A Detailed Guide to Treasury Functionality and ...

1 A Detailed Guide to Treasury Functionality and Enhancements from SAP. Christian Mnich, SAP AG. Mark Stapleton, SAP America Disclaimer The information in this document is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This document is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any Functionality mentioned therein. This document, or any related presentation and SAP's strategy and possible future developments, products and or platforms directions and Functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information on this document is not a commitment, promise or legal obligation to deliver any material, code or Functionality .

2 This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP. assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP intentionally or grossly negligent. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions. 2012 SAP AG. All rights reserved. 1. How SAP Helps You Achieve and Maintain Financial Excellence SAP's SOLUTIONS FOR FINANCE.

3 Manage Enterprise Risk and Compliance REGULATORY. COMPLIANCE &. EFFECTIVE RISK Accounting and Financial Close SAP's comprehensive MANAGEMENT. Treasury and Financial Risk Management portfolio of applications and end-to-end processes help you achieve OUTPERFORM Financial Excellence STAKEHOLDERS' Manage Financial Performance FINANCIAL. EXPECTATIONS. Strong cash flow and liquidity Shared Service for Financials Compliant and accurate financial reporting SUPERIOR Receivables Management SERVICE AT Maximized profitability REDUCED. COST Invoice to Pay Reduced cost of finance Travel Management 2012 SAP AG. All rights reserved. 2. Agenda 1. Introduction Treasury Applications from SAP. I. Payments and Bank Communications II. Cash and Liquidity Management III. Debt and Investment Management IV. Financial Risk Management 2. Innovations 2012. I. Optimized handling of Bank Statements II.

4 Commodity Management 3. Wrap-Up Effective Treasury Management More Important Than Ever Business Problems 2012 SAP AG. All rights reserved. 4. Treasury Trends Growing Pressures in Treasury That Are Here to Stay Volatility in markets, Increasing commodity prices, globalization and and stocks uncertain economics Importance of Increased effective Cash and focus on risk Liquidity Management New Regulation Rationalization and and Compliance Standardization Requirements 2012 SAP AG. All rights reserved. 5. The Common Issues These Are the Challenges We Hear from Our Customers Equities Subsidiary Payments and Bank Communications ( Treasury Operations) Customers/. Vendors Commodities Cash and Liquidity Management Derivatives Debt and Investment Strategy Financial Risk Brokers Management Banks Fixed Rate Regulator 2012 SAP AG. All rights reserved. 6. The Common Issues These Are the Challenges We Hear from Our Customers (cont.)

5 1. Decentralized 4. High operational costs organization with lack and weak IT. of information Payments and Bank infrastructure Communications ( Treasury Operations). 2. Multiple systems 5. Poor cash and and Interfaces Cash and Liquidity Management liquidity management 3. Compliance Debt and Investment Strategy 6. Reactive approach to challenges and Financial Risk risk Management violations 2012 SAP AG. All rights reserved. 7. Solving the Issues Treasury and Financial Risk Management Subsidiary Banks Payments and Bank Communications ( Treasury Operations). Commodities Cash and Liquidity Management Customers/. Vendors Debt and Investment Strategy Brokers Financial Risk Management Debt/. Investment Management Regulator 2012 SAP AG. All rights reserved. 8. Solving the Issues Treasury and Financial Risk Management (cont.). 1. Centralized 4. Low operational organization with costs and strategic integrated systems IT infrastructure Payments and Bank Communications 2.

6 Integrated system ( Treasury Operations) 5. Accurate and timely using central Cash and Liquidity Management cash positions and interfaces reliable liquidity Debt and Investment Strategy forecasts 3. Auditable and Financial Risk compliant Management 6. Proactive approach operations to risk 2012 SAP AG. All rights reserved. 9. Current Situation in Many Cases From Spreadsheet Problems to End-to-End Integration Without SAP With Treasury Solutions from SAP. Multiple Multiple Multiple Systems Banks Interfaces Integrated Treasury Solution Portfolio 2012 SAP AG. All rights reserved. 10. Treasury Challenges In an uncertain world it is critical to have the right systems and controls in place for measuring, managing, and reporting operational risk Treasurer 1. Effective cash management for clearer visibility and centralization 2. Consider the changing world in Banking 3. Transforming Treasury into a strategic business partner 2012 SAP AG.

7 All rights reserved. 11. Treasury and Financial Risk Management E2E Process Overview Treasury Operations Cash Manager Treasury Finance Financial Risk Manager Manager CFO/. Head Payments and Cash and Liquidity Debt and Financial Risk of Bank Communications Management Investments Strategies Management Finance Manage Inter- Forecast Propose Identify Identify Process Payments company Transactions Liquidity Deal Risks and Consolidate Manage Reconcile Plans with Manage Payment Factory Actual Manage Positions Investments/Portfolio Approval of High Deal Deal Operational Cash Volume Payments Processing of Deals Request Request &. &. Flow Planning Management Management Transmit and Monitor Deals Request: Hedge Hedge Management Management &. &. Payments Borrow or Invest Accounting Accounting Provide Process Electronic Manage Treasury Get Cash Overview Identify Exposure Risk Indicators Bank Statements Transactions and Report Exposures 2012 SAP AG.

8 All rights reserved. 12. Treasury and Financial Risk Management (cont.). Roles and Objectives Treasury Operations Cash Manager Treasury Finance Financial Risk Manager Manager Payments and Cash & Liquidity Debt and Financial Risk Bank Communications Management Investments Strategies Management Challenges How do I ensure highly secure How do I improve cash and How do I ensure investment or How do I pinpoint my financial and quick payments and liquidity forecasting and gain borrowing at best rates and risks and take more effective minimize external fees? more accurate and timely lowest costs? steps to mitigate them? insight into global cash balances? SAP Bank Communication Cash and Liquidity SAP Treasury and Risk SAP Treasury and Risk Solutions Management Management Management Management SAP In-House Cash SAP Bank Communication SAP Treasury and Risk Management Management, financial risk SAP Integration Package management for for SWIFT.

9 Commodities 2012 SAP AG. All rights reserved. 13. Agenda 1. Introduction Treasury Applications from SAP. I. Payments and Bank Communications II. Cash and Liquidity Management III. Debt and Investment Management IV. Financial Risk Management 2. Innovations 2012. I. Optimized handling of Bank Statements II. Commodity Management 3. Wrap-Up Most Promising Developments Based on PwC Research in 2011 and Beyond*. Technology and processes in the form of in-house banks, payment factories and SWIFT. connectivity are seen as promising new areas, which should allow increased control, visibility and forecasting of cash.. *Source: PwC, Corporate Treasury Solutions, Global Treasury Survey 2010. 2012 SAP AG. All rights reserved. 15. Optimize Payments and Bank Communication Process Overview Processing of Transmit and Process internal and monitor Get cash incoming bank Check daily external external overview statements cash overview payments payments SAP Cash Management SAP Integration Package for SWIFT.

10 SAP In-House Cash (for payment factory). SAP Bank Communication Management SAP Integration Package for SWIFT. SAP Cash Management Payment Bank Connectivity and Payment Master Data Infrastructure End-to-end best practices to streamline payments and bank communications;. coordinated processes across SAP and non-SAP systems 2012 SAP AG. All rights reserved. 16. Situation Without SAP Bank Communication Management SAP ERP Third-Party System Execute Upload File Payment Program Security: Create Authorization Payment Encryption Order Digital Signature Bank Send Payment Order File to Bank Server Import Collect Bank Bank Statement Statement Security Post/Processing and Clearing Download File 2012 SAP AG. All rights reserved. 17. Process Flow with SAP Bank Communication Management SAP Bank SAP ERP Communication SAP NetWeaver Management Process Integration Execute Create Batch Routing Payment Program Payment Approval Mapping Create Payment Work List SWIFTNet Order Security Security Encryption (Approval Workflow, Digital Signature Authorization, Digital signature).