Non-SAP Payments processing in SAP BCM – Approval and processing through BCM to Service provider

Non-SAP Payments processing in SAP BCM – Approval and processing through BCM to Service provider

Abstract

SAP Bank Communication Management typically provides usage of payment media generated with the help of payment program (F110 or F111). The file will be downloaded to a file server, then the file is uploaded to a 3rd party system, which takes over the arrangement of the transmission of files to and from the bank. However, it will not process the payment media file generated from the other non-SAP systems. This white paper explains how technology can be best utilized with additional add-on component of SAP in order to meet the business requirements.

Background

The client uses different modes of payment to vendors, government authorities and employees. The payment is generated from different processing system as per bank prescribed formats (MT100 or ISO 20022 XML). According to business requirement, a client wants to stream-line the payment processing (approval process) and avoid the risk of non-encrypted data transfer from one system to another, before transmitting it to the bank for payment.

Scenario

SAP Payments

When a payment is processed through SAP, where the liability is raised in SAP and further payment processing will be handled in SAP, using SAP Bank communication management payment which will be processed through the payment program (F110 or F111).

Non-SAP Payments

Payment processed from other system and payment medium files generates payment file (ISO 20022 XML) as per bank.

Business Requirement

Payments like Salaries processed outside SAP Landscape and send to Bank. As Salaries file data is highly confidential, it must be encrypted and sent to bank. Before sending to bank, payment file (ISO 20022 XML) to be approved.

SAP Solutions

The standard delivery of SAP Bank Communication Management creates data medium for payments that are made in supported payment runs. In SAP BCM, these FI payment runs (payment run for creditors and debtors and payment run for payment requests) and HR payment runs are integrated automatically. This is because the payment proposals are stored in the same database tables that SAP BCM accesses to create the data medium.

The database integration causes logical restrictions: The SAP BCM application, as well as, the payment module to be executed, FI or HCM, need to be implemented on the same system. It is not possible to process external data mediums.

The SAP Bank Communication Management, option for multisystem payment consolidation software, however, provides a file-based interface for the connection to external SAP systems and non-SAP systems.

The SAP BCM, gives you an option of processing data mediums in standardized data formats from any system. By using the software, the SAP BCM user has the advantage of having a central inbound interface available. With it you can use SAP BCM application to cover the entire payment structure.

Process Steps

1. Payment processed in non-SAP system and Payment medium (ISO 200 222 XML) file generated.
2. Payment medium (ISO 200 222 XML) file interfaced into SAP.
3. SAP will convert the payment medium file (ISO 200 222 XML) into a payment batch (using function modules). For other payment medium format where function modules are not available, custom function module has to be written.
4. Non-SAP Payment medium will be created as a batch in bank monitor.
5. Non-SAP Payment medium batch available for approval in bank monitor.
6. Non-SAP Payment medium batch is approved or rejected.
7. On approval of the batch, payment medium file will be encrypted and sent to the service provider for further processing.

Note:- Accounting entries are tracked in sources system, only payment is processed thru SAP BCM using BCM Connector.

New Feature available in SAP

SAP Bank Communication Management, option for multisystem payment consolidation is an add-on tool. It provides a file-based interface for the connection to external SAP systems and non-SAP systems. The SAP BCM connector, gives you an option of processing data mediums in standardized data formats from any system.

Prerequisites

SAP BCM connector (BCON 602) ERP6 (EHP8 on Oracle DB) or ECC6 (ERP6 on HANA DB) is a prerequisite.

Value Proportions

• Risk compliant – Multi eye release procedures with digital signatures for all payment (including non-SAP payments)
• Common interface with multiple Banks (Payment factory using BCM)
• Payment status confirmation
• Salary payment batch approvals

Conclusion

SAP BCM Connector add-on has the ability to process non-SAP payment medium (ISO 20022 XML) through batch approvals and encrypts the data and sends it to the service provider (SWIFT). SAP BCM Connector add-on release 2.0 is available from ECC 6 onwards. With BCM connector add-on, payment process can be stream-lined (approval process) and avoids the risk of non-encrypted data transfer from one system to the another before transmitting it to the bank for payments.

Note: Google is source for all the images used in process flow/diagrams.

About Author

Colin Thomas

Colin Thomas has ten years of domain experience in Financial Accounting and twelve  years of SAP experience. His experience in SAP includes business process re-engineering and SAP implementation in Finance and Manufacturing and Treasury processes. He holds a master’s degree in Commerce and he is certified in S4 HANA Finance 1610, Certified in IFRS and ITIL certification.