FSCM - IHC Process Overview.pptx

In-House Cash (IHC)
www.zarantech.com
SAP FSCM

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2 Agenda
• SAP In-House Cash Business Requirements and Overview
• Organizational Entities
• In-House Cash Center
• SAP In-House Cash – Business Processes
• Summary

2Current Situation
5
Various and ever-changing multi-national corporate group structures . . .
Internal Bank
Internal Bank
Subsidiary
Subsidiary
Head office
(Europe)
Subsidiary
Subsidiary
Region
1
Region
2
Subsidiary
US
Subsidiary
Asia
Subsidiar
y
. . . with a high volume of internal and external payment transactions

2SAP In-House Cash: Overview
6
SAP In-House Cash provides payment-related services for a group
of affiliated companies
SAP In-House Cash supports:
 Central dispatching, routing, and processing of payments
 Creation of provided account statements to account holders
 Delivery of financial status to cash management
 Tracking of payment status

2SAP In-House Cash Organizational Entities
8
Corporate
Group
Functions and Tasks of the Organizational Entities Involved
Subsidiary 3
Subsidiary 2
Subsidiary 1
Head Office
In-House Cash
Center
Account
management
Financial
Accounting

2Organizational Entities: Subsidiary
9
Subsidiary
 Individual trading entity (e.g. subsidiary) with its own systems (e.g. R/3)
 This subsidiary holds one or more current accounts within the corporate group hea
d office (In-House Cash Center).
 The subsidiary simply has to define new bank details (for the virtual bank) to the corpor
ate group head office (In-House Cash Center) as though it were a normal house bank.
Corporate Group
Subsidiary 3
Subsidiary 2
Subsidiary 1

2Organizational Entities: Head Office
10
Head Office
• The head office manages the current accounts for the corporate group subsidiaries within the IHC
Center.
• The financial accounting department within the head office manages the IHC Center general ledger a
ccounts.
• Other components such as CO, MM, .... could be in use at the head office.
Head Office
In-House Cash
Center
Account mana
gement
Financial
Accounting
Corporate Group

2Organizational Entities: IHC-Center
11
In-House Cash Center
• The IHC Center is situated at the head office and can be a separate organizational entity within the
head office.
• The IHC Center manages the subsidiaries IHC current accounts as a head office subledger
• Represents a part of the company that processes internal corporate group and cross-group payments.
Head Office
In-House Cash
Center
Account mana
gement
Financial
Accounting
Corporate Group

2Organizational Entities: Financial Accounting Dept.
12
Financial Accounting Department
• The general ledger accounts for the IHC Center subledger are set up here
• It holds the IHC Center balances in summarized form
• It creates the balance for the corporate group, taking account of IHC
• The financial accounting department uses SAP-FI
Head Office
In-House Cash
Center
Account
management
Financial
Accounting
Corporate Group

2Summary
13
Corporate Group
Subsidiary 3
Subsidiary 2
Subsidiary 1
Head Office
In-House Cash
Center
Account mana
gement
Financial
Accounting
Organizational entities:
• Operative subsidiaries 1,2,3...
• The IHC Center and the financial accounting department are situated within the head office
• The IHC Center (manages the subsidiary current accounts)
• The financial accounting department manages the chart of accounts and the general ledger balances.

2SAP In-House Cash: Overview of the IHC- Center
15

2IHC Center: Conditions
16

2Process 1: Internal Payment
18
Example: “Subsidiary 1 makes a payment to Subsidiary 2”
Pmnt Program OP
1.
2a.
2b.
Corporate Group
Subsidiary 3
Subsidiary 2
Subsidiary 1
Head Office
In-House Cash
Center
Account mana
gement
Financial
accounting
Payment Bank Statement

19
Subsidiary 1:
• Defines a new (virtual) house bank „IHC Center“ beforehand
• Starts the standard payment program and generates a payment order
 House bank:
 Payee:
 Partner bank:
IHC Center
Vendor „Subsidiary 2“ IHC
Center
• When the IHC Center is in operation, it is possible to freely define the payment con
ditions

20
IHC-Center:
• Debits the IHC current account of subsidiary 1
• => Receivable due from subsidiary 1
• Creates a credit memo for the IHC current account of subsidiary 2
• => Payable due to subsidiary 2
• Generates and sends bank statements to subsidiaries 1 and 2
• The netting amount results from the account balance (based on the turnovers)

21
Subsidiaries 1 and 2:
• Import the internal bank statements in the same way as the bank statements from external house ban
ks via the standard bank statement programs
• At this point the system automatically clears the open items
• Internal payments without involvement of banks

2Subsequent Process: Internal Netting
22

2Subsequent Process: Internal Netting
23

2AP In-House Cash Currency Conversion Function
24

2Process 2: Central Payments
25

26

27

28

2Process 3: External Incoming Payments Via IHC
29

2Process 3: External Incoming Payments via IHC
30

2Process 3: External Incoming Payments via IHC
31

2
Process 3: External Incoming Payments with
Zero Balancing
32

2Process 4: Internal Payments with several IHC Centers
33

2Process 4: Internal Payments with several IHC Centers
34

2Process 6: Local Payments
35

2Business Benefits
37
• Reduce physical cash transfers by internal netting
• Reduce number of bank accounts
• Reduce administrative overhead
• Minimize netting process times
• Save bank fees for bank accounts and payment transactions
• Avoid cost for external cross-border payments
• Reduce float and value date losses
• Gain more interest keeping cash within the group
• Reduce hedging deals concentrating exposure within the group
• Reduce hedging cost using economies of scale
• Improve competitive position in external money markets

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FSCM - IHC Process Overview.pptx

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