Hi, I'm Alex

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  • Contents:
  • Introduction
  • What is working capital
  • Financial definition of working capital
  • Business operation flow
  • Key Concepts - Continual Change
  • Key concepts - Timing
  • Case study: Tesla
  • Variations by organisation
  • Service Industries
  • Retail Industries
  • Balance sheet items in detail
  • Accounts Receivable (AR)
  • Accounts Payable (AR)
  • Inventory
  • Cash
  • Other balance sheet items
  • Key performance indicators
  • Net Working Capital (NWC)
  • Days sales outstanding
  • Days inventory outstanding
  • Days payables outstanding
  • Cash conversion cycle / net operating cycle / cash cycle
  • Current and quick ratio
  • Ageing analysis
  • Challenges and complexities
  • The purchase to pay cycle
  • Invoice discounts
  • Revenue recognition
  • Timing
  • Intercompany flows
  • Business systems architecture
  • Other topics
  • Economic and market conditions
  • Working capital opportunities
  • Advanced topics
  • Supply chain financing
  • Finance vs. discounts
  • Limitations of working capital KPIs
  • Reporting in business systems featuring SAP
  • ERP: SAP ECC & S/4HANA
  • Financial consolidation
  • BDC - Intelligent Working Capital Insights App
  • Overview page
  • Inventory page
  • Accounts receivable page
  • Accounts payable page
  • Liquidity and cash page
  • Overall thoughts
  • BDC overview
  • Data products
  • Databricks
  • Datasphere
  • Datasphere finance foundation
  • SAP Analytics Cloud
  • Intelligent Applications
  • AI in Working Capital Management
  • Appendix 1: data products
  • Share, comment/discuss

    • Working Capital - theory and practice featuring SAP's intelligent working capital insights application

    project

    by Alexander Roan on 2 Sep 2025

    Introduction

    Recently, SAP introduced the 'Working Capital Intelligent Insights Application' as part of SAP Business Data Cloud (BDC).

    This is the first in a series of BDC-powered intelligent apps.

    I like this app and its underlying architecture. Positives:

    BDC also includes Datasphere and Databricks, which together make it possible to build on the SAP-delivered apps with:

    But what is working capital? And how well does this app represent it? In this article I'll take a look at working capital theory and the new SAP reporting.

    What is working capital

    Working capital is a measure of financial resources that are available to an organisation in the short term.

    Working capital can refer to the specific KPI 'Net Working Capital (NWC)'. Or, it may be used in a more general sense to refer to the factors that influence the calculation of the KPI.

    The analysis and interpretation of working capital is complex:

    Financial definition of working capital

    In this definition, 'available resources' and 'short term' have specific meanings:

    Available resources:

    Short term:

    Assets and liabilities are recorded on an organisation's balance sheet. It's important to keep in mind the balance sheet is a point in time snapshot. It provides a valued list of the items a company owns and owes at a specified point in time. This list is constantly changing.

    The high level structure of the balance sheet is:

    It's called the balance sheet, as these items balance according to the accounting equation:

    Assets = liabilities + equity

    To understand working capital, let's look into the detail of the current items:

    Current assets:

    Current liabilities:

    It's a long list, and some items are a complex. But, usually, only a few lines drive the majority of working capital. These are the points we want to focus on:

    So Net Working Capital primarily captures Cash, AP, AR, and inventory at a point in time.

    In other words, the KPI tells us something about the organisation's primary operations. Let's look at how these factor into operations.

    Business operation flow

    Manufacturing is a good place to start. Cash, AP, AR, and inventory are all present.

    Business operation flow

    The diagram shows the flow of operations. Several steps have an impact on the balance of assets and liabilities:

    1. Receiving materials:
      • Raw materials are considered convertible to cash within 1 year
      • These are recorded as current assets when received
    2. Accounts payable
      • An invoice arrives with a future due date for payment
      • An invoice represents money owed to a supplier within 1 year
    3. Outgoing payments
      • The invoice is paid when it's due
      • Cash is reduced when the payment is sent to the supplier
      • The open invoice is cleared and money is no longer owed
    4. Manufacturing
      • Raw materials (RM) are removed from inventory (RM asset reduction)
      • During production, work in progress is recorded (WIP asset increase)
      • After production, finished products (FP) are added to inventory
        • (FP asset increase, WIP asset reduction)
      • Overall, a net asset increase as FP value is higher than RM value
    5. Shipping
      • Finished products are sent to the customer (FP asset decrease)
    6. Accounts receivable
      • An invoice is sent to the customer
      • This invoice represents money the customer owes us within 1 year
    7. Incoming payments
      • An incoming payment is received from a customer
      • This increases cash
      • This clears the open customer invoice.

    When thinking about the flow of operations and working capital, I'd suggest to keep in mind two key concepts; continual change, and timing.

    Key Concepts - Continual Change

    I tend to imagine a single item flowing through operations. However, in reality working capital never measures a single item, it measures a point in time with a mix of in-progress items.

    Most manufacturing organisations operate on a 'make to stock' basis. Sales are made from stock. Stock is replenished through manufacturing based on forecast/planning.

    Depending on when you capture a snapshot of the balance sheet, the levels of cash/AP/AR/inventory can vary significantly.

    Consider a big order shipment, or a big cash receipt. These will cause a shift in working capital from one moment to the next.

    A better abstraction may be something like this:

    business operation flow - continual change

    Key concepts - Timing

    Accounts Receivable and Accounts Payable represent sales and purchases made on credit. Total sales equals cash sales plus accounts receivable.

    These credit sales and purchases involve negotiated payment terms. This introduces a timing factor to working capital.

    If a manufacturing company operates on a make to stock basis, their inventory levels represent another timing factor. Inventory at minimum should cover the time it takes to buy raw materials and manufacture a product.

    business operation flow - timing difference

    To illustrate timing:

    In this example, the difference between A/R and A/P payment terms means the organisation has a 30-day window where it needs to fund raw materials with its own cash.

    In 'make to stock' the individual sale and shipment is not linked to raw material procurement. But, the total bucket of all sales, all shipments, all inventory, all purchasing are linked in this timing.

    If total A/R and total A/P terms are poorly aligned, companies need a lot more cash to fund operations.

    An idea scenario is to run a 'make-to-order' business. If a customer's advance payment or down payment covers procurement and manufacturing costs, this puts a business in an excellent cash position.

    I was curious about Tesla when I read customers were putting deposits down one year in advance for the Cybertruck. Next, let's look at Tesla's financial data.

    Case study: Tesla

    Yahoo Finance is a good resource for financial summaries - Tesla on Yahoo Finance.

    On 31/12/2024:

    This is a massive amount of positive working capital.

    However, at this level of detail, it is difficult to draw more detailed conclusions.

    Let's look at Tesla's US SEC filling to get more insights - SEC filing. This includes data for June '25 and December '24.

    Current assets on 31/12/2024:

    I knew Tesla were cash rich, but I was still slightly shocked to see the number This asset mix may indicate:

    But, what about the Tesla taking deposits far in advance. Let's look at the liabilities.

    Current liabilities on 31/12/2024:

    We can see deferred revenue of 3.2bn, some of which may related to advance payment for vehicles. Keep in mind, these numbers are Tesla wide.

    Accrued liabilities of 10.8bn also includes customer deposits of 1bn.

    So, around 4.2bn of advance payments from customers. Unfortunately, we don't know the exact nature of these, nor the product they relate to.

    However, we do see total inventory of 12.0bn. Customer advance payments of 4.2bn covers 1/3 of inventory.

    So 1/3 of inventory is financed by customer advance payments.

    From the above, I also note AP aligns well with inventory (12.0B, and 12.5B). This suggests Tesla aligns purchases with production needs well, minimizing excess stock. This would indicate a high level of procurement efficiency.

    I'd conclude that:

    Variations by organisation

    Working capital differs by various factors. Three big ones are:

    Manufacturing was a good place to start, but let's look at how it differs for services and retail.

    Service Industries

    Generally, services don't have inventory or trade accounts payable.

    Working capital in services

    However, working capital can still be a relevant measure. Consider a consulting firm or a systems integrator.

    Current assets:

    Current liabilities:

    Creating a services industry customised version of working capital can help them monitor their cash, receivables, 'service WIP inventory', and costs.

    The big considerations for services are:

    Retail Industries

    Generally, retail doesn't have Accounts Receivable, sales are cash. They don't have manufacturing, but they do hold stock in inventory.

    Working capital in retail

    The rough flow in retail:

    The process is similar for online stores, just replacing in-store collection with shipping.

    In retail, the size of the business and the nature of the stock has a big effect on working capital.

    A large retail chain with fast moving stock sells for cash and buys on credit. They may be able to sell stock before they pay for it. When large retailers negotiate long AP payment terms, this puts them in an excellent cash position.

    Small, specialist retailers on the flip side may have some inventory items that they buy, and remain in stock for a long time. This ties up cash.

    In retail, inventory and supplier terms are a key focus. Other factors to keep an eye on include returns liability, and gift cards (deferred revenue).

    Balance sheet items in detail

    Accounts Receivable (AR)

    Accounts receivable tracks sales made on credit to customers with a due date for payment in the future.

    An A/R invoice is usually issued at the point of product or service delivery. This invoice includes the agreed payment terms.

    Payment terms include two main factors:

    A simple payment term is '60 days net due', or with a discount '60 days net due or 15 days 2% discount'.

    From a working capital perspective, organisation's want to ensure customers can pay, and that they pay as quickly as possible.

    A wide range of AR factors impact working capital, these include:

    Accounts Payable (AR)

    Accounts payable tracks purchased made on credit from suppliers with a due date for payment in the future.

    An A/P invoice is usually received at the point of goods or service receipt.

    For working capital, look at a subset of total A/P. The part that relates to products or services.

    Payment terms also apply to AP.

    AP factors that affect working capital include:

    Inventory

    Inventory levels are an important consideration for working capital. Holding high inventory levels requires a large AP spend, and that cash remains tied up in inventory until it's sold.

    Optimising inventory is a challenging topic. Manufacturing plans are usually based on sales plans, which are based on actual sales. However, this is not an exact science and planning beyond the very near future is extremely difficult.

    On the one hand, we want to minimise inventory to release cash. On the other hand, we may want extra inventory as safety stock as a buffer for unexpected events.

    Key inventory factors to consider related to working capital

    Cash

    Optimising inventory, AP, and AR can make more cash available. Cash is also affected by various other factors, key cash considerations include:

    Other balance sheet items

    Working capital may include other current items:

    Current assets

    Current liabilities

    These are usually smaller components. When analysing a company, if one of these is a big factor, it should be investigated further.

    Key performance indicators

    When it comes to analysing working capital, I'd highlight five key performance indicators:

    1. Net working capital
    2. Days sales outstanding
    3. Days payables outstanding
    4. Days inventory
    5. Cash conversion cycle

    I would supplement any analysis with a few connected KPIs:

    In general, working capital KPIs are used as broader indicators of health:

    Let's have a look at each KPI.

    Net Working Capital (NWC)

    Net Working Capital (NWC) = Current Assets − Current Liabilities

    A common way to visualise NWC is to put assets and liabilities in stacked bar columns. The difference between the two columns equals working capital. Let's visualise the Tesla data we looked at earlier.

    Tesla NWC

    These charts are great. They make the nature of assets very clear. In the Tesla case not only do we see high working capital, we see most of it is highly liquid as cash, cash equivalents and short term investments.

    Converting inventory and receivables into cash takes time, and actual realised value may be lower than the book value.

    These charts also give a good indication of the relationship between Cash, Receivables, Inventory, and Payables.

    High level interpretation guidelines for NWC include:

    What if we compared Tesla with another automotive company? What if we compared those with consumer goods, retail, and services?

    I've picked out Ford, Proctor and Gamble, Walmart, and Accenture as samples. Here are their working capital breakdowns side-by-side. All on the same scale apart from Walmart, which is comparatively much larger.

    NWC comparison

    As discussed, NWC is a point in time static metric. Despite all the detail above, we haven't gained any insight on how these assets and liabilities related to revenue or costs. The next three KPIs; DSO, DPO, and DIO blend balance sheet and P&L data to give us a more dynamic view.

    Days sales outstanding

    DSO looks at the balance of open accounts receivable at a point of time in conjunction with revenue over a period of time (a year).

    DSO picture

    Going back to Tesla:

    Their annual revenue clears their open AR around 22 times in a year! Or, put another way, it only takes 17 days of cash receipts for them to collect their full open AR balance.

    To get to 17 days: Days Sales Outstanding (DSO) = (AR / Net revenue) * 365

    Where:

    We can visualise this by plotting the revenue in relation to 365 days, and highlight how the 4bn receivables relates to 17 days.

    DSO for Tesla

    Calculation notes:

    Generally speaking, a low DSO is attractive. It indicates an organisation can convert credit sales to cash quickly. A high DSO may hint at collection issues.

    Let's look at the comparison with the other companies:

    DSO across companies

    Interpretation

    Days inventory outstanding

    DIO looks at the balance of inventory at a point of time in conjunction with cost of sales over a period of time (a year).

    Cost of sales are booked at the point of shipping and are the direct costs related to the creation of a product or service that is sold. It's the part of revenue that relates most closely to inventory.

    DIO picture

    Going back to Tesla:

    COS covers inventory about 7 times a year. Or, put another way, it takes 55 days of COS to pay for current inventory.

    To get to 55 days: DIO = (Inventory / Cost of sales) * 365

    Where:

    Let's look at our comparison companies:

    Example company DIO

    Tesla: 55 days Ford: 32 days P&G: 67 days Walmart: 40 days Accenture: No inventory / not relevant

    Interpretation

    Where we see significant variation in NWC and DSO, the DIO looks a lot closer across these companies. When we look at inventory in relation to sales, Ford performs well, but as we've seen this is supported by a credit sales model which will help drive sales volume.

    Days payables outstanding

    DPO looks at the balance of AP at a point of time in conjunction with cost of sales over a period of time (a year).

    DPO picture

    Going back to Tesla:

    COS covers inventory about 4.5 times a year. Or, put another way, it takes 82 days of COS to pay all open supplier invoices.

    To get to 82 days: DSO = (Accounts payable / Cost of sales) * 365

    Where:

    Let's look at our comparison companies:

    Example company DIO

    Tesla: 80 days Ford: 55 days P&G: 182 days (fits with typical FMCG strategy) Walmart: 61 days Accenture: 101 days

    Interpretation

    Cash conversion cycle / net operating cycle / cash cycle

    DSO, DIO, and DPO can be combined to create the cash conversion cycle (CCC).

    Think of:

    DSO: Number of days it takes to convert receivables to cash DIO: Number of days it takes to convert stock to receivables or cash DPO: Number of days you hold onto payables.

    DSO + DIO can be considered total days to convert assets to cash.

    Next, if you think of DPO as number of days to pay suppliers cash we owe them, if you deduct DPO from DSO + DIO you get a measure of the overall number of days it takes to convert net assets to cash.

    CCC picture

    Looking at our example companies:

    working capital CCC

    A short cash conversion cycle is that an organisation can convert its assets to liabilities quickly. If the cash conversion cycle is negative, it means the company collects from customers before paying suppliers.

    Interpretation

    All companies except Ford are using suppliers to fund their operations. The high DSO at Ford drives their CCC to a higher positive number.

    Current and quick ratio

    Two popular ratios for working capital are the current ratio and quick ratio.

    Current ratio:

    Current Ratio = Current Assets / Current Liabilities

    Tesla: 2.04 Ford: 1.1 P&G: 0.7 Walmart: 0.79 Accenture: 1.46

    Quick ratio:

    Quick Ratio = (Current Assets - Inventory) / Current Liabilities

    Ageing analysis

    This isn't as much of a KPI as a process measure. In AP and AR ageing reports show the open items by length of time open.

    Keeping on top of AR ageing is very important in ensuring customers are paying in line with agreed payment terms.

    Connected to AR ageing are various key process, including:

    Challenges and complexities

    In real life, working capital can be a bit more difficult to calculate and interpret. In this section, I'll look at some of the major challenges and complexities.

    The purchase to pay cycle

    The purchase to pay (PtP) cycle that hides under DPO is complex. Part of optimising DPO is optimising PtP.

    The PtP cycle for physical inventory:

    GR/IR is a special control account. It stands for goods receipt/invoice receipt. The GR/IR allows for goods receipts and invoice receipts to be matched with reference to purchase orders. This is the core of the 'three-way' match in PtP.

    Outside an ideal PtP flow, various things can happen:

    These scenarios impact working capital.

    Invoice received, but goods not received in particular increases our A/P liability on the balance sheet without a matching increase in assets on the balance sheet.

    Part of optimising working capital is having a good GR/IR reconciliation process.

    Invoice discounts

    So far, we looked at simple examples of payment terms:

    Back at the start of my career, when I worked in an AP product group, our SAP had several hundred payment terms set up.

    For example:

    I re-call recently that SAP added an AI capability to create plain English descriptions of payment terms!

    With this level of complexity, it can be very difficult to manage payment terms.

    Factors to consider:

    A classic working capital improvement activity is to review contracts, download vendor and customer master data, and transactional data and do an analysis:

    There are various case studies of organisations finding huge amounts of working capital improvement just by this simple analysis.

    Revenue recognition

    When we ship goods, we reduce inventory (assets). It's important to record the corresponding accounts receivable asset as soon as possible to balance this. This also starts the clock ticking on the AR invoice payment terms.

    However, revenue recognition rules can be a little complex.

    This is another area where analysis should be done to validate whether an organisation is billing at the right moment (earliest possible).

    Within services, without a tangible product, revenue recognition gets a little more complex. Typically, a contract should define 'work packages' that can be easily demonstrated and used as a basis of booking service delivery and billing/invoicing. From a working capital perspective, the structure of the contract deliverables is very important.

    It's not uncommon in services to see disputes around quality and completeness of delivery, leading to significant delays to the ability to bill.

    As a consultant, I've personally had issues with this! In one case when a client wasn't happy with a deliverable, my billing ended up happening two months later than planned. Lesson learned - make the contract much clearer on the minimum level of delivery for billing.

    Timing

    All the KPIs are based at least partly on the balance sheet at a point in time, they are very sensitive to operational events

    Intercompany flows

    The sample company numbers we have looked at so far come from annual accounts. Preparing those takes a big effort and a long time. Those numbers are not available on a real-time basis for daily operations.

    A big part of the issue in preparing working capital KPIs is intercompany.

    The below diagram is an illustrative mock-up for a multinational focused on tax efficient operations. The main features are:

    Tax efficient intercompany

    With this model, the maximum amount of margin is earned in a location with low tax rates.

    This model is well established. SAP has long had functionality called 'plants abroad' to do this.

    Unfortunately these intercompany flows make it hard to calculate true NWC, DSO, DIO, DPO as cash, AR, inventory, and AP is split across entities.

    Periodic financial closing includes the elimination of intercompany, but we don't want to wait for closed books every month to look at working capital.

    It's easy to look at reports about a single legal entity, but this often doesn't give us a country/product/region/group-wide view.

    Business systems architecture

    Another big challenge in calculating working capital comes from business systems architecture.

    In multinationals, we rarely have a single ERP, that we can log on to and check KPIs.

    Here is an abstraction of a relatively simple multinational ERP architecture.

    Multinational systems architecture

    There are often multiple systems per country, entity, and category. These are the systems that hold the cash, receivables, inventory and payables data we need.

    The periodic financial closing will consolidate this data on a periodic basis in a trusted way. However, this is not available on a day-to-day basis.

    The traditional solution to sending ERP data to external data & reporting systems. However, from a financial perspective, this is not ideal.

    ERPs are controlled accounting systems. When you take data out of an ERP, trust degrades. This is a key concern for important KPIs like working capital used in key business decisions.

    Other topics

    A few additional comments by industry:

    Manufacturing

    Retail

    Economic and market conditions

    Alongside internal KPIs, several economic and market factors should be monitored:

    Working capital opportunities

    A brief checklist to consolidate the factors to consider when trying to improve working capital:

    Advanced topics

    Supply chain financing

    Generally speaking, an organisation wants to pay for their purchases as late as possible. Powerful multinationals will often try to negotiate 90 days, or at least 60 days payment terms.

    On the flip side, suppliers want to get cash as quickly as possible. They may need this for various reasons; funding their own purchases, investing in growth, etc.

    When I worked at Procter & Gamble, I remember the power the big UK supermarkets had over us. But then again, I also remember the power we had over our suppliers.

    This situation can make it difficult for a customer and its supplier to reach a mutually beneficial relationship with payment timings that work for both parties.

    Supply chain financing involves bringing a financial services organisation as an intermediate. They pay the supplier early, and receive payment from the customer later.

    The mechanisms can get a little complicated when it comes to payment dates, discounts, and fees. However, this model can be highly beneficial for a customer and supplier if working capital is of critical importance to them.

    Recently, there are various case studies of supply chain financing in the ESG space. In this area large organisations may want to buy from smaller, independent suppliers, but they may not want to meet the early payment needs of those small businesses. Supply chain financing can bridge this gap.

    Walmart and HSBC are partnering on supply chain financing in the ESG space. This partnership allows Walmart to engage with smaller suppliers focussed on sustainable practices. This is how SCF can help preserve a supplier's working capital

    Suppliers taking a loan could have the same effect, however, supply chain financing leverages the buyers' creditworthiness. This is one of the main reasons it can work well in ESG.

    Finance vs. discounts

    One important topic which is overlooked related to working capital is whether to take or receive discounts.

    Taking advantage of discounting can improve cash flow, but at the expense of profit margin.

    Cash flow can also be improved through lending. Therefore, discount opportunities can be evaluated in terms of the cost of lending to make a decision on the optimal way to improve working capital.

    Organisations that set payment terms and do not regularly review them may be offering discounts when it would be better to take advantage of lending or other methods to improve cash flow.

    A model can be built to compare the short term cost of funds and the impact of discounts.

    This topic is rarely covered in working capital reporting.

    In theory, an overlay could be added to working capital reporting showing Discount ROI vs. Funding Cost with supplier segmentation.

    Limitations of working capital KPIs

    A brief checklist to consolidate the limitation of working capital KPIs

    Reporting in business systems featuring SAP

    ERP: SAP ECC & S/4HANA

    When it comes to ECC and S/4HANA there are numerous reporting options for working capital.

    Baseline from ECC

    In S4/HANA:

    The problem with ECC and S/4HANA reporting is not necessarily the reporting capability of the system, it's the intercompany and solutions architecture points we looked at before. In most multinationals, the full operational flow doesn't exist in one system for a country or business unit. This makes the in-built reports less useful.

    Financial consolidation

    There are multiple solution options for financial consolidation. These systems and processes are used to calculate the KPIs that we've taken from annual reports in this article. However, these are not much use when it comes to getting real-time visibility on working capital.

    BDC - Intelligent Working Capital Insights App

    SAP recently launched the 'Intelligent Working Capital Insights Application'.

    There's a BDC free trial where you can configure and experiment with this app.

    Features:

    SAP Help - BDC working capital intelligent insights

    SAP Help - SAC working capital intelligent insights

    The app itself is split into five pages:

    Overview page

    Have a look at the below screenshot from the BDC trial / documentation. A few observations on this:

    Overview Page

    Inventory page

    This is where magic starts to happen, we can see our DIO, and immediately get a visual on important things that explain it:

    Inventory Page

    Accounts receivable page

    I'd like to customise this further to include discounts, ageing and potentially something on credit rating breakdown of open AR.

    Accounts Payable Page

    Accounts payable page

    Excellent to see a few visualisations on discounts here. I would potentially want to customise this to add in an ageing analysis.

    Accounts Receivable Page

    Liquidity and cash page

    Great summary: liquidity breakdown, key relevant ratios like ROCE and cash flow.

    Liquidity and Cash Page

    Overall thoughts

    The real benefit of this app is in three areas:

    It would be hard to do a full criticism without using it as part of a real business, but my quick reaction is:

    Depending on the organisation there will be certain cash, inventory, AR or AP specific metrics important to that business that would be good to bring in.

    BDC overview

    My quick look at the intelligent working capital insights app glossed over a bunch of SAP systems. In this section, I'll briefly introduce and describe each:

    Business Data Cloud can be considered as a software as a service platform oriented towards unification and governance of SAP data.

    Several products sit under the umbrella of data cloud:

    The following SAP slide gives a great overview of BDC capabilities

    SAP BDC

    This shows how data products provide line of business (e.g. S/4HANA) data to BDC and Datasphere and how this can be manipulated in Databricks and consumed in SAP Analytics Cloud.

    It's important to keep in mind that data products are fully managed and they automatically update with line of business system changes, so there's no interface overhead here.

    I'll give a quick overview of each part of the architecture below.

    Data products

    Help - Data Products

    Databricks

    A special edition of databricks lakehouse available in BDC

    Features:

    Example use cases:

    Help - DataBricks

    Datasphere

    Help - Datasphere

    Datasphere finance foundation

    Including

    Models based on semantic tags make it easy to analyze and calculate various financial KPIs.

    Profit & Loss:

    The SAP Analytic Cloud Story Finance: P&L Statement (based on SAP Datasphere) is an example of how the foundation can be used.

    It offers an overview of selected KPIs relevant to profit & loss, for instance Cost of Goods Sold (COGS), Net Profit, Operating Profit and Operating Expense. Year-over-Year, Plan vs. Actual comparisons and variances are also included.

    Data Connectivity:

    Based on live data access to SAP Datasphere (based on SAP S/4HANA or SAP S/4HANA Cloud).

    Help - Finance Foundation

    SAP Analytics Cloud

    Help - SAP Analytics Cloud

    Intelligent Applications

    Pre-build applications from SAP.

    For example, the working capital intelligent insights application discussed earlier.

    AI in Working Capital Management

    The above section covered Databricks, which can be used to integrate AI with SAP line of business data.

    However, any AI / ML and data engineering product stack can be used to apply these capabilities to working capital data.

    AI/ML models and algorithms can be run on the detailed data that lies underneath working capital KPIs to do various things:

    Appendix 1: data products

    One of the themes of this article is the wide range of data needed to calculate and interpret working capital.

    We've seen that it's difficult to calculate working capital KPIs in a single system.

    External data warehouses are a popular alternative, however these generally require a range of effort to manage interfaces, replication, data model design etc.

    The SAP data products we talked about are designed to be mostly SAP managed ways to get working capital data from source systems to the app. SAP published the list of data products used in this app. There are 35 in the current version. This list gives a good indication of the scope of data we are talking about for working capital calculation:

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