by Chirag Chokshi, Senior Principal with the Enterprise Finance Group, Infosys Consulting
In today’s global and dynamic business environment, the treasury department often has to deal with the daunting task of managing and controlling large sets of bank accounts across diverse geographies. Some of the challenges include maintaining optimum bank structure, managing large portfolio of bank accounts and signatories, and maintaining a relationship with banks. Degree of automation as well as simplification of processes are essential to enhance efficiency of the organization in the fast-paced global business environment. SAP has revamped Cash & Liquidity Management functionality with the advent of SAP S/4HANA, aligning business processes to provide control to the actual owner of the processes. As a result, several settings which were traditionally configuration items in earlier SAP Releases i.e. SAP ERP became part of master data which are usually owned by business users. Payment approvals and signatories were managed through Bank Communication Management Release Strategy configuration in the classical SAP ERP Central Component (SAP ECC) system, while in SAP S/4HANA Bank Account Management (a submodule of Cash & Liquidity module), managing payment signatories and maximum payment amount is part of House Bank Account master data. This resulted in increased efficiency of payment approval process. This article explains the requisite configuration and house bank account master data needed for the Bank Relationship Management signatory-based payment approval process.
SAP has introduced several enhancements and simplification in the new and revamped SAP S/4HANA Cash and Liquidity Management solution as listed below.
- Single Source of Truth: SAP has simplified data footprint in several modules such as Universal Journal containing general ledger as well as various subledger data in one table (ACDOCA) and One Exposure from Operations containing Cash and Liquidity Management related data in one table (FQM_FLOW). This helps provide real-time analytics and reporting from transaction SAP S/4HANA ERP system.
- Simplification & Enhancement of Business Processes: Traditionally, in classic SAP ECC, some of the business-relevant setup was an SAP configuration activity. Due to this, such system setup was done by IT departments at the request of business users instead of by business users themselves. With SAP S/4HANA, activities or system setup relevant for business is driven by master data instead of system configuration, helping to enhance efficiency of the business operations/processes.
Bank Account Management (BAM) is the totally new function of SAP S/4HANA Cash & Liquidity Management through which SAP offers capability to create bank accounts as a master data to manage throughout their lifecycle such as open, close, modify, or reopening of bank accounts. Please refer to article How to Use Workflow to Streamline and Control Bank Account Management Processes in SAP S/4HANA Finance for more information. SAP also added new tabs/fields on the house bank account master data. Payment Signatories and Cash Pool tabs helped SAP to simplify and enhance Payment Approval and Cash Concentration Processes respectively.
Note: SAP S/4HANA Bank Account Management module is also referred as Bank Relationship Management. However, we will use the term Bank Account Management (BAM) in this article as SAP uses both names for this module. We will see “Bank Account Management” in the IMG menu path of SAP S/4HANA.
This article consists of step-by-step configuration required for BAM Payment Approval Process, “Payment Signatory” tab of House Bank Account master data, and sample payment approval process debriefing signatory-based payment approval.
As SAP S/4HANA Cash & Liquidity Management requires additional license, SAP Offers “Full Scope” with full-blown function with license and “basic scope” to allow classic SAP ECC functionality such as maintaining house bank/bank accounts. This process requires “Full Scope” of SAP S/4HANA Cash & Liquidity Management. For activating “Full Scope”, the following settings are required.
- Activate Business Function FIN_FSCM_CLM through transaction SFW5. Figure 1 displays that FIN_FSM_CLM is activated (Status tab; Bulb is lit).
Figure 1: Activate Business Function FIN_FSCM_CLM
- In SAP S/4HANA IMG (Configuration) for Cash & Liquidity Management, select option “Full Scope”. Menu Path: Finance Supply Chain Management -> Cash and Liquidity Management -> General Settings -> Define Basic Settings. This configuration can also be accessed through SM30 transaction, specify table/view FCLM_CONFIG2.
Figure 2: Select Full Scope in Cash and Liquidity Management Configuration
Once the Full Scope for Cash & Liquidity Management is configured, the next step is configuration of Bank Account Management (BAM) and Bank Communication Management (BCM). Prior to the BAM Payment Signatory function being introduced by SAP, BCM release strategy configuration was used for payment approval process. BCM release functionality is still available, but using Bank Account Management signatory-based payment approval helps to transform control to the business users. Before explaining master data setup of the House Bank, I will explain the configuration required to enable BAM Payment Signatory based payment approval process.
Step 1: Define Settings for Bank Account Master Data
Configuration of Settings for Bank Account Master Data is required to support Payment Approval Process, define Sensitive Fields for the House Bank Account Master Data, and Define import methods for bank statements. This article explains the configuration settings required for the payment approval process.
IMG Menu Path for configuration of Bank Account Master Data Settings: Finance Supply Chain Management -> Cash and Liquidity Management -> Bank Account Management -> Basic Settings -> Define Settings for Bank Account Master Data
- Account Type Definition: Account Types represent the type of Bank Accounts i.e. Checking Account, Savings Account, Disbursement Accounts, Lockbox, etc. Account Types are primarily useful for two purposes: 1) As a filter or selection criteria for reporting, 2) Assigning payment approval pattern to account types. SAP has pre-delivered account types, and additional account types can be configured per specific requirements. Figure 3 below depicts the Account Type Configuration.
Figure 3: Account Type Configuration
- Define Signatory Groups: Signatory Groups and Payment Approval patterns would help specify the payment signatories in the House Bank Account master data. SAP offers one-step payment approval or multi-step payment approvals. Multi-step payment approvals can be sequential or non-sequential. Figure 4 shows the Signatory Group configuration.
Figure 4: Signatory Group Configuration
- Define Approval Patterns: Payment Approval Patterns define the rules of the payments, i.e. approval would be sequential or non-sequential, sequential approval would be single-step or multi-step approval, assignment of signatory group to the approval step of approval pattern. Additionally, minimum approval amount and currency can also be configured, but I recommend specifying a minimum approval amount in the house bank master data. Figure 5 shows the configuration of payment approval patterns P001- two-step payment approval, P002- one-step payment approval, and S001- non-sequential approval. Signatory Groups are assigned to approval steps of P001 and P002, respectively. As S001 is a non-sequential approval pattern, signatory groups are assigned through “Maintain Non-Sequential Approval Patten.” Figure 6 shows assignment of the signatory group to S001.
Figure 5: Payment Approval Patterns
Figure 6: Signatory Group Assignment to a Non-Sequential Pattern
- Assign Approval Patterns with a combination of Company Code/Account Types: Assignment of the approval pattern with combination of company code and account type drives which signatory group(s) would approve payments made from specific house bank account. Figure 7 shows the configuration of assignment of approval patterns. Multiple approval patterns can be assigned to Company Code/Account Type. Priority sequence would decide which approval pattern would be applicable first for payment approval.
Figure 7: Assignment of Approval Patterns
Step 2: Enable Signatory Control
This configuration step would enable the users defined as signatories in the House Bank Account master data to approve or reject the payments. Signatories information in the House Bank Account master data does not take effect without this configuration.
IMG Menu Path for configuration of Bank Account Master Data Settings: Finance Supply Chain Management -> Cash and Liquidity Management -> Bank Account Management -> Enable Signatory Control
Figure 8 Enable Signatory Control Configuration
Figure 8 shows the configuration of Enable Signatory Control. For the BAM Payment Signatory approval process, the following configuration (circled in the figure) should exist:
- Process 0BANK002, Function Module FCLM_BAM_BCM_AGT_PRESEL, Product BAM
- Process 0BANK004, Function Module FCLM_BAM_BCM_REL_PROC_CTRL, Product BAM
The following Configuration in the Bank Communication Management is required for enabling BAM Signatory Control:
- Rules Maintenance
- Additional Criterions for Payment Grouping
Step 3: Bank Communication Management Configuration – Rules Maintenance
Payment Grouping configuration contains rules for merging different payment documents to create a batch of payment documents which would be sent to banks for making payments. Payment grouping configuration contains the rules that generate payment batches and priorities in case multiple rules satisfy the criteria. Figure 9 displays the configuration of payment grouping rules and associated priorities. Rule “CC1710_11” has priority over “FIDO” and other rules as the value of Priority for “CC1710_11” is 0 which is lower than other rules.
IMG Menupath: Financial Supply Chain Management -> Bank Communication Management -> Payment Grouping -> Rules Maintenance
Figure 9: Bank Communication Management Payment Grouping Rules Configuration
Double clicking on “RI. Maint” opens up the rules maintained for payment grouping. Figure 10 displays the Rules maintained for Rule ID “CC1710_11”. This rule generates the payment batch for the payment documents posted for company codes 1710 and 1711.
Figure 10: Payment Grouping Rules for Rule ID CC1710_11
Step 4: Configuration of Additional Criterions for Payment Grouping
This configuration allows two additional criterions for creating a batch for the payment group. As Bank Account Management payment signatories are specified in the House Bank Account, it may be possible that different House Bank Accounts for given company codes may have different signatories. So, one of the requirements is to have first criterion for additional grouping, which should be the House Bank ID (Field Name: HKTID). Figure 11 displays the additional criterions for payment grouping.
IMG Menupath: Financial Supply Chain Management -> Bank Communication Management -> Payment Grouping -> Additional Criterions for Payment Grouping
Figure 11: Additional Criteria for Payment Grouping
Now I will explain how Rule CC1710_11 rule groups payment to create batches.
- As the Rule ID configuration contains paying company codes 1710 and 1711, payment documents for those two company codes are selected.
- As a next criteria, HKTID (House Bank Account) is grouping field 1 I and VALUT (Value Date) is grouping field 2, payment documents of those two company codes are first grouped by House Bank ID and then by value date of payment documents.
- Each batch is created by company code, house bank account, and value date.
This configuration would help to create batches by the house bank account and hence, the batch would go right to the approving user(s) specified in the House Bank Master data. Assignment of Approvers to the House Bank Account is specified in the next section on House Bank Master Data. Please note that Grouping Field 1 of Additional Grouping Criteria must be HKTID.
Once the above configuration is maintained, the next step is maintaining the House Bank Master data. SAP S/4HANA Cash & Liquidity Management is an SAP Fiori application-based solution. The next section displays “Payment Signatories” tab of the Manage House Bank Account application.
Process Flow of Payment Approval by Signatory Assigned in House Bank Master Data
Once the requisite Bank Account Management (BAM) and Bank Communication Management are configured as explained in the Step-by-Step section, Payment Approval can be done using the BAM Payment Signatory. In this section, I will explain House Bank Master data as well as the Payment Approval process using Cash & Liquidity Management FIORI APP.
Step 1: Assign Payment Signatories to the House Bank Account Master Data – “Manage Bank Account” APP – Payment Signatories tab
Figure 12 shows FIORI APP – Manage Bank Accounts which is used to create the House Bank with SAP S/4HANA Cash & Liquidity Management. This figure also displays the “Payment Signatories” tab of the House Bank Account. In this tab, Signatory Group G001 (configuration explained in Step 1b to Step 1d) is assigned to User ID “MANAGER2,” and that ID can approve maximum USD 1,000. This is a one-time setup of a master data. This is a significant improvement from SAP ECC, where this setup was done through Release Strategy configuration in Bank Communication Management module. Now, as it is part of the House Bank Account master data, a business user can make changes without the involvement of IT, which helps with increased flexibility and agility in the Payment Approval process.
Figure 12: Payment Signatories Assignment with House Bank Account
Step 2: Fund Transfer Request between Bank Accounts using “Make Bank Transfer” APP
Using Make Fund Transfer FIORI APP, I crated Payment Request for Fund Transfer USD 400 from Bank Account 12345678 (House Bank HBNK1/Account HCUR1) to Bank Account 87654321 (House Bank HBNK1/Account HSAV1). Figure 13 contains
Figure 13: Bank Transfer Request Initiation between House Bank Accounts using “Make Bank Transfer” APP
Clicking “Save” button created Payment Request 53 as shows in Figure 14.
Figure 14: Payment Request Creation
System prompts to create Payment document or not once the Payment request is created. Clicking “Pay” button creates payment document (Clearing Document # 2000100008), Payment Run id 00003R. Figure 15 depicts the payment document creation as stated above.
Figure 15: Payment Document Creation for the Funds Transfer between two bank accounts
Step 3: Review Status of Payment through “Track Bank Transfers” APP
FIORI APP “Track Bank Transfers” displays status of Payments posted in the system. In figure 16, header of Track Bank Transfer displays that 4 payments are in “New” status and 4 payments are “Approved” status. Clicking on “New” button displays all the payments in “New” status. Figure 16 displays payments with “New” status. Payment made in previous step through Run id 00003R for USD 400 appears in second line of the report displayed. System assign status “New” once payment is created and it goes to Approver (MANAGER2 for House Bank Account) for approval.
Figure 16: Payments with “New” Status – “Track Bank Transfer” APP
Step 2: Approval of Fund Transfer by Manager2 through “Approve Bank Payments”
Payment Signatory assigned as an approver (MANAGER2 for this use case) logs on to SAP S/4HANA and open FIORI APP “Approve Bank Payments” for reviewing payment batches requiring approval. Figure 17 displays the FIORI TILE of “Approve Bank Payments” tab and Report generated once Payment Signatory double click on this FIORI TILE. This APP being one of the SMART FIORI APP displays “3” on TILE indicating that three payments are awaiting approval.
Report contains two tabs: “For Review” and “Reviewed”. Payment awaiting approval appear in “For Review” tab. Payment posted in step 2 for USD 400 appears in 3rd line of “Fore Review” tab. In the Right top, there is a button called “Submit Reviewed” tab which contains number of payments which are reviewed and can be approved in the parenthesis. At present, there are no payments reviewed by him and hence, count in parenthesis is 0 i.e. Submit Reviewed (0).
Figure 17: Approve Bank Payment FIORI TILE and REPORT
Double clicking on the payment line opens up the details of the Payment Batches (Figure 18) which contains buttons for action/decision for the payment batch i.e. Approve, Reject, Defer at the top right and payment details in tabs like Batch Details, Payments, Approval Flow, Attachments etc.
Figure 18: Payment Batch Details with Buttons for Approval Actions
Clicking “Approve” button opens Screen for Approval Note as in and once payment is approved, Payment Batch status changes from “For Review” to “Reviewed”. Figure 19 shows Approval Note screen and clicking OK approves the payment. Figure 20 displays that Submit Reviewed Batches button count increased to 1 from 0.
Figure 19: Approval Note and Confirmation of Approval of Payment
Figure 20: Payment Batch Status changed to “Reviewed” upon Payment Approval
As a final action of payment approval, Double clicking button “Submit Reviewed Batches” brings dialog box asking submitting reviewed batches as displayed in Figure 21. Clicking on Submit would make approved payment ready for sending instruction to bank for further disbursement.
Figure 21: Submit Reviewed Batches of Payment for Disbursement
STEP 5: Review Status of Payment through “‘Track Bank Transfers” APP after Approval
After Payment Signatory (MANAGER2) approved payment as explained in step 4, FIORI APP “Track Bank Transfer” displays payment under “Approved” status. Track Bank Transfer APP report in Step 2 had 4 payments in New Status and 4 payments in Approved Status. With approval of payment in Step 4, New status count decreased to 3 while Approve Status count increased to 5.
In summary, Bank Account Management Payment Approval process offers following improvements.
- Payment Signatory and Maximum Approval Amount is now part of House Bank Account Master Data which was earlier part of Bank Communication Management Release Strategy configuration. This shift allowed freedom to Treasury Managers to change signatories and amount reflecting cash positions/personnel with the department and help make this process more agile.
- SAP S/4HANA Cash & Liquidity Management is a revamped solution and offers Smart FIORI APPs providing high level information on TILE itself (i.e. Number of Payments on “Approve Bank Payments”) with exhaustive details in the report generated. The process flow of the payment approval is explained with example of some available FIORI APPs like Make Bank Transfer, Approve Bank Payments and Track Bank Transfer.
MEET THE AUTHORS
Chirag Chokshi is a Senior Principal with the Enterprise Finance group of Infosys Consulting. He is an SAP Solution Architect having 18 years of experience with a major focus on SAP Financials. He has played an instrumental role in the successful execution of various finance transformations and global rollout projects. He is a recognized SME for Record-to-Report (RTR) & Order-to-Cash (OTC) process areas as well as new S/4HANA capabilities such as Central Finance and S/4HANA Cash & Liquidity Management. You may contact him via email at firstname.lastname@example.org.
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