SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.

: FSFI005 version 01

Core Functional Specification Finance Cash Management

Written By: Joanna Wasilewska FICO Consultant Signature Approved By: Carmen E Brown Finance Solution Architect (Core Team) Signature Date Date

Global Process Owner Gudjon Gustafsson Process Champion Mark Keatley EVP

Signature

Date

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

REVISION DETAILS Issue No. 01 02 Issue Date 18-July 2011 27 January 2012 Amendment Details Initial Release Post Blueprint Workshops and Enhancement from APSE and workshop inputs

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01 TABLE OF CONTENT 1 2 3 4 PURPOSE...................................................................................................................... 4 SCOPE.......................................................................................................................... 4 OVERVIEW..................................................................................................................... 4 DETAILED FUNCTIONAL SPECIFICATIONS................................................................................4 4.1 Cash Position............................................................................................................ 4 4.2 Liquidity Analysis Forecast............................................................................................5 4.3 Source Symbols ......................................................................................................... 7 4.4 Planning Groups ........................................................................................................ 7 4.5 Planning Levels.......................................................................................................... 8 4.6 House Banks and Bank Accounts ....................................................................................10 4.7 Manual Bank Statement .............................................................................................. 11 4.8 Variants for Manual Bank Statement ...............................................................................12 4.9 Electronic Bank Statement .......................................................................................... 12 5 ROLES AND RESPONSIBILITIES........................................................................................... 13 6 DEFINITIONS AND ACRONYMS............................................................................................ 14 7 DOCUMENT REFERENCES................................................................................................. 14 8 RICEF-W...................................................................................................................... 14 9 DATA......................................................................................................................... 14 10 INTERIM BUSINESS PROCESS............................................................................................ 15 11 NON FUNCTIONAL REQUIREMENTS....................................................................................15

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

PURPOSE

The purpose of this document is to define what the SAP system should do and what functions and facilities are to be provided to fulfill the requirements of the User Requirements Specification. It describes design objectives for the SAP system from a functional perspective. 2 SCOPE

The scope of this Functional Specification covers the Cash Management Processes to be used in Actavis. This document covers following areas: 3 Cash Position Liquidity Forecast OVERVIEW

SAP Cash Management is used to monitor cash flows and to ensure that the organisation have sufficient liquidity to cover its payment obligation. It aims to identify liquidity deficit/surpluses. This document contains an outline of all of the configuration and customisation in SAP required for the Cash Management process, which is detailed in the following scenarios: SC24 Cash Management

Financial Accounting

DETAILED FUNCTIONAL SPECIFICATIONS

4.1

Cash Position

The cash position report provides short-term liquidity information on the daily cash inflow and outflow of the bank accounts and bank clearing GL accounts (interim bank GL accounts). To enable the use of the Cash Position report the bank and cash G/L accounts relevant for the status analysis have been are assigned a cash management level in the company code segment.

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

The cash position provides the current overview of the bank accounts by value date and, on account of the integration with payment advices, a complete overview of the short-term movements in liquidity.

Cash management uses information form various sources, viz.: a. Bank postings and bank clearing postings b. FI postings to G/L accounts relevant to SAP Cash and Liquidity Management c. Memo records entered manually (payment advice) Memo Records: Incoming and outgoing payments that are not transferred to the SAP Cash Management System via actual postings, can be entered manually in the planning. Notified incoming payments, noted items, provisional bank statement postings, all bank fields etc can be entered as Memo Records Payment Advices in the system. Also all subledger fields, noted items, general planning etc can be entered as Memo Records Planned Items in the system. Actavis will use some Memo records in Cash Position and Liquidity Forecast statements. Actavis is in the process of identifying the requirements of Memo Records items.

4.2

Liquidity Analysis Forecast

The liquidity forecast comprises the medium-term the incoming and outgoing cash flows, as well as the planned items in the sub-ledger accounts for a long period. The increments can be changed from daily for the first week, to weekly for the next two months, and then monthly for the next six months.

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

Liquidity forecasting integrates payments in and out from Financial Accounting, Sales and Distribution, and purchasing to document medium- to long-term developments in liquidity. Incoming and outgoing payments per open item from accounts receivable and payable will form the basis of liquidity forecast. Since planning and forecasting these payments is usually long term, the probability of payment being made on the planned day is less than the payment probability stated in the cash position. Following report capturing 13 weeks liquidity forecast will be used by Actavis for liquidity forecasting purpose:

13 Week Cash Flow Forecast Report

Cash inflows Trade Receivables (Sales) Intercompany Receivables Other Cash Inflows Total Cash Inflows Cash outflows Trade Payables (Expenses) Intercompany Payables Salaries & Benefits Corporate Income Tax Description All cash receipts from 3rd Party sales All cash receipts from Intercompany Sales that are not included in I/C Netting. The counterparty needs to be stated and the flow has to match the outflow of the counterparty All other cash receipts then above, i.e. VAT refund, Royalties, Interests etc. Summary of the cash receipts - calculated formula All cash disbursements to a 3rd party vendor for trade payables and inventory payments All cash disbursements from Intercompany purchases that are not included in I/C Netting. The counterparty needs to be stated and the flow has to match the inflow of the counterparty All cash disbursements related to salaries and benefits All cash disbursements related to corporate income tax

+/+

+ +
N/A

+ + +
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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

Fixed Assets Purchases (Capex) R&D Intangibles Debt service All Other Outflows Total Cash Outflows Net Cash Generated Currency Bought Currency Sold Total FX Trading Opening Balance (Previous Week) Opening Balance Adjustment Opening Balance Transfers ( to ) / from Actavis Group Closing Balance

All cash disbursements related to fixed assets purchases (capitalized expenses (capex)) All cash disbursements related to R&D cost All cash disbursements related to debt service (loan repayments, interest payments, leases etc.) All other cash disbursements than stated above (VAT payments etc.) Summary of the cash disbursements - calculated formula Total cash receipts - total cash disbursements (calculated formula) All cash receipts from foreign currency trading with a 3rd party in the respective currency All cash disbursements from foreign currency trading with a 3rd party in the respective currency Summary of FX Trading - calculated formula Closing balance form previous week brought forward - linked Adjustment of opening balance if not right from previous week Closing balance from previous week brought forward plus opening balance adjustment (if any) - calculated formula Cash receipts or cash disbursement which relates to funding from Actavis Group hf. Opening balance + Net Cash Generated + Transfers (to)/from Actavis Group + Total FX Trading

+ + + +
N/A N/A + N/A

N/A

+/N/A

+/N/A

4.3

Source Symbols

The source symbols group divide the planning levels according to the sources that provide them with data. They can then be assigned to either the liquidity forecast or the cash position. Following source symbols will be used for Actavis: 1. 2. 3. 4. Bank Accounting (BNK) Procurement (Materials Management) (MMF) Sales (Sales and Distribution) (SDF) Accounts Payable and Accounts Receivable (Sub ledger Accounting) (PSK)

For details of the Source Symbols, please refer to Appendix 1. 4.4 Planning Groups

Customers and vendors are assigned to a planning group by making an entry in the master record. A planning group represents particular characteristics, behaviors, or risks of a customer or vendor group. It enables analysis

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01 of incoming and outgoing payments according to the probability of the cash inflow or outflow, the amount, and the type of business relationship. Groupings are used to stipulate format of the cash position report to be displayed. Grouping determines which levels and accounts should be displayed in the cash position. Following grouping will be used for Actavis cash position reporting. For details of the Planning Groups, please refer to Appendix 2. Actavis will use following customer and vendor planning groups for cash management:

Customer Planning Groups:

1. 2. 3. 4. 5. C1 C2 C3 C4 C5 Domestic Customer Foreign Customer Intercompany Customer Employee Other Customers

Vendors Planning Groups:

1. 2. 3. 4. 5. 6. 7. 4.5 V1 V2 V3 V4 V5 V6 V7 Domestic Vendor Foreign Vendors Intercompany Vendors VAT/Tax Vendors Excise Duty Vendors Employees Other vendors

Planning Levels

Typical financial transactions in Cash Management are displayed using planning levels, which explain the opening and closing balances. General Ledger and sub-ledger-accounts can be assigned to a planning level to analyse the cash position or liquidity forecast by using the source symbol. It has been assumed that Actavis will use following SAP standard Planning levels are provided in standard SAP: Planning Level AB AG AU B1 B2 B3 B4 B5 B6 B7 B8 Planning Level Description Payment advice (confirmed) Agency business Payment advice (unconfirmed) Outgoing checks Outgoing transfer, domestic Outgoing transfer, foreign Bank collection Other interim postings Own-accepted liabilities Cl. acct for bill payment Incoming checks
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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01 B9 CB CL CP DB DE DI DP F0 F1 FF FK FR FW IB IP KB KP LB LP M1 M2 M3 ME MP OB OP RL RR S1 TA TB TD TK TP WB WP XA XR XX ZB ZP Customer cash receipt Commercial paper bank Cash concentration Commmercial paper - subledger Bank foreign exchange Loan revenue General planning Subledger forex Posting to bank account Posting of purchasing & sales Down payment request Advance pymts (offsettg entry) FRA Personnel FI bill of exchange Interest Derivatives Bank Interest Derivatives People Deposit at notice Deposits at notice - subledger Bank loans Personal loans Purchase requisition Purchase order Scheduling agreement Rent received Planning - Noted items TR currency option, bank TR currency option, subledger Rent Result Rents Receivable Sales Orders Deposit/loan mgmt: invest Time deposits: banks Fixed-term deposit management Deposit/loan mgmt: borrow Time deposits: subledger Bank securities Security revenue Blocked for payment Invoice verification Block indicator X All fields of bank records All fields, subledger records
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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

For details of the Planning Levels for G/L Accounts, please refer to Appendix 3, and for Planning Levels for Sub ledger Accounts see Appendix 4. Actavis is in the process of reviewing the required planning levels; we can create/delete the planning levels as per requirement.

4.6

House Banks and Bank Accounts

To enable the use of automatic payment run programs or the posting of bank statements automatically House Banks must be created within SAP. These House Banks will correspond to the Companies Banks. Furthermore, each Bank Account that is maintained with these Banks will be created in SAP as a Bank Account that is linked to the House Bank. Actavis Iceland will have following house banks for their company codes: Company Code: IS12: Actavis Group PTC ehf. will have 3 house banks. DNB Nor Bank ASA Islandsbanki hf. Iceland Islandsbanki hf. Iceland

Company Code: IS13: Actavis Group hf. will have 7 house banks. DNB Nor Bank Hamburg Branch DNB Nor Bank New York Branch DNB Nor Bank London Branch DNB Nor Bank Copenhagen Branch DNB Nor Bank Stockholm Branch DNB Nor Bank ASA Islandsbanki hf. Iceland

Actavis Italy will have following 3 house banks: Duetsche Bank S.P.A. Italy Unicredit Bank S.P.A. Italy DNB Nor Bank Hamburg Branch (Currently Non Operational)

It has been assumed that both the company codes in Italy i.e. IT11 Italy Manufacturing and IT12 Italy Commercial will share same house banks. Each bank account will have a main bank GL account and 5 bank clearing (interim) GL accounts. Following logic will be used for GL accounts for each the bank accounts: GL Account Number 159XX0 159XX1 159XX2 159XX3 159XX4 159XX5 GL Account Description Main Bank Account Bank Transfer Domestic Bank Transfer Foreign Incoming Customers Payment Bank Clearing Bank Other Interim Posting
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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

Actavis Iceland will have following bank accounts for their company codes: Company Code: IS12: Actavis Group PTC ehf.:

DNB Nor Bank ASA (Currency: EUR) DNB Nor Bank ASA (Currency: USD) DNB Nor Bank ASA (Currency: GBP) DNB Nor Bank ASA (Currency: DKK) DNB Nor Bank ASA (Currency: SEK) DNB Nor Bank ASA (Currency: NOK) DNB Nor Bank ASA (Currency: CHF) DNB Nor Bank ASA (Currency: CAD) Islandsbanki hf. Iceland (Currency: ISK) Islandsbanki hf. Iceland (Currency: ISK)

10 bank accounts Company Code: IS13: Actavis Group hf. DNB Nor Bank Hamburg Branch (Currnecy: Euro) DNB Nor Bank New York Branch (Currency: USD) DNB Nor Bank London Branch (Currency: GBP) DNB Nor Bank Copenhagen Branch (Currency: DKK) DNB Nor Bank Stockholm Branch (Currency: SEK) DNB Nor Bank ASA (Currency: NOK) DNB Nor Bank ASA (Currency: CHF) DNB Nor Bank ASA (Currency: CAD) DNB Nor Bank ASA (Currency: PLN) DNB Nor Bank ASA (Currency: RON) DNB Nor Bank ASA (Currency: HUF) DNB Nor Bank ASA (Currency: RUB) DNB Nor Bank ASA (Currency: JPY) Islandsbanki hf. Iceland (Currency: ISK)

10 bank accounts 4.7 Manual Bank Statement

To be able to post a Manual Bank Statement within SAP the main settings are as follows: Create account symbols the G/L accounts (such as banks, cash receipts and outgoing payments) whose postings have to be made from account statement. Each G/L account is assigned to an account symbol to the G/L account numbers. For details of the Account symbols please refer to Appendix 5. Assign accounts to account symbols - Define which postings are to be triggered by transactions in the account statement (such as bank transfer, incoming payment. For details of the Assignment of the Account symbols please refer to Appendix 5. Create keys for posting rules - posting rules are assigned to possible transactions in the account statement file. A list of assignments where one external transaction code is assigned to one posting rule is called transaction type. For details of the Posting Rules please refer to Appendix 6, and Appendix 7 for Posting Specifications.

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01 Create a transaction type - bank details are assigned for the account statements that have to be imported, to a transaction type. All the house bank accounts at a particular bank are usually assigned to the same transaction type. Variants for Manual Bank Statement

4.8

The default layout Manual Bank Statement can be changed and new layouts or Variants can be created to if required, to adapt the assignment and/or selection of the account assignment fields. These will be created as necessary during the design phase of the project. 4.9 Electronic Bank Statement

If possible Actavis would prefer to import the bank statement electronically; this will depend on the specified bank producing a bank statement in an SAP readable electronic format. When this is the case SAP functionality to will be used to import the statement, with a similar posting logic as that defined for use with the Manual Bank Statement. Certain Banks have an electronic statement format that initially requires the use of a conversion program, this functionality will used when required as a precursor to posting the Bank Statement. Following assumptions have been taken into account: DNB Nor will be the mainstream bank for Actavis. Actavis will use Electronic Bank Statement (EBS) functionality. The EBS file format will be MT940 in SAP system. Electronic Bank Statement functionality (EBS) will be available for DNB Nor and one local bank for each company code. Other banks will use Manual Bank Statement functionality. There will be requirements from IT2 project to interface SAP system with IT2. More details on IT2 requirements are awaited. Information regarding requirements of Cash Concentration, Interest, Foreign Exchange and Netting Transactions will be defined during 1st review of this document. Release 1 Banks can provide MT940 formats

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01 5 ROLES AND RESPONSIBILITIES Roles SAP Functional Consultant SAP Solution Architect Responsibilities Global Process Owner Process Champion EVP Authors this Functional Specification document Ensures this document accurately reflects its intended Purpose and Scope Ensures this document accurately reflects its intended Purpose and Scope Review and approval of this document Ensures this document accurately reflects its intended Purpose and Scope Review and approval of this document Ensures this document accurately reflects its intended Purpose and Scope Review and approval of this document Ensures this document accurately reflects its intended Purpose and Scope Review and approval of this document

Single Roles: - Customer Payment Processing - Vendor Payment Processing - Customer/Vendor Payment Document Display - Bank Statement Processing - Bank Statement Display - Cash Position and Liquidity Forecast Reporting Job Roles: Cash management configuration/maintenance role House bank, bank account creation and maintenance role Electronic Bank Statement (EBS) configuration role

AP Assistant AP Accountant AR Assistant AR Accountant Bank Accountant Treasurer Finance Manager

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01 6 DEFINITIONS AND ACRONYMS Term SAP Glossary FI CO Description All terms and descriptions of SAP across all modules. Location: Core Team on Sharepoint Financial Accounting module in SAP system (External) Reporting Controlling module in SAP system (Internal) Management Accounting

DOCUMENT REFERENCES Doc Ref 1. 2. BBR2R CSFI005 Document Title Core Business Blueprint Record to Report (R2R) Core Configuration Specification Cash Management

RICEF-W

The following enhancements are required to support the designed processes: Type Report Interface Conversion FS Ref Description 13 weeks cash forecasting as per format (SPDs) Interface with IT2 (more details awaited) EBS File Formats for incoming files of various banks used by the sites in MT940 format in SAP. Standard MT940 should be available from SAP. Complexity Medium High High Approved

Enhancement Form Workflow

DATA

Consideration should be given to the following data requirements:

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SAP SYSTEM Functional Specification Finance - Cash Management Doc. Ref.: FSFI005 version 01

Object Bank Key

Description Bank Data (thru Bank Directory CD) upload for Actavis company codes bank accounts, customer master data and vendor master data bank details Bank balances upload per bank account Uncleared Vendor payments per bank account

Usage

Bank Balances Uncleared Vendor payments Uncleared customer payments

Uncleared Customer payments per bank account

10 INTERIM BUSINESS PROCESS No IBP considerations have been identified

11 NON FUNCTIONAL REQUIREMENTS The following NFR are required to support the functionality:

Process Step
N/A

Requirement Type
N/A

Requirement
No further NFR have been identified

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