Using Stock Management (5OD)

The Stock Management process in SAP S/4HANA Cloud covers master data management, the purchase and sale of stocks, as well as paying and posting in Financial Accounting. In addition, various functions for managing securities account positions and for period-end closing are available. If the issuer of your stocks has made changes to the capital structure, you can use the corporate actions apps to map these changes in the system.

Treasury Reporting provides you with a broad range of apps for analyzing your debts and investments in stocks.

You can use this function to invest in stocks and manage the positions of securities during their lifecycle. On the SAP Fiori launchpad, you can also use the apps for managing corporate actions to map changes to the capital structure of your securities by the issuer, for example, a stock split or a capital increase.

The field length for price and units in Treasury Management is a topic of concern for many customers.

SAP S/4HANA Cloud offers a wide array of digits to be used in financial transactions. In detail the length of the price and unit field are described below.

The number of units in financial transactions now has 10 places before the decimal point and 12 places after the decimal point, that is, 22 places in total.

The security price has 9 places before the decimal point and 14 decimal places, which means a total of 23 digits.

The payment amount is number of units * price.​ Taking the example payment amount in the security transaction of 1 * 1011 12,345,678,901.23 USD.​

The total amount of 12,345,678,901.23 can be calculated in two ways:​

• Using the decimals of the unit: 123.4567890123 * 100,000,000   ​
• Using the decimals of the price: 1,000,000,000 * 12.34567890123

Treasury and Risk Management offers you a wide choice of product types with which to portray and manage your financial transactions and positions.

Depending on the product type, the financial transactions run through different activities within the transaction and position management process.

Financial Transaction Management in SAP S/4HANA Cloud mainly consists of creating transaction, managing and processing transaction in the Treasury Front and Back Office.

You can use the app Create Financial Transaction to create financial transactions. It is a central entry point for creating financial transactions of all product types.

There are certain prerequisites in order to use this app. You need to

• Create Business Partners
• Set up standing instructions
• Define and assign flow types
• Define condition types

You can use the app Manage Financial Transactions to manage all your financial transactions across all financial instrument groups in one place. From this overview, you can jump directly to the apps for displaying or processing your financial transactions.

This app shows all transactions across different instrument categories. It lets you filter easily by different attributes and save variants for a quick overview.

Use the tabstrip above the table to show only a particular instrument category. Depending on the product group chosen it will show more details in line with the product group specific data.

In the app it is also possible to group, filter or sort the information according to your requirements.

Keep in mind that the Term Start, Term End or Transaction Amount, Transaction Currency is not a fixed one-size fits all value but adjusted to the product category.

The table shows the available Product Categories and Term Start and End Dates and Relevant Amounts for Different Instruments.

You can use the function of the Process Financial Transactions app to process financial transactions created using the Create Financial Transaction app, for example. It is a central entry point for processing your financial transactions. However, you can call each function for a financial transaction from the initial screen.

Depending on the product type and the current status of the financial transaction, different processing functions are available. 

Before actually investing in securities (for the first time) some prerequisites must be fulfilled. The steps would include the following:

• Creating the class data for your securities
• Creating an asset securities account
• Specifying the position indicator

The security class data includes all the structure characteristics of a security. Make use of the Manage Securities Classes app to portray stocks using the product type 01A Stocks delivered with the system.

Before you can process a securities financial transaction in transaction management, you must first enter the following master data:

• Business partner data (issuer, counterparty)
• Class Data
• Securities account data / futures account data
• Position indicator

When you create an order to buy or sell a security or to issue a bond, the system copies the securities class data needed. You add the specific transaction data (such as the amount or price of a stock purchased) to this data.

The system uses the details of the class conditions and specific transaction details (such as the nominal value and price) to calculate the cash flow of the transaction.

Class data is entered on different tabs. The product types dictates which tabs are used.

For stocks enter the issuer, issue currency, the issue price among other attributes in the tab Basic Data. Define the Stock Category, Quotation and the Stock from for the securities here.

Depending on your needs also fill the Conditions, Exchanges, or Security Swaps tabs.

If you want to purchase or sell a security or issue a bond, you must have a securities account. The securities account usually corresponds to actual securities accounts at a bank.

The security account also acts as a differentiation criterion for security positions and can be created with the Manage Securities Accounts app.

Make settings for the Depository Bank, the Securities Account Number, and enter the payment instructions (for the different currencies).

Use the Manage Position Indicator app to display and change the position indicator of a subledger position.

Define or check the Position Management Procedure of the position indicator. In the example, the German local GAAP (HGB): Strictly lower of cost or fair value is maintained for the valuation area DE0.

After the prerequisites are fulfilled the purchase transaction for investment in stocks can be recorded.

Create the securities transaction by opening the Create Securities Transaction app on the SAP Fiori launchpad.

Enter the company code, security class ID number, transaction type, and the business partner (in the role Counterparty). For the stock investment pick the product type 01A and the transaction type 100 (Stock Purchase).

Fill the information about the position, amounts (for example, number of units and the price) and the trading data on the structure tab.

Add additional data for, as an example, brokerage costs on the tab other flows with the help of dedicated flow types here.

The cash flow contains all flows of a financial transaction, classified by flow types, in chronological order. Typical flow types include nominal amount increases, fixed or variable interest, and repayments. The investment amount, the interest payment, and repayment amount are concentrated on one or several flow records through this process.

As the cash flow of financial transactions forms the basis for all trading, management, and evaluation activities within Treasury, the flows have particular significance. They are generated by financial mathematics from the general data on the transaction, the structural characteristics, and the conditions assigned to the transactions. The flows contain both the payment data and their calculation bases, as well as all data required for posting.

Differentiation terms are used to determine how the positions are created. Some differentiation terms are defined by the system for each product group, and others can be selected additionally. The differentiation SEC. ACCOUNT is defined and assigned for all company codes and valuation areas that do not have a specific differentiation assignment. For Securities, the following is predefined:

• Valuation area
• Special valuation class
• Accounting code
• Security class ID number
• Securities account

In addition to that, you can define and assign your own differentiation in the Define and Assign Differentiation configuration activity. This enables you to use account assignments of other areas, such as Cost Center, Profit Center, WBS Element, and Functional Area, to differentiate treasury positions in Treasury and Risk Management. When the flows are posted to Financial Accounting, the account assignment values for a treasury position are also transferred to Financial Accounting.

With the Process Security Transactions - Collective Processing app, you can display and process several securities transactions at once.

The collective processing app enables you to process your security transactions. Besides functions that allow you to select and display transactions, you can also go to the individual screens for processing the financial transactions.

When you settle a transaction, you check the security transaction and add any missing data. When you save the transaction, the transaction flows are assigned the status, Flagged for Posting.

After the transaction has been settled the treasury flows, per valuation area, can be posted to the Financial Accounting General Ledger Accounts.

Filter flows that are relevant for posting, with parameters such as company code, transaction, product type, and so on.

Post the flows that you select with the following options:

• With the Pay Only option, you can start the payment process.
• With the Post Operational Only option, you can fix and post flows for the paying valuation area and start the payment process, if necessary.
• With the Post All Valuation Areas option, you can fix and post flows for all valuation area.

Generate a posting log for each posting.

To display the data for a flow, select the relevant posting line and choose Details. To see the accounting documents, select the reference key ID.

During the term of the stock, there are several actions needed which are explained in more detail below.

For the period end closing and the valuation you need to set security prices. Use the Enter Security Prices app to manually perform this task.

After defining the Security Class ID Number and the Exchange you can enter the price date, price type (for example, spot, bid, ask) and the price of the security. The system would also display the source of the rate (for example, manual entry or through data-feed).

Furthermore, the system displays the yearly high and low points of the security price/rate.

You use the Run Accrual/Deferral app to determine expenses and revenues from financial transactions or positions for a given period and to assign them to the correct accounting period, irrespective of when they were due.

The amount in time is first calculated and then applied as the basis for calculating the amount to be accrued/deferred. The amount in time is the partial amount of the flow relating to the period from the Term From date until the key date of the accrual/deferral. It is calculated using the selected accrual/deferral method.

For each selected position/transaction and for a given key date, the system determines the profit-related flows for which accruals or deferrals need to be created.

The system checks whether all the flows relevant for accrual/deferral and falling before the key date have been posted. If this is not the case, the system issues a warning message. The warning message informs you that flows that are relevant for accrual/deferral and for which the due date has passed have not yet been posted and are therefore not included in the P&L statement.

The accrual/deferral function checks whether and when the flow to be accrued/deferred was posted and whether this is in accordance with the accrual/deferral currently calculated.

Use the Enter Book Values for Manual Valuation app to enter the new book values for treasury positions for a specific key date.

After you have entered the new book values, you can start the valuation of the treasury positions using the Run Valuation app executed with the valuation category Manual Valuation With Reset or Manual Valuation Without Reset.

This valuation categories allows you to write-up or write-down a position to the book values entered in position currency and valuation currency in the Enter Book Values for Manual Valuation app, independent of the valuation rules defined.

The following valuation steps support manual valuation:

• Security valuation
• Foreign currency valuation
• One-step price valuation
• Index valuation

Perform the key date valuation for the selected valuation-area-dependent treasury positions with the Run Valuation app.

There are several prerequisites in order to run the valuation. The rates, prices, and NPVs required for the valuation must be available in the price/rate and NPV tables. Also all the business transactions before the valuation key date must be fixed.

Perform the key date valuation according to the settings in the relevant position management procedure. Use the following valuation categories:

• Year-End Valuation
• Mid-Year Valuation with Reset
• Mid-Year Valuation Without Reset

After having set all the needed valuation parameters, the posting control and the output details the system values the selected positions and posts the corresponding valuation flows.

When you perform a key date valuation, the system sets an internal block to prevent operational business transactions that affect position amounts from being created before the valuation key date when the valuation has not been reversed previously.

In our example, the system also looks at the security price change and valuates the difference according to the Position Management Procedure. The highlighted sections show the valuation area DE0 where there is the Position Management Procedure 3ESL maintained. Here, the system would not consider the price change (increase) since it strictly lowers the value principle.

Issues enterprises often over dividends for on their stocks. To map this attribute, use the app Manage Securities Classes.

At your Securities Classes go to the Conditions tab. Through the Conditions Items, it is possible to set the effective dates and the dividend amount per share.

The Conditions Detail features further functions for the date calculation.

After the dividend settings were made in the Manage Securities Classes app using the Execute Debit Position - Manual Debit Position app to edit and post flows generated by the conditions of a security, such as dividends, with scheduled status.

For dividends (profit distribution or accumulated dividends), you can choose to capitalize the dividend full or partial.

There are several prerequisites needed before you can perform the steps in the app. These include the following:

• Enter the required market data (such as factor values for factor based dividends of investment certificates).
• Update the condition data for dividends in the Manage Securities Classes app, when the issuer published the amount of the dividends.
• Use the Update Planned Records for Securities app.
• Post all other flows that affect the relevant security class ID numbers and securities account up to the due date for which the debit position run is carried out.
• Run the Automatic Debit Position and Postings - Securities Accounts app for the accrued dividend flows.

Note

The automatic debit position and manual debit position (incoming payments) functions are closely linked. Both functions are used to process flows generated by the conditions. You process many flows together when you use the automatic debit position function (accrued dividends), whereas the manual debit position (incoming payments) function enables you to process each flow individually and offers the possibility to capitalize the accumulated dividend/profit distribution flows. Here, you can also make changes to the flows.

Use the interactive graphic to learn more about the corporate actions available.

Using the Manage Corporate Actions app, you can create a corporate action to make the change that the issuer has made to the capital structure for classes in your treasury position.

Specify the corporate action category and type to create a new entry. In the Basic Data area, enter the key date of the position change and a description of the corporate action.

If you save the corporate action, it is assigned status 0 (Planned). You can then still change it or delete it. You can post the corporate action only after it has been activated.

You can use the Post Corporate Actions app to update the company code positions and to generate the FI documents (posting log), where applicable.

In order to run the app, some prerequisites must be met, which are as follows:

• The corporate action must be activated.
• Do not carry out valuation after this key date for any security positions affected by the corporate action.
• You must have created a position indicator for any new positions.

After entering all the needed data for the calculation date, posting date, company code - for example, you can post the corporate action.

When you post the corporate action, the company code positions are updated and the related FI documents are generated, where required.

With this feature, you can transfer your securities positions at their book values from one securities account to another using the Execute Securities Account Transfer app. The securities account transfer can affect the general ledger as well as the subledger since, by changing the securities account for a position (= change in the subledger accounting), you can change both the valuation class and the account assignment reference if the target securities account has a different account assignment reference in the position indicator to that of the source securities account (= changes in the general ledger accounts).

You can reverse the securities account transfer using the Reverse Securities Account Transfer app.

The securities account transfer takes the transfer amount at book value from the source securities account and posts it to the target securities account. The system generates the associated flows depending on the position management procedure.

You can display the quantities of the security ID number in the source and target securities account before the securities account transfer.

You can display the source and target securities account cash flows including the securities account transfer.

Note

There can not be any fixed, condition-based transactions (such as repayment) after the key date of the securities account transfer for the positions involved.

With this feature, you can transfer the units/nominals of a treasury position to another position with different account assignments (such as cost center, WBS element, functional area, profit center). In this internal transfer, the position component values are transferred proportionally according to the transfer category of the target position management procedure.

If you have activated Public Sector Management and use the fund and grant account assignments as differentiation criteria for your treasury positions, the account assignment transfer can also be used to transfer a treasury position from one fund to another or from one grant to another.

To complete the lifecycle the final step in the stocks process is the sale of the securities.

Create the sale transaction for the securities using transaction type 200 (Stock-Sale) in the Create Securities Transaction app.

Settle and post the transaction. Payment-relevant flows, such as costs, are paid according to your payment process.

Subscription rights grant the stockholder the option of retaining the old share of capital stock when the company performs capital increases (against cash contributions and certain capital increases). For subscription rights, the predefined 03A Subscription Right product type is available. You only require subscription rights for an (ordinary) capital increase.

Additional Information

• The total value of a securities account position doesn't change as a result of the capital increase. The subscription rights that result from the capital increase simply shift the proportional share value.
• The value of the subscription right for accounting purposes differs from the theoretical value if the book value of the old stock is lower than its current market value. In this case, you have to determine the accounting value of the subscription right by matching its theoretical value to the book value of the old stock.
• The book value of the old stocks is, on the one hand, reduced by the amount of the accounting value of the subscription rights, and, on the other hand, the subscription right is posted to the position by the same amount. This means that the total value of the positions before and after the capital increase is the same.
• The adjustment flows required for the book value markdown in the old stocks position are generated automatically.

The process to execute a capital increase consists of several steps. These are in detail:

1. Create the class data for the new stock and for the subscription right.
2. Create the position indicator for the new stock and for the subscription right manually or automatically.
3. Post subscription rights, so that the old stock position is written down by an amount that corresponds to the accounting value of the subscription rights, and the subscription right position is posted.
4. Purchase/sell subscription rights, if necessary.
5. Exercise subscription rights, so that the rights are converted to the new stock.
6. Transfer new stock in order to have the ID Number of the old stock assigned to the new stock.

Several different apps are used throughout the capital increase process. The slides shows the associated apps per process step.

Select the play button to watch the video on how to create class data for stocks in the SAP S/4HANA Cloud, public edition.