FSCM-TREASURY

BANK COMMUNICATION MANAGEMENT

 SCOPE
Understand how SAP BCM module can be used for payment
approvals and monitoring

See How cash balance tracking and bank statement monitoring

can be implemented to track missing statements or reconciliation
problems in SAP

Implement interfaces with Banking Partners

Payment Approval Process
Payment
Approval
Process –
Option 1
Payment
Approval
Process –
Option 2
Payment
Approval
Process –
Option 3
Payment
Approval
Process –
Option 4
How do I design a Better Process ??
 BCM &
Connectivity
Overview
 BCM &
Connectivity
Overview
 BCM &
Connectivity
Overview
BCM - INTRODUCTION
BCM- FLOW
 SAP - BCM
Integration
The SAP Bank Communication Management application forms part of
the SAP ERP Financials solution. This allows for close integration of
payment processing in ERP Financials with the Payment Medium
Workbench.

Features:
SAP Bank Communication Management includes the following functions
Merge payments
Approve payments
Payment status monitor
Bank statement monitor
Display incoming status messages
Reservation for cross-payment run payment media
Status of collector payments
Define alerts
Benefits
The following are the benefits derived from implementing BCM process:

o Reduction of manual efforts; ensures the payment process is automated Reduce cycle time of payment
processing
o Common interface of payment processing, when there are dealing with multiple banks.
o Payment runs are batched based on various criteria predefined in the system configuration.
o Workflow based approval system ensures that payments are routed through a proper channel with minimum
of manual efforts.
o Payment file is generated upon the final authorization and can be sent to bank directly using BCM.
o Single point of reporting tool for the status of payments, showing clear visibility to the stake-holders.
BCM – IN DETAIL
Merge Payments
With this function, you can group together payments from several payment
runs into one payment run and transfer them together on payment media.

The required functions are supported in the payment programs for vendors
and customers (F110), for payment requests (F111) and also in all Data
Medium Exchange (DME) preliminary programs for payroll and travel
expenses.

Approve Payments
You can use this function to display a work list of payment batches for
processing. You can then choose to approve or reject batches from the
worklist. This work list is the link between payment program and payment
medium creation. After full approval, the payment medium for the batch will
be created and sent to your bank.

After the payment program run, execution of program SAPFPAYM_MERGE

creates the batches. Depending on your settings, some of those batches
(typically low value ones) are released automatically. They do not appear in
the work list. All other batches create workflow items, which you can approve
or reject.
Payment Approval Process - Continued
Payment Approval Process - Continued
 Payment
Approval
Process -
Continued
 Payment
Approval
Process -
Continued
 Payment
Approval
Process -
Continued
 Payment
Approval
Process -
Continued
BCM – IN DETAIL
Payment Status Monitor
With this function you can access an overview of batches (groups of
payments) and see their current status. You can drill down to the payments in
each batch and access information on their release (approval) process and
status history.

Bank Statement Monitor

The bank statement monitor displays the status of bank statements from
individual house bank accounts. Information from an external bank statement
is adapted using internal bank account information from Financial
Accounting, and then different statuses are determined.
A bank statement that is delayed or that does not reach the monitor can be
identified with this function just as quickly as any differences occurring
between the bank statement balance and the internal G/L account balance.
Any items that are not assigned as well as differences in posting are also
recognized in this way.

Display Incoming Status Message

You can use this function to display status messages containing status codes
and status reason texts for particular batches. The function can be used for
error investigations, such as when a batch status has not been updated after
receiving notification for that batch.
 BCM – IN DETAIL
Reservation for Cross-Payment Run Payment Media
In this activity, you can define the identifications that you use to summarize
payments from different payment runs into batches. In order to process these
payment runs, you use the program for creating cross-payment run payment
media(transaction SAPFPAYM_MERGE). This will create the batches (groups
of payments) and start their release process. On release of the batch, the
payment media for the payments contained in this group are created
automatically. You can use this function for the following payments:

o Payments from the payment program for Accounts Receivable/Accounts

Payable Accounting (transaction F110)
o Payments from the payment program for payment orders (transaction
F111), in particular
o online payments and payments with repetitive code.

Status of Collector Payments

With this function, you can see the status of payments that were earmarked
for the batch and release process. You can see if such a payment is already
included in a batch and whether a payment medium file for this batch (which
includes the payment) already exists. You can also see the date and
identification of the payment run in which the payment was created. You can
view the merge run (SAPFPAYM_MERGE) in which it was put into a batch, and
the file creation run (again, SAPFPAYM_MERGE).
 BCM – IN DETAIL
Define Alerts
With this function, you can define the different alerts that can be used
for Bank Communication Management . Such alerts include payment alerts
(for example, when a particular payment is unacknowledged), and timeouts
(for example, when not receiving an acknowledgement for a particular batch
within a defined time interval).

BCM has the ability to receive transmission confirmations and update status
for files in an easy to use monitor
File Transmission Status
 File
Comparison
Payment Status Report
SAP Provides a Standard program
that can be used to read XML
confirmation files and update
payment status in BCM

Acknowledgements:
T code: S_EBJ_98000208
Depending on your process, you
can pick up ACK files manually or
via PI. In either case, SAP
standard transaction
S_EBJ_98000208 can import the
acknowledgement files. If you
have different levels of ACK files,
then you can have acceptance
and rejection statuses on each of
them. For example, your payment
file may be accepted in general,
but one payment in it may be
rejected for some reason.
Payment Status Report
Consideration for Payment Automation
CONFIGURATION:
The scope of implementation of BCM covers

o Implementing Payment Medium Workbench (PMW). PMW is a tool to configure and created payment media
sent by organizations to house banks. The tool replaces the classic payment media programs (RFFO*).
o Configuring BCM workflows providing double / treble / quadruple levels of payment approvals

PMW is a tool used to create payment file formats for transferring to banks. The payment medium formats can be
either a classic payment medium program or through the PMW.

There are few SAP standard PMW file formats for various countries. A new format can also be created if there is a
need for custom file format or if there are no other formats available for that bank/ country. This customization
can be either done through modifying the standard function modules of an existing PMW format or through
developing via Data Medium Exchange Engine (DMEE). (However this document does not deal with customizing
through DMEE).
PAYMENT MEDIUM FORMAT
Path: SPRO > IMG > Financial Accounting (New) > Accounts Receivable and Accounts Payable >
Business Transactions > Outgoing Payments > Automatic Outgoing Payments > Payment Media > Make Settings for
Payment Medium Formats from Payment Medium Workbench

The above path can also be accessed through the T. Codes OBPM1 / OBPM2 / OBPM3 / OBPM4.

Let us briefly go through the steps in implementing PMW:

• Create/ change payment medium formats
• Assign variant to the format
• Assign the format to payment method
Maintain PMF
The payment medium formats can be changed according to the user needs in TA OBPM1. Also the user can create
new format by using “New Entry”

The standard SAP format ACH has been used.

The formats have been defined using function modules in the form of events.

SAP has predefined the following events and any customizations to the codes have to be routed through the Sample Function Modules
01, 06, 11, 21 etc. For instance, if there are some changes in Event 20, the same has to be incorporated in Sample Function module in
Event 21. Once event 20 is reached, event 21 will also be triggered.
Maintain PMF
Maintain Variants for payment medium formats:
The variant for the payment medium format have to be maintained for the combination of Company Code & House
Bank. This has to be done in the TA OBPM4.

Assign payment medium format to payment method:

In the T Code OBVCU, select the payment method for the country & assign the payment medium format as per
PMW:

In the above screen, instead of “Use classic payment medium programs”, we should assign it as “Use PMW”. This
setting is a pre-requisite for BCM functionality
Maintain PMF
Reserve identification for Cross Payment Run Payment Media:
For the purpose of batch creation, we should also configure the unique identifiers. This is done in T Code OBPM5.

The payment runs, with the run ID (in F110) beginning with the identifiers reserved above, are alone considered for
batching in the BCM process.

For the payment module, select FI AP/AR Payment Program for customers and vendors, and create new entries.

The above illustration means that any run ID starting with RB & ZB alone is considered for BCM batching purposes.
Configuring BCM
Before looking into the basic configurations relevant for BCM, we have to first activate BCM using T Code SFW5.

Configuration:

The relevant settings for BCM can be configured in the following path:

SPRO > IMG > Financial Supply Chain Management > Bank Communication Management

The above path is referred in future sections as SPRO > BCM

The individual steps are given in detail below:

 Configuration
Path: SPRO > BCM > Basic Settings > Basic Settings for Approval
In this activity, we need to maintain the “Rule Currency”, “Exchange Rate Type”, “Days resubmission” and whether
“Signature” is required or not.

Rule Currency: For batching rules consisting of various currencies, the

currency specified here is considered as the default currency. In our
illustration, it is INR.
Exchange Rate Type: This is used to define different exchange rates. You
can use the average rate for foreign currency translation, and the
buying and selling rates for the valuation of foreign currency amounts.
Days‟ resubmission: For resubmission of payments, the date of
resubmission from the current date can be set here. In the illustration,
it is given as “1”, which means that the default resubmission date =
current date + 1 day.
Signature required: If you tick this check-box, then the batch approval
system follows a digital signature process. Every time before a batch is
approved; a pop-up for the user signature appears.
Payment Grouping
Path: SPRO > BCM > Payment Grouping
This is the activity where we maintain the rules for batching the payments. We need to create rules by defining a
unique Rule ID, giving a description to it and marking a priority. Once the rules are prioritized, the batching
happens according to the priority set in the rules.
Payment Grouping

Then we need to maintain the Attributes to define rules for batches. The attributes can be selected from any of the given fields
like, Amount, vendor, business area etc, depending upon the requirements of the user.
In our illustration, Amount in Local currency has been used. This means that any payment run amount falling within the given
rang will form part of a single batch.
The same way, any number of rules can be framed to fit the user requirements.
We can also set additional criteria apart from the attributes mentioned above. Two grouping fields can be added which will
ensure further batching.
For instance, if our Additional criterion is “SRTGB”, then the payments are first batched on the basis of Amounts as set earlier and
then further batched based on “Business Area (SRTGB)”.
Payment Status Management
Path: SPRO > BCM > Payment Status Management

Map external status to internal status: In this activity, we can interpret the status codes from the external world.
Any incoming status message has a code which can be mapped to an internal status based on a company code and
house bank. If an alert needs to be triggered for an external status code, we must define the alert.

Timeout for Batch Status update: In this activity we can specify a maximum allowed time interval between two
status updates. An alert will be triggered after the allowed time elapses.
Bank statement monitor
Path: SPRO > BCM > Bank Statement Monitor > Settings for Bank Statement Monitor

In this activity, we define the settings for bank statement monitor, particular to various house banks.

The above fields are discussed below: Company code, House Bank, Account ID for which the bank monitor
settings are required are to be entered.

Process Status: The processing status indicates whether the bank statement has been processed correctly. It
may be Red, Green or Yellow depending upon the status. To set this status, tick the check box.
Bank statement monitor
Difference Status: The difference status displays whether the bank statement has the same balance as the
corresponding internal bank account. To set this status, tick the check box.
Serial number status: The serial number status shows whether the sequence of the last five bank statements is
complete. In case the same is not complete, Red symbol is displayed in the monitor.
Reconciliation status: The reconciliation status displays whether there are open items in the internal account.
Interval & Interval Unit: The intervals in which the bank statements are to be expected, for the corresponding
set of Company code, house bank & Account ID, are maintained here. The interval unit can be either days,
weeks, months or year.
For instance, if the bank statements are to be updated daily, maintain Interval as “1” and Interval unit as
“Calendar Days”.
Factory Calendar ID: It is used to distinguish between working days and non-working days. In the above
illustration, “IN” has been chosen as the factory calendar ID, which means that settings relevant for India will be
considered.
Item: The display position of the account in the bank statement monitor. In the above illustration, „IBPOCITIC-
CA‟ has been marked as Item 1, which means that account will be displayed at the top of the bank statement
monitor.
Release Strategy
Path: SPRO > BCM > Release Strategy
This is where the crux of BCM lies, because release strategy is the point at which the approval workflow comes
into place.
Automatic payments:
Path: SPRO > BCM > Release Strategy > Mark rules for Automatic Payments

We also have the option to mark any or all of the rules for automatic payment (without using the approval
workflow). This is done in this step:
• Against the particular rules, if the “Auto” check-box
is ticked, then the batches which fall under the
specified rule would not flow through the approval
system.
• For instance, in the illustration above, if “SET1” is
ticked for “Auto”, then any batch with value less
than Rs.100000 will be marked for automatic
payment.
• If “Drill down” check box is ticked, then the batch
provides an option for drill down display before
making payment.
Release strategy
Change and Release:
Path: SPRO > BCM > Release Strategy > Change and Release

The workflow comes into use at this stage. Basically, the workflow system uses two types of objects for the
approval mechanism – BNK_INI and BNK_COM.

The change and release procedure makes use of the first object (BNK_INI) while the additional release procedure
uses the other object (BNK_COM).

This is called as „change and release‟ step because only at this stage the user has the option to “Change” the batch
before “releasing” it to the next level of approver for his approval. In the second and later levels, the users cannot
edit the batch. They only have the option to „Approve‟ or „Return‟ the batch.

In the change and release option, first we assign role to the release steps:
Any user is treated as a role and workflow is assigned for the particular role. The objects pick up the role from the
rule ID specified in this step.
Release Strategy

The fields are explained as below:

Release Object: Since the change and release function uses the BNK_INI object, assign the same in this field.
Release step: This means the Release procedure, i.e., how many processing steps are carried out. It can be either,
dual (01), treble (02) or quadruple (03) controls. This is to be given based on the user requirements.
01 in the above illustration indicates that it is a Dual control, which means “Creation” plus “one release step”.

WF Release Step: For change and release, assign the same as 1st Release Step.

Rule: Identifies a rule for user determination in the Framework for the Principle of Dual Control. In this field you
store the eight-digit numeric ID of a rule for user determination.
Release Strategy
After saving the entry, select the entry and press „create rule‟ icon, which takes to the next screen:
Additional Release
Additional Release

The above illustration means that the Principle of Dual control is adopted.

And if the batch value falls between Rs.1 lakh and Rs.10 Lakhs, then its flown to Release reason 1. If the value is
between Rs.10 Lakhs and Rs. 50 Lakhs, batch flows to Release reason 2.

Assign Role to release steps in the additional release steps function is the same as explained in Change and
release function.
Additional Release
Assign workflow to release procedure: In this activity, you can assign a release workflow and a release procedure
workflow to every release procedure of a release object. The release workflow realizes the technical processing
of the release in the system. The release procedure workflows realize the technical processing of the various
release procedures (such as the principle of treble control) in the system.
Digital Signatures
Digital Signatures

SAP offers 2 signature methods:

System Signature: After the user has authenticated himself or herself with logon data, the system uses a digital signature.

User Signature: The user writes the digital signature with his or her own personal key. An external security product must be
installed that implements the SAP SSF interface.

For our illustration purposes, system signature with authorization by SAP user ID/ password is considered. This means that the
same SAP user ID password which is considered at the time of login by the user is used as transaction ID/ password at the time
of approving batches. Once the user approves & presses the save icon, the digital signature is prompted: