SAP Cash Application

May 28, 2019 Posted by: Davy Van Berghen
cash-application-process-blog-billtrust

Cash Application

SAP Cash Application is a cloud-based extension (an API) that provides intelligence based on machine learning for your invoice and payment matching process.

Machine Learning is part of the SAP Leonardo Digital Innovation System.

1-1

The machine learning technology is a technology that teaches computers how to perform tasks by learning from data, instead of being explicitly programmed. Sophisticated algorithms are needed to ‘learn’ from the massive volumes of Big Data.

On business level, Machine Learning has a lot of benefits:

  • With the algorithms been setup, more Automation is achieved
  • Faster Decisions can be taken
  • Machine Learning supported business processes improves the Efficiency, enablesaccurate planning and forecasting, automatestasks and reduces costs and human errors.
  • We gain Deeper insights by analyzing big and complex data, stream data that are difficult to be done by humans.
  • It provides help to drive better Business outcomes.

For Finance, the SAP Cash Application is one of the Machine Learning use cases.

2-1

 

Key Functionalities

The automated functionalities provided by Machine Learning in the SAP Cash Application include:

  • Proposing and matching open receivables for incoming bank statement items
  • Clearing incoming bank statement items.
  • Proposing customer accounts for incoming bank statement items
  • Posting incoming bank statements items to accounts

These automation is executed by scheduled jobs, where some conditions should be met:

  • The matching rate of the proposal is higher than specified in the configuration.
  • The proposed receivables are still open.
  • All other clearing rules are fulfilled.
  • The proposed account is a valid existing account.

The jobs can be defined on Accounts Receivable level and on Cash Management level.

Example Account Receivable Job Definition

3-1

Customers paying their invoices often send a remittance/payment advice, indicating the invoices that have been paid.

SAP Cash Application has the capability to extract the invoices that have to be cleared based on the remittance advice sent by the customer.

4-1

With ‘Intelligent Matching’, the system is able to match and clear the payments with the invoices mentioned on the payment advice.

Example Payment Advice

5-1

6-1

 

This drastically lowers manual efforts by automatically extracting remittance information from unstructured advices (like email, PDF, paper, etc.) and enhances the payment matching of invoices based on the remittance advice.

The SAP Cash Application Process overview

7-1

 

By bank statement import, lockbox import or Payment Advice there is determined if it concerns an incoming or outgoing payment. On level of the payment advice the extraction is made.

Depending on the identification (incoming or outgoing payment), the payment classification is done  (receivable or payable).

As a next step, the account identification is also done and at the end the line items are matched.

The line item matching process is done in 6 steps:

8-1

 

On Line Item Matching Step 3 and 4, the Cash Application functionality will do the necessary by:

  • Scheduling the SAP Cash Application job
  • Machine Learning inference returning the proposals to S/4HANA.

Configuration

SAP Cash Application has to be enabled and basic settings need to be applied.

This is done on level of the customizing in the IMG guide.

9-1

Requirements

SAP Cash Application requires:

  • S/4HANA Cloud – as of version 1802 or higher
  • S/4HANA on-premise – as of version 1709 or higher ECC 6.0 - Ehp7 or higher (however not all features are available for legacy ECC systems).

The latest release of SAP Cash Application includes integration with the latest release of SAP S/4HANA Cloud and SAP S/4HANA on premise.

The additional license cost for using SAP Cash Application includes the infrastructure cost as it is running in the SAP Cloud.

Key takeways

Automation

SAP Cash Application increases efficiency and reduces errors in the finance department.

It enables Finance to focus on the strategic tasks.

Speed

The process of the incoming payments is faster, reduces the DSO, increases the liquidity and improves customer service.

Integration with S/4HANA

It leverages a tight integration with SAP S/4HANA Cloud services and on premises solutions. This will complement standard rules, extract values from historical data and maintaining your current workflow.

Reduced TCO

Learning from an accountant behavior and start working immediately. This will continually adapt without further maintenance of the system.

Personally, I was impressed about the functionality of SAP Cash Application and I am confident thatt it takes cash processing to a next level.

Are you curious about SAP Cash Application and how Expertum helps you in answering your questions?

Get in touch with our experts: Contact Us 

Davy Van Berghen

Senior Consultant Financial Solutions within Expertum Belgium