FSFI005 Cash Management v0.2

7/28/2019 FSFI005 Cash Management v0.2

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Functional Specification Finance - Cash Management

Doc. Ref.: FSFI005 version 01

Core Functional Specification

FinanceCash Management

Written By:

Joanna Wasilewska

FICO Consultant

Signature Date

Approved By:Carmen E Brown

Finance Solution Architect (Core Team)

Signature Date

Global Process Owner Signature DateGudjon Gustafsson

Process Champion Signature Date

Mark Keatley

EVPSignature Date

Controlled Document DO NOT COPY without permission Page 1 of 15


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REVISION DETAILS

Issue No. Issue Date Amendment Details

01 18-July 2011 Initial Release

02 27 January 2012Post Blueprint Workshops and Enhancement from APSE andworkshop inputs


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TABLE OF CONTENT

1 PURPOSE......................................................................................................................42 SCOPE.......................................................................................................................... 4

3 OVERVIEW.....................................................................................................................4

4 DETAILED FUNCTIONAL SPECIFICATIONS................................................................................4

4.1 Cash Position............................................................................................................44.2 Liquidity Analysis Forecast............................................................................................54.3 Source Symbols .........................................................................................................74.4 Planning Groups ........................................................................................................74.5 Planning Levels..........................................................................................................84.6 House Banks and Bank Accounts ....................................................................................104.7 Manual Bank Statement ..............................................................................................114.8 Variants for Manual Bank Statement ...............................................................................12

4.9 Electronic Bank Statement ..........................................................................................12

5 ROLES AND RESPONSIBILITIES...........................................................................................13

6 DEFINITIONS AND ACRONYMS............................................................................................14

7 DOCUMENT REFERENCES.................................................................................................14

8 RICEF-W...................................................................................................................... 14

9 DATA......................................................................................................................... 14

10 INTERIM BUSINESS PROCESS............................................................................................15

11 NON FUNCTIONAL REQUIREMENTS....................................................................................15



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1 PURPOSE

The purpose of this document is to define what the SAP system should do and what functions and facilities areto be provided to fulfill the requirements of the User Requirements Specification. It describes design objectivesfor the SAP system from a functional perspective.

2 SCOPE

The scope of this Functional Specification covers the Cash Management Processes to be used in Actavis. Thisdocument covers following areas:

Cash Position

Liquidity Forecast

3 OVERVIEW

SAP Cash Management is used to monitor cash flows and to ensure that the organisation have sufficient liquidityto cover its payment obligation. It aims to identify liquidity deficit/surpluses. This document contains an outlineof all of the configuration and customisation in SAP required for the Cash Management process, which isdetailed in the following scenarios:

SC24 Cash Management

4 DETAILED FUNCTIONAL SPECIFICATIONS

4.1 Cash PositionThe cash position report provides short-term liquidity information on the daily cash inflow and outflow of thebank accounts and bank clearing GL accounts (interim bank GL accounts). To enable the use of the CashPosition report the bank and cash G/L accounts relevant for the status analysis have been are assigned a cashmanagement level in the company code segment.


Financial AccountingFinancial Accounting


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The cash position provides the current overview of the bank accounts by value date and, on account of theintegration with payment advices, a complete overview of the short-term movements in liquidity.

Cash management uses information form various sources, viz.:

a. Bank postings and bank clearing postings

b. FI postings to G/L accounts relevant to SAP Cash and Liquidity Management

c. Memo records entered manually (payment advice)

Memo Records:

Incoming and outgoing payments that are not transferred to the SAP Cash Management System via actualpostings, can be entered manually in the planning. Notified incoming payments, noted items, provisional bankstatement postings, all bank fields etc can be entered as Memo Records Payment Advices in the system. Also allsubledger fields, noted items, general planning etc can be entered as Memo Records Planned Items in thesystem.

Actavis will use some Memo records in Cash Position and Liquidity Forecast statements. Actavis is in the processof identifying the requirements of Memo Records items.

4.2 Liquidity Analysis Forecast

The liquidity forecast comprises the medium-term the incoming and outgoing cash flows, as well as the planneditems in the sub-ledger accounts for a long period. The increments can be changed from daily for the firstweek, to weekly for the next two months, and then monthly for the next six months.



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Liquidity forecasting integrates payments in and out from Financial Accounting, Sales and Distribution, andpurchasing to document medium- to long-term developments in liquidity.

Incoming and outgoing payments per open item from accounts receivable and payable will form the basis ofliquidity forecast. Since planning and forecasting these payments is usually long term, the probability ofpayment being made on the planned day is less than the payment probability stated in the cash position.Following report capturing 13 weeks liquidity forecast will be used by Actavis for liquidity forecasting purpose:

13 Week Cash Flow Forecast Report

Cash inflows Description +/-Trade Receivables(Sales) All cash receipts from 3rd Party sales +

IntercompanyReceivables

All cash receipts from Intercompany Sales that arenot included in I/C Netting. The counterparty needs tobe stated and the flow has to match the outflow ofthe counterparty +

Other CashInflows

All other cash receipts then above, i.e. VAT refund,Royalties, Interests etc. +

Total CashInflows Summary of the cash receipts - calculated formula N/A

Cash outflows Trade Payables(Expenses)

All cash disbursements to a 3rd party vendor fortrade payables and inventory payments +

IntercompanyPayables

All cash disbursements from Intercompany purchasesthat are not included in I/C Netting. The counterpartyneeds to be stated and the flow has to match theinflow of the counterparty +

Salaries &Benefits

All cash disbursements related to salaries andbenefits +

Corporate IncomeTax

All cash disbursements related to corporate incometax +



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Fixed AssetsPurchases(Capex)

All cash disbursements related to fixed assetspurchases (capitalized expenses (capex)) +

R&D Intangibles All cash disbursements related to R&D cost +

Debt serviceAll cash disbursements related to debt service (loanrepayments, interest payments, leases etc.) +

All Other OutflowsAll other cash disbursements than stated above (VATpayments etc.) +

Total CashOutflows

Summary of the cash disbursements - calculatedformula N/A

Net CashGenerated

Total cash receipts - total cash disbursements(calculated formula) N/A

Currency BoughtAll cash receipts from foreign currency trading with a3rd party in the respective currency +

Currency Sold All cash disbursements from foreign currency tradingwith a 3rd party in the respective currency -

Total FXTrading Summary of FX Trading - calculated formula N/AOpeningBalance(Previous Week)

Closing balance form previous week brought forward- linked N/A

Opening BalanceAdjustment

Adjustment of opening balance if not right fromprevious week +/-

OpeningBalance

Closing balance from previous week brought forwardplus opening balance adjustment (if any) - calculated

formula N/ATransfers ( to ) /from ActavisGroup

Cash receipts or cash disbursement which relates tofunding from Actavis Group hf. +/-

Closing BalanceOpening balance + Net Cash Generated + Transfers(to)/from Actavis Group + Total FX Trading N/A

4.3 Source Symbols

The source symbols group divide the planning levels according to the sources that provide them with data. They

can then be assigned to either the liquidity forecast or the cash position.

Following source symbols will be used for Actavis:

1. Bank Accounting (BNK)2. Procurement (Materials Management) (MMF)3. Sales (Sales and Distribution) (SDF)4. Accounts Payable and Accounts Receivable (Sub ledger Accounting) (PSK)

For details of the Source Symbols, please refer to Appendix 1.

4.4 Planning Groups

Customers and vendors are assigned to a planning group by making an entry in the master record. A planninggroup represents particular characteristics, behaviors, or risks of a customer or vendor group. It enables analysis



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of incoming and outgoing payments according to the probability of the cash inflow or outflow, the amount, andthe type of business relationship.

Groupings are used to stipulate format of the cash position report to be displayed. G rouping determines whichlevels and accounts should be displayed in the cash position. Following grouping will be used for Actavis cashposition reporting.

For details of the Planning Groups, please refer to Appendix 2.

Actavis will use following customer and vendor planning groups for cash management:

Customer Planning Groups:

1. C1 Domestic Customer2. C2 Foreign Customer3. C3 Intercompany Customer4. C4 Employee5. C5 Other Customers

Vendors Planning Groups:

1. V1 Domestic Vendor2. V2 Foreign Vendors3. V3 Intercompany Vendors4. V4 VAT/Tax Vendors5. V5 Excise Duty Vendors6. V6 Employees7. V7 Other vendors

4.5 Planning Levels

Typical financial transactions in Cash Management are displayed using planning levels, which explain theopening and closing balances.

General Ledger and sub-ledger-accounts can be assigned to a planning level to analyse the cash position orliquidity forecast by using the source symbol.

It has been assumed that Actavis will use following SAP standard Planning levels are provided in standard SAP:

Planning Level Planning Level Description

AB Payment advice (confirmed)

AG Agency business

AU Payment advice (unconfirmed)

B1 Outgoing checks

B2 Outgoing transfer, domestic

B3 Outgoing transfer, foreign

B4 Bank collection

B5 Other interim postings

B6 Own-accepted liabilities

B7 Cl. acct for bill paymentB8 Incoming checks



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B9 Customer cash receipt

CB Commercial paper bank

CL Cash concentrationCP Commmercial paper - subledger

DB Bank foreign exchange

DE Loan revenue

DI General planning

DP Subledger forex

F0 Posting to bank account

F1 Posting of purchasing & sales

FF Down payment request

FK Advance pymts (offsettg entry)

FR FRA Personnel

FW FI bill of exchange

IB Interest Derivatives Bank

IP Interest Derivatives People

KB Deposit at notice

KP Deposits at notice - subledger

LB Bank loans

LP Personal loans

M1 Purchase requisition

M2 Purchase orderM3 Scheduling agreement

ME Rent received

MP Planning - Noted items

OB TR currency option, bank

OP TR currency option, subledger

RL Rent Result

RR Rents Receivable

S1 Sales Orders

TA Deposit/loan mgmt: invest

TB Time deposits: banks

TD Fixed-term deposit management

TK Deposit/loan mgmt: borrow

TP Time deposits: subledger

WB Bank securities

WP Security revenue

XA Blocked for payment

XR Invoice verification

XX Block indicator X

ZB All fields of bank records

ZP All fields, subledger records



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For details of the Planning Levels for G/L Accounts, please refer to Appendix 3, and for Planning Levels for Subledger Accounts see Appendix 4.

Actavis is in the process of reviewing the required planning levels; we can create/delete the planning levels asper requirement.

4.6 House Banks and Bank Accounts

To enable the use of automatic payment run programs or the posting of bank statements automatically HouseBanks must be created within SAP. These House Banks will correspond to the Companies Banks. Furthermore,each Bank Account that is maintained with these Banks will be created in SAP as a Bank Account that is linkedto the House Bank.

Actavis Iceland will have following house banks for their company codes:

Company Code: IS12: Actavis Group PTC ehf. will have 3 house banks.

DNB Nor Bank ASA

Islandsbanki hf. Iceland


Company Code: IS13: Actavis Group hf. will have 7 house banks.

DNB Nor Bank Hamburg Branch

DNB Nor Bank New York Branch

DNB Nor Bank London Branch

DNB Nor Bank Copenhagen Branch

DNB Nor Bank Stockholm Branch

DNB Nor Bank ASA


Actavis Italy will have following 3 house banks:

Duetsche Bank S.P.A. Italy

Unicredit Bank S.P.A. Italy

DNB Nor Bank Hamburg Branch (Currently Non Operational)

It has been assumed that both the company codes in Italy i.e. IT11 Italy Manufacturing and IT12 ItalyCommercial will share same house banks.

Each bank account will have a main bank GL account and 5 bank clearing (interim) GL accounts. Followinglogic will be used for GL accounts for each the bank accounts:

GL Account Number GL Account Description

159XX0 Main Bank Account

159XX1 Bank Transfer Domestic

159XX2 Bank Transfer Foreign

159XX3 Incoming Customers Payment

159XX4 Bank Clearing159XX5 Bank Other Interim Posting



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Actavis Iceland will have following bank accounts for their company codes:

Company Code: IS12: Actavis Group PTC ehf.:

DNB Nor Bank ASA (Currency: EUR)

DNB Nor Bank ASA (Currency: USD)

DNB Nor Bank ASA (Currency: GBP)

DNB Nor Bank ASA (Currency: DKK)

DNB Nor Bank ASA (Currency: SEK)

DNB Nor Bank ASA (Currency: NOK)

DNB Nor Bank ASA (Currency: CHF)

DNB Nor Bank ASA (Currency: CAD)

Islandsbanki hf. Iceland (Currency: ISK)


10 bank accounts

Company Code: IS13: Actavis Group hf.

DNB Nor Bank Hamburg Branch (Currnecy: Euro)

DNB Nor Bank New York Branch (Currency: USD)

DNB Nor Bank London Branch (Currency: GBP)

DNB Nor Bank Copenhagen Branch (Currency: DKK)

DNB Nor Bank Stockholm Branch (Currency: SEK)

DNB Nor Bank ASA (Currency: NOK)

DNB Nor Bank ASA (Currency: CHF)

DNB Nor Bank ASA (Currency: CAD) DNB Nor Bank ASA (Currency: PLN)

DNB Nor Bank ASA (Currency: RON)

DNB Nor Bank ASA (Currency: HUF)

DNB Nor Bank ASA (Currency: RUB)

DNB Nor Bank ASA (Currency: JPY)


10 bank accounts

4.7 Manual Bank Statement

To be able to post a Manual Bank Statement within SAP the main settings are as follows:

Create account symbols the G/L accounts (such as banks, cash receipts and outgoing payments) whose

postings have to be made from account statement. Each G/L account is assigned to an account symbolto the G/L account numbers. For details of the Account symbols please refer to Appendix 5.

Assign accounts to account symbols - Define which postings are to be triggered by transactions in the

account statement (such as bank transfer, incoming payment. For details of the Assignment of theAccount symbols please refer to Appendix 5.

Create keys for posting rules - posting rules are assigned to possible transactions in the account

statement file. A list of assignments where one external transaction code is assigned to one posting rule

is called transaction type. For details of the Posting Rules please refer to Appendix 6, and Appendix 7for Posting Specifications.



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Create a transaction type - bank details are assigned for the account statements that have to be

imported, to a transaction type. All the house bank accounts at a particular bank are usually assigned tothe same transaction type.

4.8 Variants for Manual Bank Statement

The default layout Manual Bank Statement can be changed and new layouts or Variants can be created to ifrequired, to adapt the assignment and/or selection of the account assignment fields. These will be created asnecessary during the design phase of the project.

4.9 Electronic Bank Statement

If possible Actavis would prefer to import the bank statement electronically; this will depend on the specifiedbank producing a bank statement in an SAP readable electronic format. When this is the case SAP functionalityto will be used to import the statement, with a similar posting logic as that defined for use with the ManualBank Statement.

Certain Banks have an electronic statement format that initially requires the use of a conversion program, thisfunctionality will used when required as a precursor to posting the Bank Statement.

Following assumptions have been taken into account:

DNB Nor will be the mainstream bank for Actavis.

Actavis will use Electronic Bank Statement (EBS) functionality. The EBS file format will be MT940 in

SAP system.

Electronic Bank Statement functionality (EBS) will be available for DNB Nor and one local bank for

each company code. Other banks will use Manual Bank Statement functionality.

There will be requirements from IT2 project to interface SAP system with IT2. More details on IT2

requirements are awaited.

Information regarding requirements of Cash Concentration, Interest, Foreign Exchange and Netting

Transactions will be defined during 1st review of this document.

Release 1 Banks can provide MT940 formats



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5 ROLES AND RESPONSIBILITIES

Roles Responsibilities

SAP FunctionalConsultant

Authors this Functional Specification document

Ensures this document accurately reflects its intended

Purpose and Scope

SAP Solution Architect Ensures this document accurately reflects its intended

Purpose and Scope

Review and approval of this document

Global Process Owner Ensures this document accurately reflects its intended

Purpose and Scope


Process Champion Ensures this document accurately reflects its intended

Purpose and Scope


EVP Ensures this document accurately reflects its intended

Purpose and Scope


Single Roles:

- Customer Payment Processing- Vendor Payment Processing- Customer/Vendor Payment Document Display

- Bank Statement Processing- Bank Statement Display- Cash Position and Liquidity Forecast Reporting

- Cash management configuration/maintenance role- House bank, bank account creation and maintenance role- Electronic Bank Statement (EBS) configuration role

Job Roles:

- AP Assistant- AP Accountant

- AR Assistant- AR Accountant- Bank Accountant- Treasurer- Finance Manager



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6 DEFINITIONS AND ACRONYMS

Term Description

SAP Glossary All terms and descriptions of SAP across all modules.Location: Core Team on Sharepoint

FI Financial Accounting module in SAP system (External) Reporting

CO Controlling module in SAP system (Internal) Management Accounting

7 DOCUMENT REFERENCES

Doc Ref Document Title1. BBR2R Core Business Blueprint Record to Report (R2R)

2. CSFI005 Core Configuration Specification Cash Management

8 RICEF-W

The following enhancements are required to support the designed processes:

Type FS Ref Description Complexity Approved

Report 13 weeks cash forecasting as per format (SPDs) MediumInterface Interface with IT2 (more details awaited) High

Conversion EBS File Formats for incoming files of variousbanks used by the sites in MT940 format in SAP.Standard MT940 should be available from SAP.

High

Enhancement

Form

Workflow

9 DATA

Consideration should be given to the following data requirements:



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Object Description Usage

Bank Key Bank Data (thru Bank Directory CD) upload for Actavis

company codes bank accounts, customer master data andvendor master data bank details

Bank Balances Bank balances upload per bank account

UnclearedVendorpayments

Uncleared Vendor payments per bank account

Unclearedcustomerpayments

Uncleared Customer payments per bank account

10 INTERIM BUSINESS PROCESS

No IBP considerations have been identified

11 NON FUNCTIONAL REQUIREMENTS

The following NFR are required to support the functionality:

Process Step Requirement Type RequirementN/A N/A No further NFR have been identified


FSFI005 Cash Management v0.2

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