Perspectives from SAP Treasury and Working Capital Management Conference – 2022

The SAP Treasury Conference in Barcelona (June 21 – 23 2022) just wrapped up and in this blog I share with you some insights and personal impressions of what we have seen at the conference.

First of all, it was a great opportunity to reconnect face to face with the community, get insights directly from SAP and see impressive implementation cases.

For what I was told this conference had one of the largest attendance of the year, it’s clear that the SAP Treasury community was very excited to meet f2f, share ideas and hear about the new solutions.

From my perspective, apart from the workshops and inisghtful presentations, the stars of the conference were Taulia (recently acquired by SAP) and Advanced Payment Management, both promising to deliver great benefits to customers.

WORKSHOPS

I was able to attend 2 workshops:

WORKSHOP #1: RECENT INNOVATIONS AND UPDATES IN CASH MANAGEMENT AND LIQUIDITY PLANNING

This was a great workshop hosted by Dr. Klaus Mueller and Joergen Jensen.

We were able to review and discuss the latest innovations in Bank Account Management (BAM), Cash Management and Liquidity Planning.

The innovations treated in the workshop are the ones well summarized in this blog from Martin Schmidt, so in order to avoid redundancy I will just add my comments:

https://blogs.sap.com/2021/12/06/sap-s-4hana-cash-management-what-is-new-in-2021/

BAM

  1. Bank Account Application process
    1. This is good enhancement, responding to a need of customers that were doing some complex status in workflow to manage the part of the process happening before opening the bank account in the system, that starts with the Manage Bank Account app.
    2. These new applications allow to manage the part of the lifecycle that happens before the account is approved and created in the bank.from%20SAP%20workshop
  2. Two person-verification
    • The new updates provides enhancements in the 4 eyes principles to update bank accounts.
  3. Contract Type
    • This is in addition to the attribute Account Type. It is used to classify different bank account types based on the contract with the service provider.
  4. Power of Attorney
    • This is good enhancement, but for now meant to manage only “legal aspects” of Power of Attorneys by allowing to track in the system who are the people with power to sign on the bank accounts.
    • This is not yet integrated to BCM or with the Signatories function for bank accounts, which at some point is an enhancement that will need to be added.

FLOW BUILDER 2.0 or  FLOW BUILDER PLUS

  • Flow Builder 2.0 is a new version  with technical enhancements pointing to improve performance.
    • Reduced data volume due to flow reduction and compression
    • Reduced memory consumption
    • Advanced Liquidity Analysis
    • Decoupling of Cash Position and Liquidity Analysis.

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from SAP workshop

  • There is more flexibility for the customizing affecting BKPF source, as you can see below.
    • Ability to update Cash Position or Liquidity Analysis Only.
    • Apply settings specifically for certain company codes.
    • The update mode for Liquidity Derivation, in the deferred mode brings back a mode similar to the classic Liquidity Planner, with no real time integration.
    • These settings try to improve the performance issues that Flow Builder 1.0 had to manage the extremely large quantity of documents, or complex clearing chains.

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from SAP workshop

 

CASH POSITION

  • SAP introduced the Direct Cash Position, based on account balance. Personally, I believe that this is a great enhancement for Cash Position, and really required.
  • There is a new FIORI app, Short-Term Cash Positioning.

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from SAP workshop

  • The main enhancement is to build the initial balance not from accounting documents, but from a direct initial balance input, from FQMET_BALANCE.

  • There are several options to get this balance updated, from bank statement closing balance, manually, API´s.
  • The Direct Cash position reduces the dependency on accounting, and on the correct and daily reconciliation of open items and bank accounts. It helps to eliminate the question that several Treasurers ask themselves: “why do I need to care about accounting? I just need to know the cash available “.
  • It builds the cash position using a direct initial balance from FQMET_BALANCE  input as described , while today and future flows still are taken from FQM_FLOW.

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from SAP workshop

  • Also it can handle pretty well Cash Pool structures being able to report the complete Cash Pool, as 1 bank account which is the Pool Header, which is a perfect way to visualize the balance under the cash pool.

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from SAP Workshop

  • Another relevant update for Cash Pool is that now is decoupled from bank master data and assignment of bank accounts to pool structure are independent of BAM.

In summary, all innovations are, in my opinion, in the right direction, responding to lessons learned and customers demands from the last couple of years.

S/4HANA Cash Management is maturing to become an efficient, simple and powerful Cash Management solution.

WORKSHOP#2: IMPROVE LIQUIDITY WHILE DRIVING ESG PROGRESS IN THE SUPPLY CHAIN

I joined this workshop to get an understanding of the value that Taulia would add to the SAP Portfolio of solutions, and I got pretty enthusiastic about Taulia solutions after this session.

The sessions was hosted by Haresh Chhaya from SAP providing the Treasury perspective and by  Stephan Mueller also from SAP; and  Vincent Beerman and  Christophe Juvanon both from Taulia.

Taulia is a company that SAP just acquired, and its focus is to provide solutions that allows companies to do an strategic management of processes affecting Working Capital Management.

This is the connection point with Treasury process, because Treasury Department must ensure to have the right amount of Cash. Not deficit, not excessive surplus. So an accurate visibility and increased efficiency in managing Working Capital is a pillar of right Cash Management.

See in the image below how S/4HANA and Taulia do interact:

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from SAP workshop

In the workshop, we focused mostly in the Supply Chain Finance:

  • Better visibility on AP open items.
  • Identification of opportunities to improve payment terms with our vendors.
  • Benchmark of how other companies in the industry are performing.
  • All with a great user interface.

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from SAP workshop

Another interesting offering from Taulia are the options AR and AP invoices payment optimization.

  • Account Receivables early payment, allows you to get customer invoices  collections earlier, improving DSO.
  • AP invoices early payment: Pay your vendors earlier/on-time automatically, to get access to better discounts.
  • These solutions provide great advantages to Treasury department:
    • Improve DSO and DPO measures.
    • Stabilization and predictability of cash flow.
    • Cash Optimization, by getting access to discounts from vendors.

Apart from these topics covered in the workshop, Taulia offers other solutions that are worthy to explore and hopefully can merge more and more with SAP applications:

  • Cash Forecasting
  • Inventory Management
  • Electronic Invoicing.

Taulia is a promising acquisition from SAP, with focus in Working Capital Management improvement, that for sure can create a valuable synergy with Treasury.

CASE STUDIES

There were great presentations from different companies and solution providers. I will focus more than anything in the ones that I could attend the complete session and presented impressing cases, due to the complexity and approach adopted

Hitachi Global Treasury Transformation with SAP Treasury (with Deloitte)

  • Hitachi had a complex legacy system, decentralized and with poor cash management integration.
  • 900 company codes, multiple banks, lots of manual processes.
  • They started a Treasury Journey with SAP Treasury, which was the solution selected for the following reasons:
    • Easy Integration, Scalability and Support of specific developments for own needs.
    • Operation efficiency: Less interfaces for 3rd party integrations, fully integration with accounting and Data Lake.
    • User convenience: Users familiarized to use SAP.
    • Security: System can be operated withing Hitachi´s security gates, reducing security concerns.
  • The journey includes a 3 or 4 year project to implement the following functionalities:
    • BAM and Cash Visualization for 10 core banks.
    • Cash Forecast tool
    • Debt and Investment
    • FX Transaction Management
    • Interest Rate Derivatives and Hedge Accounting
    • Cash Pooling
    • Exposure Management
    • Internal FX Hedge Management
    • E2E integration with Bloomberg FXGO.
  • One highlight is that it was required to create a custom tool for Cash Forecasting to adapt to specific Hitachi´s needs.

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from Hitachi case study presentation

Optimizing Liquidity and Risk Management at Zalando through SAP Integration  (with ICD)

  • Zalando had a huge expansion in the last 12 years, going from 6M revenue to 14.3BN , which pushes the company to manage a best-in-class e-commerce platform, finance solutions and technology in general.
  • They manage a complex map of Treasury processes:
    • Cash Management, Bank statements, Cash Pooling
    • Treasury and Commercial Payments
    • Convertible Bonds issuance
    • Hedge Accounting
    • External and Internal Loans
    • Money Market Funds integration with ICD
    • FX Hedging.
  • SAP allows them to manage the different processes for the challenging Treasury requirements, to centralize and have better visibility of cash and leveraging the integration with online solutions like ICD, to better manage their short-term investments.
  • Zalando plans to implement TPI standardize the integration with trading platforms.

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from Zalando case study presentation

Unleashing the value of Treasury Core Model in Sanofi (with Intensum)

  • This is my favorite, specially because I could see it live as I had (and still have) a very little participation in this huge project.
  • Sanofi has an incredibly complex map of companies, lines of businesses and presence in multiple geographies that makes Treasury management (and other processes) extremely challenging.
  • To manage this complexity, Sanofi went for, as much as possible, a fully standard implementation.
  • BAM, Cash Management, Payments, In-House Cash, Treasury Management modules were implemented.
  • Apart from a solid standard solution, the company also enforced a strong delivery model, industrialized through the different releases and rollouts.
  • This allows to the Sanofi Central Treasury team to have a strong control and effective guidance through the implementation.
  • To have a standard and centralized Treasury operations model, allows them to take quick action and react for their Treasury operations. During the presentation they highlighted a couple of examples:
    • How this centralization allowed them to react quickly during the Russian crisis, by having an immediate visibility of the Treasury position for the involved countries.
    • Also how they were able to detect specific issues with FX Exposure in remote regions, allowing them to react quickly to take action.
  • Some of the important keys mentioned for a successful implementation were:
    • To select the right implementation partner.
    • To industrialize delivery.
    • To ensure knowledge spread across all the participants in the project and impacted users in all countries.

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from Sanofi use case presentation

MICROFORUMS

Centralization of High Payment Volumes Using SAP S/4HANA Advanced Payment Management and Multibank Connector (from Infiniance)

This micro forum explained how BCM, APM and MBC can build a strong and scalable payments solutions.

  • Advanced Payment Management, providing a centralize framework to manage payment formats and centralize payments from different sources.
  • Bank Communication Management to approve and monitor payments.
  • Multi Bank Connectivity to enable an easy integration with banks. In the presentation it was mentioned that they could onboard the bank connection in 2 hours in some cases!

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Architecture – from Infiniance microforum

  • See the next slide with benefits of Advanced Payment Management

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SAP public content

Insights into new In-House Banking Capabilities

  • It was a great presentation from Lase Becker.
  • It is the evolution of SAP In-House Cash. To make the story short, ti comes to replace IHC functionalities.
  • In-House Banking is embedded in Advanced Payment Management.
  • Today this is available in S/4HANA Cloud and should be in on-premise systems as well, according to the presentation. If not, it will be ready soon.

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from New IHB Capabilities microforum

Solution%20Architecture

Solution Architecture

Benefits

Benefits

CLOSING SUMMARY

During the closing summary of the conference, Dr. Arif Esa and Haresh Chhaya walked us through the vision for the future of the SAP Treasury solution.

And we can confirm this path if we check the latest innovations, where SAP is doing a huge effort to deliver a unique value prosotiuon, with a fully integrated solution  with innovation in the core pillars, to achieve a best-in-class Treasury solution.

  • Payment Centralization
  • Working Capital Optimization
  • Improved Cash Visibility and Predictive Liquidity
  • Smart Trading

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Conclusions

In summary, it was an excellent week in Barcelona. We received great insights in the workshops, we attended impressive case studies, but the very best was the possibility to meet with the community in person again.

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SAP Treasury Conference and Working Capital Management – Barcelona 2022

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