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Author's profile photo LAKSHMI APPIREDDY

Cash and Liquidity Management Configuration

Overview

I would like to give an overview of the cash and liquidity management configuration in this blog. It will help you to understand the required configuration steps, process design, and sample key data structure (KDS) for your implementation. It helps businesses to take the decision to manage funds. The Treasury Department can take the decision whether to adjust funds internally or take a working capital loan from the bank to manage their funds by verifying Cash and Liquidity management reports.

A) Introduction

Cash Management and Liquidity Management both are subcomponents of Financial Supply Chain Management (FSCM). Cash Management is used to verify the cash position of all the bank accounts and liquidity Management is used to verify the liquidity position of the sub-ledgers like Accounts payable and Accounts receivable. We can also use Memo records, Payment requests, Parked documents to verify the Cash and Liquidity position. It is used by the Cash Management operations team and the Treasury department. We use T-code: “FF7A /FF7B” to verify the cash and Liquidity position report. This document is developed using SAP ECC 6.0 version.
I would like to give a quick summary of the configuration followed in the document.

The base concept remains the same in the S4HANA system with additional features.

Planning levels
We need to create planning levels. It is important to understand key data structure (KDS) before performing the configuration. I have followed below KDS for defining a) Planning levels for cash position (Bank G/L accounts) b) Planning levels for Liquidity position (sub-ledgers AP/AR) and c) Planning levels for Memo Records:

Planning level Planning level description Source Used for
L1 Main Bank BNK Bank
L2 Outgoing Bank BNK Bank
L3 Incoming Bank BNK Bank
K1 Unconfirmed Vendor PSK Vendors
K2 Confirmed Vendor PSK Vendors
Y1 Blocked Vendor PSK Vendors
D1 Unconfirmed Customers PSK Customers
D2 Confirmed Customers PSK Customers
Y2 Blocked Customers PSK Customers
PR Payment request (B2B) BNK Memo Record-Bank
MP Bank loans PSK Memo Record-Bank
MQ Subledger transactions PSK Memo Record-Vendor/Customer

Planning Groups

We need to assign planning groups to planning levels. It is used for grouping planning levels at the time of reporting. The planning group represents the characteristics, behaviors, or risks of the customer or vendor group. In this way, you can break down incoming and outgoing payments according to the amount, the probability of the cash inflow or outflow, the type of business relationship, and so on.

Planning Group Planning level Planning Group Description
V1 K1 Domestic Vendors
V2 K1 Foreign Vendors
C1 D1 Domestic Customers
C2 D1 Foreign Customers
MP MP Bank loans
MQ MQ Subledger transactions

Planning Type

Planning types used for manually planning. Planning type controls the planning level, number ranges, archiving category, auto expiry, and field status for the generation of Memo records (Memo records are valid for a certain period)

Planning Type Planning Group Description
MP Bank loans
MQ Subledger transactions

B) Configuration

1) Define Default Value Date

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Basic Settings- Define Default value date

Activate proposal value date for your company code to default the current date as value date for cash-relevant transactions and Save it.

2) Define Source Symbols:

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Basic Settings- Define Source Symbols

Note: SAP has already delivered Source Symbols, but if you want you can define your own source symbols. In this document, I’m using BNK & PSK only.

3) Enable planning level as an input entry for GL Master (OBD4)

You need to enabler it for cash/bank account groups of your chart of accounts. You need to double-click on the respected account group (chart of accounts) and then make the planning level an optional or mandatory field.

4) Enable Cash Management Group (Planning Group) as an input entry for Sub-Ledger Master record (OBD3/OBD2)

It is required for Vendor/ Customer master records. You need to click on respected vendor/customer account groups and make the cash management group an optional or mandatory field under the ‘company code’ segment.

5) Define Planning level

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Master data-G/L Accounts- Define Planning level

Click on New Entries and Create all the required Planning levels for the Cash position as well as Liquidity position and memo records and Save it.

6) Define Planning Groups

SPRO-FSCM-Cash and Liquidity Management-Cash Management-Master data-Subledger Accounts- Define Planning GroupsHere we are going to Define Planning

Groups and Assigning to Planning levels (This step is applicable only for PSK (sub-ledgers/Memo records related)

Click on new entries, define below and save them.

7) Maintain Blocked Levels

SPRO-FSCM-Cash and Liquidity Management-Cash Management-Structuring- Maintain Blocked levels

Click on New entries, define below and save them.

Note:

  • If the invoice is blocked for payment, then the system will update planning level Y1/Y2 as soon as the invoice is posted for the customer/Vendor. You can verify the same in the vendor /customer line items reports (FBL1N/FBL5N).
  • If the invoice is not blocked, then the system will update planning level K1/D1(unconfirmed vendor/ unconfirmed customer) in the FBl1N/FBL5N report, until the user made a change to confirmed vendor/customer.
  • If the user removes the payment block manually, it will be changed from Unconfirmed to Confirmed item. Then the system will update the planning level from K1/D1 to K2/D2 in the invoice and you can verify it in the vendor/customer line item reports FBl1N/FBL5N report.
  • The system will derive planning levels from the planning groups, which are assigned in the business partner/vendor/customer master data.

8) Define levels in the payment request

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Structuring- Define levels in payment requests

Click on New entries, define below and save them. It is used for bank-to-bank transfers mainly. In the B2B process, we create a Payment request first and then approve it.

9) Define number ranges for manual planning

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Structuring-Manual Planning- Define Number Ranges for Manual planning

Define number ranges for your company code and save them. It will be assigned to planning types.

10) Define planning types

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Structuring-Manual Planning- Define Planning Types

Planning Types used for Manually Planning. Planning type controls the planning Level, Number ranges, archiving category, Auto expiry, and field status for a generation of Memo Records that are valid for a certain period.

Define planning types and assign them to plan levels and number ranges and Save them.

11) Define cash management account name

SPRO-FSCM- Cash and Liquidity Management-Cash Management-Structuring- Define Cash Management Account Name

Define cash management account names for your bank accounts and save them.

12) Define groupings and maintain headers

SPRO-FSCM- Cash and Liquidity Management- Cash Management – Structuring – Groupings – Define Groupings and maintain Headers

You can define multiple groups as per reporting needs. You can create one group for Cash position verification and another for Liquidity position verification or You can create a Single group for both Cash & Liquidity position verification.

Click on New entries, define the below groups and save them.

13) Maintain structure

SPRO-FSCM- Cash and Liquidity Management-Cash Management – Structuring – Groupings – Maintain Structure

There are two types for each grouping. E- level and G- group (Bank account/planning groups). You need to make sure to define a structure for each planning level and group.

Click on New entries, define a structure for Cash position (ZTESTCASH) and liquidity position (ZTESTAPAR) and save it.

14) Activate cash and liquidity management in your company code(OBY6)/(OT22)

Cash management is activated at the company code level. You need to activate it for all your company codes. The system will not update any planning levels if you do not activate it.

Conclusion

I hope this blog helped you to understand the configuration steps, business process scenarios, and sample key data structure. I would like to also make another blog to show you the end-user steps. It will give you an idea about the business process scenarios and cash & liquidity management reports. I will update the End-User steps in my next blog. Thank you for your time.

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      21 Comments
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      Author's profile photo Viswanatha Reddy Singamala
      Viswanatha Reddy Singamala

      Well articulated, thanks for sharing knowledge.

      Author's profile photo LAKSHMI APPIREDDY
      LAKSHMI APPIREDDY
      Blog Post Author

      Thank you, Viswanatha Reddy!

      Author's profile photo Sasikala Singamala
      Sasikala Singamala

      Nice Blog.

      Author's profile photo LAKSHMI APPIREDDY
      LAKSHMI APPIREDDY
      Blog Post Author

      Thank you, Sasikala!

      Author's profile photo Sanjai Babu Kopuri
      Sanjai Babu Kopuri

      Very informative. Thanks for sharing and looking forward for end user steps blog.

      Author's profile photo LAKSHMI APPIREDDY
      LAKSHMI APPIREDDY
      Blog Post Author

      Thank you, Sanjai!

      Author's profile photo João Paulo Campos Amaral de Almeida
      João Paulo Campos Amaral de Almeida

      Very good! Thanks for share.

      The CM flag in the OBY6 is not able to choose when in the OT29 was already slected. OT29 is mandatory.

      Author's profile photo LAKSHMI APPIREDDY
      LAKSHMI APPIREDDY
      Blog Post Author

      Thank you so much Joao Paulo!

      Yes! In SAP ECC we can able to activate CM through the T-Code-OBY6. Incase of S4HANA, we have to activate it though the T-Code-OT29.

      Author's profile photo Loren Schmidt
      Loren Schmidt

      If we have central treasury SAP landscape and do not currently have the CM flag active in our remote source systems, what actions do we need to take in those source systems to enable the CM flag?  Is it simply checking the box in OBY6 or would there need to be additional configuration or process changes?

      Author's profile photo Demostenes Alex Demostenes
      Demostenes Alex Demostenes

      Hi LAKSHMI, Thanks for sharing your knowledge with us. I´d like to contact you about this new ‘one exposure’ concept that completes now this scenario. Could you contact me by mail demostenes.sousa@gmail.com, so we can exchange information about S4H Cash Management improvements .

      Thanks

       

      Author's profile photo Srinivas Radhakrishna
      Srinivas Radhakrishna

      Well explained.

      Author's profile photo venkatesh bhandari
      venkatesh bhandari

      Great Explanation with eye in to detail on planning level, group types and its relation.  Thanks Lakshmi Looking forward your blogs

      Author's profile photo Adeel Ahmed
      Adeel Ahmed

      Hi lakshmi,

       

      Great Article...

      Author's profile photo praveen C
      praveen C

      very useful and handy info.

      Author's profile photo Vijayakumar BN
      Vijayakumar BN

      Nice detailed writeup, thanks.

      Author's profile photo Basis Team
      Basis Team

      Thanks for sharing the detailed flow. Very logical. Keep it up

      Author's profile photo Ravi Nalamotu
      Ravi Nalamotu

      Good Work, Please keep it up!

      Author's profile photo Takaho Akizawa
      Takaho Akizawa

      Thank you Lakshmi, It's Very informative. Thanks for sharing your knowledge with us to resolve the issue in planning level.

      Author's profile photo Vimal Shah
      Vimal Shah

      Hi Lakshmi,

      Regarding below point, I want to know how I can convert unconfirmed vendor/ unconfirmed customer to confirmed vendor/ confirmed customer?

      • If the invoice is not blocked, then the system will update planning level K1/D1(unconfirmed vendor/ unconfirmed customer) in the FBl1N/FBL5N report, until the user made a change to confirmed vendor/customer.

      Can you please suggest your view.

      Regards,

      Vimal Shah

      Author's profile photo Helen Geraldine Salas galvez
      Helen Geraldine Salas galvez

      Hi EveryOne,

      Someone know how is the function to debug a Query, I have a problen in PRD is not deriven a Query and don´t know de function.

      Author's profile photo Karan Sankhyan
      Karan Sankhyan

      Please provide the entire document for the Cash flow direct method configuration