Track Intercompany Loans Using SAP's Transaction Manager Module: Part 2

  • by Mary Loughran, Independent Consultant
  • Valerie Choo, Treasury Subject Matter Expert
  • December 22, 2016
Learn the configuration steps needed for the intercompany loans process outlined in the article “Track Intercompany Loans Using SAP’s Transaction Manager Module, Part 1.” The configuration is in line with the process described in part 1 of this article.
Learning Objectives

Reading this article, you will learn:

  • The SAP Transaction Manager configuration necessary to implement intercompany loans
  • How to define product, transaction, flow, and update types
  • The steps necessary for mirroring configuration and general ledger (G/L) account determination configuration
  • How to define reference interest rates
Key Concept
When companies reach a more complex size, they often need to implement financing processes to facilitate borrowing from surplus cash entities and lending to the deficit cash entities. Therefore, intercompany loans are a common trade that corporations use. Intercompany loans is a good trade type to use to show basic functionality within SAP’s Transaction Manager. Through customizing intercompany loans, the structure, functionality, and accounting of the trade are defined. Before starting on the configuration, it is important to understand the requirements of the trade, including the accounting entries that should be generated.

Transaction Manager configuration is extensive when considering the several submodules within Transaction Manager (e.g., Money Market, Foreign Exchange, Securities, and Derivatives). This article concentrates on the required configuration for processing intercompany loans using SAP’s Transaction Manager module, which includes the following:

  • Definition of product type
  • Definition of transaction types
  • Definition of flow types
  • Definition of update types
  • Mirroring configuration
  • General ledger (G/L) account determination configuration
  • Definition of reference interest rates

Transaction Manager configuration is consistent wherever possible across different trade types. For example, there are basic differences between money market trades and derivative trades. Derivative trades have underlying assets, but money market trades do not. The configuration required for the different trade types is going to be different. Therefore, understanding the configuration for intercompany loans, which is in the Money Market submodule, greatly expedites the understanding of processing other trade types using Transaction Manager. Once you understand the processing and configuration for one trade type, it is easy to expand that knowledge to other trade types, such as Foreign Exchange or derivative trades.

Configuration for types of trades across all Transaction Manager sub-modules requires the following:

  • Define Accounting Codes
  • Assign Accounting Codes to Valuation Areas
  • Definition of Product Type
  • Definition of Transaction Types
  • Definition of Flow Types
  • Definition of Update Types and Assign Usages
  • Set Effects of Update Types on Position Components
  • Derived Business Transactions
  • Account Determination
In addition, the valuation class, position management procedure, and account assignment reference are required fields for trades across all Transaction Manager sub-modules.

Note
The above list is not exhaustive. There are other configuration nodes that are relevant to all Transaction Manager trade types.

Although the settings for each of the above configuration nodes could be different across the different trade types, understanding the structure of the trades and the configuration process for Money Market trades is absolutely going to be helpful in understanding how to configure Foreign Exchange or Derivative trades. That is what I mean by the statements above.

The intercompany loans process for which you apply the configuration steps in this article is outlined in the Financials Expert article “Track Intercompany Loans Using SAP’s Transaction Manager Module, Part 1.” 

Prerequisites

The functionality described in this article is included in SAP ERP Central Component (ECC), although licensing may be required to use the SAP Treasury and Risk Management module. SAP’s Transaction Manager module tracks Treasury trades through their full life cycle–from trade entry to payments to month-end processing to maturity of the trades. All accounting entries related to the trades are triggered by the trades and are posted directly to the SAP General Ledger.

The primary advantages of implementing intercompany loans in an SAP system include:

  • Implementing intercompany loans is a manageable and self-contained project, which gives a Treasury department a feel for the functionality contained in Transaction Manager.
  • The Transaction Manager modules integrate well into other SAP modules, such as Cash Management and Financial Accounting.
  • The configuration for intercompany loans is well supported by Transaction Manager. Custom development should not be necessary.
  • Configuration is similar across other submodules within Transaction Manager.

We have divided the configuration into the logical sections listed in Table 1. The configuration can be entered into the SAP system in the order displayed in Table 1.


Mary Loughran

Mary Loughran has been specializing in the SAP Financials area since 1997 and has worked with numerous clients throughout North America and Europe in the areas of finance and treasury. She was employed as a consultant with SAP America and was a designated expert within SAP America for treasury before she left SAP in 2004. Mary’s expertise is in the areas of SAP Treasury and Risk Management, SAP In-House Cash, Liquidity Planner, Accounts Payable, payments from SAP in general, Cash Management, and Electronic Banking. Mary was an independent consultant from 2004 to 2016. 

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Valerie Choo

Valerie Choo is a global treasury subject matter expert. She has been involved in multiple SAP Treasury and Risk Management projects such as implementing global treasury systems, consolidation of SAP Treasury and Risk Management activities, and process improvements, particularly in Cash Management Operations. Valerie’s expertise in the functional areas includes cash management back office operations, electronic bank statement processing, in-house cash, and SAP Treasury and Risk Management integration with other work streams, particularly accounts payables, accounts receivables, intercompany and tax.

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