Dear,
A common mistake is assuming that Bank Analyzer functionalities are only applicable to banks.
Bank Analyzer is basically a Capital Optimization engine, and this functionalities are applicable to any business or industry, as they're all facing the challenges of the new environment of Capital Scarcity.
Maybe the confusion comes from the name; Bank Analyzer implies that its functionalities are limited to banks, when this is not the case.
In fact, you probably know that some years ago SAP released the Insurance Analyzer system, which is basically a Bank Analyzer system enhanced with some templates addressed to model Insurance Products.
http://help.sap.com/insurance-fsia/
In a future post we'll talk about Insurance Analyzer, but today we'll look at other potential markets for Bank Analyzer that have not received proper attention by Sales and Marketing teams.
IFRS 9 requires financial assets belonging to the business model, whose objective is to collect contractual cash flows, containing expected payments of principal and interest, to be measured at amortized cost.
We all know that Loans fall in this classification (by the way, that's why we're implementing Bank Analyzer-AFI) but Receivables also fall in the same classification with the same requirements.
We also can look at the materiality of the differences between purely Nominal Accounting and Amortized Cost measurements, and that would help us to identify potential candidates for implementing Bank Analyzer in non-purely financial business.
In my opinion, a particularly interesting example are Telecommunications companies. If we look at their balance sheet structures, we'll see that the Accounts Receivable is a very significant part of their Assets, which makes them an interesting target for implementing accurate Accounting Systems, capable of fulfilling Amortized Cost measurements.
Another reason which makes this target interesting is purely technical. Many telecommunications companies use SAP Billing and Revenue Management for Telecommunications, integrated with SAP Contract Accounts Receivables and Payables (FICA).
SAP FICA is an excellent tool for the management of Accounts Receivables, including sub-ledger functionalities, but limited to Nominal Accounting Principles, and insufficient for managing the new regulatory requirements in Revenue Recognition.
For the moment, most of the Telecommunications companies are fulfilling their IFRS requirements, with Business Segment based adjustments of their Accounts Receivable values on the General Ledger.
We're going to see that this is not a good approach in the middle-term
The International Accounting Standards Board is already working in IFRS 15 which is increasing significantly the disclosure requirements on Revenue recognition, from Contracts with Customers
http://www.ifrs.org/current-projects/iasb-projects/revenue-recognition/Pages/Revenue-Recognition.aspx
Fulfilling these requirements will require the use of a Financial Sub-ledger, capable of managing contract-based, amortized cost valuations; one of the basic functionalities of SAP Bank Analyzer.
Taking advantage of the Bank Analyzer functionalities, by Telecommunications Companies using SAP Billing processes, will require the integration of the FICA base Accounts Receivables Contracts, Business Partners and FICA Business Transactions, with the Bank Analyzer Source Data Layer - Primary Objects.
Once the Accounts Receivable Contracts have been properly integrated as Financial Transaction in the Bank Analyzer SDL, there're no limitations in the use of the Bank Analyzer Risk Engines for fulfilling the company accounting requirements and new disclosure regulations.
We've worked recently in a Proof of Concept of this integration and we'll give you more details of it in a future post.
Looking forward to read your opinions.
Join the SAP Banking Group at: http://www.linkedin.com/e/gis/92860
K. Regards,
Ferran.
A common mistake is assuming that Bank Analyzer functionalities are only applicable to banks.
Bank Analyzer is basically a Capital Optimization engine, and this functionalities are applicable to any business or industry, as they're all facing the challenges of the new environment of Capital Scarcity.
Maybe the confusion comes from the name; Bank Analyzer implies that its functionalities are limited to banks, when this is not the case.
In fact, you probably know that some years ago SAP released the Insurance Analyzer system, which is basically a Bank Analyzer system enhanced with some templates addressed to model Insurance Products.
http://help.sap.com/insurance-fsia/
In a future post we'll talk about Insurance Analyzer, but today we'll look at other potential markets for Bank Analyzer that have not received proper attention by Sales and Marketing teams.
IFRS 9 requires financial assets belonging to the business model, whose objective is to collect contractual cash flows, containing expected payments of principal and interest, to be measured at amortized cost.
We all know that Loans fall in this classification (by the way, that's why we're implementing Bank Analyzer-AFI) but Receivables also fall in the same classification with the same requirements.
We also can look at the materiality of the differences between purely Nominal Accounting and Amortized Cost measurements, and that would help us to identify potential candidates for implementing Bank Analyzer in non-purely financial business.
In my opinion, a particularly interesting example are Telecommunications companies. If we look at their balance sheet structures, we'll see that the Accounts Receivable is a very significant part of their Assets, which makes them an interesting target for implementing accurate Accounting Systems, capable of fulfilling Amortized Cost measurements.
Another reason which makes this target interesting is purely technical. Many telecommunications companies use SAP Billing and Revenue Management for Telecommunications, integrated with SAP Contract Accounts Receivables and Payables (FICA).
SAP FICA is an excellent tool for the management of Accounts Receivables, including sub-ledger functionalities, but limited to Nominal Accounting Principles, and insufficient for managing the new regulatory requirements in Revenue Recognition.
For the moment, most of the Telecommunications companies are fulfilling their IFRS requirements, with Business Segment based adjustments of their Accounts Receivable values on the General Ledger.
We're going to see that this is not a good approach in the middle-term
The International Accounting Standards Board is already working in IFRS 15 which is increasing significantly the disclosure requirements on Revenue recognition, from Contracts with Customers
http://www.ifrs.org/current-projects/iasb-projects/revenue-recognition/Pages/Revenue-Recognition.aspx
Fulfilling these requirements will require the use of a Financial Sub-ledger, capable of managing contract-based, amortized cost valuations; one of the basic functionalities of SAP Bank Analyzer.
Taking advantage of the Bank Analyzer functionalities, by Telecommunications Companies using SAP Billing processes, will require the integration of the FICA base Accounts Receivables Contracts, Business Partners and FICA Business Transactions, with the Bank Analyzer Source Data Layer - Primary Objects.
Once the Accounts Receivable Contracts have been properly integrated as Financial Transaction in the Bank Analyzer SDL, there're no limitations in the use of the Bank Analyzer Risk Engines for fulfilling the company accounting requirements and new disclosure regulations.
We've worked recently in a Proof of Concept of this integration and we'll give you more details of it in a future post.
Looking forward to read your opinions.
Join the SAP Banking Group at: http://www.linkedin.com/e/gis/92860
K. Regards,
Ferran.
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