Cash Concentration 

Purpose

The cash concentration enables automatic transfer postings in a specific frequency in a master contract. These are based on carryforward rules and relationship attributes.

The aim of cash concentration is to keep the account balances of the participating accounts within a certain value range at defined times. A main account (root account) at the top of the account hierarchy absorbs the surplus balances of the other accounts or compensates for any insufficiencies on these accounts. You can, for example, specify that an account must always have a certain minimum balance or that the remaining balance on an account is always to be transferred to another account (for example, an investment account) at the end of every month.

When the transfer amounts are transferred, it is possible to take into account risk amounts such as subject to final payment balances that are specific to an execution date, or balances for prenotes that are subject to posting control, which means that the risk is blocked on the participant account. In addition, you can restrict the transfer amount by the value date-based balance (value date capping) if there is a posting date-based excess of the maximum balance. For more information, see: Editing Cash Concentration.

The hierarchies used in the cash concentration can have two or more levels. On all levels in the hierarchy, except the top node, the system checks the due date of each participant account to see if it is due for the next cash concentration run. A participant account is due for the cash concentration if the next due date for the account is on or before the selection date of the next cash concentration run. All due accounts in an master contract are included in the cash concentration.

When the cash concentration is run, the system generates payment orders (debit or credit) for participant accounts in the account hierarchy that you created.

Depending on your requirements, you can either run the cash concentration for a single master contract as a single run, or as part of a parallelized mass run (in end-of-day processing, for example) for a certain number of master contracts. You can restrict the number of master contracts you want processed in the mass run by specifying bank posting areas and/or master contract products.

Start the single run for cash concentration on the SAP Easy Access screen under Account Management ® Master Contract ® Cash Concentration for a Master Contract ® Start Cash Concentration.

You start the mass run for the cash concentration from the SAP Easy Access screen under Account Management ® Periodic Tasks ® Cash Concentration ® Start Mass Run with Package Template or Start Mass Run without Package Template.

For more information about running the cash concentration, see Running Cash Concentration.

Prerequisites

Accounts must belong to a master contract that is based on a master contract product where the Cash Concentration feature attribute has been activated. You can run cash concentration only for master contracts where this feature is active. If necessary, check the features in the master contract editing on the Features. tab page.

You name a main account and create a master contract on the SAP Easy Access screen by choosing Account Management  ® Master Contract  ® Master Data of Master Contract ® Create Master Contract and then the Cash Concentration, or Contract Relationships tab page.

Process Flow

1. Generating the account hierarchy

You define a master contract, and you specify the accounts that transfer funds to each other, and those from which funds are transferred when the account hierarchy is constructed.

In a hierarchy display with horizontal hierarchy levels, the editing sequence is such that the accounts of each hierarchy level under the main account are processed from left to right. For additional hierarchy branches underneath each account, the lower levels are processed in the same sequence beforehand.

The following example hierarchy illustrates the processing sequence:

Processing is as follows:

...

...

       1.      Account of Inc. North

       2.      Account of subsidiary A from Inc. Central

       3.      Account of branch of subsidiary B from Inc. Central

       4.      Account of subsidiary B from Inc. Central

       5.      Account of subsidiary C from Inc. Central

       6.      Account of Inc. Central

       7.      Account of Inc. South

The cash concentration function does not process the account of the holding. This provides liquid funds for the other accounts or absorbs them from them.

2. Control characteristics for the complete account hierarchy (tab page: Cash Concentration)

At the master contract level, you define the carryforward rule, limit check, and partial execution on the Cash Concentration tab page.

3. Control characteristics for individual participant accounts (Contract  Relationships tab page, and Participant Attributes button)

You can specify the following characteristics on the level of each participant account:

·        Regardless of the selected carryforward rule:

¡        Which transaction types are to be used for the postings

¡        The frequency for the cash concentration runs

·        If you do not select the carryforward rule Non-Key Date-Based: Value Date-Exact, Differentiated by Posting Date:

¡        Whether and for which amount a minimum or maximum amount is to remain on the account after the cash concentration run.

¡        For which minimum or maximum amount the transfer amount generated by the cash concentration may be.

¡        Whether and how the amounts are to be rounded

·        If you do select the carryforward rule Non-Key Date-Based: Value Date-Exact, Differentiated by Posting Date:

¡        Balance that the participant account is always to have.

4. Running The Cash Concentration

For more information on the single run, the mass run for the cash concentration, and the system response to errors, see Running Cash Concentration.

Result

Check the result of the cash concentration in the application log for cash concentration, by choosing Account Management ® Logs ® Cash Concentration ® Application Log for Cash Concentration from the SAP Easy Access screen.

Example

You can use the cash concentration functions in the case below, for example:

You want the surplus remaining on several salary accounts to be carried forward to an investment account at the end of each month. In addition, a fixed amount (280 USD) is to be paid out on another account at the start of the next month.

Therefore, create a hierarchy with the investment account as the main account (root account) and the other accounts as nodes on the next level of the hierarchy. Start with a maximum balance of 0 USD for the salary accounts. Start with a minimum balance that is the same as the payment to be made (280 USD) for the other account that has the regular payment in the following month.

For more examples, see Example of Cash Concentration and Example of an Account Hierarchy.