SAP FX Risk


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SAP FX Risk: An Overview and Key Considerations

What Is SAP FX Risk?

With SAP FX Risk Management, SAP customers can assess their organization’s exposure to foreign exchange (FX) and evaluate the hedging strategies used to mitigate FX risks. SAP FX Risk Management enables SAP ERP to help organizations monitor their FX exposure, hedge positions, record transactions, and provide alerts, utilizing SAP’s pre-built features. This includes automatically calculating SAP FX risk within the general ledger by recording the net amount of a transaction in the transactional currency.

SAP’s Balance Sheet FX Risk application helps organizations understand FX risks associated with functional and business processes in the Treasury & Risk Management (TRM) module for SAP ERP systems. The Balance Sheet FX Risk tile displays balance sheet FX risk measures absolute exposures, absolute hedges, and absolute net exposures, as well as hedge amount and exposure, and amounts to standardize the company codes in exhibit currency.

Key capabilities include:

  • Recording of foreign currency balances and transactions in the general ledger
  • Automating posting of foreign exchange rate fluctuations to relevant accounts
  • Generating balance sheet reports in different currencies
  • Keeping up with advanced communication with counterparties through the correspondence system.

Key Considerations for SAPinsiders

SAP FX Risk: An Overview and Key Considerations

What Is SAP FX Risk?

With SAP FX Risk Management, SAP customers can assess their organization’s exposure to foreign exchange (FX) and evaluate the hedging strategies used to mitigate FX risks. SAP FX Risk Management enables SAP ERP to help organizations monitor their FX exposure, hedge positions, record transactions, and provide alerts, utilizing SAP’s pre-built features. This includes automatically calculating SAP FX risk within the general ledger by recording the net amount of a transaction in the transactional currency.

SAP’s Balance Sheet FX Risk application helps organizations understand FX risks associated with functional and business processes in the Treasury & Risk Management (TRM) module for SAP ERP systems. The Balance Sheet FX Risk tile displays balance sheet FX risk measures absolute exposures, absolute hedges, and absolute net exposures, as well as hedge amount and exposure, and amounts to standardize the company codes in exhibit currency.

Key capabilities include:

  • Recording of foreign currency balances and transactions in the general ledger
  • Automating posting of foreign exchange rate fluctuations to relevant accounts
  • Generating balance sheet reports in different currencies
  • Keeping up with advanced communication with counterparties through the correspondence system.

Key Considerations for SAPinsiders

Evaluate partner solutions that can potentially extend the functionality of SAP FX Risk. Many SAP partners, such as Serrala, offer specialized FX risk management solutions that complement the capabilities of SAP ERP. Organizations with unique requirements to manage FX risk and its balance sheet impact, beyond the standard best practices offered by SAP, should leverage the expertise of solutions partners and third-party solution providers to implement FX risk management systems that align to specific business needs.

Consider automation of labor-intensive FX Risk management processes. Organizations can enable their treasury teams to work on higher-value tasks by leveraging SAP’s FX Risk Management to automate manually intensive procedures, such as management of FX instruments, confirmation of financial transactions, payments, and accounting activities.

Leverage SAP FX Risk Management capabilities to improve operational compliance. By automating the transfer of FX exposure values to the general ledger, treasury teams can quickly examine open items and balances in unfamiliar cash of your general ledger accounts. In addition, to make better operational and strategic decisions, organizations can benefit from comprehensive reporting and analysis tools in FX Risk Management for SAP S/4HANA Cloud, such as multi-currency accounting.

2 results

  1. Adrian Wilder image

    Automate Your Foreign Exchange Rates

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    Does your company conduct business in Europe, Asia, or Latin America? Gain more customers by communicating monetary amounts in their local currencies in a standard, easy, and automated way in SAP S/4HANA. For some cultures, it is important to receive amounts in their own local currencies, instead of the most common currencies. Knowing the cost…
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    Freely-Definable Currency and Financial Statement Version (FSV) Setup

    Reading time: 10 mins

    Global SAP customers often need operational currency that differs from the national currency their legal entity(s) resides in. To reconcile this discrepancy, SAP customers have, in the past, created mirror company codes, used special ledger, or performed currency conversion/translation in a data warehouse (i.e. SAP BW/BPC) to support their reporting needs. According to delaware Consulting,…