Cash Flow Statement in Group Reporting
The Cash Flow Statement is a critical component of each corporate close cycle and holds significant strategic importance for external stakeholders. Ensuring its accuracy is paramount. Certain industries, such as Energy and Utilities (due to infrastructure and equipment complexities), financial services (owing to diverse financial activities), and telecommunications (because of technology upgrades and long-term contracts), particularly face challenges in creating a reliable cash flow statement. However, no organization, regardless of industry, finds it "easy" to prepare an accurate cash flow statement.
Additionally, organizations have multiple workstreams (e.g., Treasury, Capital Structure, Tax) that contribute to the complexity of accurately collecting the data required for the Cash Flow Statement. Consequently, clients are notably enthusiastic about SAP's "out-of-the-box" cash flow statement solution, which can ultimately lead to increased automation, streamlined processes, and enhanced data control and integrity.
While SAP S/4 HANA for Group Reporting (GR) includes a standard Cash Flow report, there are nuances that clients should understand to avoid any unexpected issues. Analytics, including the Cash Flow Statement, are unfortunately often among the last items addressed in a standard project cycle. Maintaining discipline in managing data integrity is crucial, as GR cannot determine allocations for categories (line items, operating, financing, and investing activities) from overall amounts without precise input.
In an optimal SAP ecosystem, local accountants accurately capture movements (such as Balance Sheet movements like changes in PP&E and P&L items like depreciation and amortization) in the general ledger. These movements are then correctly loaded into GR, allowing departments such as Corporate Accounting, Treasury, Capital Structure, Tax, and others to make necessary adjustments directly in GR with a dedicated document type for each workstream. Authorizations ensure that all adjustments are tracked by workstream/user and timestamp.
It is important to note that no two cash flow statements are identical, and each client has unique sets of Info objects and Master Data, often making the pre-delivered standard report obsolete. Furthermore, the "out-of-the-box" Cash Flow Statement advertised by SAP is a web-based Fiori report. Many organizations, including directors and analysts, still rely heavily on Excel-based interfaces for quick calculations and formatting, a critical aspect not sufficiently addressed by standard web-based Fiori reports. Most clients have established formats integrated into their official documentation processes, indicating a preference for custom Excel-based Cash Flow statements, which our company can assist in developing.
GR offers functionalities that can help develop the Cash Flow Statement through “reporting rules” defined by the user. These include a range of mathematical operators to instruct the system on how to compile data for each line item in the Cash Flow Statement. GR's reporting rules provide extensive customization capabilities, including account movements (transaction types), journal entries (document types), consolidation units (company codes), and reverse sign indicators among others.
We are available to assist in identifying and assessing requirements from both functional and technical perspectives. Our goal is to build a Cash Flow Statement that is streamlined, accurate, easy-to-read, and aligned with corporate culture.