What is cross-legal-entity hedging relationship in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: cross-legal-entity hedging relationship

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: Contains hedged items and hedging instruments from multiple legal entities.

Smart SAP Assistant

• Key Concepts: 
  Cross-legal-entity hedging relationship is a feature of the Accounting for Financial Products (AFP) component of SAP’s Financial Services Business Application (FS-BA). It allows companies to manage their financial risks across multiple legal entities by creating a hedging relationship between them. This means that the gains and losses of one legal entity can be offset by the gains and losses of another legal entity, thus reducing the overall risk. 
  
  How to use it: 
  To use this feature, companies must first create a hedging relationship between two or more legal entities. This is done by entering the relevant data into the system, such as the legal entities involved, the type of hedging relationship, and the amount of risk to be offset. Once this is done, the system will automatically calculate the gains and losses for each legal entity and adjust them accordingly. 
  
  Tips & Tricks: 
  When creating a cross-legal-entity hedging relationship, it is important to ensure that all relevant data is entered accurately. This will ensure that the system can accurately calculate the gains and losses for each legal entity. Additionally, it is important to regularly review and update the hedging relationship as market conditions change. 
  
  Related Information: 
  The Accounting for Financial Products (AFP) component of SAP’s Financial Services Business Application (FS-BA) also includes other features such as derivatives accounting, structured products accounting, and financial instruments accounting. Additionally, SAP provides a range of other solutions for managing financial risks such as Risk Management and Treasury Management.