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Continuing from my previous blog where in there was a discussion around SAP Financial Supply Chain Management & SAP Treasury, and why Treasury was brought into FSCM.  In this blog I will try to put forth in a simple way how SAP Treasury applications can be leveraged.  First of all, the SAP solutions which are grouped under Treasury are         

  • Treasury & Risk Management
  • Cash & Liquidity Management
  • In-House Cash
  • Bank Communication Management

There is a logical reason behind this grouping.  Similar to FSCM, the interconnectivity between these modules are so very important and very high.  Of these I will explain in brief about the most widely used modules in this blog – Cash & Liquidity Management and Treasury & Risk Management. 

Cash and liquidity management is a widely used solution because of its easy usage and also it is 1 of the most important tool for any organization.  This is used for cash planning and forecast of liquidity.  I will try to explain with a use case for easy understanding.  Assume we have multiple bank accounts.  Also in each account, balance is not going to truly reflect the cash status.  There might be cash locked in outgoing checks, incoming checks, suspense accounts, transfers which are yet to reflect in our account.  Now we can see this at a consolidated level what is going to be the total balance remaining i.e. the exact liquidity we have for all accounts and also across all banks.  The total balance for individual currency can also be viewed.  This is just a simple use case.  There are multiple ways in which we can structure the reports.  Using Liquidity planner, we can plan for liquidity across time buckets so that we will be able to check exactly what our payments due and what is our cash strength to make those payments, what is the excess cash available for investments etc.  But Cash and Liquidity Management is a receiving module and gets the info from FI, Treasury, In-House Cash etc.

What to do with the excess cash is the next question.  Also from these reports we get to see that there are certain payments to be made in a foreign currency etc.  Now that is where the treasury department will have to make efficient use of the excess funds and also the case where this is a requirement of fund.  There are many avenues for these which are known as financial instruments where the excess cash is invested and taken out as per the requirement.  The short term liquidity requirements are met through short term loans/borrowings.  The excess cash can be invested in money market area or securities.  It is not only treasury department of an organization which will deal with instruments but also financial services organizations which whose revenue itself is through managing financial instruments efficiently.  Further there are banks that also make use of their cash liquidity. 

So there is a huge market which is going to deal with this and in fact they are directly going to dictate the finances of many organizations and directly impact the economy.  It is because of these reasons, that there are many standards, regulations and policies in place which are to be taken care of.   SAP Treasury solution is going to support the handling of all these instruments across their whole life cycle from purchase, accounting, valuation to sale/maturity.  It supports all kinds of instruments/commodities like money market, derivatives, forex, securities & commodities.  It supports some of the most complex financial instruments along with hedging strategies in full compliance according to FAS133. These are all managed through Treasury – Transaction Manager. 

But dealing with finance itself, is going to have many inherent risks resulting from market fluctuations to counterparty.  There is a comprehensive risk management system in SAP treasury which is going to analyze and quantify the risks and classify according to our requirements.  The major advantage here is it is fully integrated with treasury which is going to make the whole process of risk management much more efficient.  But the key for an efficient risk management is to have an enterprise wide risk policy and a clear risk management process in place.  Once this is there in place, SAP is going to provide the perfect platform for supporting the risk management process.

I would signify the importance of In-House Cash and Bank Communication Management in another blog.  Together with SAP FSCM, SAP Treasury will certainly be a perfect stepping stone for the overall efficient management of Finance for any organization.  It is important to choose the right solution, but it is even more vital to get the solution correct so that business can be optimized.  SAP treasury is one of the best in class product in this space but we need to ensure that we leverage maximum out of SAP for our business.  I strongly feel that there should be no sacrifice of business for the want of technology.  With SAP the second part of equation is removed.  So it is imperative to derive maximum business benefit out of it. 

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  1. mravifico mravifico

    Thanks for the information in the article, it give clear picture of what is the use of Treasury and Cash and Liquidity management in SAP.

    This risk management in FSCM u have described is anywhere linked to SAP GRC? What is the difference between these 2 risks.

    1. Ravishankar Ramamurthy Post author

      Thanks for your comments.

      The risk management under Treasury is the managing of financial risks.  We cannot manage operational risks through this. You can check more about financial risk management in my next blog.
      SAP Treasury Overview Part 2 – Financial Risk Management

      GRC is mainly to bring about governance and compliance across the organization.  It is more of strategy oriented and is a solution offered through business objects.  GRC will help make the financial statements comply with internal and external regulatory requirements.  It can deal with operational risk.  But the market risk on investing excess cash is something which is going to be handled through TRM.


      1. James Morales
        For me I always follow the rule of thumb. If less than 30 days it’s cash management as the probability of cash movements in and out are much higher. If it’s > 30 days it’s liquidity planner as the probability of receivables and payable movements being made is much lower.
  2. James Morales
    We use Treasury to manage our Capital Market operations and to also streamline month end closing activities with the interface to accounting. Bank statements are also loaded and fall into the Treasury area. We are currently looking into implementing In  House Cash and Hedge Management sub modules as well. Looking forward to further blogs on the subject.
  3. Gopinath Sharath
    Thank you for this article, very informative. We basically are using FSCM TRM for money market, foreign exchange and Securities. So far so good and we are leveraging on the functionality and implementing Hedge management at the moment. However we are planning to also implement Cash and Liquidity on a larger scale and at the moment, the kind of comments we get on the functionalities are not satisfactory. My question here would be, how reliable is cash and liquidity for functions like cross company cash concentration etc., Is liquidity planner in SEM anyway related to FSCM Cash and Liquidity management?

    Thank you for your blog and look forward for more updates in the future

    1. Ravishankar Ramamurthy Post author

      Thanks for your comments. 

      Cash and Liquidity management that is residing inside Treasury is a pretty stable solution and I guess is the most widely used SAP treasury component.  For purposes like cash concentration & liqudity planning this is a good and usable solution.

      However, the liquidity planner available in BPC is not directly related to FSCM.  The data source for it is through SAP BW.  I have not worked on it, but based on the demos and documentation, it looks like a much more user friendly software with integration to BI for comprehensive analysis and reporting.  For realtime update to cash and liquidity management, the one inside Treasury is much better as far as I know. It is much more flexible and easier to integrate TRM and this.


    2. James Morales
      My understanding of the SEM liquidity planner is that it’s really more for an executive perspective vs a day to day operational perspective. The SEM piece does more of the actual vs plan comparisons you don’t get with normal CM/LM. The first battle is using plain CM to get a handle on where your cash is and getting better at planning upcoming expenditures. Then you use SEM to measure how you’re executive against that plan. You could probably do this via a custom design inside R/3 without involving BI.
  4. Gareth Clarke
    Hi RAVI,

    I have been working in SAP TRM for some time and have battled to get to grips where SAP Cash and Liquidity Management Ends and Where Liquidity planning begins.

    What I mean by this is as far as planning for future items so far as when integrated to other SAP components say SD or MM where you have future commitments. Does this fall in SAP Cash and Liquidity Management or does this fall in the liquidity planner?

    I have always tried to stay away from this due to licensing of SEM Liquidity planner. Could you please provide some clarity as we desperately would like to propose this functionality to a number of clients.


    Gareth Clarke

    1. Ravishankar Ramamurthy Post author
      Hi Gareth,

      Typically Cash management which includes cash position and liquidity forecast would generally work for short term in the range of a month or 2 or at the max 3.  This depends on the nature of the business as well as the ability to forecast receivables and payables with a high probability. Because beyond 3 months the ability to forecast with high probability will be reduced to a large extent.  That is when long term planning comes into picture where in we can use the liquidity planner or any planning tool for that matter to plan for the liquidity items.  And the actual cash flow will come in from an ERP system and the plan from the planning system which can be analysed using BI or other analytics tool.

      Moreover when you are planning, if you have the commitments flowing in from other components, you can take into account the commitments and plan more accurately. 


  5. Luis Tovar

    Hello Ravi, thanks for sharing your knowledege, do you know if TRM standard has the functionality for issuance of stocks?


    Best regards

    Luis Tovar

    1. Ignacio Lopez

      Hi Luis,


      “The issuance of stocks is not covered by a standard product type in TRM”. As far as this Corporate Action is not that frequent, at least normally not as frequent as issuance of bonds. You can handle it in FI, with a simple entry.


      See Juerg comments:



      Best Regards



  6. Paul Waters

    Hello –


    Our firm is currently a partner of SAP Treasury whereby mutual  corporate treasury clients send completed foreign exchange trades from our platform into the SAP Treasury module of record keeping and reconciliation. 


    I am trying to find the appropriate contact on the SAP side to have a high level discussion with about a more intimate strategic partnership.  Any assistance in helping me to find said individual would be greatly appreciated.


    Many thanks,



    Christopher Matsko

    Head of Sales


    360 Trading Networks, Inc.

    521 Fifth Avenue, 38th Floor

    New York, NY 10175

  7. sasha mcgrath



    I am new here and after 10+ years in Treasury Back office, I am embarkign into SAP treasury applications.

    I would like to know where to start. I ahve applied for a job where the following are manadatory requirements . I would welcome some help please . Thank you .


    I woudl welcome some clear examples where the below will be applied.

    • Excellent knowledge of design and deployment of FI-Treasury
    • Excellent knowledge of SAP In-House Cash
    • Experience of SAP PI & SWIFT Connectivity
    • Previous Pharmaceutical experience would be ideal

    Dear Grigoriy Babitskiy


    Thanks for giving Advice,but the book cost is so expensive for me .in INR the book is 6700/-

    is there any Document pls send me.iam waiting for your repaly

    thanks sir


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