SAP Cash & Liquidity Management

Report
Treasury focused on growth
14 November
2014
Etienne Kleuters
Michel Hanssen
Table of Contents
1.
2.
3.
Introduction
Business case for Treasury Management System
Treasury system landscape
Cash and Liquidity Management
Hedge Management
Business forecasting
Exposure Management
4.
5.
Next steps
Lessons Learned
1. Introduction - Qrcus
Michel Hanssen
SAP Finance Consultant
[email protected]
1. Introduction - OCI NV
Facts and figures
Leading global nitrogen fertilizer producer and engineering &
construction contractor
Employing more than 55,000 people in 35 countries
Listed on NYSE Euronext as AEX-fund in Amsterdam
Founded in 1950 as a construction company
First fertilizers activities acquired in 2008,
nowadays top 3 nitrogen-based fertilizer producer
1. Introduction - OCI Fertilizers
Locations
1. Introduction - OCI Nitrogen
Key strategic player within OCI Fertilizers
One of the European market
leaders in fertilizers and
ammonia products and the
largest producer of melamine
worldwide. Over 80 years of
history and as from 2010 part
of OCI
Location
HQ in Geleen (The Netherlands)
(approx. 800 employees worldwide)
Production
Ammonia, Mineral Fertilizers and
Melamine
Annual Turnover
EUR 1.2 billion
Challenges:
Combining two separate companies into one OCI Nitrogen
Disconnected from corporate environment and operate as a stand
alone company
2. Business case for TMS
< 2010
2010
Organization
Policies
Fully
integrated in
corporate
treasury DSM
Meeting first
requirements
stand alone
treasury
organization
Information
Challenges:
Develop a sustainable system
Achieve process efficiency
Secure accuracy / Data integration
Meet the increased need for information
2014
Upscaling to
increased
requirements (risk
management,
regulatory,
accounting, financing,
public listing parent)
?
Integration in
corporate
treasury
3. Treasury system landscape
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Credit Risk
Market Risk
Portfolio Analyzer
BPC
Transaction Manager
Hedge Management
Money
Market
Foreign
exchange
Derivates
Exposure Management
Debt Mgmt
Securities
Commodities
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
SAP In-House Cash
SAP Bank Communication Management
Forecasting
3. Treasury system landscape
Cash & Liquidity Management
Treasury applications from SAP
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
Level / Short text
Today
D
Today +1
C
D
C
Today +2
D
C
Today +3
D
C
Today +4
D
C
800
-800
Cash position
Banks
A0A0
FIFI
Banks
500
500
500
500
Payment in Transit
-800
B1 Outgoing Payment subledger
B3 Incoming Payment subledger
Treasury deals
T1 Treasury in
T1 Treasury out
Liquidity position
AP/AR
F1 Creditors
-800
F2 Debtors
300
Sales and Purchases
P1 Purchase orders
P2 Sales orders
-800
300
3. Treasury system landscape
Hedge Management
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Market Risk
Transaction Manager
Hedge Management
Money
Market
Foreign
exchange
Derivates
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
3. Treasury system landscape
Hedge Management
Types of risk which are hedged by OCIN:
Foreign currency risk
Interest rate risk
Hedging aims to mitigate the impact of economic risks on an entity’s
performance.
Hedge accounting:
Adjust the accounting treatment of a hedging instrument and/or a
hedged item to enable recognition of gains and losses on the hedging
instrument in the income statement in the same period as offsetting
losses and gains on the hedged item.(Matching concept).
12
3. Treasury system landscape
Hedge Management
Strict criteria:
Existence of formal documentation
Achievement of effectiveness tests
(80%- 125%)
Effectiveness tests:
Retrospective
Prospective
Key date valuation
Interim or annual financial
statements
13
Inception date
Interim or annual financial statements
3. Treasury system landscape
SAP Business Planning & Consolidation (BPC)
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Market Risk
Transaction Manager
Hedge Management
Money
Market
Foreign
exchange
Derivates
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
BPC
Forecasting
3. Treasury system landscape
SAP BPC
SAP BPC is used for:
Budget & Forecast
Ad hoc simulations
Advantages:
Integration with SAP ECC
ERP system
 Shared responsibility
Business Controllers

One-time input of (forecast)
data
 Possibility to delegate
responsibilities of data input
to other departments

3. Treasury system landscape
SAP BPC
BPC
Automated CF Statement
Identify exposures
Scenario analysis
3. Treasury system landscape
Exposure Management
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Market Risk
Transaction Manager
Hedge Management
Money
Market
Foreign
exchange
Exposure Management
Derivates
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
BPC
Forecasting
3. Treasury system landscape
Exposure Management
Main requirements:
“OCI Nitrogen looked for a structural
– Identify FX exposures
solution to get the required insight and
– Analyse Sensitivity
understanding of their FX exposure”
– Accurate reporting FX results
Qualitative analysis to identify types of FX risk
–
–
–
–
Transactional (economic) versus Translational (accounting)
Direct and indirect
Different price commitment periods
Mainly EURUSD (long and short)
Quantative analysis to determine sensitivity
3. Treasury system landscape
Exposure Management
4. Next steps
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Credit Risk
Market Risk
Portfolio Analyzer
BPC
Transaction Manager
Hedge Management
Money
Market
Foreign
exchange
Derivates
Exposure Management
Debt Mgmt
Securities
Commodities
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
SAP In-House Cash
SAP Bank Communication Management
Forecasting
5. Lessons Learned
Understanding the business is key
Identify key (corporate) objectives and quick wins
Early involvement relevant stakeholders
Stay flexible
Don’t let best get in the way of better (2014, Peter Fels, Sabic)
Thank you
Etienne Kleuters
Treasury & Credit officer
[email protected]
Michel Hanssen
SAP Finance consultant
[email protected]

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