Tired of paying outsource services and banks to calculate and settle your intercompany payments? As the need to globalize operations has expanded and the associated cost to manage intercompany payments has exponentially increased, Treasurers have sought new ways to better manage cash and intercompany settlements in a distributed corporate structure where subsidiaries operate in different countries and multiple currencies.

Now, users of SAP have the opportunity to take greater control of their intercompany payment processing with a netting solution that substantially reduces costs while also providing the increased integration, control, and visibility essential in today’s challenging global financial environment.

The e5 IHC RDS for SAP allows for the rapid implementation of the SAP In-House Cash netting solution with a fixed-price, fixed-scope project. Using the core functionality in SAP’s IHC application and the rapid deployment made possible by the e5 IHC RDS, organizations can now implement a solution that greatly simplifies the intercompany settlement process by facilitating the internal calculation of multi-party, multi-currency netting settlement requirements; and do so on a timeline and budget that was previously unavailable. With the addition of available e5 IHC RDS Add-Ons, organizations can further increase the value proposition by extending the solution to include automated seamless integration with SAP’s Transaction Manager, Financial Accounting, and Intercompany Accounts Payable and Accounts Receivable. This SAP functionality enables organizations to settle their intercompany obligations without the need for external cash transfers where allowed by regulation and in countries where tax or legal regulation requires cash settlement, the solution can seamlessly blend the two together, allowing for total flexibility.

One Solution. Two Tiers.

To address different company requirements, e5 has developed two tiers to its IHC RDS solution: IHC Netting Single Account and IHC Netting Multi Account. The first tier is a simpler model designed for companies who simply want to settle intercompany payments with the least amount of complexity, typically without a hedge program or desires to introduce market FX rates for use in settlement. The second tier is expanded for those companies who prefer to keep the different currency balances segregated and convert the balances based on non-accounting exchange rates, typically from FX market trading.

The first tier, IHC Netting Single Account, is a solution for companies for which each participant has a single account and all foreign currency transactions are converted at the prevailing accounting rate of the day. These net balances can then either be left as is or net cash settled if required.

The second tier, IHC Netting Multi Account, is a solution for companies who actively want to manage the exchange rate used for the posting of netting transactions. Under this model, all participants will have accounts in select currencies (i.e., EUR, GBP, CAD, and AUD) and their functional currency account (i.e., USD). Transactions will post to the appropriate account based on currency and each foreign currency account will be converted, based on a client’s netting exchange rate, to the owning entity’s functional currency account on a daily basis.

Both tiers include a manual IHC transaction creation program as well as an IHC transaction spreadsheet upload tool. Additionally, the creation of a PDF statement will be included. This statement allows participants to record the netting results. Both tiers include the ability to charge interest to facilitate cashless netting and the ability to facilitate netting cash settlement.

SAP IHC Netting Benefits:

• Provides intercompany netting solution equal to or better than that of banks and boutique software firms.
• Translates all intercompany payables and receivables to each entities functional currency or base netting currency.
• Handles net cash settlements like other solutions.
• Handles cashless (book) settlements, which means no external cash transfers or fees.
• Fully integrates to SAP intercompany accounts payables and receivables.

e5 IHC RDS Benefits:

• Speed and cost savings for proven solutions compared to regular implementation projects.
  Comparable or better functionality to bank and boutique software, allowing companies to save significantly on annual fees.
• Easily extendable to integrate seamlessly with subsidiaries’ intercompany payables, receivables and general ledger.
• Easily extendable to other functionality such as cross-company cash pool loan management and shared service center payment factories for third party accounts payable processing

For more information about how e5’s IHC Rapid deployment for SAP can benefit your organization, contact us at: info@e5solutions.com and please reference “IHC RDS”.