Dear Colleagues,
As organizations often operate in multiple locations and industries, it is critical to establish a common language for communication with their counterparts. Financial planning, reporting, disclosure, and consolidation form the basis of this language and are crucial to a company's information systems.
In the past, companies created flat-structure financial statements with numerous general ledger (GL) accounts to represent both the economic nature of accounting events and the analytical position in which they occurred. However, as businesses became more complex and regulatory requirements more stringent, the increasing number of analytical dimensions and economic event types resulted in large charts of accounts with thousands of GL accounts. Additionally, the structure of financial statements often varied among affiliates within the same group, making consolidation a challenging task.
To address these issues, SAP introduced the Flexible General Ledger and Universal Journal of S4 HANA, which introduced the concept of a multi-dimensional ledger. In this system, the analytical positions are represented by combinations of dimensions in the coding block, while the economic nature of the accounting event is represented by the GL account. This technology facilitated the harmonization and simplification of charts of accounts among affiliates within a group, making it easier to produce homogenous financial statements and facilitating their reconciliation and consolidation.
SAP S/4HANA Finance for group reporting includes a complete set of financial consolidation capabilities, including currency translation, inter-unit eliminations, data validation, and real-time company and group scope analysis reports. It also features seamless integration with SAP Analytics Cloud for central reporting and visualization of consolidated and non-consolidated financial information.
However, SAP has not yet released a complete solution for solvency and fair value accounting planning, including collateral revaluation, commitments postings, and value at risk analysis. An alternative to this is to complement the planning capabilities of SAP S/4HANA Finance with the solvency calculation capabilities of the SAP Credit Risk Analyzer and the IFRS-9 accounting capabilities of SAP Financial Products Subledger, using planning data rather than actual data.
Integrating in the same Planning cycle the Accounting Valuation and the Capital consumption forecast allows us to identify the expected benefit by market segment and weighted by the capital consumption of that segment. Establishing the basic pillar to Optimize Capital.
These are the guidelines followed by our team in the construction of our Capital Optimization system, built on top of the Integrated Financial and Risk Architecture.
Our Capital Optimization system speaks with the business processes of our clients' SAP Systems translating them in terms of Capital and Liquidity generation and consumption. With this information the Capital Optimization system measures the deficits and surpluses of capital and liquidity of the business processes and proposes financial instruments to offset these deficits and surpluses, optimizing the consumption of capital and liquidity of the system.
We are working on presenting our system to the market and looking for business partners and investors.
If you are interested, do not hesitate to contact me at ferran.frances@capitency.com
I look forward to reading your comments.
Kindest Regards,
Ferran Frances.
www.capitency.com
Join the SAP Banking Group at: https://www.linkedin.com/groups/92860
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