SAP Functionality Training

· Treasury & Risk Management –

· Overview & Basic Function
(TRM-BF)

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Objectives
• Give an overview of SAP TRM

• Understand the integration between the different TRM modules and

Treasury-CM

• Give an introduction on TRM-Transaction Manager (TM) and Basic

Function (BF)

• Give an introduction to the BF standard functionality which are

relevant to this implementation

• Introduce TM-BF concept, terminology and master data

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Topics

• Introduction
• TRM Overview
• TRM-Transaction Manager (TM)
• TM Terminology & Concept
• TM Basic Function
• TM Standard SAP reports
• Relevant Business Process
• Summary

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*Introduction - SAP Corporate Finance Management
“Corporate Finance Management enables · Consists of a series of components geared
treasurers and finance managers to towards analysing and optimising business
processes in the finance area of a company
analyze, optimize and control
their business decisions on · Complies with hedge accounting requirements
under FAS 133 where a link can be created
the global level of an enterprise” between the hedged item and the hedging
instrument.

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Introduction
Corporate Headquarter – Treasury
Analyzer
Credit Risk Market Risk Portfolio
Analyzer Analyzer Analyzer

Financial Information
Money Basic Foreign
Markets Securities Derivatives System
Market Function Exchange
Transaction Manager

In-House Cash Liquidity Planner

Financial
Banks Cash Management Accounting

IH CM LP IHC CM LP IHC CM LP
C
Data from Bank
Subsidiary 1 operational Subsidiary 2 Subsidiary 3
data
systems

Offers real-time datafeed with Reuters, etc. for live quotes and other market data.

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*Transaction Manager
· This component offers tools for capturing financial deals ranging
Transaction from ST investment to LT financial assets. (Administration of
Manager Deals & positions)

· Incorporates an authorisation concept that guarantees functional

Treasury segregation of trading, back office and accounting activities (auto
Basic
BasicFunction
Function Organization transfer to financial accounting)

Front
Front
Office · Provides flexible reporting capabilities
Securities
Office
Securities
Middle
Middle
Office
Office
Derivatives
Derivatives Back
Back
Office
Office
Money
MoneyMarket
Market
Management
Management Best Business Practices:
· Process automation
Foreign · Generalization of back office accounting
ForeignExchange
Exchange
Management · Segregation of duties from Front office to Back office
Management

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Transaction Manager - Instrument Supported

Product types

Investment / Borrowing Hedging

instruments instruments

Money Forex
Securities Loans Derivatives
market
• Forex spot • Cap / Floor
• Stocks deals
• Fixed-term • FRA
deposits • Subscript. rights • Forward • Swaps
• Deposits at notice • Investment exchange deals - Interest rate
• Commercial Paper certificates • Foreign - Currency
- Cross currency
• Cash flow • Bonds exchange interest rate
transactions • Redemption bonds swaps
• OTC options
• Interest rate • Convertible bonds - Currency
instruments
• Warrant bonds - Currency barrier
• Facilities - Interest rate
• Warrants
- Stock
- Swaption, IRG
• Listed options &
futures

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Transaction Manager - Straight Though Processing
Straight-through processing model from deal capture through to accounting
Release

Middle/Back
Trading Accounting
office
• Create • Postings
order/contract • Payment
• Exercise/expiration activities
• Give notice • Reversals
• Rollovers •
• Exercise rights Accruals/deferra
ls
• Valuation
Correspondence Position Processing
Management
User authorization Transactions
Limit management
• Collective processing
• Confirmation • Settlement/control
management
• Netting • Payment details
(incoming/outgoing)
• References Payment details
• Interest rate adjustments
• Securities acct transfers Curr.
...
Bank
...
Acct
.
Confirmation Confirmation
• Corporate actions ..

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 Cash Planning Process
Risk
Risk Mgt
Mgt SAP Modules Integration
Process
Process
Reconciliation
Reconciliation
TRM-MRA
TRM-MRA Process
Process
TRM-CRA
TRM-CRA
Risk Analysis TM-FX
TM-FX TR-CM
TR-CM
FX Forward Bank Reconciliation
FX Spot Process
Process
Receipts
Receipts
TM-MM
TM-MM Cash
Cash Planning
Planning
Investment
Investment
Process Fixed Deposit Process
Process FI-AR
FI-AR
Process
Deposit at Notice
Commercial paper Invoices
TR-CM Receipts
Bank Loans
Hedging
Hedging Cash Position
Process
Process
TM-DE
TM-DE Payment
Payment
FI-AP
FI-AP Process
Process
Funding
Funding Commodity Futures Bonds
Process
Process OTC /OTC Options TM-SE
TM-SE Commodity Invoices
Payments

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Integration with Financial Accounting

TRM-FX
TRM-FX TRM-MM
TRM-MM
Contracts Contracts
Month-end Interest
Month-end

Financial
Financial -- GL
GL

TRM-SE
TRM-SE TRM-DE
TRM-DE

Contracts Contracts
Month-end Month-end

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Transaction Manager - a typical contract
Trading Back Office Accounting
Offer

Bids
Execute

(optional) Create Contract Confirm

Rollover Contract Post
Check Contract
Generate FI postings

Maturity
Settle Contract Post
Redemption Generate FI postings
Give Notice
Dr Investment Dr Bank Clearing
Example: Cr Bank Clearing Cr Investment
Dr Bank Clearing
Cr Interest Income

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*Questions
1. What are the 5 sub-modules in Transaction Manager

- Basic Function (BF)

- Money Market (MM)

- Foreign Exchange (FX)

- Derivatives (DE)

- Securities (SE)

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*TRM Terminology & Concept
• Concept: Product Category, Product Type, Transaction Category & Transaction type
Transaction and position management for Treasury contracts are done via these settings:
Examples
Fixed term dep. 510 600 Foreign exchange
Product category

Fixed term dep. 51A Product type 60A Spot/forward

100 200 Transaction type 101 102

Investment Borrowing Spot Forward

• Product Category - represents a classification of financial instrument (system level)

• Product Type - represents a type of financial instrument (user level)
• Transaction Category - Specifies the type of transaction allowed for a financial product (system level)
• Transaction Type - Specifies the type of activities allowed for a financial transaction/product (user
level)

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TRM Terminology & Concept
• Terms - Cash Flow/Other Flows Tab:
Flow Types
- Describe possible changes in cash flows.
- Flows are basis for generating cash flow for further processing such as posting
Flow Category
- Controls the way the flow is processed for accounting purposes.

Examples
Fixed Deposit:
Flow 1100 : Principal increase
Flow 1200 : Nominal interest
Flow 1120 : Final repayment
… etc
Spot/forward:
Flow 1000 : Buy foreign exchange
Flow 2000 : Sell foreign exchange
… etc.

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TRM Terminology
• Other Terms - Management Tab:

Account assignment reference

Determines the G/L account to which the current financial transaction is posted.

Portfolio
A field use to group different contracts together for reporting, analysis, or account
determination purpose (Optional)
Reference
Used to link 2 or more related contracts together.
• Other Terms - Status Tab:
Correspondence
Generates specific letters for the financial transactions managed in the system.
Can be internal or external use.

Processing Category
Determines how the transaction is processed (sequence of activities)

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*TM - Basic Function
In Basic Functions for Transaction Manager (TM) we need to Transaction
maintain some central master data management, which are Manager
the pre-requisites for any treasury contracts.

These data are maintained centrally in SAP in one directory, Basic

BasicFunction
Function
they are:
Securities
Securities
Master Data:
- Banks
- Business partners master
Derivatives
Derivatives
- Business partners standing instruction
- Traders Authorization
Money
MoneyMarket
Market
Management
Reference Data Management
- Contract Reference
Foreign
ForeignExchange
Exchange
Management
Management

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TM - Basic Function : Bank Master
Bank master records contain information about any banking institution with which an
organization conducts business.

Bank Master is used to :

- contain bank details
- to make payments to the counter-party.
The bank data :
- is contained in the bank directory,
- contains the master data of all the banks required for payment processing.
- includes house bank and business partners bank.
Bank Details
Ctry Bank Key Bank act Pbank

SG 600 501 01 521-4561 A1

Bank A

US 2005000 18-8990 B1
Bank B

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TM - Basic Function : Bank Master
Bank master maintenance include:

Manual Bank Creation

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TM - Basic Function: Business Partner
Business partner master:
- refers to any counter party which a financial deal is entered with.
- needs to be created first in SAP before any transactions can be recorded to it
- roles are assigned to Business Partners to record the functions in a particular transaction.
- The role category of Business Partner determines which application functions are
permitted for the Business Partner.
Business
Partner

General role Company

Central Data
data code data

Name
Role Overview Account Information
Address Overview
Role data Autom. Payment trans
Bank details
Credit standing Payment data
Legal data
Control data Control data
Relationship
Bank Relationship
Additional data

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TM - Basic Function: Business Partner
Business Partner Role Type:
- roles are assigned to Business Partners to record the functions in a particular transaction.
- role category determines which application functions are permitted for the Business
Partner.
Business Partner Customer Master

HSBC HSBC

Role Category Role Type

* A100: Domestic Treasury Partners * 0100: Main Borrower
* B100: Foreign Treasury Partners * 1000: Treasury partner
* G003: 3rd Party Financier
* G004: Supplier

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TM - Basic Function: Business Partner
Business Partner - Standing Instructions
- In the standing instructions, payment details can be assigned to the relevant settings.
- Correspondence controls how correspondence is processed.
- Derived flows are used to simplify the calculation of amounts that are derived from other
flows.

Business
Partner

Payment details Correspondence Derived flows

Assign Assign Assign

Confirmation (Print,
House Bank
Fax, SWIFT, IDOC) Derivation procedure
Bank Details
Counter-confirmation

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TM - Basic Function: Others
Trader Master
- trader refers to the dealer or the authorized personnel who makes the transactions
- trader is defined in ‘configuration setting’

Trader Authorization
- defines the financial instrument that the trader is authorized to deal with

Contract Reference
- records relationship between treasury transaction

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*Relevant Business Process
Basic Function:

• Master Data
• Maintain Bank Master
• Maintain Trader Authorisation
• Maintain Business Partner

• Reference
• Maintain Contract Reference

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*TM Standard SAP Reports
Transaction Reports: Master Data List:
- Transaction Overview: Journal - Business Partner Roles
- Correspondence Monitor - Business Partner Standing Instructions
- Payment Schedule - Trader Authorization
- Maturity Schedule - Contract Reference
- Interest rate adjustment schedule
- Overdue List for Counter-confirmation
- etc…..

Position Reports:
- Position Overview

Accounting Reports:
- Posting Journal

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*Questions
What is :

Product type

Transaction type

Flow Type

Portfolio

Business Partners

Account assignment
reference

Correspondence

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*Summary
Terms :

Product type
represent a type of financial instrument, e.g. Fixed Term Deposit,
Transaction type
the type of activities for the financial instrument
Flow Type
basis used for generating cash flow for further processing such as posting
e.g. Principal Increase, Interest, Principal decrease
Portfolio
A field used to group different contracts together for reporting, analysis, etc
Business Partners
the party we deal with in Treasury, e.g. Banks, Supplier
Account assignment reference
Determines the G/L account to which the current financial transaction is posted.
Correspondence
Specific letters for the financial transactions managed in the system.

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