www.sap-press.

com 1
Cash Accounting and Cash Flow Planning with
SAP Liquidity Planner
Stephan Kerber, Dirk Warntje
Content
Introduction .............................................. 3
Structure of the Book ..................................... 3
Acknowledgments .......................................... 4
1 Business Overview .................................. 5
1.1 The Concept of Cash Accounting .......... 5
1.2 Tasks of Cash Accounting and
Liquidity Planning ................................. 6
1.3 Recipients and the Need for
Information .......................................... 7
1.4 Financial Accounting and
Cash Accounting ................................... 8
1.5 Differences to Cash Management ......... 9
1.6 Conclusion ........................................... 11
2 Case Scenario: Implementing Cash
Accounting and Liquidity Planning .... 13
2.1 Conclusion ........................................... 15
3 SAP Liquidity Planner: Liquidity
Analysis Using SAP Actual
Calculation ................................................. 17
3.1 Overall Process and System
Integration ............................................ 17
3.2 Technical Settings in SAP Actual
Calculation ........................................... 17
3.3 SAP Actual Calculation
(Cash Accounting) ................................ 19
Data Model and Master Data ............... 19
FunctionalityOverview ..................... 21
Customizing SAP Actual Calculation ... 21
Tools .................................................... 26
Tables ................................................... 27
3.4 Cash Accounting Processes ................... 28
Information Acquisition from
Assignment Mechanisms ...................... 28
Information Acquisition from
Bank Statement Information ................ 29
Information Acquisition from
Financial Accounting ............................ 31
Manual Assignment and Manual
Transfer Posting ................................... 36
Analysis Reports ................................... 36
3.5 Conclusion ........................................... 37
4 SAP Liquidity Planner: Liquidity
Planning and Reporting
Using SAP BW/SEM ............................... 39
4.1 Modeling in SAP BW/SEM .................... 40
SAP Business Content ......................... 40
Master Data ......................................... 45
Characteristics ..................................... 53
Planning Layout in
SAP SEM-BPS/BW-BPS ........................ 54
4.2 The Liquidity Planning Process .............. 63
4.3 Extracting Actual Data .......................... 64
4.4 Reporting in SAP BW ............................ 67
4.5 Conclusion ........................................... 69
5 Liquidity Planning and Reporting
Without SAP BW/SEM .......................... 71
5.1 Overview .............................................. 71
5.2 Customizing .......................................... 71
5.3 Master Data and Actual Data ................ 75
5.4 Planning ............................................... 76
5.5 Reporting ............................................. 77
5.6 Conclusion ........................................... 78
2 Galileo Press 2006. All rights reserved.
Content
6 Outlook ...................................................... 79
Appendix .................................................... 81
Lee Iacocca and Cash Flow ............................. 81
Indirect Cash Flow .......................................... 81
Plug-in ........................................................... 81
Case Scenario ................................................. 82
Bibliography .............................................. 83
Index ........................................................... 85
www.sap-press.com 3
Introduction
This book is about money. Where does money come
from and where does it go? Because liquidity is one of the
critical success factors for a company, it is integral to run-
ning a business. The most important aspects of liquidity
are the ability to ensure solvency and generate payment
surpluses. In this context, companies constantly try to an-
alyze and plan their cash ow. Unfortunately, established
applications such as Accounting or Cash Management
dont provide the necessary information on cash ow re-
quired by companies; however, SAP Liquidity Planner af-
fords you with the much needed relief in this area, as
shown by its rst implementations in both nationally and
internationally operating companies. The complex re-
quirements placed on a retrograde liquidity analysis, a
decentral planning tool, and an efcient reporting were
met by the use of SAP Liquidity Planner.
SAP Liquidity Planner is a component that consists of
two applications: Cash Accounting (SAP R/3) and Liquid-
ity Planning (prior to Release 3.5, it was part of SAP Stra-
tegic Enterprise Management (SAP SEM), from SAP Busi-
ness Information Warehouse (SAP BW) Release 3.5 on-
wards, it has been included in BW). Cash accounting
determines the cash ow either based on an electronic
bank statement or data from nancial accounting. Liquid-
ity planning is carried out using the planning functionality
in SAP BW. Reporting is performed by SAP BW.
In the past, this component was part of Corporate Fi-
nance Management (CFM), and since the introduction of
mySAP Enterprise Resource Planning (mySAP ERP) in 2004,
it has been located in the Cash Management and Liquid-
ity Management area as part of Financial Supply Chain
Management (FSCM).
This SAP Press Essentials book outlines the concepts of
cash accounting and liquidity planning, as well as the re-
sulting requirements that a business software must be
able to meet. In this book, the authors demonstrate how
you can meet these requirements using SAP Liquidity
Planner and also, how you can implement this product.
Readers of this book should have a sound knowledge of
the accounting application in SAP R/3 as well as SAP BW
and SAP SEM.
Structure of the Book
Chapter 1 outlines the business principles and provides
clear denitions of the terms used in the context of cash
accounting and liquidity planning. In addition, the con-
cept of cash accounting is introduced, along with a de-
scription of its interdependencies with accounting. In the
nal sections of this chapter, we clearly distinguish SAP
Liquidity Planner from SAP Cash Management.
Chapter 2 describes a case study that is referred to and
further developed throughout the book. We use this ex-
ample to help you understand the functionality and the
technical concept of SAP Liquidity Planner, but it should
also serve as an aide to you in implementing this compo-
nent.
Chapter 3 and Chapter 4 contain a detailed description
of SAP Liquidity Planner. They provide an insightful intro-
duction to the two main areas of the product: Chapter 3
describes Cash Accounting (SAP R/3), while Chapter 4
deals with Liquidity Planning (SAP BW). In both chapters,
you will also nd detailed information on customizing
and the various functions of the application. Wherever
necessary, the case scenario is referred to, enhanced, and
completed.
Chapter 5 describes a workaround for simplied liquid-
ity planning and reporting in SAP R/3 without using SAP
BW.
Chapter 6 addresses possible developments and future
requirements of SAP Liquidity Planner. The Appendix con-
tains additional information.
4 Galileo Press 2006. All rights reserved.
Introduction
Acknowledgments
SAP is a registered trademark of SAP AG, Dietmar-Hopp-
Allee 16, D-69190 Walldorf. We would like to thank
SAP AG for its permission to use the trademark and the
materials provided in this book. Note that SAP AG, how-
ever, is not the publisher of this book nor is it responsible
for the contents of this book.
We would like to express our deepest gratitude to our
colleague Robert Bieber who supported us with numer-
ous tips and invaluable information.
www.sap-press.com 5
1 Business Overview
In this chapter, we will rst dene and differentiate cash
accounting and liquidity planning. This is a rather impor-
tant step in understanding these concepts as they are of-
ten used in a multitude of ways. Next, well describe the
tasks performed by cash accounting and liquidity plan-
ning. Because cash accounting and general accounting
are inherently interrelated, we should point out their in-
terrelationships. Lastly, well describe the differences be-
tween cash accounting and SAP Cash Management.
1.1 The Concept of Cash Accounting
In business literature, youll nd countless discussions
about the concept of cash accounting and its denition. In
these discussions, youll also encounter the following
terms: cash budget management, ow-of-funds analysis,
and cash ow statement, as well as cash ow accounting.
Cash accounting records the changes of cash ows, cash
ows being incoming and outgoing payments of liquid
funds such as cash in hand and bank savings.
In accordance with national and international account-
ing standards such as FASB and IAS, we will use the term
cash ow in this book to describe the changes in the
means of payment. Liquidity is therefore referred to as a
nancial accounting-related concept. Within a certain
period, cash accounting records transactions that have a
direct inuence on the stock of liquid funds, regardless of
the period the payments refer to (see Geuppert 2003,
p. 8). This type of recording and displaying of cash ows
can be compared to scal accounting, which is used in
the public sector.
Therefore, cash accounting distinguishes itself from ac-
crual accounting and cost accounting. Figure 1.1 illustrates
Incoming/Outgoing Payments
Expenditure/Revenue
Expense/Profit
Costs/Benefits
Cost and Activity Accounting
Data Source
(SAP)
Cash
Accounting
Accounting
Controlling
Cash Accounting
Profit and Loss Statement
Cash Basis Accounting
Figure 1.1 Cash Accounting in the Context of General Accounting (according to Baetge 1992, pp. 3)
6 Galileo Press 2006. All rights reserved.
1 Business Overview
the basic differences between the various types of ac-
counting.
In addition, it is now apparent that in business theory,
cash accounting always refers to several periods. This
concept is generally adopted by SAP Liquidity Planner.
Because the SAP Liquidity Planner component consists of
two applications (see Section 3.1), the rst application,
SAP Actual Calculation, refers to past and current peri-
ods, while the other application, SAP Liquidity Planning
(SAP BW/SEM), considers future periods.
Cash Accounting Liquidity Planning
past future current
period
t
Retrograde Determination Reciprocal Determination
Figure 1.2 Time-Based Delimitation of Cash Accounting and
Liquidity Planning
1.2 Tasks of Cash Accounting and Liquidity
Planning
The primary task of cash accounting is to provide infor-
mation on a companys solvency and internal nancing
potential. Apart from that, it serves as a basis for the cre-
ation of ow-of-funds analyses and plannings. Compared
to the balance sheet and the prot and loss statement,
cash accounting enables you to better assess the nancial
situation of a company.
The ability to generate sufcient liquid funds from its
business activities and to secure these funds in future pe-
riods is one of the prerequisites for a company to survive
(static aspect) (Amen 1999, p. 4). Cash accounting sup-
ports a company in evaluating its solvency status as well
as its insolvency risk.
The comparison of prot and cash ow of the W. T.
Grant company, as shown in Figure 1.3, demonstrates the
importance of analyzing and determining the cash ow
situation. Even though the Grant company was protable
up until one year before its insolvency, it wasnt able to
meet its payment obligations. However, cash ow had al-
ready been negative in earlier years.
Figure 1.3 Comparison of Prot and Cash Flow at W. T. Grant
(Source: Largay/Stickney 1980, pp. 15)
The reason for such a discrepancy can be found in the dif-
ferent ways in which information is analyzed by account-
ing. For example, discrepancies can occur due to an in-
creased stocking up of a warehouse, an expansion strat-
egy that requires high investments, or by a bad overall
economic situation during which extended terms of pay-
ment are granted.
A classic example that personies this state of affairs,
and is therefore frequently cited, is the situation at Chrys-
ler Corporation at the end of the 1970s when Lee Iacocca
assumed the position of CEO. At that time, Chrysler had
a high stock of automobiles, compounded by a low de-
mand for these vehicles. The cash ow situation was very
critical (see also the section in the Appendix, Lee Iacocca
and Cash Flow, or Iacocca 1984, pp. 200).
These two examples (i.e., W. T. Grant and Chrysler)
clearly show that in order to evaluate the degree of sol-
vency, cash ow is a far better indicator than the prot of
a company.
Usually a companys external nancing potential, for
example, by acquiring external capital, is rather limited.
Due to the size of the company or its current situation
(for example, high debt-equity ratio), external nancing
can become increasingly difcult. For this reason, the in-
ternal nancing potential plays an increasingly important
role within the range of different nancing possibilities
for a company (dynamic aspect) (Amen 1999, p. 4).
Internal nancing potential means that a company can
www.sap-press.com 7
1.3 Recipients and the Need for Information
generate more revenue than expenditures from its activi-
ties. This potential is also referred to as internal nancing
strength. If a company can continuously build up liquid-
ity, in addition to conducting its regular business activity,
this surplus is called strategic liquidity.
To obtain universally valid and comparable informa-
tion on the degree of solvency of a company, the internal
nancing potential and the overall nancial situation, na-
tional and international accounting principles require
ow-of-funds analyses or cash ow statements as proce-
dures and display formats. Here a distinction is made be-
tween indirect and direct procedures. In this book we
will only describe the direct procedure since cash ac-
counting doesnt support the indirect procedure. There-
fore, direct procedure will be a critical part of this book.
You can nd an example of the indirect procedure, which
is supported by accounting (SAP FI), in the Indirect Cash
Flow section in the Appendix of this book.
According to national and international regulations,
the ow-of-funds analysis can be divided into three ar-
eas:

Cash ow from operating activities

Cash ow from investing activities

Cash ow from nancing activities

According to IAS 7, the basic structure of a ow-of-funds
analysis could look as follows (Ktting/Weber 2001, pp.
467):

Cash ow from operating activities

+ Incoming payments from customers
Outgoing payments to suppliers
= Cash ow from operating activities (1)

Cash ow from investing activities

+ Incoming payments from asset retirements
Outgoing payments for asset acquisitions
+ Incoming payments from nancial asset retirements
Outgoing payments for investments in nancial
assets
= Cash ow from investing activities (2)

Cash ow from nancing activities

+ Incoming payments from equity allocations
Outgoing payments to company shareholders
+ Incoming payments from borrowings
Outgoing payments for loans
= Cash ow from nancing activities (3)
The total of the three areas represents the total cash ow
of the company. The cash ow statement is an essential
part of quarterly and annual reports since it meets the in-
formation needs of various recipients (see Section 1.3).
1.3 Recipients and the Need for Information
According to the Financial Accounting Standards Board
(FASB), the major recipients of cash accounting informa-
tion that is contained in a cash ow statement are the fol-
lowing groups (FASB 1978, para. 25):

Investors, lenders, suppliers, employees

To investors, lenders, suppliers, and employees, a busi-
ness enterprise is a source of cash in the form of divi-
dends or interests , repayment of borrowing, pay-
ment for goods or services, or salaries or wages. They
invest cash, goods, or services expect to obtain suf-
cient cash in return

Customers
To customers, a business enterprise is a source of goods
or service, but only by obtaining sufcient cash to pay for
the resources it usesand to meet its other obligations
can the enterprise provide those goods or services.

Management
To managers, the cash ows of a business enterprise are
a signicant part of their management responsibilities,
including their accountability to directors and owners.
Figure 1.4 illustrates the major important relationships
between a company and its business partners in terms of
activities and liquidity.
Due to the different kinds of business relationships,
each of the involved parties has a specic need for infor-
mation with regard to cash accounting. The following list
contains the most important items (Geuppert 2003, pp.
10, and FASB 1978, para. 24):

For management

Ensuring solvency by optimizing cash ow based

on short-term and long-term liquidity planning

Determining the internal nancing potential,

building up strategic liquidity, and determining re-
quirements for external nancing

Determining nancing requirements for planned

investments and integration in cash accounting
and liquidity planning
8 Galileo Press 2006. All rights reserved.
1 Business Overview

Ensuring creditworthiness, particularly with regard

to the requirements of rating agencies

For investors and lenders (equity providers and pro-

viders of external capital)
Assessing the ability to pay dividends, interest, and
amortization

For suppliers
Evaluating the creditworthiness and solvency and
forecasting the payment behavior based on these
evaluations

For employees
Evaluating the creditworthiness, solvency, and future
existence of the company

For customers
Assessing the delivery reliability and the consistency
of conditions
The different recipientsand therefore varying informa-
tion needsdemonstrate the importance of cash ac-
counting and liquidity planning.
1.4 Financial Accounting and Cash Accounting
The data source (see Figure 1.1) for cash accounting is the
posting material in nancial accounting. In nancial ac-
counting, cash accounts, balance sheet accounts, and
prot and loss accounts (P&L accounts) are interrelated;
therefore, we can also speak of a threefold accounting
system. This account-based integration
1
, as shown in Ta-
ble 1.1, enables you to determine the cash ow required
in cash accounting.
Chart of accounts
Cash accounts Balance sheet
accounts
P&L accounts
Cash accounting Balance sheet Prot and loss
statement
Reve-
nues
Expen-
ditures
Assets
(without
liquid
funds)
Liabili-
ties
Expense
Prot
Cash balance P&L account
Table 1.1 The Three Parts of Accounting
Investors
Lenders
Suppliers
Company
Employees Customers
Activity Cash Flow
Investment Dividends and
Withdrawals
Payment of
Activity
Payment of
Activity
Payment of
Activity
Amortization and
Interest Payments
Loan
Figure 1.4 Cash Inow and Cash Outow from a Companys Perspective (according to Geuppert 2003, p. 10)
1 Accounting and consequently ERP systems are structured according to
the principle of double-entry accounting. A triple-entry accounting sys-
tem hasnt been implemented yet.
www.sap-press.com 9
1.5 Differences to Cash Management
In addition, business transactions related to accounting
can be classied as affecting net income and not affecting
net income, and as having an effect on liquidity and having
no effect on liquidity (Gebhardt 1999, pp. 21). The pay-
ment of a dividend, for instance, is a transaction that af-
fects the net income and the liquidity; therefore, it is rel-
evant for both cash accounting and the prot and loss
statement. The depreciation of an asset merely affects the
net income, but not the liquidity. This distinction makes
it easier to determine the source of funds and their appli-
cation. Figure 1.5 illustrates the relationships between
the individual accounts in nancial accounting.
Here you can see that there are 14 different account
assignment types available to post business transactions
in accounting. For each account assignment type, we
have provided an example (the following numbers corre-
spond to the posting example used in Figure 1.5):
1. Cash payment for ofce equipment
2. Revenue from cash sales
3. Depreciation of tangible assets
4. Posting of supplier invoice
5. Invoicing of an activity
6. Dissolving of provisions
7. Revenues from invoices
8. Borrowing
9. Payment of supplier invoices
10. Cash payment for material purchases
11. Accounting exchange on the assets side
12. Contribution in kind from shareholders
13. Clearing of receivables and payables
14. Accounting exchange on the liabilities side
It is apparent that the connection between two account
assignment types demonstrates the source or application
of funds. This is because the central task of cash account-
ing is the What for search: What have funds been re-
ceived or paid for? Lets try to clarify this with another
example.
In the accounting department of a company, a sup-
plier invoice (1) is posted. The posting displayed in Figure
1.5 affects the net income, but has no effect on liquidity.
This is further claried by the posting example in Table
1.2.
Bank Vendor
Ofce
equipment
$ 100 (2) (2) $ 100 $ 100
(1)
(1) $ 100
Table 1.2 Vendor Payment
Then the open item is paid (2). According to Figure 1.6,
this transaction has an effect on the liquidity, but not on
the net income.
Only when these two postings haven been linked with
each other can you determine the cash ow according to
its application. One hundred dollars ($ 100) was used for
ofce equipment. This posting is a simple example of the
direct determination of a cash ow.
1.5 Differences to Cash Management
In this section, well describe the primary differences
between Cash Management and Liquidity Planner. SAP
Cash Management is focused on short-term cash manage-
Figure 1.5 Accounting-Relevant Linking of Cash Accounts, Balance Sheet Accounts, and P&L Accounts
10 Galileo Press 2006. All rights reserved.
1 Business Overview
ment, whereas SAP Liquidity Planner considers medium
to long-term liquidity planning.
Cash Management provides information on the cur-
rent bank account status and it contains a liquidity fore-
cast regarding incoming and outgoing payments from the
perspective of payments for accounts receivables and for
accounts payables (or write: payments to customer and
to vendor). The bank accounts in the general ledger con-
stitute the data basis for the bank account status. If a
bank account shows a current status of $ 500, this status
is displayed in the bank account status in Cash Manage-
ment. The liquidity forecast uses accounts receivable and
accounts payable as a basis. It evaluates the open items
of suppliers and customers, and the terms of payment
stored with the respective documents, and displays this
information in the liquidity forecast. A cash ow is not
determined, because only the open items are evaluated
and displayed. In addition, the cash ows to be expected
can be displayed only with regard to specic customers
and customer groups, or suppliers and supplier groups
respectively. The only information that can be deter-
mined is From whom and For whom. What the funds
are paid for cannot be identied. Conversely, cash ac-
counting refers to real cash ow and the source and ap-
plication of funds can be identied. Unlike Cash Manage-
ment, cash accounting requires all general ledger ac-
counts that have an effect on liquidity, as described in
Section 1.4.
Moreover, cash accounting is part of an overall process
that consists of cash accounting and liquidity planning,
which will be described in further detail in Chapters 3
and 4.
Table 1.3 contains a list of the most important differ-
ences:
Cash Management Cash Accounting
No consideration of cash ow Real cash ow consideration
No identication of source
and application of funds
Identication of source and
application of funds
Cash Management Cash Accounting
Customer Group X
Customer Group Y
Vendor Group X
Vendor Group Y

Revenue
Liquid Tangible Assets
Other

Material
Personnel
Taxes

Opening Balance
Cash Management and
Forecast
Closing Balance Closing Balance
Revenues Revenues
Expenditures Expenditures
Figure 1.6 Distinction Between Cash Management and Cash Accounting
Table 1.3 Differences Between Cash Management and Cash
Accounting
www.sap-press.com 11
1.6 Conclusion
Cash Management Cash Accounting
Accounting as the data
source, but only bank
accounts and subledgers
All relevant accounts of cash
accounting chart of accounts as
data source
Liquidity forecast (based on
open items)
Forecast of revenues and expen-
ditures possible (based on open
items)
View: Vendors and customers
(groups) and bank account
status
View: Revenue and expenditure
items
No integration in planning
process
Integrated planning process
(SAP BW/SEM)
Table 1.3 Differences Between Cash Management and Cash
Accounting (cont.)
1.6 Conclusion
In the following chapters, we dene the concepts of
cash accounting and liquidity planning and introduce
them in the context of different accounting types.
Moreover, we describe the group of recipients and
their need for information regarding cash accounting,
and we highlight the interdependencies with account-
ing by clarifying how you can use the information from
accounting to determine your cash ow situation.
Finally, we describe the differences between SAP
Liquidity Planner and SAP Cash Management to out-
line the tasks performed by SAP Liquidity Planner
within the FSCM product portfolio.
www.sap-press.com 13
2 Case Scenario: Implementing Cash Accounting and
Liquidity Planning
Based on a specic real-life situation that weve encoun-
tered several times, we will build up a scenario for imple-
menting SAP Liquidity Planner. In the subsequent chap-
ters, this case scenario will be further developed in parts.
This example is used to support your understanding of
the functionality and the technical concept of SAP
Liquidity Planner, but it will also serve as an aide in help-
ing you to implement this component.
The initial situation looks as follows: Well consider an
international corporation, the IDES Group, which is struc-
tured as follows:

The corporate headquarters is in Germany. The cen-

tral departments of corporate accounting and global
treasury are also located in Germany.

Legally independent production sites exist in Ger-

many and Eastern Europe.

The sales and distribution network stretches across

Europe and the US, with legally independent sales
companies in the respective countries.

Research and development is located at corporate

headquarters in Germany.

IDES uses SAP as its standard business software with

the currently implemented applications:

SAP FI for accounting

SAP CO for controlling

SAP SD for sales and distribution

SAP MM for materials management

SAP PP for production

Concerning ofce applications, IDES uses a standard

off-the-shelf ofce software.
The current business situation of the IDES group can be
described as follows:

Existing products have been introduced and distri-

buted throughout the markets and will continue to
be distributed at the same high level for the next two
or three years. However, the company expects a de-
crease in prices in the long run. This means that the
revenues from its core business will go down (cash
inow reduction). At the same time, the company
forecasts a strong increase in raw material prices and
rising labor costs at the production sites. This will
lead to a situation in which the expenditures in pro-
duction will increase dramatically (increase in cash
outow). Consequently, net cash ow will be strongly
reduced in the coming years.

Furthermore, company management expects product

imitations to enter the market in two or three years,
which could lead to price wars and further aggravate
the situation. For this scenario, corporate manage-
ment expects an even stronger reduction of net cash
ow.

In the preceding year, the company acquired a US-

based competitor in order to strengthen its market
position abroad. This acquisition was nanced with a
large bank loan that will be amortized within the next
10 years. So, for a period of 10 years, there will be
payments for amortization and interest (increasing
cash outow).
Corporate management realizes that a continued pursuit
of its existing strategy can quickly lead to a negative cash
ow situation; however, since the company is expected
to remain sound, the management decides to develop a
comprehensive strategy that should include the factors
mentioned above:

Future competitors will be met with a product offen-

sive at an early stage. For this reason, investments
should be made for the research and development of
new products. At IDES, the development of a prod-
uct takes two years. To cover R&D for this period, the
14 Galileo Press 2006. All rights reserved.
2 Case Scenario: Implementing Cash Accounting and Liquidity Planning
company needs liquid funds (cash outow for research
and development in the coming two years).

The existing range of products will be introduced into

new markets, especially in Asia. For this expansion,
the company needs additional funds (cash outow for
expansion to new markets). At the same time, man-
agement expects additional revenues from selling ex-
isting products to the new markets (cash inow from
selling existing products to new markets).

The company wants to maintain the production sites

in Germany. Therefore, corporate management will
develop new work and production models with its
personnel, which are intended to reduce costs and
expenditures (reduction of cash outow in production
for the coming years).

In addition, the company checks whether the existing

bank loan can be converted into a maturity loan. This
measure would lead to a reduced cash outow for a
period of 10 years (reduction of cash outow by re-
scheduling the existing loan).
Until now, liquidity planning has been conducted by the
global treasury department. The policy unit receives
spreadsheets from the individual subsidiaries and inte-
grates them into a central liquidity planning document.
This planning process proves to be too complicated,
time-consuming, and rigid.
A cash accounting based on value-date dependent
documents from SAP FI is not carried out because Cash
Accounting in SAP Liquidity Planner is currently not be-
ing used.
2
The corporate accounting department merely
performs an indirect analysis of actual data (indirect cash
ow statement).
The company management wants to use a tool that
can measure (actual data) and plan (planned data) the in-
dividual cash ows. Based on the new strategy, corporate
management realizes that a powerful tool is required for
cash accounting and liquidity planning, but also for con-
trolling the corporation in general. In addition, the de-
centralized planning process will become more efcient
and less time-consuming. Furthermore, it must be possi-
ble to easily and quickly map the various planning sce-
narios. The tool should also be used as a central reporting
platform.
SAP Liquidity Planner is precisely the tool that meets
the companys requirements (see also Section 3.1). As
mentioned in the introduction, SAP Liquidity Planner
consists of two components:

SAP Actual Calculation (cash accounting)

SAP BW/SEM (planning application and reporting)

Cash accounting enables you to identify and evaluate the
cash ows in the company with regard to their value
dates. As SAP Actual Calculation accesses the data pro-
vided by SAP R/3 Accounting (cf. Section 1.4), manage-
ment can ensure the quality of the actual data because of
this integration. This data forms the basis for qualied
plan/actual analyses.
Since the planning and reporting functions in SAP Li-
quidity Planner are based on the functionalities of SAP
BW/SEM, the company can optimize the advantages of
this product.
Corporate management benets from using SAP Li-
quidity Planner in the following ways:

Direct determination of cash ows

Quality of actual data by integrating SAP R/3 Ac-

counting

Extraction from the SAP R/3 systems into SAP BW

Flexible planning functionalities to map different

planning scenarios in SAP BW/SEM

Successful implementation of an efcient corporate-

wide planning process due to the use of SAP BW/
SEM as a central planning platform (this is particularly
efcient for decentrally organized companies)

Central reporting tool for all parts of the company

Use of SAP BW/SEM for the planning aspects of SAP

Liquidity Planner; this enables you to establish a rela-
tionship with other plannings (for example, sales and
distribution plans, investment plans) and an integra-
tion with liquidity planning.
In various implementation projects, weve seen many
companies struggling to survive with ever-changing mar-
ket environments, similar to the initial situation described
above. The companies need reliable and up-to-date in-
formation, as well as the ability to run through various
2 As already described in Chapter 1, you cannot use the SAP Accounting
module to directly determine your cash ow situation.
www.sap-press.com 15
2.1 Conclusion
planning scenarios. Often, the focus was on improving
the planning process.
Our experience has shown that these or similar situa-
tions, carrying out cash accounting and liquidity planning
with SAP Liquidity Planner can be very useful. In the re-
mainder of the book, well describe the functionality of
SAP Liquidity Planner and how you can implement it.
In the next two chapters, well only marginally refer to
the above example and provide a detailed description of
the technology and functionalities of SAP Liquidity Plan-
ner.
When working in Chapters 3 and 4, you should use
the IDES system provided by SAP with the following
data:

Company code 1000 for IDES AG, company code

2200 for IDES France, and company code 2600 for
IDES Italia.

Use the international chart of accounts, INT.

Use the general ledger account, 100000 cash as an

additional cash account.

You should use the information and assignments pro-

vided in the following table (see Table 2.1).
2.1 Conclusion
SAP Liquidity Planner is the ideal tool for analyzing
and planning cash ows. By using this tool, you can
identify imminent bankruptcies due to insolvency and
counteract them with the appropriate measures.
Liquidity item (LI) Account number
Summarization item 100000 Cash ow from operating activities ------------
LI 110000 Revenues from product sales 800002
LI 120000 Revenues from services sales 800001
LI 130000 Raw materials 170000
Summarization item 140000 Personnel ------------
LI 141000 Payments of wages and salaries 449000 and 430000
LI 142000 Payments of social insurance contributions 440000
LI 150000 Payments for rents 471000
LI 160000 Payments for materials 476100; 476000
LI 170000 Payments for raw materials 300000
Summarization item 200000 Cash ow from investing activities ------------
LI 210000 Expenditures for nancial assets 133000
LI 220000 Expenditures for tangible assets 11000
LI 230000 Revenues from enterprise transfers 11000
LI 240000 Capital gains 133000
Summarization item 300000 Cash ow from nancing activities ------------
LI 310000 Revenues from borrowing 62110
LI 320000 Expenditures for loan amortization 62110
LI 330000 Revenues from interest 273100
LI 340000 Expenditures for interest payments 220000
Table 2.1 Case Scenario: Liquidity Item and Account Numbers
www.sap-press.com 85
Index
A
ABAP editor 19
ABAP report 28
Account-based integration 8
Accounting 8, 11
Accounts receivable and accounts
payable accounting 26
Account assignment type 9
Accrual accounting 5
Actual account 22, 23
Actual Calculation 14, 17, 19, 21, 27, 35
Actual data 14, 41, 64, 75, 76
Administrator Workbench 41, 64
Allocating assignments from FI informa-
tion 22
Analysis report 36
Application menu 28
Application of funds 9
Assignment 23
from FI information 24
mechanism 21, 23, 28
B
Bank account 23
Bank statement 23, 30, 31
item 29
Basic InfoCube 44
Buffer item 35
Business Area 22
Business Content 40, 41, 42
Business transaction code 30
Business Transaction Events 18
C
Case scenario 13, 15, 18, 19, 20, 21, 23,
26, 31, 34, 36, 45, 52, 54, 55, 56, 59
Cash flow 5, 6, 7, 10
accounting 5
statement 5, 7, 81
Cash account 15
Cash accounting 3, 5, 6, 8, 10, 14, 19,
22, 28, 75, 79
Cash Budget Management 5, 71, 72, 75,
77
Cash inflow 8, 13
Cash Management 5, 9, 10
Cash outflow 8, 13, 14
Characteristic 49, 50, 52, 53, 54, 56, 73
value 73
Chart of accounts 8
Clearing document 21, 28
Clearing transaction 25
Commitment item 72, 73, 74, 75, 76
Communications structure 51, 64
Company code 19, 72
Company structure 71, 76
Consistency check 37
Corporate accounting 13
Corporate Finance Management 28
Cost accounting 5
Creditworthiness 8
Crystal Reports 40
Customizing 18, 19, 21, 22, 24, 71
D
DataSource 40
Data flow 45, 51
Data model 19, 28, 36
Data target 40
Default item 19, 22
Defining
actual accounts 21
query-relevant G/L accounts 22
query sequences 22, 26
Deletion process 26
Determinability 20
Direct determination 9
Document chain 21, 24, 31
Document update 75
Drilldown report 78
E
Electronic bank statement 21
Element definition 73
External capital 6
Extraction 64, 66
Extractor 17
F
Financial accounting 8, 9, 19, 21, 31
Financial accounting-related liquidity 5
Financial management area 71, 72
Financing requirement 7
Fiscal year variant 72
FI Document Chains 37
Flow-of-funds analysis 5, 6, 7
Flow-of-funds planning 6
Flow data 26, 27
FM area 72, 75
From Bank Statement 23, 30
From Bank Statement Information 23, 29
From FI Information 24, 26, 27, 33, 34,
35, 37
From Invoices 26, 35
G
G/L account 26, 32
G/L accounts list 37
Global treasury 13, 14
GR/IR clearing account 25
H
Having an effect on liquidity 9
Having no effect on liquidity 9
86 Galileo Press 2006. All rights reserved.
Index
Hierarchy 52
House bank 22, 30
I
IAS 5
IDES 13
IDES system 15
Implementing SAP Liquidity Planner 13
Indirect cash flow statement 14
InfoCube 43, 44, 48, 52, 66
InfoObject 40, 43
InfoProvider 43
Information System 28, 36, 71
InfoSource 40, 64, 65
Insolvency 81
risk 6
Installing assignment mechanisms 22
Internal financing potential 6, 7
K
Key figure 57
L
Layout Builder 54
Lead column 73
structure 74
Line item 28
Line items table 27, 29, 36
Liquidity
analysis 25
forecast 10
item 15, 19, 20, 25, 30, 31, 32, 35
planning 3, 5, 6, 14, 39, 63, 71, 77
relationship 7
M
Manual transfer posting 19
Master data 19, 45, 46, 47, 49, 75
Modeling 40
Multi-planning area 54
MultiCube 41, 45
MultiProviders 43
mySAP ERP 71
N
N:M Treatment 24
Net cash flow 13
New Formula 68
Number range 19, 36
object 20
O
ODS object 43
Online update 27, 28, 32
Overall process 21
P
Partial reassignment 24
Plan/actual
analysis 14, 20
comparison 17, 71, 72
deviation 69
Planability 20
Planned data 14
Planning 76, 79
area 54, 55, 56, 61, 74
data 41, 44, 60
depth 20
function 54, 55, 61, 76
functionality 17
interval 53
layout 48, 53, 54, 59, 60, 73, 74
level 55, 56, 57
package 55, 58, 61
process 14, 15, 79
profile 74
screen 61
unit 53
value 74
workbench 55
Plan version 74, 75
Plug-in 17, 81
Posting data 25
Posting transaction 31
Profit 6
Q
Query 32, 40, 67, 68, 69
sequence 23, 30, 37
R
Rebuild 27
Recipients 20
Release status 17
Reporting 14, 40, 43, 71, 77
platform 14
Report Painter 73
Retrograde determination 21
S
SAP Actual Calculation see
Actual Calculation
SAP Business Content see
Business Content
SAP BW 14, 17, 39
SAP BW-BPS 54
SAP Liquidity Planner 6, 17, 39
SAP R/3 3, 14, 17, 65
SAP R/3 Enterprise 71
SAP SEM 3, 14, 17, 39
SAP SEM-BPS 48, 53, 54
Scheduler 66
Solvency 6, 7
Source of funds 9
Source symbol 36
Storing global data 21, 22
Strategic liquidity 7
System integration 17
System table 19
T
Test run 28
Tools 26
Totals list 37
Totals table 27, 31, 36, 71
Total cash flow 7
Transactional InfoCube 44
Transaction Events 18
Transfer posting 36
Transfer rule 65
Transfer structure 51, 65
Treasury 71, 72, 73, 74, 76, 77
U
Update rule 50
www.sap-press.com 87
Index
V
Variable 40
Version concept 17
W
Web Template 40