SAP In-House Banking
In this blog we will learn about the latest SAP product – In-House Banking (a component of Advanced Payment Management).
Treasury and Banking in the SAP ecosystem can increase visibility into and control over global payments, corporate risk, and cash & liquidity. SAP applications can streamline processes, increase effectiveness, improve operational decision making, and minimize risk for organizations. The strategic importance of the treasury management function has increased steadily over the past few years. For many corporations, the global financial crisis highlighted the importance of flexible banking relationships and the need for real-time visibility to global cash positions. As treasury organizations grow in significance, they are also having to respond to the increasing pace of disruptive change.
Treasury departments are nowadays confronted with a wide range of challenges in payment transactions. SAP has developed solutions for all of these challenges. The combination of SAP S/4HANA Finance for Cash Management, SAP S/4HANA Finance for advanced payment management and SAP Multi-Bank Connectivity enables the centralization and optimization of E2E payment transactions.
Nowadays payment volumes are growing significantly, and payments are becoming more and more instant or real-time with that the need for a scalable solution which can handle real-time payments, but also allows to act in real-time based on internal requests is essential.
In-House Banking vs In-House Cash:
SAP In-House Cash is an internal banking solution for corporates based on SAP’s banking software SAP Bank Customer Accounts (BCA). The main component of SAP In-House Cash is the in-house cash center which processes payments between the various subsidiary companies. The in-house cash center is basically a virtual internal bank where subsidiaries hold current accounts. It is available with SAP S/4HANA on premise.
SAP In-House Banking is the new innovation, an internal banking solution, where subsidiaries can maintain in-house bank accounts with headquarters, available from this year, with SAP S/4HANA Cloud 2208 release. It works with both SAP S/4HANA Cloud and on premise with advanced payment management.
While there are similarities between the two solutions, there are some differences too. Both solutions aim to reduce the number of external bank accounts and bank connectivity cost with internal banking. With all the latest innovations, In-House Banking offers benefits over In-House Cash and these benefits are shown above.
Business Needs for In-House Bank:
- Central overview of cash management positions
- Central financial overview of the company
- Easy access for treasury colleagues for funding and liquidity
- Cost reduction by reducing external house bank accounts
- Easy fund transfer between the complete organization
- Flexibility to apply internal rates and conditions
- Better control of subsidiaries liquidity
- Harmonized processes
- Simplify internal processes for payments
- Centralize the cash flows via a payment factory
Centralize and streamline all payment transactions within a group or company using in-house banking for corporations, a complementary service related to SAP S/4HANA Cloud for advanced payment management to achieve one view of the corporate group’s cash situation.
- Manage internal bank accounts:
- Management of internal accounts
- Internal organization of accounts for internal payments, payments on behalf and central inbound processing
- Maintain internal bank accounts for your subsidiaries in different currencies
- Report balances of payments to internal bank accounts
- Maintenance of internal bank accounts for subsidiaries including conditions and limits
- Count on intuitive maintenance with the ability to create accounts en-masse
- In-house banking supports the process for the creation of both single and mass accounts
- It supports not only the migration process, but also the process for setting up the initial bunch of accounts in a very fast way
- In-house banking for corporations acts as an internal bank where subsidiaries hold internal accounts in different currencies. For a subsidiary, these in-house banking accounts have the same behaviour as external house bank accounts
- You can open, change and display in-house banking accounts
- Payment Scenarios:
- Payments on behalf of other legal entities
- Central incoming payments, such as from external zero-balancing processes.
- central incoming payments including direct processing of payments via a central payment factory
- The inhouse bank forwards a payment from a subsidiary in the name of other legal entity
- With routing
- Without routing (simple forwarding scenario)
- Processing of intercompany payments, payments on behalf of, and central incoming payments, for example, from external cash pools
- Make cashless settlement of open items in intercompany accounts payable and receivable
- Centrally monitor payments
- Centrally monitor the cash situation for internal bank accounts including consideration of internal limits:
- In-house banking enables you to set limits to monitor the cash situation of the involved subsidiaries. You can set single limits on account level and group limits on business partner level. While the single limit is always set in the account currency, the group limit can be set in a currency that is different from the account currency
- In-house banking supports both negative and positive limits. A positive limit implies that a certain positive amount needs to stay in the account. For example, if a 10.000€ plus amount is set as the limit, then the balance in this account should not be below this limit. A positive limit is equivalent to a base amount.
- Lifecycle features:
- Full account lifecycle support
- Limit and condition management
- Account statement processing
- Bank fee calculation
- Account closure processes
- Interest Calculation:
- Interests can be assigned on account level, group level, and on bank area level. The group level can be used, for example, to divide the subsidiaries into different risk classes, such as low, medium, and high
- Manage financial conditions how the interests are calculated based on the account balance situation (either in credit, debit or overdraft)
- Conditions are defined together with validity (valid from and valid to) and applied to the certain point or period in time
- A condition can be set at a single account level, a group of accounts level or at a bank area level
- Monitoring of overdraft accounts
- Create bank statements, balances
- Interest scale notifications for your subsidiaries
- Reporting of balances and volumes of payments among internal bank accounts
- Access intraday bank statements from the payment factory
- Account balancing process in which interests are calculated on a regular basis
- Creation of bank statements as CAMT.053 and PDF file that are sent to the subsidiaries involved
- Creation of interest notifications as PDF file that are sent to the subsidiaries involved
- Creation of balance notifications that are sent to the subsidiaries involved
- Schedule End-of-Day (EoD) jobs:
- To check the process steps executed for the day
- Various reports are available for the in-house banking process steps.
- Direct transfer to general ledger:
- Make general ledger transfers within a single day
- All the postings resulting from payments or interests are reflected on the in-house banking accounts
- These postings must be transferred to the general ledger accounts of Financial Accounting owned by the in-house bank on a regular basis
- All the postings of in-house banking with the status “posted” are selected and transferred to the general ledger during the day
- The general ledger transfer is based on the Accounting Business Transaction interface. The Accounting Business Transaction interface enables a decoupling of the sender of a business transaction from Financial Accounting.
- Integrated fully with SAP Bank Account Management
- SAP Multi Bank Connectivity and SAP Bank Communication Management
- Watchlist screening & BIS portal
- In-house banking is completely embedded into advanced payment management and uses all its functions to centralize and streamline payments. The functions available with advanced payment management include:
- Flexible routing to external banks
- Exception handling
- Various formats for payments
- Flexible checks.
- Manage internal bank accounts
- Organization of subsidiary accounts in a virtual banking environment on corporate side
- Similar life cycle function as a real bank account
- Attractive appearance tailored to business needs.
- Optimized payment processing
- Central payment factory to organize all payments in one system
- Direct integration with advanced payment management
- Supported payment scenarios: intercompany payments, payments on behalf, central incoming payments.
- Visibility of the daily financial status
- All relevant information in one overview
- Overdraft Information and Alerts
- Seamless integration into cash management.
For more information, see also https://help.sap.com and https://roadmaps.sap.com