Manage Cash Pool and Loan Management Proposal

This document explains how you create cash pool and loan management proposals in 'Cash/Loan Pool Proposal. Open' (MFS300).

Cash pooling describes the scenario where currency transfers within a company, and interest invoicing, are managed by a centrally located treasury department accessing the currency accounts of the divisions belonging to the company.

Loan management describes the scenario where a local division lends money to and is invoicing another division, without a centrally located treasury department acting as a middleman.

Outcome

A proposal that can be invoiced is created. The basis for the proposal is the cash pool and loan management IDs defined in 'Cash and Loan Pool ID. Open' (MFS025).

See Create Cash Pool and Loan Management ID.

When creating the proposal, all cash pool and loan management IDs defined in (MFS025) are included unless one of these scenarios apply:
  • The cash pool and loan management ID is already included in another proposal for the selected period.
  • The account defined on the cash pool and loan management ID has no balance during the selected period.

Before you start

These common starting conditions apply:
  • Bank transactions using the accounts selected in (MFS025) for contra entries have been recorded.
  • One or several interest rate IDs must be created in 'Interest Rate ID. Open' (CMS460) with associated interest rates defined in 'Interest Rate ID. Define Rates' (CMS461). For details, see the related documents.
  • Cash pool and loan management IDs must be created in (MFS025). For details, see the related documents.
  • FAM functions and accounting rules are updated for MF30 (Cash pooling) or MF40 (Loan management), or both, in 'FAM Function. Open' (CRS405) and 'Accounting Rule. Set' (CRS395) respectively. Accounting types 641 and 642 must be generated in 'Accounting Type. Open' (CRS385).

Create cash pool or loan management proposal

  1. Open 'Cash/Loan Pool Proposal. Open' (MFS300/B).
  2. Specify an ID consisting of up to 10 alphanumeric characters for the proposal. Select option 1='Create'.
  3. On the E panel, specify a report description (optional).
  4. Select whether to create the proposal for 'Cash pool and loan management IDs' defined for cash pooling or loan management.
  5. Specify the period.
  6. Click Next to create the report proposal.

Each day in the selected period, an opening, daily, and closing balance is retrieved and calculated on the account defined on the cash pool and loan management ID. Based on the closing balance, daily interest will be calculated using the interest rate ID, invoicing currency and exchange rate type. Note that either the lending or borrowing interest rate ID will be used, depending on whether the closing balance is positive (lending) or negative (borrowing).

Review and confirm proposal

The proposal can be reviewed in two ways: On screen (see steps 1-10) or by printing two different layouts (see steps 11-13), or both.
  1. On (MFS300/B), select related option 11='Details per date' for the proposal when it is in status '1-Proposal is created'.
  2. On 'Cash/Loan Pool Proposal. Det per Date' (MFS301/B), review the proposal details per customer, cash pool and loan management ID, and date.
  3. Close (MFS301) to go back to (MFS300/B).
  4. On (MFS300/B), select related option 12='Details per pool'.
  5. On 'Cash/Loan Pool Proposal. Det per Pool' (MFS302/B), review the proposal details per customer, cash pool and loan management ID, and income/cost type. On this panel, the calculated interest is summarized per cash and loan management ID, and split to income or cost. Furthermore, the simulated accounting string for each income and cost transaction is displayed.
  6. Close (MFS302) to go back to (MFS300/B).
  7. On (MFS300/B), select related option 13='Details per invoice'.
  8. On 'Cash/Loan Pool Proposal. Det per Invoice' (MFS303/B), review the proposal details per customer, invoicing currency, and cash pool and loan management ID. On this panel, the cash pool and loan management IDs included in the proposal are grouped by a dummy invoice number as the purpose of the program is to see which pools will be included on the same invoice. The break level for an invoice is the customer and invoicing currency. Note that when confirming the proposal (see below) and thereby creating the invoices, an actual invoice number will be retrieved, according to the settings on the FAM function.
  9. On (MFS303/B), it is possible to delete a record. When deleting a record, all information belonging to that customer and invoicing currency will be deleted from the proposal, including the information displayed in (MFS301) and (MFS302). When a new proposal for the same period is created, the cash pool and loan management ID related to the deleted record will be included.
  10. Close (MFS303) to go back to (MFS300/B).
  11. On (MFS300/B), select related option 6='Print'.
  12. On 'Cash/Loan Pool Proposal. Print' (MFS304/E), select which report layout to print:
    • 1-'Details per date' (MFS305PF). The calculated values are displayed per customer, cash pool and loan management ID, and date. The information in this layout is similar to the information available in (MFS301).
    • 2-'Details per invoice' (MFS306PF). The calculated values are summarized per cash pool and loan management ID, and are grouped per customer and invoicing currency, which is the break level of an invoice. The information in this layout is a mix of the information available in (MFS302) and (MFS303).
  13. When the review is finished, go back to (MFS300/B).
  14. On (MFS300/B), select related option 9='Confirm'. Select the accounting date and invoice date and click Next to create customer invoices (printed in ARS121PF) and update ledgers.

Proposal review fields

Field Field description
Opening balance The daily opening balance on the account of the cash pool and loan management ID. The opening balance is together with the daily balance summing up to the closing balance.
Daily balance The total amount of the transactions per day on the account of the cash pool and loan management ID. The daily balance is together with the opening balance summing up to the closing balance.
Closing balance The sum of the opening balance and daily balance. This amount is the base for calculation of the daily interest amount.
Income/cost type Indicates whether the closing balance and calculated interest is an income (positive balance) or a cost (negative balance).
Interest rate The interest rate defined in (CMS461) that has been used to calculate the daily interest amount. Which rate is used depends whether the closing balance is positive or negative. If positive, the interest rate ID for lending is used. If negative, the interest rate ID for borrowing is used.
Interest amount The calculated interest amount expressed in the currency of the account connected to the cash pool and loan management ID.
Currency The currency of the account connected to the cash pool and loan management ID.
Interest amount in invoicing currency The calculated interest amount expressed in the invoicing currency. The invoicing currency and exchange rate type is defined per cash pool and loan management ID in (MFS025) and the rate selected depends on the interest rate method, daily rate or end of period rate, selected in (MFS025).
Invoicing currency The currency in which the interest will be invoiced to the customer.
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