Last Updated on July 4, 2022 by Pradeep
Bank Account Management in SAP S/4 HANA – Introduction
Bank Account Management in SAP S/4 HANA (BAM) is introduced as the brand-new function in Cash Management. Likewise, Bank Account Management is an important area for SAP New Cash Management solutions with implications for cash position, payment management, and bank statements at the same time.
Bank Account Management in SAP – A must for S/4HANA Migration
With Cash Management in SAP S/4 HANA Finance, the entire management of bank data has completely changed after SAP HANA Migration. Previous functions for maintaining bank and bank account data are no longer valid. You must activate at least the basic scope of BAM to create and maintain bank accounts and banks. As a result, no SAP customer can implement or migrate to SAP S/4 HANA without implementing at least a portion of BAM.
Classic Cash Management vs. New Cash Management
Classic SAP Cash and Liquidity Management is the previous version of Bank Account Management that runs under SAP ERP ECC Version of Finance.
Classic Cash Management is composed of the classic Cash Position report ( FF7A) and the classic Liquidity Forecast report ( FF7B). Furthermore, it also comprises of classic Liquidity Planner with all its transaction codes, programs, and reports.
Technical Standpoint
Technically, the New Cash Management in SAP S/4 HANA has completely replaced the classic Cash Management. However, in the backend, classic Cash Management settings with regard to the planning levels and planning groups are still in place. Furthermore, the liquidity item from the classic Liquidity Planner still exists. Practically all cash flow data consumed by the SAP Fiori apps are stored in a new repository for cash flow and exposure data.
In classic Cash Management in SAP ERP Financials, functionality to control bank account master data was lacking and processes for managing bank account master data were missing.
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New Features in Bank Account Management in SAP
Bank Account Master data and attributes
Bank Account Management offers you a true management tool for your Bank Account Master data. Here are some important attributes.
SAP FIORI Apps
We can access all maintenance functions through SAP FIORI apps. Noteworthy, the major change apart from UI is that house bank maintenance is no longer a configuration task. Earlier it involved transporting your house banks and house bank accounts from your development system all the way to production. Instead, now you can maintain house bank data directly in production.
Treasury Department
Also, now the bank master data can be owned by the treasury department or a user group.
Attributes in SAP Bank Account Management
The new BAM also provides plenty of more attributes that allow you to better map your actual information. These are the information that you need to control and maintain bank master data. Some examples are:
- You can now maintain payment approval signatories, overdraft limits, cut-off times for specific bank account master record.
- Furthermore, you can maintain bank statement upload times, internal contact persons and external contact persons the same way.
Reporting on Bank master data with bank hierarchy and bank account group
Did you previously use the bank and house bank administration functionalities in classic Cash Management?
In case Yes, then you must have known that reporting on bank master data has always been a challenge. This is because it is marked by limited functionality and counterintuitive navigation through different screens.
Herein Bank Account Management in SAP S/4 HANA, Cash Management plays a significant role. It addresses the need to analyze and access details for banks and bank accounts through flexible reports and reporting functionalities.
BAM didn’t just offer complete reporting functionalities with filters, views, and variants. It also allows you to create two types of hierarchies to help you structure your reports.
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Types of Hierarchies in Bank Account Management in SAP
Bank Hierarchies and Bank Account Groups
A bank hierarchy allows you to structure your banks according to the ownership relationships among the banking entities. You can use this hierarchy to report on your bank accounts and your bank account balances.
Structure Process and workflow in Bank Accounts Management in SAP S4 HANA Cash management
The workflow of bank accounts in SAP involves opening, closing and changing bank accounts as the main tasks in S/4HANA.
Old Functionalities of bank Accounts Management
Earlier, the functionalities for managing bank account master data did not allow for any change in procedure or workflow. Instead, these tasks were basically IT tasks, performed in the development system and then transported to quality assurance and production. Any control processes and workflow was usually managed outside SAP.
New Functionalities in Cash Management
Now, this process has become a user procedure that is performed directly in production. Thus, you’ll also need a framework to manage and control changes.
Bank Account Management in Cash Management in SAP S/4HANA enables you to centrally control any change to bank account master data.
It further processes these changes through a structured workflow, monitored by a changelog.
We have tools in place for secure bank account master data governance. Thus, the BAM component allows you to centrally manage the process of opening, closing, and changing bank accounts for the first time.
According to your organizational needs, you can design a role-based SAP Business Workflow. These workflows involve group cash managers, subsidiary cash managers, and financial managers, bank relationship managers, the CFO or treasurer, and the IT department.
Bank account inventory and periodic review process
Depending on the jurisdiction of the internal control environment in which your Treasury department operates, you’ll periodically have to take stock of your bank accounts. You would do this by performing an inventory of all the accounts held by an entity in your organization.
Whilst in the past SAP customers have managed this process in external systems or simply in an email-centric procedure. However, with Bank Account Management in S4 HANA Cash Management, you can take advantage of the SAP Business Workflow functionalities embedded in the Bank Account Review Process app to streamline the process. Thus, it dramatically improves the efficiency of this inventory.
The functionality of SAP Bank Account Management
Core Assets to Treasury
Bank accounts are at the core of all operations involving Cash. Not only are bank accounts used by the treasury or the cash management department, but you also need bank accounts across the entire organization, from accounts payables and accounts receivables to payroll. Also, we need bank accounts in the treasury department to make treasury payments and to manage cash. Therefore, bank accounts can be considered the core assets of a cash treasury department.
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Centralized Approach
Ideally, bank accounts are owned and controlled centrally by the group cash or treasury department. Moving from a decentralized bank account management approach to a centralized approach is key to improving efficiency and ensuring compliance. Without the right tool at hand, treasury will find it difficult to gain control of bank accounts and to keep on top of changes to the signatories and to the account structure.
Functions of Bank Accounts Management in SAP S4 HANA
Daily Cash Operations with using Bank Account Management in SAP
SAP has grouped all apps and functionalities that help your daily tasks as a Cash Manager under the Cash Operations component. Of course, somewhat simplified, your principal activities every day revolve around closing cash or positioning cash.
Immediate, Accurate view of cash
From the opening balance to the various positioning cycles during the day, you need an accurate view of cash. That too immediately and as near to real-time as possible. Based on this information, you’ll execute your trades, make transfers, invest, divest, borrow, repay loans, and report on your cash position.
Series of Apps and Reports to reduce time and efforts in Bank Account Management in SAP
In classic SAP Cash Management, you had limited tools. Furthermore, the need to consolidate information and validate across different sources made your task cumbersome. You may even have opted not to use SAP Cash Management at all. Instead, you might have positioned your cash in Microsoft Excel or other non-SAP tools.
Overall, the process at times disconnected you from actual data, and your work of preparing reports became time-consuming.
The new Cash Management in SAP S/4HANA resolves this issue by introducing a series of apps and reports to help you at each step of your daily procedure.
Cash Management key performance indicators
At the outset, without looking into any detailed report, you can quickly glance at cash management key performance indicators (KPIs) to find out whether any of the values you are monitoring is out of line. Depending on the time of the day, you may be interested in the status of the bank statements that have already been integrated and processed. Likewise, you may want to check your cash position for any anomalies.
Here, we’ll show how to configure these KPIs to meet your needs exactly. For your information, SAP Fiori Launchpad directly show the KPIs.
Bank Statement
A fundamental element for accurate knowledge about your cash position is the import status of your bank statements. You may have detected an issue while monitoring the import success rate of the bank statements or perhaps you are simply executing your daily activity. There you need to drill down more details.
Bank Statement Monitor App
From the app, you’ll quickly see where the issue is, and you can directly contact the person in charge of the account with the issue. If needed, you may navigate from the app into the bank account’s details and get the external contact person at the bank to resolve the issue.
Cash Position
Once you are certain that you’ve processed all bank statements as expected, you are now ready to analyze your cash position. You already had a quick glance and know the global level cash from the cash position KPI. Here the role of Cash Position App comes.
Cash Position App
In the Cash position App, you can navigate into the various reporting dimensions and analyze your cash balances aggregated by account, bank, country, currency, etc. Furthermore, you now get a line item level view of your cash balances from the App.
Check Cash Flow Items App
To clarify any doubts, you can navigate to the Check Cash Flow Items app and drill down to the original source document.
Other Apps – FF7AN, Deficit Cash Pool, Bank Risk
You also have other apps and views on your cash position. For example, you have a new version of the classic cash position report, now called FF7AN. And you also can analyze your cash position using the Deficit Cash Pool app or the Bank Risk app. All of these apps allow you to look at the same cash flow and cash position data from different angles. This data, as mentioned earlier, now resides almost exclusively in the One Exposure from Operations table, the central repository for exposures and cash flow data.
Payment Management and Bank Transfers
Managing payments through the Bank Communication Management (BCM) module may not necessarily be a cash management task. However, these payments certainly affect cash management. This is because the flow of information from accounts payable to cash management must necessarily be accurate, timely, and reliable.
The BCM module is not directly covered in this book, but you can get the Approve Bank Payments App assigned to your user.
Bank Payment App
With this app, you can analyze scheduled payments and drill down into line items. The information from payment runs updates the cash position.
Make Bank Transfers App as part of SAP Bank Account Management
The Make Bank Transfers app is the tool you can use to enter transfers while being a cash manager or treasurer. The Make Bank Transfers app is complemented by the Approve Bank Payments app and a related approval work-flow.
You can trigger the bank transfer directly from the Cash Position app or the Cash Position Details app; simply specify the from and to accounts, the amount and the transfer method and create the transfer.
The app automatically displays the forecasted closing balance for the current day. Hence, you do get immediate insight into whether you’ll have the available funds to execute the transfer according to your current end-of-day forecast.
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Cash Pooling
Cash Pooling is another way to make transfers. The cash pooling functionality automates the bank transfers required for pooling your cash into one or multiple pool header accounts. Cash pooling is not necessarily a replacement for your ZBA program but does fulfil a similar function.
Use of Cash Pooling in SAP Bank Account Management
You can use cash pooling to pool accounts that are not in a ZBA structure.
You can also pool header accounts held at different banks using Cash Pool.
The process utilizes the cash pool defined in the BAM module, where you can create a cash pool based on a specific bank account group.
You have defined the source and target accounts and minimum balances and minimum transfer amounts. When you execute the program, the app suggests the necessary bank transfer.
The bank transfers themselves are again managed using the Make Bank Transfers app. The SAP Fiori apps we discussed can run in a web browser and can be executed in both desktop and mobile devices.
Cash managers can get both high-level overviews and detailed insights into payments easily and intuitively and then make decisions or take actions directly.
Ultimately, you’ll want to make sure that your payment instruction can be sent out to the banks before the cut-off time by the early afternoon.
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Conclusion
As we mentioned earlier, no SAP customer can go live with SAP S/4HANA without implementing at least the basic scope of BAM.
This is a scaled-down version of BAM with only its rudimentary functions. It allows you to maintain your bank and bank account master data.
We believe that, if you are already implementing the basic version, you may at least look and consider the rest of this powerful bank account management tool.
And while you are considering which version of BAM is right for you, we recommend looking at the cash position apps and the rest of Cash Management in SAP S/4HANA.
Visit Course Page: SAP S/4HANA Finance 2020 Training
