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Former Member

I am blogging after a long gap of almost a year.  Was in forums activity and suddenly felt a need to blog.  The prime objective of this blog is to elaborate on what is Financial Supply Chain Management and what is Treasury and why they are interconnected and why they are still different.

The definition of FSCM as given in SAP documentation is "SAP Financial Supply Chain Management (FIN-FSCM) optimizes the financial and information flows within a company and between business partners".   From the context of business partners and optimizing the financial flows Treasury forms an integral part of the overall FSCM network.

But from a business context which is more relevant, FSCM and Treasury are not the same.  In fact there is huge difference between both.  FSCM is mainly comprised of Credit, Collections and Dispute Management which works closely with Finance and accounts department and from an SAP context is in close collaboration with FI and SD modules for credit management. 

When we come to treasury management, it is handled from a business context by Treasury Department and in general is going to optimize the cash flow through investments (Treasury), reducing financial risk (Risk management) and optimizing payment processes internally (In-House cash).  Cash and Liquidity management is pretty useful for cash management and forecasting liquidity.  

All these work towards increasing working capital and profitability, but are done in a different manner/context.  FSCM in a broad sense is to increase working capital through efficient management of credit risk and through proactive receivable management.

Treasury is going to involve different domain knowledge all together and one must have deep knowledge of treasury in SAP also in order to make informed decisions to manage the portfolio.  I will write a detailed blog on what to look for in the case of treasury management and what SAP offers in treasury side.

Earlier Treasury was under Corporate Finance Management (CFM) and previously was a separate module as Treasury itself.  Now in ECC 6.0 onwards it has been integrated into FSCM, but that must not be confused as to a sub module of FSCM.  

I have heard many times from many different corners about FSCM and Treasury being combined together and talked about as one.  Treasury on its own itself is a huge module and the role of a treasury consultant should be clearly differentiated from the role of an FSCM consultant. The business needs and objectives of both these roles are different and it cannot be performed by a Finance person with FI knowledge alone.

There are already various blogs written on overview of FSCM which can be checked through the wiki section of SDN under FSCM.