What is 'cash trapping' in SAP FS-LRM - Liquidity and Risk Management?

cash trapping - Overview

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: A type of excess spread in asset securitization. Cumulative excess spread is known as cash trapping.

cash trapping - Details

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  Key Concepts: 
  Cash trapping is a liquidity risk management tool used in SAP FS-LRM. It helps to identify and monitor cash flows that are not in line with the company’s liquidity risk management strategy. It also helps to identify and prevent potential liquidity risks. 
  
  How to use it: 
  Cash trapping is used to identify and monitor cash flows that are not in line with the company’s liquidity risk management strategy. It can be used to identify potential liquidity risks and prevent them from occurring. The tool can be used to set up rules for cash flow monitoring, such as setting up thresholds for cash flow amounts, or setting up rules for when cash flows should be monitored. 
  
  Tips & Tricks: 
  When setting up rules for cash flow monitoring, it is important to consider the company’s liquidity risk management strategy. This will help ensure that the rules are in line with the company’s goals and objectives. Additionally, it is important to regularly review the rules and adjust them as needed. 
  
  Related Information: 
  SAP FS-LRM provides a range of other tools for managing liquidity risk, such as cash flow forecasting, liquidity stress testing, and liquidity gap analysis. These tools can be used in conjunction with cash trapping to provide a comprehensive view of the company’s liquidity risk management strategy.