Trade Funds Management: the financial engine guiding your trade investment solution

8 July 2014

Peter Douglas

Peter Douglas

Senior Consultant

SAP Trade Funds Management (TFM) has been a familiar part of several solution implementations I have worked on recently. Often, when I encounter SAP TFM as part of an existing enterprise solution, I find it sits in the background as a ‘black box’ with little direct use and is considered solely as a necessary part of the underlying integration landscape of an SAP TPM solution.

The more I work with TFM the more I have come to realise that this need not be the case.
Indeed, it is possible that businesses who have already implemented SAP TFM, for example in a TPM solution, could leverage the benefit of under-used functionality to improve the financial planning and management of their trade investments, right down to the individual trade spend level for specific customers and SKUs.

What are you missing out on?

Generally, SAP TFM provides the tools to plan and actively manage trade spend captured by an SAP TPM solution. For example, it can enable a business to:

  • Plan and reserve funds at selected customer hierarchy levels (a fund plan)
  • Further split this allocation at lower levels for selected customers and products (a fund)
  • Manage the key figures relating to trade investments set up and executed over a defined period, which can be automatically linked to the appropriate plans and funds
  • Enable real-time re-allocation of reserved amounts to other funds, freeing up spend and sending it to where it’s needed
  • Perform availability checks to ensure necessary financial conditions are met before certain transactions can take place, e.g. Settlement of trade claims.

In addition to the above, an SAP TFM solution permits the collection of data from SAP ECC to track on-invoice discounts as well as the calculation and posting of financial accruals for rebates, based on the associated spend type. These may be particularly important if integrating TFM with an SAP Trade Claims Management (TCM) solution.

All of the above is controlled by the TFM module in SAP CRM, which not only generates and stores a complete transactional record of all fund postings but also can integrate to ECC solutions, for example, by managing the replication of accruals as accounting documents in ECC. Integration also extends to BI reporting, with standard CRM extractors for value categories* within fund postings to provide complete visibility of all fund activity in reports if required.

*Individual financial value types that make up each posting, for example, 'Settled' (for Claims integration) and 'Accrual Balance' (when Accruals are calculated and posted). These form an audit trail.

How can you make the most of what you already probably have?

Well, the answer is simple: start using it!

But how do you start using it?

A bit more background first. When a trade investment (e.g. a promotion) is captured in TPM it is linked to a fund plan and fund (often automatically determined) before being released for use. Following this, a fund usage (the lowest level of granularity of Funds, which links 1:1 to each Trade Spend on a Promotion document) is automatically generated, which tracks all fund movements and financial postings relating to the linked trade spend, e.g.:

  • Creation of and updates to the figure reserved for the planned spend
  • Accruals automatically calculated for the trade spend
  • Settlements made as a result of claims by customers for rebates.

These postings, which are recorded automatically in an easily accessible set of transactional postings for audit purposes, feed into calculated key figures that sit on a 'Checkbook' in the fund usage, and show a live position of all relevant financial metrics during execution of the trade investment activity. The interplay of postings and how they update the key figures is an important sub-topic that will be left for another time.

Given this data is available in one place, a business has the ability to easily track and, if required, adjust their use of planned trade spend over the course of the life of a trade investment using standard functionality in TFM.

This means corrective action can be taken when and where it's required (in CRM), rather than being analysed after the event through BI reports. The integration of TFM with TPM means this financial data is up to date and only a few clicks away, or can be available for view where it's most relevant, for example on trade claims.

For example, your business could use this functionality to empower your sales team to proactively plan trade funds more effectively, reducing the time spent administering the funds. The enhanced visibility of fund budgeting across the trade investment landscape within your organisation would also avoid the possibility of ignoring underutilised funds and, conversely, prevent overspending before committing to retail. If some funds are being underused you could also use it to transfer amounts from one fund to another, freeing up sums for other Investment activities.

So if you already have it, why not use it?

Ultimately, TFM is a useful tool that you may already have if you are using SAP TPM. Its deep integration with other parts of the SAP ecosystem means it is tremendously powerful in providing up to the minute data on the performance of your individual Trade Investments as part of a larger plan.

SAP TFM exists as a powerful component of SAP TPM. Rather than allowing it to sit quietly in the background, if you've already got it, why not use it?
 

About the author

Peter Douglas

Senior Consultant

Focused on helping businesses gain valuable insight from their enterprise data through the delivery of solutions in predictive & advanced analytics.

Since arriving at Bluefin, Peter has had the pleasure of being part of challenging and rewarding projects across the Consumer Business, Manufacturing and Pharmaceuticals industries, for some well-known global names. His primary focus is working with clients to understand and exploit the power of emerging capabilities in advanced analytics and apply this to their business needs. His skills and hands-on experience span a range of SAP technologies, such as HANA / BW, Predictive TPM and CRM.

Peter’s passion for all things “Data Science” manifests itself in championing the predictive & advanced analytics ecosystem of SAP tools as a great opportunity for clients to tap into the power of their data to answer targeted business questions with accuracy and insight.

His previous life as a Quantum Physicist and PhD Grad has left Peter with old habits: in everything he does he loves testing theories and experimenting with new ideas and technology. He’s also addicted to continually learning new things.

Outside of work Peter enjoys life in London and, when he can, explores the World.

Bluefin and SAP S/4HANA - welcome to the one horse race