1. Objective and Scope

1.1. Objective of this Operation

The purpose of this document is to describe the way to record the Treasury Commissions calculation in PI2 and the subsequent invoicing from 2002 (PF2) and 4044(PI2)

1.2. Scope

This operational procedure (OP) applies to all companies with a convention agreement to assign Payables and Receivables to SSA \ SFA either from PF2, PI2, WP2 or outside ERP.

This procedure is under the responsibility of the Treasury Accounting Team who performs the closing process of 4044 and 2232, in coordination with the Intercompany Team to ensure the replication in the affiliates.

2. Definitions

See Finance Glossary

3. Tasks description

Treasury Commissions are applicable on:

• Accounts Receivables items:
• Third party invoice & credit note
• Interco unchained invoice & credit note
• Interco chained invoice & credit note

• Accounts Payables items
• Third party invoice & credit note
• Agent invoice & credit note
• Interco unchained invoice & credit note
• Interco chained invoice & credit note

• Data Take-Over: shortcut

The Treasury Commission will be invoiced as following:

• is invoiced to each Affiliate in 2
• Commission for AR items: global amount, sum of different type of commissions
• Commission for AP items: global amount, sum of different type of commissions
• Only rate ‘all in’ applicable
• is invoiced to the Affiliate in Affiliate currency

• No FX for Affiliate
• Part of Change PL
• is invoice on D-2, on all what is not yet invoiced until run date
• Justification is required on 2232/4044 side & Affiliate side - attachment with also the possibility to get historical data (even after archiving)
• Commissions also calculated on Affiliate 2232 but different posting scheme (no invoice) – for statistical purpose as 2002 and 2232 are the same legal entity.

Inside the Treasury Commission are included  - Type of Commissions (All in one):

• Remuneration Time value (Pre-financing)
• Expected Loss for Credit Risk
• Return On Equity at Risk
• Hedging Fee (Carry)
• Service Fee

The amounts are recorded each month at the closing period at D-2. Any assignment after the moment of the Commission calculation is rolled forward to the next accounting period.

3.1.  Commissions calculations process

3.1.1. D-2 Yearly Process

Yearly Process 

This process must be completed by mid-January, or prior to the first commission calculation of the current year, in order to determine the average interest rate. Completion is required for the initial execution at the end of January.

The commission process depends on average interest rates calculation based on data from the previous year. For example, in January 2026, the tables must be updated for 2025 using the average interest rates from 2025. 

Interest rates are sourced from Quantum and routers, and are maintained in Table T056P.

Access Transaction Z3F_FA_COMM_COCKPIT and select the “Calculate Yearly Average Rates” option.

First, execute the transaction in test mode:

Compare the results with the previous year to ensure that no currencies are missing.

After verifying the currencies, execute the transaction without test mode to update the table with the average interest rate to be applied.

3.1.2. D-2 Monthly Process

3.1.2.1.  Commissions: Calculation and Sending

3.1.2.1.1.   Calculation

At month end operations, at the timing of D-2, the following transaction Z3F_FA_COMM_COCKPIT shall be launched for the calculation of the monthly process

Select the and then the following screen will be available:

Should be executed in Background (Time Consumption).

After this step is done (ensure in SM37), go back to the cockpit

3.1.2.1.2.  Send

The next step is to ensure the sending of the Commission calculation to the tables in the PI2

Select the paying company code: 2232 & 4044 , the closing period and year:

This stage will consolidate the table based on the contracts

- by affiliate,

- type of commission (Receivables / Payables),

 -factoring company.

Also it prepares the attachment for the Business Partner, as well as update to the table that will allow the distribution to the next step.

When step is finalized go back to cockpit and proceed to step 3. 

Note: This step does not generate a spool, in case appears a spool means that there´s an error on table and we must contact the DT team to verify it and wait.

3.1.2.1.3.  Distribute Commissions accrual 

 This will send the accruals to the accurate PF2, WP2 and PI2 the data of the postings

Needed to consider the specific contexts:

Z3F_FA_COMM_AFF

Z3F_FA_COMM_FACT

When step 3 is ensured for each factoring company (2232/4044), ensure communication to Service Center to perform in WP2 and PF2 accrual posting via Transaction Code ZZF_FLYPOST_IN_PROC:

With the specific contexts

- Z3F_FA_COMM_AFF (For Affiliates);

• Z3F_FA_COMM_FACT (in PF2 for 2002)

3.1.2.2.  Commissions: accrual posting

3.1.2.2.1.  Post accrual in Factoring 4044

 The next screen we will select context Z3F_FA_COMM_FACT

Here the outcome is to post in 4044 the accrual to invoice:

Doc Type SA

50 7*

40 22202* with Material and Partner and TP

3.1.2.2.2.  Post accrual in PI2 Affiliate

The next screen we will select context Z3F_FA_COMM_AFF

Target company PRS: 2232 & 4044

In SM37 it does not generate spool in the end:

 This step will post the accrual of invoice to receive in PI1 Affiliates

 Doc Type SA

Post in Affiliate 40 6*

50 23202* with TP

 3.1.2.3.  4044 Invoice 

At this section the program will prepare all the steps to generate the billing in 4044

3.1.2.3.1.  Post 4044 invoice

At this step 3 postings are prepared and generated in the next screen:

Will select all open items in the Invoice to Issue account 22202* and generate

1. a) the invoice posting in the customer account,

D9 Document Type

01 Customer  - from MGT table

50 22202

1. b) Customer clearing to Sub IBA Account,

DZ Document Type

 Customer -from MGT table

Sub Iba - Clear the Sub Iba with the next day IBA

1. c) and transfer the Cash in the 2232 IBA 4044 and the Partner Affiliate IBA

SA Document.

If we have errors on the background we should run in in real mode and processing: mode A  ( for examples when it´s created a new customer)

Example of an error on the spool:

3.1.2.3.2. Generate 4044 invoice output 

This step will generate the physical pdf Debit Note

 Create the Debit Note Attachment and ensure no email sent at this stage.

This step doesn´t generate any spool:

3.1.2.3.3.  Send 4044 invoice

This step will update the tables with the relevant links and accounting detail to be sent to the other ERP:

3.1.2.3.4.  Distribute 4044 invoice

This step will send the Debit Note and accounting prepared to the affiliate ERP

Context: Z3F_FA_COMM_INV_AFF

As soon as this step is done it is necessary to communicate \ ensure action in the receiving ERP - PF2\WP2 – Inform the Service Center to perform the steps of replications.

3.1.2.3.5.  Post 4044 invoice PI2 Affiliate

This step will post the item in the affiliate in PI2 the Vendor Invoice:

Context: Z3F_FA_COMM_INV_AFF

Doc Type R0

1. Vendor
2. 232201*

3.1.2.3.6.  Send email to inform that the Treasury Commissions calculation process is finished

3.1.2.4.  Reporting

This step is performed on D+2.

3.2. D-1 Validation of the commissions calculation

On the next day, after the confirmation from Interco team, we need to validate if the commissions calculations are correctly posted

3.2.1. Validation in PF2 & WP2

• Use the transaction FBL1N to check the following vendors:

302307452 
2167774 

Use variant: "Comm. checks"

• Also validate the G/L 7441050000 in PF2 in company 2002

Note: If the SX is missing, we check the transaction: ZZF_CICCIBA - IBA if it´s blocked, if so should be Accounting Platform that should unlock it and we check later if it´s all ok.

Example:

3.2.2. Validation in PI2 

Perform the following checks on PI2:

a) GL 220025* - Check SX docs that reconciles with DZ docs ( SZ + DZ = 0)

b) GL 22202* (SA + D9 = 0)

c) G/L 7441050000 in company 4044

d) IBA´s -> 591*4044 (Assignment: 2232/COMS) – doc type: SB

3.3. CAMS Commission Fees : Calculation rules

3.3.1. Receivables

Factoring Commission =   Discount Amount +  FX Result

Discount Amount =   Annual Discount Rate  x  Payment Term/360  x  Converted Nominal Value

Annual Discount Rate = LIBOR Rate for accounting currency of Affiliate + Expected Loss Rate + Return on Equity Rate + Service Fee Rate

FX Result  = (  LIBOR Rate for receivable currency  –  LIBOR Rate for accounting currency of Affiliate  )   x   Payment Term/360  x  Converted Nominal Value

Calculation Method: 5 components :

• Remuneration for time value of money (pre-financing):
• Risk premium: (expected loss + return on equity at risk)
• Remuneration for activities performed (service charge)
• FX-related remuneration (FX result reflecting hedging)

3.3.1.1. PRE FINANCING

 Nominal invoice in invoice currency (All taxes included) * Conversion daily rate in functional currency * Ibor rate, for one year, for affiliate currency* payment term duration/ 360

Where:

• Ibor rate is floor to 0%
• Payment term duration is:
  • 0day for CAMS affiliates
  • Payment term set following the master data
  • SPECIFIC RULES: For some country additional day must be added to the payment term duration:
    • CHINA: as of February 1^st 5 days
    • KOREA: as of February 1^st 5 days
    • BRAZIL: as of February 1^st 5 days

This is a charge for the affiliate.

This is a revenue for Factor

 3.3.1.2. EXPECTED LOSS

Expected loss is calculated as a percentage for each rating class of Syensqo (1-5) assigned to external parties

The expected loss rates will be fixed for a period of one year.

This is a charge for the affiliate.

This is a revenue for Factor

RULES of 3^rd PARTY:

Nominal invoice in invoice currency * Conversion daily rate in functional currency * % of rating class (based at end of the month credit risk classification of customer)

RULES of Intercos :

Affiliates will be segregated by level of payment risk (payment at 0 day or company not able to meet the 0 day)

Risk 0 => Class Core:

• Company CORE following Treasury classification :
  • Syensqo SA                                       02232
  • Syensqo Finance Luxembourg SA    04233
  • Syensqo Luxembourg S.à.r.l.            06294
  • Syensqo France S.A.                         57230
• Company fully consolidated and adherent to CAMS convention.

Risk 1 => Class Non Core: Other affiliates classified as:

• NON CORE
• or not fully consolidated
• or fully consolidated but not adherent to CAMS convention .

This class concerns NON-CORE entities (see definition in treasury policy) which are not able to meet the 0 day payment terms. In line, with the treasury policy for IBAs, those entities have a credit risk which is quantified by a 2 notches downward adjustment on the Group's credit rating.

These entities should therefore pay the expected loss rate assigned to rating BB i.e. 1,030% (So level class 4).

Nominal invoice in invoice currency * Conversion daily rate in functional currency * % of rating class S or S1 (based at end of the month credit risk classification of intragroup customer)

3.3.1.3. RETURN ON EQUITY AT RISK

ROE is a profit element (part of retained earnings) and will contribute to the equity buffer kept against the unexpected bad debt losses (above the expected loss level)

The ROE classes depend on the final classes for credit risk.

Equity at Risk percentages will be determined by EY based on Basel Accord

The Rate of Return on Equity for each of the two factors will be annually determined by Syensqo according to EY’s instructions.

Nominal invoice in invoice currency * Conversion daily rate in functional currency * % of ROE  Annual by rating class (based on monthly credit risk classification of customer)*360/PT.

This is a charge for the affiliate.

This is a revenue for Factor

3^rd Party:  ANNUAL

Intercos : ANNUAL

3.3.1.4. SERVICE CHARGE 

Service fee (%) =[Allocable SBS costs including mark-up + own Syensqo cost including mark-up] / Annual Sales (Amount of ARs subject to factoring).

This is a charge for the affiliate.

This is a revenue for Factor

Definitions : 

Service Fee Rate reflects an arm’s length service fee percentage over the amount of the receivable and is identical for each receivable => Factoring

Service Fee Rate : include all costs incurred by  treasury activities in SSA and SFA + Credit management and collection services provided by SBS (related to the Companies adherents to CAMS services) +  Treasury cost (bank fees...)

SBS will invoice to SSA  all cost on the CAMS perimeter.

SSA will reinvoice part of the costs to Syensqo Finance America applying a prorata based on the volumes of transaction. 

For this 2017 forecast period the prorata = 5,10%

Cost driver Service fee (%) =[Allocable SBS costs including mark-up + own Syensqo cost including mark-up] / Annual Sales (Amount of ARs subject to factoring).

Cost driver is express in Eur. 

application formula : Nominal invoice in invoice currency * Conversion daily rate in functional currency * Cost driver Service fee %

NO TRUE UP applicable to Service fee.

Cost driver applicable to 2017

3.3.1.5. HEDGING (Carry)

(+Interest rate in functional Currency  - Interest rate in Currency of invoice)*nominal Amount in functional currency* payment term duration/360

NB/ Libor rate is floored at 0%

This is a charge for the affiliate.

This is a revenue for Factor

3.3.2. PAYABLES Payment on Behalf

CAMS provide a service : payments on behalf of (POBO) affiliates (with respect to the account payables), in combination with the “hedging service”, i.e., as the AP amounts will be converted to a local currency based on the date of the AP acceptance.

The remuneration thereof will be determined based on two separate components: a generic service charge, and the FX Result

3.3.2.1. Service Charge 

 The service charge is a monetary amount, calculated on a monthly basis and expressed in the accounting currency of the Affiliate. The Service Charge is based on the an arm's length markup on total costs => Payment on Behalf of

Service Charge:  include all costs incurred by  treasury activities in SSA and SFA included bank fees and mark up.

Cost driver Service charge (in Eur) = [Allocable PoBo cost including mark-up / Annual number of contracts.

Cost driver is express in Eur.

Application formula: Number of contract per period * Cost driver Service charge * Conversion daily rate in functional currency.

For Service charge a True up will be necessary end of the period.

Result of forecasted formula applicable to 2017: 

3.3.2.2. FX Result 

FX Result is:

-Interest rate in functional Currency  + Interest rate in Currency of invoice)*nominal Amount in functional  currency* payment term duration/360

NB/ Libor rate is floored at 0%

This is a charge for the affiliate.

This is a revenue for Factor

3.3.3. Collection on Behalf 

Formula applicable for collection on behalf:

FX Result = (LIBOR Rate for receivable currency – LIBOR Rate for CCYF) x PT/360 x Face Amount

LEXICON:

Annual Discount Rate  is the percentage rate per annum and means a sum of the applicable arm’s length (i) LIBOR Rate for the accounting currency of the Affiliate, ii) Expected Loss Rate consistent with Syensqo’s internal rating class of the customer, iii) Return on Equity Rate consistent with Syensqo’s internal rating class of the customer, and iv) Service Fee Rate.

Converted Nominal Value means a Nominal Value of a respective trade receivable / payable, converted, if applicable, to the accounting currency of the Affiliate according to the provisions of Chapter 2 Article 5.

Discount Amount is a monetary amount, calculated per each factored trade receivable and expressed in the accounting currency of the Affiliate. The Discount Amount is calculated in accordance with the formula 1.2 in Section 1 of this Enclosure. The Discount Amount represents an arm’s length remuneration for the services performed by SSA/SFA¹ with respect to the assignment of receivables as defined in Chapter 2 of this Agreement in case the accounting currency of the Affiliate is the same than the currency in which the trade receivable is denominated.

Expected Loss Rate for each relevant Syensqo’s internal rating class of the customer and the applicable Payment Term is the percentage rate per annum. Each Expected Loss Rate is calculated by annualizing the expected loss percentage (using the Payment Term / DSO factor), where the expected loss percentage for the relevant Syensqo’s internal rating class of the customer should be understood as the value of a possible loss on the portfolio of receivables falling within that rating class times the probability of that loss occurring.

Factoring Commission is a monetary amount, calculated per each factored trade receivable and expressed in the accounting currency of the Affiliate. The Factoring Commission is calculated in accordance with the formula 1.1 in Section 1 of this Enclosure and represents a combined arm’s length fee, including the Discount Amount and the FX Result, to be paid by the Affiliate to by SSA/SFA¹ with respect to the assignment of receivables as defined in Chapter 2 of this Agreement.

FX Result is a monetary amount, calculated per each trade receivable (either collected on behalf or assigned to SSA/SFA¹) / payable and expressed in the accounting currency of the Affiliate. The FX result is only applicable if the accounting currency of the Affiliate is different than the currency in which the trade receivable / payable is denominated. FX Result reflects an arm’s length adjustment due to the cost of carry and is based on the interest rate differential between the interest rates for the currency of the Affiliate and the currency in which the trade receivable / payable is denominated. The FX Result for a trade receivable has an opposite sign if compared to a trade payable, all other things being equal. Further reference is made to the applicable formulas in Section 1, 2 and 3 of this Enclosure.

LIBOR Rate for each specific currency is the percentage rate per annum, calculated as the average of 1-year LIBOR rates values for that currency on each trading day over the period of one year from 1 January throughout 31 December of each completed calendar year, and reset with the effective date of 1 January of the consecutive calendar year. Effectively, LIBOR Rate for each specific currency is fixed for a period on one year. 1-year LIBOR rates reflect the percentage rate per annum determined by the interbank market for the relevant currency and for one year tenor. Daily values of 1-year LIBOR rates for the purpose of calculating the average 1-year LIBOR rates are obtained from Thomson Reuters Eikon (or an alternative source). ). LIBOR rate is floored to 0%.

Payment Term for each individual trade receivable or payable means the number of days between the date of the receivable or payable invoice and its maturity/due date.  

​Upon the mutual consent of the parties, in certain countries the Payment Term must be adjusted by an average additional payment delay to compensate adverse effects of local regulations.

Return on Equity Rate for each relevant Syensqo’s internal rating class of the customer is the percentage rate per annum. The Return on Equity Rates reflects the arm’s length annual rate of return on equity at risk (economic capital), which is kept by SSA/SFA as a buffer against risk (unexpected loss), and are expressed and should be understood as the percentage over the face value of receivables.

Service Fee Rate reflects an arm’s length service fee percentage over the amount of the receivable and is identical for each receivable (in a given period). The service fee is calculated based on an arm's length markup on total costs.

Service Charge is a monetary amount, calculated on a monthly basis and expressed in the accounting currency of the Affiliate. The Service Charge is based on the an arm's length markup on total costs.

End of document.