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Process documentation Cash Calls  Locate the document in its SAP Library structure

Purpose

Cash calls are requests for payment for anticipated future capital and operating expenditures, sent by joint venture operators to non-operating partners. Most joint operating agreements (JOAs) include a provision that allows the operator to issue cash calls to non-operating partners. When the company running SAP Joint Venture Accounting (JVA) operates a venture, that company issues operated cash calls to its non-operating partners. When the company running SAP JVA is a non-operating partner in a venture, that company receives non-operated cash calls from the operator of the venture.

 

Operated Cash Calls

Operated cash calls are requests to the non-operating partners of joint ventures for payment of expenses before they are incurred. The transactions are posted as two equal and opposite open items to a partner account. The items are posted with two different Special G/L Entry Indicators ( SEI). Although the items update the same partner account, they update different general ledger accounts which are identified via the SEI. The open item is cleared when cash is received from the partner.

An operator can also post a cash call to itself. The entries produced by this type of cash call are posted as memo entries (representing both cash requested and cash received) directly to the billing ledger. The cash received is posted on the assumption that an appropriate transfer will be made from the operator bank account to the joint venture bank.

 

Non-Operated Cash Calls

Non-operated cash calls are requests for payment of prospective expenses received from an operator of a venture in which the company running SAP JVA is a non-operating partner. The transactions are posted as two open items to an operator vendor account. Like operated cash calls, the items are posted with two different SEIs, which update the same partner account, but different general ledger accounts. One open item is cleared with a cash payment to the operator. The other item is cleared manually in the non-operating company’s system with actual expenditures received in a non-operated bill from the operator.

 

Reclassification

Cash calls are often issued by the operator and paid by partners several months before expenditures are incurred. When this occurs, a reclassification process takes place.  Reclassification is an SAP JVA process that has the following two major functions:

     It creates an accounting record of cash call payments in the month when they are received

     It applies cash call payments in the month when expenditures are incurred

The reclassification process accomplishes these two tasks by connecting the accounting entries related to the steps in the cash call process to two time values:

     Billing month ( the month the expense appears on the bill to the customer)

     Operations month (the month the payment is matched against the expenditure)

By using the billing and operations month, the SAP JVA reclassification process identifies the cash call payments that should be included in the partner’s current month bill.

Process Flow

A typical cash call transaction proceeds through the following sequence of steps:

...

       1.      A cash call is issued.

       2.      A cash call payment is posted.

       3.      An expense for which the cash call was issued is then posted.

       4.      The cash call is reclassified for clearing.

Cash Call Transactions Occur in SAP JVA and FI

Not all cash call steps are executed within SAP JVA itself. Some steps are executed within SAP JVA, and the results are posted to standard SAP components through FI. Conversely, other steps are executed within FI, and the results are transferred to SAP JVA for further processing. FI and SAP JVA documents are produced as a result of each transaction. The following table indicates the major steps in the sequence of processing cash calls.

Processes Executed in JVA or FI

Process

JVA

FI

Issue cash call request

X

 

Post cash call payment

 

X

Post expense

 

X

Reclassify cash call

X

 

 

Methods of Posting Cash Calls

Cash calls can be posted net or gross. Net cash calls are requests made to a single partner.  Gross cash calls are requests made to all partners in an equity group. In addition, cash calls can be posted by venture or by project.

Possible Cash Call Options

Type of Cash Call

Operated

Non-operated

Venture / Net

by venture for a single partner

by venture or equity group for various currencies

Venture / Gross

by venture for all partners in an equity group

 

Project / Net

by project for a single partner

by project for various currencies

Project / Gross

by project for all partners in an equity group

 

 

Cash Call Reclassification: Splitting by Billing and Operational Month

You can clear multiple cash calls issued in different months (with different billing months) against expenditures in the same operational month through a single reclassification posting. You can also clear multiple cash calls, intended to be matched against expenditures in different months, (cash calls with different operational months) within the same operational month.

The operational month is stored in the XREF1 and the billing month in the XREF2 field of the original cash call document, as well as in the final clearing document posted by the reclassification process. 

When you select multiple cash calls with different operational or billing months for inclusion in a single execution of the reclassification process, the cash call clearing document posted by that process can be split according to operational and billing months. This handling may be selected through FI configuration. The setting is independent of company client, so it applies to the entire SAP system.

To make this setting, follow this menu path in the IMG:

...

       1.      On the Display structure menu, choose Financial Accounting General Ledger Accounting Business Transactions Open Item Clearing.

       2.      Select Define clearing rules. On the FI Clearing Rules table, enter the name and description of the new clearing rule to be used to split cash call reclassification documents by billing and operational months.

       3.      Select the radio button Clearing rule fields. On the Definition of FI Clearing Rules table, enter the item numbers and the field names by which the documents controlled by this rule will be sorted (XREF1 for operational month and XREF2 for billing month).

       4.      After you define the new clearing rule, return to the Open Item Clearing heading on the IMG and select Assign clearing rules to account types. On the Maintenance View for Assigning FI Clearing Rules screen, enter a D for customer accounts in the AcTyp field and the name of the clearing rule that will ensure that reclassification documents are split by operational and billing months in the Clearing rule field.

Posting Cash Calls to Intercompany Partners

You can send cash calls from one company that uses SAP to another company that uses SAP within the same client. Both companies must be configured for SAP JVA to enable this process.

Batch and Online Processing

Cash calls can be submitted online or batch. From the online screens, you can enter the venture or project cash call information and immediately post the cash call. Alternatively, you can hold the online information in a batch file for processing later.

Cash Call Direct Print

Cash call direct print functions within the cash call transactions allow you to create a separate hardcopy output for cash call requests.

Example

Partner ABC and the Operator agree to construct a building. Two months before the project starts, the operator issues a cash call to Partner ABC on the March bill for Partner ABC's portion of the project expenses expected in May. March is the Billing Month when the cash call appears on the bill. May is the Operations Month when the actual expenditures will be incurred. Partner ABC pays the operator for the cash call in April. In May, the building is completed and actual expenditures are incurred. The cash call payment is applied against the actual expenditures incurred in May.

When a cash call is issued, identifiers for the billing and operational month of the posting are stored in the SAP JVA billing ledger (JVTO2). However, the values for the billing and operational month are not stored in the SAP JVA ledger. Instead, a value that reflects the delta between the billing or operational month and the posting month of the cash call is stored in the ledger.

If a cash call is posted in 2/02 with a billing month of 6/02 and an operational month of 12/02, the values stored for billing month (BiM) and operational month (POM) would be calculated as follows:

BiM = 4 (6/02 - 2/02) and POM = 10 (12/02 - 2/02).

The delta values (representing the difference between the billing month and the posting month on the one hand, and the operational month and the posting month on the other), rather than the values for the months themselves, are stored in JVTO2.

 

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