Review of S/4HANA Cloud for Contract & Lease Management
In the last 5 years, SAP has advanced considerably its solution for Contract & Lease Management (SAP CLM), a solution that is part of the SAP RE-FX Flexible Real Estate Management, and has been re-branded to better describe the potential it has, not only to comply with IFRS 16 and US GAAP-ASC 842, but to actually manage the leases any company has.
The purpose of this document is to review and describe the characteristics of the S/4HANA Cloud for Contract & Lease Management.
Lease contracts describe contractual agreements between two partners: the Lessor and the Lessee.
The lessor is the owner of an asset, the lessee has a right of use asset during the period of time agreed in the lease contract.
For the use of the asset, the lessee must pay lease payments, which are agreed in the lease contract.
Contract types: Lease-In / Lease-out, Sublease , Service Contract.
Contract objects: Real Estate, Machinery, Equipment, Vehicles, Computer hardware, etc
S/4HANA Cloud for Contract & Lease Management helps customers standardize their Lease-in, Lease-out, Sublease and Service contract management activities
Main Features: Multi currency, Contract Migration, CPI adjustments, Statistical valuation rule, US GAAP as parallel ledger, Valuation Balance report (Lease cockpit) that offers customers a multi-parameter view on lease balances (Liability periods, Right of use periods, Interest sums, Depreciation sums), Output Management, General letter as part of the Output management, Extensibility of fields in the contract, Lease questionnaire.
Covering real estate, as well as machinery, equipment, vehicles and computer hardware.
Additional contract attributes can be defined by customer via SSCUI
General letter as part of the Output management that allows to send letter with free text field to customers or vendors.
Extensibility of certain fields in the contract that enables customers to substitute or insert some prefixes or fill out some fields in the contract name auto-fill, for example the customer can use the contract type and contract object name as prefix.
Lease questionnaire is a questionnaire for leasing scenarios that helps simplify lease classifications.
Two new chats as part of the Valuation cockpit that offer an overview of the status of the valuation.
CDS views for contract master data and one for the contract object types that enable the customers to make their own customized reports.
5 different lease types for lease in, lease out and service contract
Top 11 predefined types of contract items
Terms and conditions for notice and renewal options (validity)
Lease payment cash flow with full integration
Critical dates and reminders
Multi-GAAP enabling (IFRS, US GAAP, HGB)
Manage right-of-use assets and liabilities
Customer / Vender accounting
Post depreciation and repayments
Controlling / Profit center accounting
Valuation and Classification:
Classification and evaluation rules
Statistical valuation rule
Calculate and report on net present value, depreciation, repayment and interest rate
Change management / Re-valuation
Support transition scenarios
Create / Link to fixed assets (SSCUI)
Financial Accounting integration
S/4HANA Cloud for Contract & Lease Management:
is a deeply integrated sub-component of SAP S/4HANA Cloud finance (Profit Center, Cost Centers, Assets, Functional areas etc.)
is simplifying your solution landscape by:
— Real-time valuation of leases
— Elimination of financial interfaces
— Reducing the number of applications in system landscape
Coordination between the Lease Administrator and Asset Account is critical for proper classification and valuation. Sharing a common platform eliminates operational silos between these critical players.
Contract & Lease Management App
Improved contract performance with real-time lease reporting and analytics
User-friendly interface, easy-to-navigate key lease dates
Calendar view highlighting, period, renewals, notice dates, and options
Contract simulations for renewals and break options
Cost per location
Simplified lease administration
Tracking of conditions to evaluate lease performance
Quick access to contract, abstract, or other attachments
Integration of basic lease data into location management to support lease/space strategy initiatives
Contract & Lease Management Enterprise Search
Ability to find contracts from the search bar
"Search" functionality providing: unified, comprehensive, and secure real-time access to contract data.
Search functionality that returns structured data (contracts)
Various possibilities to search for a contract (such as, using part of the contract name, the address, or a reminder)
Contract & Lease Management Dashboard
Analytical insights for contract and lease management
Reporting capabilities for lease contracts with a focus on: Contract type, Contract types in company code and Contract object types.
Delivering predefined stories for SAP Analytics Cloud
By gaining visibility of the leasing portfolio
Through monitoring a contract by company code
By monitoring a contract by contract object
Through offering a flexible dashboard for contract reporting
We at DYCSI have deep knowledge of the SAP Contract & Lease Management module and have implemented it in multiple companies. Please reach out to Joe Torres for a free demo.
About the Author
Joe Torres is the Founder and CEO of DYCSI Inc. He has over two decades of senior management experience in the IT and financial services industry with institutions such as Nacional Monte de Piedad and Banco Actinver.
Joe has seen success with roles in Technology Evolution, Bank Operations, Treasury and Risk Management, Contract and Lease Management and Money Laundry Prevention Systems, Banking Tellers and Emerging Technologies to Deliver Business Value.