SAP In-House Cash can help corporate treasurers or cash managers obtain a faster overview of their liquidity position and achieve a higher degree of transparency of their cash flows. Multinational organizations can centralize their group cash flows and establish in-house banks. SAP In-House Cash is one of the least known SAP applications, partly because it is separately licensed and primarily appropriate for global companies that are less centralized. It requires different settings in both the central SAP In-House Cash system as well as in the connected subsidiary SAP ERP Financials systems. I’ll provide a step-by-step introduction into the most important business configuration settings, making you familiar with the necessary sequence of the system setup.

Business Configuration in the Satellite Systems

In my previous articles, you learned that SAP In-House Cash is based on tight integration between two SAP systems: the central SAP In-House Cash system and the SAP ERP Financials systems of the subsidiaries that are connected via Application Linking and Enabling (ALE). These satellite systems normally trigger their own payments and receive account statements from their house banks. In the case of SAP In-House Cash, all payment transactions are routed via the central SAP In-House Cash system. I have focused so far only on the technical settings, but there are three elementary business configurations that are mandatory in each subsidiary system that you want to connect to your in-house cash center (IHCC):

• Define new payment methods for SAP In-House Cash payments per country and company code (depending on the types of payment processes you use) so that the satellite system can send payments to the IHCC
• Create the IHCC as the new house bank and assign the relevant bank accounts of the company code
• Configure the electronic bank statement settings to receive statements from the IHCC

These are the necessary configuration settings to support the most important payment processes of SAP In-House Cash: internal payments, central outgoing payments, and central incoming payments.

Define New Payment Methods

To create a new payment method, use transaction FBZP or follow menu path Accounting > Financial Accounting > Banks > Outgoings > Automatic Payment > Open Items (Customers and Vendors). In the environment menu select Maintain Configuration. You need to create a new payment method for every relevant country and for the subsidiary company code.

In the country settings, select Account Number Required in the Required master record specifications section. This guarantees that the PAYEXT IDoc segment E1IDB02 is filled with the beneficiary bank details and that the SAP system can properly process the IDoc. SAP In-House Cash uses IDoc communication for the processing of payments and bank statements. (For more information, see SAP Note 460630.) Enter the classic payment medium program RFFOEDI1, which is used during the payment run (Figure 1).

Figure 1

Country settings of an SAP In-House Cash payment method

For the direct payment method, select the Collection authorization check box under the Required master record settings. Then assign the country payment methods to the relevant company codes of the subsidiaries. Depending on the type of business processes you want to use (such as external payments or direct payments) you may have to define several payment methods for SAP In-House Cash. For foreign currency payments, you need to make sure that you have selected the Foreign business partner allowed, Foreign currency allowed, and Cust/vendor bank abroad allowed? options in the company code configuration (Figure 2). If you don’t select these options, the payments aren’t executed and you get an error during IDoc processing.

Define the IHCC as the New House Bank

Now define the IHCC as the house bank in the company code settings of the satellite systems, which ensures that the payment run clears the payments via your in-house bank once you have assigned this house bank to the relevant customer and vendor master records. Use transaction FI12 or follow IMG menu path Financial Accounting > Bank Accounting > Bank Accounts > Define House Banks (Figure 3).

Figure 3

Define the IHCC as the house bank

You also need to define the relevant bank account numbers, currencies, and general ledger accounts belonging to the IHCC house bank. In addition, you have to define the EDI partner profiles that are used to enable the data exchange between this house bank and SAP In-House Cash. These settings are outside the scope of this article.

If you want to set up a new system, you first need to define an in-house bank using transaction FIHC before you can define the house bank with transaction FI12 (Figure 4). Fill all the appropriate fields with their corresponding values. This house bank is actually only a virtual bank that is required to represent SAP In-House Cash in the local system.

Figure 4

Define a new internal house bank

Configure the Electronic Bank Statement Settings

The third important business configuration for SAP In-House Cash is the setup of the electronic bank statement. As you have learned in my previous articles, SAP In-House Cash sends out electronic bank statements using the IDoc format FINSTA (an abbreviation for financial statement). These bank statements allow you to post transactions in the FI components of the satellite systems. To maintain the bank account statement settings, follow IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Electronic Bank Statement > Make Global Settings for Electronic Bank Statement (Figure 5).

Figure 5

Setup of the electronic bank statement

You should note the chart of accounts that is assigned to your company code before you configure the electronic bank statement because the settings depend on the chart of accounts. You can find this assignment by following IMG menu path Financial Accounting > General Ledger Accounting > G/L Accounts > Master Data > Preparations > Assign Company Code to Chart of Accounts. The electronic bank statement settings are assigned to a specific bank account and therefore are only relevant for the company code to which this bank account belongs. If you’re already using electronic bank statements, you don’t need to worry that the configuration for SAP In-House Cash will affect your current settings.

Configuring electronic bank statements consists essentially of seven steps:

• Step 1. Create the account symbols that determine the general ledger account to which you are posting. You should create two account symbols for incoming and outgoing payments.
• Step 2. Assign the account symbols to the relevant general ledger accounts
• Step 3. Create keys for posting rules. These posting rules represent typical posting transactions for the bank statement, such as incoming and outgoing payments.
• Step 4. Define the actual posting rules that are needed for the account determination in the SAP system. The posting rules contain all the relevant information, such as the posting key, relevant accounts, and document types.
• Step 5. Define transaction types that are used to group banks that use identical external transaction codes. External transaction codes are transmitted via the electronic bank statement and contain information about a bank transaction (e.g., a charge). You typically need only one transaction type as long as all banks use standardized external transaction codes.
• Step 6. Assign the external transaction codes to internal transaction types and the posting rules. This is necessary for the SAP system to process incoming bank statements correctly.
• Step 7. Assign the bank accounts to the transaction types

You have now completed all the relevant configuration in the satellite systems. Let’s take a closer look at the business configuration of the IHCC, which receives payments from subsidiaries and sends account statements back to the satellite systems of the subsidiaries.

Configuration of the IHCC

Many settings are required to configure the IHCC and it is not possible to describe all of them in this article. The configuration consists essentially of four steps:

• Step 1. Set basic settings required to define the IHCC as a bank area and define the technical configuration settings such as number ranges for payment orders
• Step 2. Define master data such as products (which characterize an SAP In-House Cash account by determining, for example, whether an account can be debited or credited) and conditions, such as interest rates or applicable charges
• Step 3. Set up payment processes such as external or internal payments
• Step 4. Configure periodic tasks, mainly the transfer of postings to the general ledger

I will discuss the first step in more detail and provide some basic direction for the other three steps to give you an idea of what is required to set up the IHCC.

Step 1. Set basic settings required to define the IHCC as a bank area and define the technical configuration settings such as number ranges for payment orders. The IHCC is represented by the bank area, which is the central organizational entity in the SAP system. If you want to define more than one IHCC (for example, for different regions), you need to set up one bank area for each of these IHCCs. All the SAP In-House Cash accounts are managed and all relevant postings are carried out within the bank area. To create a bank area, follow IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Bank Area > Define Bank Area and enter the appropriate values (Figure 6).

Figure 6

Configuration of bank area master data

You need to maintain a number of attributes for the bank area, including the location of your in-house bank and the language of the application. The bank area currency is usually the same as the local currency of the company code to which the bank area is assigned. Enter the company code of the general ledger where the SAP In-House Cash postings take place. The general ledger variant defines how the SAP In-House Cash postings are transferred to the general ledger in the FI system of the SAP In-House Cash headquarters.

A few additional basic settings are worth mentioning. For example, you can choose whether the general ledger and the bank customer accounts (BCA) application, which is the technical foundation of SAP In-House Cash, are in the same or separate systems. This is relevant for the transfer of postings. To define these settings, you need to follow IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Basic Settings > Postings > Set +/- > Sign Postings/GL Transfer/Name Check (Figure 7).

Figure 7

General ledger transfer definition

If the BCA is in a different system from the general ledger I have described in a previous article how to configure the partner profiles in the system.

Before you can actually use SAP In-House Cash, you have to activate the component. To do this, in SAP ECC follow IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Activate SAP Components and select the IHC check box (Figure 8).

Figure 8

Activate SAP In-House Cash

In addition, you need to activate a number of publish/subscribe (P/S) and process function modules for SAP In-House Cash. P/S and process function modules are two forms of SAP’s Business Transaction Event (BTE) enhancement and interface technique that were originally developed for FI. P/S interfaces inform external software that certain events have taken place in an SAP standard application and provide them with the respective data. The external software cannot return any data to the SAP system and the P/S interface doesn’t affect the SAP standard program at all. In contrast to this procedure, process function modules allow data exchange in both directions and control a business process differently than how a standard SAP program handles it. Therefore, process function modules affect SAP standard programs.

You can activate the P/S and process function modules by following IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Activate Function Modules (P/S) SAP Application or Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Activate Function Modules (Process) for SAP Application. Make sure that the following function modules exist for SAP In-House Cash:

• P/S function modules for payment transactions:
  • 00010311 SAMPLE_INTERFACE_00010311_IHC
  • 00010312 SAMPLE_INTERFACE_00010312_IHC
  • 00010320 BCA_PREPARE_REVERSE_PO_FROM_CC
  • 00010024 IHC_BCA_PN_PI_LIM_CHECK
  • 00010030 IHC_BCA_PN_PI_RETRIEVE_VALUES
  • 00010041 IHC_BCA_PN_PI_RETRIEVE_REFS
  • 00011210 IHC_BCA_PN_PI_SET_XTRAKEY
• P/S function module for the creation of bank statements:
  • 00010510 SAMPLE_INTERFACE_00010510_IHC
• P/S function modules for general ledger transfer:
  • 00011300 SAMPLE_INTERFACE_00011300_IHC
  • 00011220 SAMPLE_INTERFACE_00011220_IHC
  • 00011240 SAMPLE_INTERFACE_00011240_IHC
• Process function modules:
  • 00011012 SAMPLE_PROCESS_00011012_IHC
  • 00011310 SAMPLE_INTERFACE_00011310_IHC2

You can create P/S modules both by an SAP application as well as by third-party software. Therefore, you need to activate this by following IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Create/Activate Partner and Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Activate Partner Product. Make sure that there is an entry for both the product IHC and the partner IHC.

You need to maintain the two P/S partner function modules BKK_IHB_BASTA_IN_CHECK (event number 00002810) and BKK_IHB_BASTA_2850E (event number 00002850) for the partner IHC. These function modules are required because of various functional enhancements developed by SAP. Create these function modules by following IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Define Function Modules (P/S) of a Partner. Then enter the two process partner function modules IHC_APPL_XBS_POST (event number 00002810) and BKK_IHB_BASTA_2850P (event number 00002850) by following IMG menu path Financial Supply Chain Management > In-House Cash > Basic Settings > Business Transaction Events/Event Control > Define Function Modules (Process) of a Partner (Figure 9).

Figure 9

Maintain SAP In-House Cash function modules

Step 2. Define master data such as products and conditions. After the basic settings, you have to maintain some master data for SAP In-House Cash. This includes:

• Business partners: These can be customers, other banks, or IHCCs, but also internal organizational units such as the cash management department. You can define five different business partner roles: account holders as owners of the current account, authorized drawers, account maintenance officers, bank statement recipients, and contact persons.
• Conditions: This contains all the relevant information for interest and charge settlement of current accounts and value date activities
• Limits: These are used to restrict the amount-based drawing on an account
• Products: They serve as a template and framework for current accounts and include possible conditions, relevant transaction types and functions, and the media with which customers have access to an account
• Accounts: These are the central objects within SAP In-House Cash and are created as characteristics of a product

Step 3. Set up payment processes such as external or internal payments. Once you have maintained this master data you can start setting up the payment processes for SAP In-House Cash by following IMG menu path Financial Supply Chain Management > In-House Cash > Payment Processes in In-House Cash.

Step 4. Configure periodic tasks, mainly the transfer of postings to the general ledger. You can do this by following IMG menu path Financial Supply Chain Management > In-House Cash > Periodic Tasks > General Ledger. Here you need to maintain general ledger transactions that group postings for several transactions in SAP In-House Cash into a single transaction. This enables assignment to a general ledger account or posting type. Then you have to assign a general ledger transaction to each transaction type involved in the payment transaction and determine the current accounts for the general ledger assignment. As mentioned before, the details of these settings are outside the scope of this article.

Customizing the Group Head Office

Now that I’ve gone through how to make the relevant system settings in the subsidiary system and in the IHCC, what is missing is the configuration of the FI system of the group head office that hosts the IHCC. Essentially two settings are required for the group head office:

1. Configure the payment request program (transaction F111) that is used to release external payments to external business partners
2. Configure an electronic bank statement so that the house bank of the head office can send it to the head office 

A prerequisite for the configuration of the group head office is that you have defined the general ledger accounts of the head office company code (including the bank clearing accounts) to make sure that you can post documents on these accounts.

For the SAP In-House Cash process central payments that I described in the article “Optimize Your Corporate Payment Transactions with SAP In-House Cash,” you need to use the payment program for payment requests. The configuration consists of three steps.

First, define the relevant account types for the payment program for payment requests. The default setting would be payment transactions with customers and between bank accounts. Follow IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Payment Handling > Define Global Settings.

In addition, you specify the business-related origin of the payment data (i.e., the actual application that generates the payments) and whether the payment program should check (for example) available amounts or which account determination should be used (the one of the origin application or that of the payment program). You can make these settings by following IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Payment Handling > Enter origin Indicators (Figure 10). SAP recommends that you only select the Available amts check box. In this case, the payment program for payment requests (transaction F111) only checks available amounts.

For payment transactions with bank accounts, you have to define the bank subaccounts that are posted to in the general ledger. The accounts are specified per house bank account, payment method, and currency. If you haven’t defined a currency, then the account applies for all currencies. You have to completely maintain the bank subaccounts for the company code. The relevant settings are made in the tables T018V, T042Y, and T042I. Follow IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Payment Request > Define Clearing Accounts for Receiving Bank for Account Transfer. In addition, you need to define the bank subaccounts in the general ledger that you want the payment transactions with bank accounts to be posted to. Follow IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Payment Handling > Bank Clearing Account Determination > Define Account Determination.

Then you have to determine which banks or bank accounts the payment program should select. Follow IMG menu path Financial Accounting > Accounts Receivable and Accounts Payable > Business Transactions > Outgoing Payments > Automatic Outgoing Payments > Payment Method/Bank Selection for Payment Program > Set Up Bank Determination for Payment Transactions.

Be aware that the tables T042I (configuration of F110 payment programs) and T042Y (configuration of F111 payment programs) have to be consistent. (For more details on this, see SAP Note 481197.) You can check the consistency by following IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Payment Handling > Bank Clearing Account Determination > Check Account Determination. If you don’t want this consistency check, you can also switch it off by using SAP Note 429017.

The final step in the configuration of the group head office accounting system is the setup of electronic account statements, which you can do by following IMG menu path Financial Accounting > Bank Accounting > Business Transactions > Payment Transactions > Electronic Bank Statement > Make Global Settings for Electronic Bank Statement.

Juergen Weiss

Juergen Weiss works in the functional area of SAP Financial Supply Chain Management. As part of SAP’s product management team, he was globally responsible for the Financial Supply Chain Management applications, including Electronic Bill Presentment and Payment, Dispute Management, Collections Management, Credit Management, Treasury and Risk Management, Bank Relationship Management, and In-House Cash as well as Accounts Payable and Receivable.

You may contact the author at juergen.weiss@sepa-now.de.

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