Kyriba Cloud Azure AWS Payments Paymode-X (Bottomline) Datalog Netting BMG Coprocess Financial service systems ION Openlink Integrity Advanced ION IT2 Coupa ION Treasura Basic Cash positioning Cash forecasting Debt management Investment management Accounting G/L Fund transfers Bank connectivity Intermediate Standard functionality included in Basic Debt management (additional instruments supported) Risk management Some support for commodities I/C lending, IHB, netting Basic hedge accounting Bank account management Breadth of functionality Functionality included in Basic and Intermediate Debt management (full instrument coverage) Increased risk management support for commodities Improved workflow Some working capital Ability to handle large transaction volumes IHB is more robust, including routing and sophisticated posting rules Advanced hedge accounting Enhanced interface tools Superior technical architecture Capability-specific solutions may also be used when a TMS or ERP does not meet functional requirements PwC Financial and Treasury management 10
3 SAP S/4HANA Treasury management
SAP provides deep support for Treasury management. Below is an expanded view of core treasury processes supported in the SAP S4/HANA offering Overview Cash and Liquidity Management: Cash and Liquidity Management enables cash managers to easily and intuitively get a high-level overview and detailed insights into bank accounts, cash position, and cash flows, which enables them to make decisions and take actions directly. Payments and Bank Communications: Payments and Bank Communications streamlines, controls, and gives better transparency into business’ communications with your banks. Automated payment workflows streamline routing and approval processes. Financial Risk Management: Treasury and Risk Management (TRM) brings all financial and commercial exposures and hedge instruments in one place. It facilitates hedge relationship setup. TRM integration to GL simplifies financial reporting. Functionalities and Benefits SAP Modules SAP Bank Account Management SAP Cash and Liquidity Management Taulia Working Capital Management SAP Analytics Cloud (Planning & Reporting) SAP Bank Communication Management SAP Advanced Payment Management SAP In-House Cash Real-time cash positions and short-term cash forecast Payment approvals and rule-based workflows Trading platform integration and deal processing Centralized and integrated bank relationship management Single source of truth for operational data (“One Exposure”) AI based liquidity planning Supply chain finance Monitoring for bank statements and payment messages Access to multiple payment networks (SAP, SWIFT, H2H) In-house bank and payment factory SAP Multi Bank Connectivity SAP Treasury & Risk Management Exposure Management Hedge Management Transaction Management Risk Management Hedge Accounting Trade Finance Market data integration Market and credit risk management Regulatory reporting (Hedge) Accounting for financial instruments PwC Financial and Treasury management 12
SAP has been making ongoing enhancements to its Treasury functionality including new offerings and utilization of new cloud technology and connectivity APIs. Below are some highlights SAP Cloud Analytics Treasury Analytics Liquidity Planning SAP Multi Bank Connectivity Integration/Connectivity Advanced Payment Management SAP S/4 Finance Cash & Liquidity Management Cash Operations Liquidity Management Bank Relationship Mgmt New Payment Factory Cash Position Cashflow Analysis Status Monitoring Bank Risk Control Bank Transfers Liquidity Forecast Liquidity Planning Actual Cash Flow Analysis Central Account Management Workflow Processes Bank Fee Analysis Cash Pool Management Integration SAP/non-SAP Format Processing Flexible Rule Management Bulk Payments Banks Trading Platforms (360T, FXall, ICD) Market Data (Refinitiv) SWIFT Alliance Lite2 Working Capital (Taulia) Multi-Bank Connector User Experience UX Financial Risk Management SAP Fiori Apps Library Exposure Management Hedge Management Hedge Accounting Integration of Trading Platforms Central Exposure Database Exposure Positions Exposure Lifecycle Net Open Exposure Report for Balance Sheet and Cash Flow Hedging Hedge Management KPIs Hedge Designation Effectiveness Testing Hedge Accounting Postings Transfer and Update of Foreign Exchange Transactions Limit Management Sending of Trade Requirements Saving of Competitive Bids Financial Status Account Statement Monitor Bank Management Bank Transfer Processing . One Exposure PwC Financial and Treasury management 13
SAP Bank Relationship Management Enables administration and control of the entire bank account life cycle PwC View Harmonization and standardization of the entire bank account life cycle reduces fraud and operational risk while lowering associated costs. Non-SAP Business Opportunity With the ability to centrally manage all bank accounts and to set up a single source of truth for all bank account-related information and data, SAP’s Bank Relationship Management gives a set of powerful tools to better analyze bank account data across the entire group and across your entire system landscape. It allows you to control your bank account inventory and enables you to track signatories on your accounts. Client Benefits End-to-end control of the entire bank account life cycle SAP Bank Relationship Management SAP BAM Bank Hierarchy Bank Fee Analyses Centralized Bank Account Management (open, close, change, ) Define Bank Structures, Bank Account Groups and self-defined Views Import BSB Files Monitor Bank Fees Manage Conditions Other Signatory Control Cash Pool Workflow Control and define Payment Approvals through BCM integration Cash Pools Cash Transfer Reporting Workflow to maintain and review bank accounts Bank Risk Bank Transfers Analyse Bank Risks and Ratings through TRM integration Initiate bank account transfers using Fiori App functionality Foreign Bank Account Report SAP BCM SAP TRM Out-of-the box reporting for foreign bank account Reduced fraud and operational risk Better visibility, control and cycle time of bank account maintenance Lower total cost of ownership (TCO) PwC Financial and Treasury management SAP S/4 Finance Bank Correspondence Correspondence letters triggered by system changes (Accounts, Signatories) S/4 HANA Finance for Cash Management 14
SAP Payments and Bank communication End-to-end integration from SAPs digital core to banks for payment processes PwC View Harmonization and standardization of the entire payment and bank account life cycle reduce fraud and operational risk while lowering the associated costs. Business Opportunity Financial messages such as payments, bank statements or status reports can be processed and monitored in one central application. External systems can easily be integrated. Through the secure multi-bank connectivity, all messages can exchanged directly with financial institutions. Bank accounts can be reduced and managed centralized in one single source of truth (SSOT). SAP Multi-Bank Connectivity Secure multi-bank and multi-corporate connectivity; embedded SWIFT connectivity (Alliance Lite2) SAP FI SAP TRM Reduced fraud and operational risk SAP Non-SAP Better visibility, control and cycle time of payment processing Lower total cost of ownership (TCO) PwC Financial and Treasury management Payment approval Release Workflow definition Payment Monitor Bank Statements Monitor Status Messages Monitor Alert definition SAP Advanced Payment Management Client Benefits End-to-end control of the entire payment and bank account life cycle SAP Bank Communication Management Inbound interface for processing payment medium files with standardized data formats from external systems or other SAP systems SAP Multi Bank Connector Outbound payment processing Inbound message processing Fully integrated and automated S/4 HANA embedded Third party system integration SAP Bank Relationship Management Bank Account Management Workflow based processes Inventory workflow Payment signatory control Bank fee analyses Cash pool functionality SAP In-House Cash Payments on behalf of Intercompany payments Centralized incoming payments Manual payment orders End-of-day processing Bank A Bank B Bank C Other S/4 HANA Digital Core 15
SAP Multi Bank Connectivity SWIFT Bank Direct Bank Integration SAP Multi-Bank Connectivity SWIFT Bank PwC View Multi-Bank Connectivity allows to replace existing bank interfaces by one single connection. SWIFT Bank Connector Business Opportunity SWIFT Tenant S/4HANA Multi-Bank Connectivity offers a direct integration between SAP and banks via a cloud app. This integration is available via various channels, e.g. SWIFT or host to host. Corporate Tenant 1 Bank Tenant Member Bank Connector SAP is recognized as a SWIFT Partner (Cash Management Label) ERP Client Benefits Corporate Tenant 2 Member Bank Cost reductions for clients using currently SWIFT service providers Connector End-to-end solution combining S/4HANA and SAP Multi-Bank Connectivity ERP Cloud based corporate to bank connectivity out of SAP Multi Bank Connectivity Corporate Tenant 3. Bank Tenant Member Bank SAP Cloud Platform PwC Financial and Treasury management 16
SAP S/4 HANA Cash Management Accelerate your cash operations by real-time Information Fast decisions and actions on company’s cash and liquidity require real-time information from different sources out of one source of truth. Business Opportunity The Cash Operations component of the new Cash Management in SAP S/4HANA provides real-time cash position reporting capabilities. Imported bank statements can immediately be checked on the cash position, without any dependency on accounting. Cash position analysis from high-level to transaction-level provides better and faster information. The SAP Fiori apps provide seamless integration from insight to action, i.e., from the analytical view to the transactional level. Client Benefits Real-time cash information for faster decisions One single version of the truth More detailed information through drilldown functionality Flexible and non-disruptive cloud or on premise deployment options PwC Financial and Treasury management Integrated Scenarios S/4 HANA Finance for Cash Management SAP TRM SAP LP SAP CML SAP FI SAP FICA SAP MM SAP SD One Exposure from Operations PwC View User Experience UX SAP Fiori Apps Library Cash Operations Liquidity Management Short-term cash position Initiate bank transfers Monitor bank statements Cash concentration Analyse bank risks Create memo records Deficit cash pools Mid- and long term liquidity forecast Actual cash flow analysis Embedded rolling liquidity planning External Sources S/4 HANA One Exposure is the central storage of all actual and forecast operational business transactions and therefore the single source of truth for all financial risks from operations. With the integration of Logistic (SD/MM), FI, and TRM data from local and non-local systems, One Exposure facilitates comprehensive cash and liquidity management including cash planning, across multiple companies at real time. Additionally, One Exposure offers more dimensions for reporting compared to classic Cash Management. 17
18 Cash Flow Forecasting Start Data Flow & Architecture FP&A Payroll Others? Source Systems Data Sources Database Reporting / Analytics Bank Statements Cash Position GL AP AR Cash Management (One Exposure) Cash Flow Analyzer Treasury Memo Records Variance Analysis Optional: Sales/purchase orders, other SAP applications (e.g. Concur, Ariba) PwC Financial and Treasury management End SAP S/4 HANA
SAP Hedge Management (Automated) FX hedging based on SAP Exposure and Hedge management PwC View After the automation of the back office activities, the digitalization of the front office and accounting tasks might be just around the corner. FX Trading Platform and/or FX Robotic Trading Platform Deal Execution Raw Exposure Data SAP Treasury and Risk Management SAP One Exposure SAP Hedge Management Net Open Exposure Report Business Opportunity Based on raw exposure data imported from various data bases and predefined risk strategies, FX hedges are executed automatically via existing trading platforms. Hedge relationships are generated to allow for an automated processing of hedge accounting over the lifetime of the hedge. The hedge effectiveness is assessed based on calculated mark-to-market value components of the hedge and the hedged item. SAP BW SAP TRM SAP Exposure Management SAP Hedge Accounting SAP Transaction Manager Exposure Positions Lifecycle Exposure Hedge Designation Effectiveness Testing Hedge Accounting Deal Capturing Confirmation Settlement Accounting Client Benefits IFRS 9/local GAAP compliant hedge accounting processes MS Excel SAP Market Risk Analyzer Mark-to-Market, VAR, CFaR, Sensitivity/Scenario Analysis Other Databases SAP FI Financial Reporting Saving of process costs for non-value adding activities (i.e. small volume hedges) PwC Financial and Treasury management 19
FX Hedging Integrated end to end process from exposure identification to hedge execution PwC View SAP’s FX hedging process has been completely redesigned over the last years, including new solutions for cash flow and balance sheet exposure identification, aggregation and the integration of trading platforms. Business Opportunity SAP can automatically read and integrate all underlying FX exposures, allowing a group wide reporting, aggregation and hedging of all FX exposures. Additional features like target hedge ratios, linking a variety of FX instruments (spots, forwards, options, collars etc.) and hedge accounting are available. Client Benefits Harmonized data structure allows an automated exposure calculation Direct integration of SAP based data – independent of SAP modules High transparency on exposure data Less manual data aggregation Shorten exposure determination process Automated hedging process PwC Financial and Treasury management FP&A Corporate Accounting Others? AP / AR Exposure Sources EXPOSURE MANAGEMENT (Cash flow & balance sheet exposures) Pre-Trade Hedge Management Aggregation of exposures Net exposure reporting Check details of trade requests Determine the amount to hedge Generate hedge request Execution of trades Approval workflow for hedge reqts Confirmation Trade Request Check status of trade / reprocess Hedge Execution Post-Trade Hedge Management Executed FX Deal Mark-ToMarket GL entries & Posting Settlement Effectiveness Reporting 20
SAP S/4HANA Treasury Maturity Model Bank Relationship Management Cash and Liquidity Management 1 Foundational Capabilities 2 Enhanced Capabilities 3 Advanced Capabilities Bank Signatories Bank Account Management Review Workflows FBAR Reporting Cash Position Bank Transfers Treasury & Risk Management In-House Banking Cash Flow Forecast (13 weeks) Liquidity Planning (rolling forecast up to 24 months) Variance Analysis Money Market (Loans & Deposits) Securities (Asset Management / Long Term Debt) FX Hedging Interest Hedging IC Loans Hedge Accounting Trading Platform Integration Market & Credit Risk Management Cash Pooling Payments on Behalf Intercompany Netting Collections on Behalf External Payments Incl. Authorizations Payments & Bank Communication Electronic Bank Statements Bank Communication Management Payment Factory (Payment Routing, Validation, Enrichment) Bank Connectivity PwC Financial and Treasury management 21
4 Implementation Timeline
Timeline of a typical implementation Based on our experience, a standard implementation of all modules, with minimal customizations, can be achieved in 8 to 15 months, depending on the modules chosen to be implemented and the complexity involved. Below are the key activities and deliverables for each phase. 5 – 9 months 3 – 6 months 1 month Evolve Release Innovate Go-Live Discovery Design Build Innovate Phase Project plan and kickoff Confirm business process and key design decisions Design business processes and review key elements for implementation Review data conversion strategy and approach Validate business requirements Review and confirm gaps against standard Iterative design and build of client specific configuration, using conference room pilots to confirm design decisions SIT 1 SIT 2 Release Phase System Integration Test User Acceptance Test Train the trainer Data Migration and Validation Cutover UAT Hypercare Evolve Phase Post go-live support Lessons learned Unit test solution Build security roles and authorizations Milestone Go-live PwC Financial and Treasury management 23
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Principal - Cloud & Digital Treasury San Jose, CA Anjali is a director in PwC's SAP Treasury practice. She has 20 years of consulting and industry experience in treasury technology transformation initiatives, corporate treasury, and other financial disciplines. She has implemented SAP at various large and mid-sized
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