Streamline Liquidity Forecasting by Integrating Real Estate Cash Flows with Enhancement Package 2

  • by Sravani Swetha Kaja, Principal Consultant (SAP)
  • September 24, 2010
Learn how to integrate liquidity forecasting with real estate cash flow.
Key Concept
With enhancement package 2, SAP has streamlined the liquidity forecasting tool by incorporating cash flows generating from real estate contract conditions. This brings more visibility and accuracy to liquidity forecast under Cash Management enabling businesses to make accurate investment decisions.

SAP Cash Management in SAP Financial Supply Chain Management has two components: cash position and liquidity forecasting. The cash position provides a short-term view to monitor liquidity in bank accounts. Liquidity forecast allows you to evaluate information such as the expected amount receivable or amount payable for certain customers, vendors, or subledgers in the mid- or long-term.

A real estate contract is an agreement between the tenant and landlord for leasing facilities. A real estate contract has cash flows that the tenant has agreed to pay to the landlord. Until SAP ERP Central Component (SAP ECC) 6.0, up to enhancement package 1, the liquidity forecasting tool did not reflect the real estate cash flows. The real estate cash flows mainly arise through letting out (i.e., renting to customers) of facilities. The cash flow is mostly periodic in nature (i.e., monthly, quarterly, or yearly). It may be either cash inflow (i.e., from customers through letting out) or cash outflow (i.e., through letting in of the facilities). The contractual conditions are recorded through a real estate contract in the SAP system.

With enhancement package 2, SAP has integrated real estate cash flows with liquidity forecasting. Before, if a company carried out any business along with real estate business, there was no visibility of real estate cash flows in liquidity reporting. Now that there is, you can achieve more accurate reporting that includes real estate information. This is especially important if your real estate business generates significant cash flow. Accurate liquidity reporting enables the business to determine a surplus or deficit in cash balances at the period end, thus allowing you to make better investment decisions. I’ll show you the step-by-step directions for enabling integration between the liquidity forecasting tool and the real estate contract cash flows along with a test case.

I’m also assuming that you’ve implemented liquidity forecasting in Cash Management and Flexible Real Estate Management (RE-FX). The article applies to SAP ERP 6.0 systems with enhancement package 2 and higher. I will first show you the steps to follow for integration and then demonstrate the results with a test case.

Sravani Swetha Kaja

Sravani Kaja has been a principal consultant (SAP) at a multinational corporation for the past six years. Sravani has expertise in SAP ERP Financials with a focus on real estate business processes. With a post-graduate degree in business management, finance, and accountancy, Sravani has worked on several SAP implementations, rollouts, and support projects.

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