Dear Gurus,
Our client is implementing In-House Cash module to meet their Cash pooling (zero Balancing) requirement. I am new to this area. Request to please help me to understand the settings in SAP to meet this requirement.
Scenario
· Cash Pooling Arrangement is between Parent entity & Child Entities.
· Maximum Limit is - pre defined
· Parent Entity has an Overdraft Facility.
· Each Transaction is treated as a Loan and / or Repayment of Loan between Parent Child Pair.
· nterest is due on loan outstanding half yearly (30 Sep & 31 Mar). Interest is capitalized net of withholding tax on next calendar day for non – payment of interest due.
· Lender /borrower remain a lender/borrower and interest is levied accordingly; till the entire outstanding is not settled.
· At year end Amendment of interest takes place & is applicable for the outstanding loans from the date of disbursement. i.e. True up of loan happens and any change in the interest rate will retrospective effect (from start date) on the outstanding loan amount .
· All Child accounts are zero balance at End of Day and funds are transferred to Parent as repayment of loan or lending to Parent.
· Each Co Code is having external Bank accounts and sweep in transactions are reflected both in HO & Subsidiary Bank Statements.
· Bank statements are uploaded separately for each Co Code (HO & Subsidiary)
Example
C (parent) lends to A (child 1) if there is a shortfall and
charge interest and remains a lender till all outstanding is not repaid by A to C, similarly B (child 2)
lends to C on surplus and charge
interest and remains a lender till all outstanding is not repaid by C to B
Nature Co Code Start of day EOD
Parent C 100 240
Child 1 A -60 0.00
Child 2 B 200 0.00
My understanding
a. An IHC center to be created at Parent Co Code (C ) that will act as a virtual Bank and each subsidiary will maintain separate current account in the IHC center.
b. Two additional current accounts
- Account to represent that FI that imports the bank statement holds in the in-house cash center.
- Suspense Account - Payments for which the system was not able to automatically determine a recipient are posted to this account.
Mapping of the same will be done in “Set Up Account Determination for Incoming Payment” in IMG settings
c. The above combination of three accounts (a + b) needs to be created for each currency in which the cash pooling is happening.
d. IHC center will be created as House Bank in each of the subsidiaries and current account as created before will be the bank account number in the House Bank. The same will be used for internal Bank statement update in subsidiary.
Doubt
1. Flow of accounting entries in each stage
2. Subsidiaries external Bank Statement will also have zero balancing entries like HO Bank Statement. So how to deal with this part.
3. True up of Loan & post tax interest capitalisation
