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Title
Foreign exchange netting with In House Cash Purpose
The FSCM In-House Cash solution (FSCM-IHC) supports the central paymentorder processing for intra-company payments. Each participatingsubsidiary has an IHC account and in the case of different functionalcurrencies among the subsidiaries, these payments may occur in differenttransaction currencies. The management of these payments until itssettlement is called FX netting cycle. As the final step of the nettingcycle, a net FX position in the account currency is built for eachsubsidiary to either fund the account or to transmit the surplus toother accounts or external partners. This report program facilitates theprocess in selecting relevant payment orders, producing netting reports,and updating payment orders.
At the beginning of the netting cycle, all incoming payment orders ofparticipating subsidiaries are collected for a centralized currencymanagement. From the netting center's perspective, all payment ordershave to be translated into possibly three different currencies: thetransaction currency, the functional currency of the subsidiary, and thecommon netting currency. The payment orders are initially parked (inpost processing) with an entry rate. When it comes to the nettingsettlement date when all FX positions are locked in FX deals, apreliminary rate and then a final rate against the netting currency arereceived from an external business partner, such as a bank. All amountsin netting and functional currencies are recalculated using the updatedexchange rates. After the final update, payment orders are posted toclose the netting cycle. Integration
The report program utilizes the standard Bank Customer Account (BCA)application, a component of SAP Bank 4.6C/CFM 2.0 solution. Prerequisites
The program relies on the parked payment orders entered manually intothe IHC center as the start of the netting cycle. The current version ofthis program selects previously entered parked payment orders to supportthe business process.
The following configuration prerequisites are needed:
( 1) All exchange rates are derived from table TCURR. A netting exchangerate type with a reference currency is defined and used in the table.
( 2) Bank area is configured as In-House Cash Center, using the aboveexchange rate type.
( 3) Authorization checks. There are two levels of authorization relatedto this program.
,,I. Authorization to execute the program. The correspondingauthorization in the user profile is:
Authorization object S_PROGRAM; in which
Field P_GROUP covers (possibly in wildcard expression) authorizationgroup 'F_B11';
Field P_ACTION covers appropriate actions: 'SUBMIT' for execution, etc.
,,II. Authorization to post payment order. Perform the following steps:
Check via transaction F9AUTH some authorization group is assigned toobject PYMNT_ORD.
The correct authorization in the user profile should be: Authorizationobject F_PAOR_GRP; in which field BEGRU covers the authorization groupverified by F9AUTH and field ACTVT covers appropriate activities, '10'for posting, '01' for create, etc.
Through IMG, In-House Cash -> Authorization management -> Amountdependent authorization -> Maintain amount limits/principle of dualcontrol for payment orders, provide the authorization group and asufficient large amount to the In-House Cash bank area. Leave theproduct and transaction type blank if the authorization check applies toall products and transactions in the bank area.
(3) For each transaction belonging to the netting cycle, 'FX netting'flag is turned on in the maintenance view of transaction types (usingthe IMG). Selection
On ''Basic information':
- Parameter 'Bank area' is the IHC center.
- Parameter 'Exchange rate type' indicates the netting exchange rate type
defined for table TCURR and used throughout the netting cycle.
- Parameter ''Effective date of exch. type' specifies a key date in table
TCURR, when combined with exchange rate type above, determines theexchange rates to be used in the netting report.
- Parameter 'Netting equivalent currency' is the common netting currency
to evaluate the payment orders on a comparable base.
On 'Payment order selection':
- Checkbox 'Prepost entries' selects post processing (parked) payment
orders.
- Checkbox 'Posted entries' selects posted payment orders.
- Select option 'Posting date" selects payment orders with posting dates
in the range.
- Select option 'Transaction type' picks payment items of those
transaction types.
On 'Report setting':
- Radio button 'Display only'. In this mode, program recalculates payment
item amounts, but no database update.
- Radio button 'Preliminary'. In this mode, program recalculates and
updates database when user saves changes.
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