cleanFiles/bookmap_SAP_Commodity_Management_Solution_for_Oil__en-US_learning-sap-com_lsc-prod.zip (MMCP-DROPZONE) - 2025-03-17T13:06:31.000Z

Configuring Financial Transactions

<div id="content"><div class="parentsection"><div class="section"><div class="kalturaVideoLessonWrapper"><div aria-label="" class="kalturaVideoLessonContainer" data-testid="video" id="1_98oemp8v"></div></div></div></div><div class="parentsection"><div class="section"><div tabindex="0"><h3>Lesson Summary</h3></div><div class="formalblock"><p tabindex="0">In this video you've learned:</p></div><ul style="list-style-type:disc"><li tabindex="0"><strong>Configuration Consistency:</strong> Treasury and risk management configurations are consistent across instruments, with variations for specific instruments.</li><li tabindex="0"><strong>Company Code Setup:</strong> Set up company codes in Treasury, aligning with FI organization settings for seamless integration.</li><li tabindex="0"><strong>Product Type Definition:</strong>Define product types for instruments like futures and swaps, ensuring correct category selection.</li><li tabindex="0"><strong>Transaction Type Assignment:</strong>Assign transaction types to flow types, determining open or closed positions and cash flow relevance.</li><li tabindex="0"><strong>Update Type Configuration:</strong> Configure update types to define position updates and GL derivation for cash flow and profit/loss.</li></ul></div></div></div>

Financial Transactions Configuration

SAP Commodity Management Solution for Oil & Gas and Metals & Mining

SAPIndustry_Day5_Part3.mp4

All right. So this will, we will go through some typical configuration in use for, is using treasury and risk management for commodity risk. So what are the general attributes? What are the transaction manager configuration and product type related configuration that would see in this session? Sorry. So similar to what you see for, you know, on the front opposite side, like FDR edit and create is the general central transaction for everything. Similarly, the configuration is also pretty much consistent like that. The whole structure of configuration is very same. for most of the instruments with variations required for some typical instruments. Like you go through general settings where you set up your company codes and everything and then come to finally the product type, which our product type is nothing but your instrument type, whether it's a future or option in that sense. So basically if you have exchange rates, configured in the system. You define your exchange rate indicators. This is similar to what you do in your FI site as well. And that is just a process within Treasury as well. So as I was saying, you can provide your exchange rate types and IDs, and these can be then used within Treasury and risk management for translation of positive and negative. amount. So it's pretty much standard. You don't have to really configure out of the way there's a standard delivered configurations available in the system. Company code, additional data is every time when you set up a treasury and risk management system, you would have to add a company code which was set up in FI before. This is not a place where you set up your company code for the first time, but whatever company code was set up through FI, organization you would enter it, assign it here. Most of these details will be captured automatically like this field here. You can give a Swift code or BIC code for your company code if you require. Exchange rate types will be captured here. You can default the price type again for securities, calendars, sorry. And then for commodity like for swaps right based you can there is a setting here which says you can update the commodity price and the price if the sites are floating for swap you can use a commodity curve for uh you know calculate the price or you can just you know update with manually maintain prices or you know don't update zero update so all these possibilities are available this typically is dependent on the requirement, but usually it's always, you know, calculated by a curve. Portfolio, again, it's a, you know, a position attribute for your reporting. You can, apart from the free characteristics, this can be also used as a reporting parameter. You're free to a, it's not a mandatory field. Although you can make it mandatory, but it's not a mandatory feed. you can provide what you want and this is again company code dependent traders again if you have if you want to capture your trader information like sometimes there are two different type of traders like executing trader is disparate and responsible traders are different for example i can be executing trader I book a trade from with with my clearing broker but I will not be the one who enters that trade so there will be another responsible trader who would enter that trade and so you would want if you want to capture both these information you can you know achieve that also so again traders are company go dependent so you can configure the way you want and this will be associated in the trade. So you can define your user data. This is typical SAP settings defaults for a particular user. So there's nothing much to check here. Now it comes to actually the instrument type settings. So you have different product types, like you have actually you see there are different categories of configuration so you have OTC derivatives there will be one category for listed derivatives securities and so and so forth but typically as I was saying the whole architecture is quite similar for each and every category so if you like it's like defined product types then transaction types and flow types so this is And that's why we had said, like, you know, to go through these configuration, it would be a proprietary and risk management background is available. So since this is not a treasury and risk management screen, we would just highlight the configuration required for commodity derivatives. So as you can see, the product type is where you would define your instrument type, like when I highlighted before, 70 is what is used for future. So that is where you would create that under listed derivatives. Whereas if you were doing a OTC trade like forwards or swaps, you would go under OTC derivatives folder. So these are the parts mentioned as well for the configuration. So as I was saying, as soon as you open the defined product types here, it will bring up the screen. There are multiple folders here. Once you click listed derivatives, this screen will open up. If this does not exist, you can create new entries and you give a number range object, select the category as commodity future, quotation type is direct quotation, which means, you know, it will use a price from based on DCSIDs. and if there was an FX rate involved in this, it will use a direct effects rate conversion as opposed to indirect. And settlement is cash settlement because futures, you can determine that as well if it was a physical delivered or cash settlement. And margin is always future style and basically you give a rate type as well for variation margin. There's not much actually, here these are the this is the only screen with the most important part is that you select this category correctly and of course the product category so similarly this is an option again the most important part is product category and this category here so that it knows that it is a commodity future option under option you have OTC options as well different categories or security options so it is important to select a future commodity options commodity forwards again this is there is not much to do here product category is the most important part and as we discuss commodity forwards always gets settled same goes for commodity swap the product category is most important rest everything is not does not apply for a commodity swap now this is a commodity OTC option again the most important part here is the product category and you provide the underlying product types in this case it's a commodity forward the next attribute to configure is transaction type so Basically, what we discussed before was transaction type, at least in case of futures, determines whether it is an open or a closed transaction. That's it. There are different kinds of a transaction type for swaps and forwards, which will go through. But for futures, it's just either you're opening a position or closing a position. Like what you see here. For forwards, it's either purchase, sale, purchase based on a fixed price, or purchase based on average price and the variations in swaps are different like a payer you pay a fixed price you pay a floating price and receive fixed price or you receive floating price and pay fixed price so these are the various options in a commodity swap this is like a more detailed view of transaction type so this is the processing category I was telling this mentioning about you can order you can use this to control whether you need a settlement process in between or not it this zero-tripple-02 just means that it needs a settlement you could also select zero-tripple-0 -01 which is without settlement that completely depends on how the requirement you would have this is for commercial future nothing else is required you always select automatic posting if you don't want to go through release management flow types is nothing but to tell a system what kind of flow it is right so it is pretty self-explanatory in that sense so if a very easy example is like a fee right so what type of fee it is so flow types show tells me oh it's a fee it's kind of an exchange fee In this case, it's a cash settlement amount. So at upon expiry, when you select cash settlement, then this particular flow type will be added in your cash flow view. And that will be relevant for posting. And that can be controlled here. So you have to indicate whether this is relevant for posting. And this relevant for CM here is not commodity management, but cash management. So if you have integration with cash. management this kind of flow can be pulled in in cash management as well relevant for P&L as in when you do a month-end valuation if it is relevant for profit loss so that's what it means as well all other fields are basically not relevant for commodity flow types similarly this is for you know options or futures depending, these kind of flow types, at least for all the commodity derivatives, will be standard delivered. You don't have to necessarily change anything or add anything, even in the new system. So this is just an example, how the flow types are defined. So once you define your flow type, the next step is to assign each type of flow type to your transaction type, so they are available in your trade. So in this case, if you see there are multiple flow types assigned to the single transaction type. So that means that some kind of charges, there is a purchase and sales. So both purchase and sale can be, you can purchase a trade or a seller trade. So that's why you assign both the flow types and charges. So you can assign n number of flow types to the same transaction type, depending on what the scenario is. And the next and final step is basically you assign a flow type to an update type. So update types are nothing but how the position is updated. So it says whether the position, whether the flow is negative or a positive. So in this case, or, you know, whether in that sense, whether it's an incoming type of flow for cash flow or outgoing. So that's how it determines. The profit is then, you know, incoming, the loss is outgoing in terms of cash. So that's how the update types define. And then every flow type which you create, you will have to assign it to an update time. Because update type is important because all the GL derivation when you go into posting are typically assigned to an update type and not a flow type. So, again, there's some additional configuration for OTC trades, just to show what position update it would do. There is not much to do here. These will be, again, standard, delivered. And this typically does not, you know, generate anything in your cash floor or anything. but the system would identify that a swap or a forward trade is existing and the position is open. There is no way to tell the system in this case a position is open or not, unlike futures and options. So that's why this configuration is maintained. And as I said, this is just for regular on processing. It does not really generate any cash flow as such in your reporting. Thank you.

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