hanse orga international corp. payment factory: …afparizona.org/resources/documents/expo 2013...
TRANSCRIPT
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Hanse Orga International Corp.
AFP of Arizona 2013 Annual Southwest Expo
Payment Factory: Leveraging Best Practices in Treasury
Payment Factory Presentation AFP of AZ 1 6/7/2013 Mary Ann Rydel – Director of Product Mgmt and Customer Support
Hanse Orga International Corporation
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Agenda
Multiple Definitions of a Payment Factory
Why a Payment Factory?
Who is Hanse Orga?
Types of Payment Factories
What Strategy is Right for my Company?
Building a Business Case - Benefits of a Payment Factory
Other Payment Items of Note
» Connectivity Interfaces & SWIFT for Corporates
» ISO 20022 Format
» SEPA
Payment Factory Presentation – MN AFP 2 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
What is a Payment Factory?
Many people may define a payment factory differently:
A hub to centrally manage communication to and from the banks.
A shared service center for payables.
A group responsible for optimizing the company’s disbursements on behalf of its affiliates.
A payment management solution that enables organizations to streamline payment
processing and control costs centrally.
Payment Factory Presentation – MN AFP 3 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Why do I Need a Payment Factory?
With the credit crunch, treasury departments must focus on better management of cash
» Require improved working capital
– Need to reduce costs
– Need to optimize efficiencies
» Require better control and visibility into cash forecast
To meet audit and compliance requirements, treasury organizations are being asked to tighten
controls in the financial supply chain
To achieve future growth goals, treasury departments must be able to quickly react to business
conditions
» Ability to quickly integrate acquisitions
» Ability to compete in new international markets and handle new payment types
» Ability to quickly react to issues with counterparty risk
Payment Factory Presentation – MN AFP 6/7/2013
A payment factory is one of the necessary components in achieving these strategic requirements.
4
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Why do I Need a Payment Factory?
Many organizations utilize a variety of decentralized e-banking solutions
» Carries risk and is error prone
» Lacks integration with the ERP
» Carries high costs and high maintenance
The decentralized processes lack control and standardization
» No group-wide overview of all cash flows
» No standardized approval processes and workflows
The decentralized process increases inefficient manual efforts
» Time-consuming effort to manage multiple bank connections
» Manual effort to determine cash positions and create cash forecast
Payment Factory Presentation – MN AFP 6/7/2013
A payment factory is one of the necessary components in improving these operational inefficiencies.
5
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Organization
HQ in Hamburg, international
offices in the Netherlands,
France, the UK and the USA
Proven sustainable growth and
profitability
Privately owned, no external
investors
Solutions are certified by SAP®
under “FinanceSuite 4.3”
Dual product strategy: Solutions
for SAP® and non-SAP® ERP
(Oracle, JD Edwards,
PeopleSoft, …)
People
200 people
Strong employee retention
Functional experts with deep
understanding of
cash management and
liquidity planning, bank
communications, payments,
treasury, cash application,
account reconciliation, eBAM
International consulting team
Strong global partners
Clients
500+ clients
Strong client retention
Clients in all industries
including: Oil & Gas,
Chemicals, Insurance, Retail,
Manufacturing, Logistics,
Government
Client size ranges from
Fortune 500 to mid-size
companies
Worldwide deployments
Who is Hanse Orga? The Hanse Orga Group
Payment Factory Presentation – MN AFP 6 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Hanse Orga FinanceSuite for SAP®
Payment Factory Presentation – MN AFP 7 6/7/2013
Cash & Liquidity Management
Cash Forecasting
Cash Management
Cash Position Worksheet
Cash Pooling & Concentration
Variance Analysis vs. Actuals
Intragroup Workflow
Payment Management
Ad-hoc Payments
Payment Monitor
Bank & SWIFT Connections
Payment Factory
Payment Workflows
Bank Statement Management
Treasury Management
In-House Banking
Loan Management
Limit Management
Derivatives (FX, IR, Swaps etc.)
Intercompany Netting
Treasury Accounting
eBAM
Bank Scoring & Conditions
Bank Account Administration
eBAM Messaging
Bank Performance Analysis
Workflows
Bank Relationship Management
Finance
Suite
HR IS-
U
CO FS-
CD
BW
MM
FI
SD
AutoBank
Dispute Management
Bank Statements
Optimized Post-Processing
Remittance Advices
Performance Cockpit
Lockboxes
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Hanse Orga’s Clients (500+)
Payment Factory Presentation – MN AFP 8 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Types of Payment Factories
Focus on centralizing and standardizing payment flows enterprise-wide
» All company-wide payment flows (batch and manual) are routed through the payment factory
» All bank communication is managed centrally
» All payment formats are managed centrally
Focus on consolidation and optimization of payment processing
» Business rules are utilized to route the payment through optimal channels (e.g. transformation of cross-
border payments into domestic payments)
» Smart (re)grouping and/or aggregation of payments
» Due to tax and legal implications this setup might require the implementation of an in-house bank
Virtual or decentralized payment factory
» Roles and responsibilities are still retained at the level of the subsidiary
» Entire organization uses one central system for managing payments and bank connectivity
Payment Factory Presentation – MN AFP 9 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management
Payment Management
Treasury Management eBAM
Payment Factory Structure
Bank 2 Bank 3 Bank 4 Bank 1
Non-SAP®
Companies
Protected
Company Network
Payment Factory
Paymen
t run
file
Paymen
t run
file
Paymen
t run file
Payment
run file
Payment
run file
Payment
run file
Payment
run file
RFC
SAP® FS-CD
SAP® HR
SAP® IS-U
Payment
run file
CC 2 CC 3 CC 4 CC 5 CC… CC 1
SAP®2
Payment Factory Presentation – MN AFP 10 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management
Payment Management
Treasury Management eBAM
Payment Optimization Examples
Payments can be reformatted and rerouted in order to change payment channels.
Payments can be aggregated so that many individual payments for one creditor are
grouped and sent as one payment.
Payments can be restructured in order to route the payment to a different, cheaper
bank in a different country.
Payments with partially entered data can be programmatically completed and
delivered.
Data fields, such as a reference field, can be automatically edited in order to reduce
the data entry workload.
Urgent payments can automatically be monitored and executed.
Payments can be validated for completeness and accuracy before the files are
delivered so that unnecessary rejections and delays are avoided.
Returns processing can be enhanced by receiving, repairing, and reissuing from a
centralized point.
Internal company payments can be netted and settled internally without having to be
processed through a financial institution.
Payment Factory Presentation – MN AFP 11 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
How Does In-House Banking Relate to a Payment Factory?
Payment Factory Presentation – MN AFP 12 6/7/2013
Bank 1
Holding
Subsidiary 5
Subsidiary 2
Subsidiary 3
Subsidiary 1
Subsidiary 4 Bank 3
Bank 2
Subsidiary 5
Subsidiary 2
Subsidiary 3
Subsidiary 1
Subsidiary 4
Bank 1
Bank 3
Bank 2
Without IHB
With IHB
Intragroup
All Payment Files
Sent Externally
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management
Treasury Management
eBAM
Benefits of In-House Banking (IHB)
Management of Intra/Intercompany Payables and Receivables
» Without an IHB, intra/intercompany payments occur through the external banking system and therefore have real transaction fees and settlement delays
» In-house banks remove the need for an external and/or individualized transfer of funds between two subsidiaries
» Instead, a netting process occurs which allows for the net value of the transactions to be exchanged between the virtual accounts of each subsidiary
Payments on Behalf of Another Entity
» Allows the parent company or subsidiary to pay on behalf of another subsidiary (e.g. Cross Border Payments)
» Multiple payment structures are possible
» Multiple accounts & interest compensations models are supported
Internal Lending
» The In-House Bank can directly loan funds to subsidiaries that have a short term cash deficit
» Borrowing internally is less expensive than paying interest to a third party.
» The In-House Bank can monitor and settle a cash pooling structure
Payment Factory Presentation – MN AFP 13 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management
Treasury Management
eBAM
Payment Factory: Building a Business Case
Payment Factory Presentation – MN AFP 14 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
What Strategy is Right for my Organization?
Payment Factory Presentation – MN AFP 15 6/7/2013
Centralized (IHB)
Decentralized
Sophistication
Maximize
Group’s
Return
Ensure
Liquidity
Control Lost
Opportunity
Costs
Manage
Liquidity/ Cash
Flow Forecasting
Control Manage
Cash & Bank
Infrastructure
Manage
Commercial
Payments/
Collections
Optimized
Use of Cash
Manage
Working
Capital
Integrated Finance SSC & Treasury IHB
Objectives
Typical Large Corporate
Link WCM to Performance
Manage
Bank
Relationships
Visibility Over
Bank Accounts/
Balances
Payment Factory and IHB
Central Treasury
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Business Case for a Payment Factory (1 of 3)
Reduce costs with increased operational efficiencies
» Increase Straight-Through-Processing (STP)
» Reduce exception processing costs
» Reduce/eliminate costs of e-banking platforms
» Rationalize the infrastructure
» Obtain global overview of banking volumes & statistics
» Improve ability to measure Key Performance Indicators (KPI)
Reduce operational costs by eliminating manual or redundant processes
» Center of Excellence for creating or maintaining payment formats and support
» Decrease the number of required bank accounts
» Decrease auditing and compliance efforts
Payment Factory Presentation – MN AFP 16 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Business Case for a Payment Factory (2 of 3)
Meet security, audit, and compliance requirements
» Reduce fraud and risk
» Standardize audit trails across banks and payment processes
» Company-wide adoption of processing procedures
» Consolidated point of sanction screening
» Leveraging of master data
Enable flexibility to quickly adapt to changing market conditions
» Minimize reliance on a single financial institution
» Reduce time to market and promptly add new banking partners in new geographies
» More quickly integrate new acquisitions
» Effectively respond to market e-initiatives and fraudulent concerns
Payment Factory Presentation – MN AFP 17 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Business Case for a Payment Factory (3 of 3)
Improve working capital by optimizing payments
» Reduce costs of cross-border payments
» Reduce transactional processing and warehousing costs
» Reduce bank communication costs
Increase control and visibility into cash position and cash forecast
» Central visibility into real-time cash position
» Optimized liquidity management
Payment Factory Presentation – MN AFP 18 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Payment Factory: Other Items of Note
Payment Factory Presentation – MN AFP 19 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Connectivity Interfaces
Bank Proprietary
» Websites and Tokens
» FTP/SFTP/VPN -> Mailbox/Portals
» Encryption methodologies
National
» Europe – EBICS, FTX- Connector, MBS-IP, BCS
» United Kingdom – BACS
» Brazil – FEBRABAN
» Japan – Zengin
SWIFT
» MA-CUG, SCORE
» Alliance Lite, Alliance Lite2
» Service Bureaus
Payment Factory Presentation – MN AFP 20 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
ISO 20022 - Format
What
» Data format standards developed by the International Organization for Standardization
» Five financial business domains in scope (payments, FX, securities, trade services, cards)
» Format management – pain, camt
Why
» To enable communication interoperability between companies and their financial partners
» Create a single standardized approach for methodology, process, and repository that can be used by
all financial standards initiatives
» Eventual elimination of the numerous other overlapping standardization initiatives
Benefits
» It allows clients to use a single, globally-recognized file format to originate multiple payment types
(e.g. wire payments, ACH credits and debits, SEPA, EDI, EDIFact, etc. payments).
» Adoption can result in reduced IT costs and increased Straight Through Processing (STP).
» Reduction in reconcilement processing and detailed matching based on field tags
Payment Factory Presentation – MN AFP 21 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
ISO 20022 - What is XML?
<Document xmlns="urn:iso:std:iso:20022:tech:xsd:pain.001.001.02"
xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance">
<pain.001.001.02>
<GrpHdr>
<MsgId>090128349</MsgId>
<CreDtTm>2009-01-28T08:52:13</CreDtTm>
<NbOfTxs>1</NbOfTxs>
<CtrlSum>203.00</CtrlSum>
<Grpg>MIXD</Grpg>
<InitgPty>
<Id>
<OrgId>
<BkPtyId>1234512345</BkPtyId>
</OrgId>
</Id>
</InitgPty>
</GrpHdr>
<PmtInf>
<PmtMtd>TRF</PmtMtd>
<PmtTpInf>
Payment Factory Presentation – MN AFP 22 6/7/2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
SEPA – Objective
Uniform Currency
Uniform Standards
Uniform Legal Framework
Uniform Execution Mechanisms
Credit Transfers (SCT)
Direct Debits (SDD)
Card Payments (SCF)
Cash (SECA – Single Euro Cash Area)
Currency = Euro
Without Amount Restriction
In all 27 EU member states, the European Economic Area (Iceland, Norway, Liechtenstein),
and Monaco and Switzerland, for a total of 32 countries.
23 SEPA 07.06.2013
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
SEPA – New Formats
SEPA 24 07.06.2013
XML "Old"
camt.053.00x.0x (Bank to Customer Statement) MT940 (Bank Statement)
camt.052.00x.0x (Bank To Customer Account Report) MT942 (Remittance Advice)
camt.054.00x.0x (Bank to Customer Debit/Credit
Notification)
Aggregate Item/Bank
Statement Information (examples: DTI, etc.)
pain.002.00x.0x (Payment Status Report) National Transfer Protocol (examples: PTK, etc.)
XML "Old"
pain.001.00x.0x (Customer Credit Transfer Initiation) National Credit Transfer
Formats (examples: Ciri, ClieOp, SWIFT MT, etc.)
pain.008.00x.0x (Customer Direct Debit Initiation) National Debit Formats (examples: DOM80, ClieOp, SWIFT MT, etc.)
Payment Formats
Incoming Messages
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
SEPA – Most Important Contents of SEPA Regulation
25 SEPA 07.06.2013
*EU regulation comes into effect
Content: Valid As Of:
Reachability for Euro countries for SCT (previously not yet regulated)
31.March.2012*
Reachability for non-Euro countries for SCT (previously not yet regulated)
31.October.2016
Technical requirements for SCT and SDD 01.February.2014 (10/2016 for non-Euro countries)
Validity of mandates and reimbursement regulation 01. February.2014
IBAN conversions for consumers 01. February.2014 to
01. February.2016
National exceptions 01. February.2014 to
01. February.2016
Change of EU pricing regulation • Uniform pricing regulation without amount restriction
31.March.2012*
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
SEPA Affected Processes
Hanse Orga Business Briefing in Brussels 26 06/02/2013
Credit Payment
Runs
Debit Payment
Runs
Manual
Payments Approval
Electronic
Signature
Bank Communication
Payments & Bank Statements
Debtors Creditors
Validation
Splitting
Cash Allocation
Banks
Processing of
R-Messages
Master Data:
BIC & IBAN
pain.001.00x.0x
per Country
pain.001.00x.0x
per Country
Bank Protocols Significantly
Increased
Volumes
New Formats:
camt.052/053/054
Decreasing
Assignment
Rate?!
BIC & IBAN,
SEPA Manates
pain.008.001.0x
per Country Change Direct
Debit Processes
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Setting up a SEPA Project: Checklist Bullet Points
Set up a Project
Team Strategic Analysis: Centralization of Payments and/or Collections?
Timing
Formats
» Country Specific Requirements
Infrastructure
Banking Landscape
Migrating to IBAN/BIC
Technical Impact of Converting
Field Usages
Execution and Cut-off Times
Special Preparation for SDD
» Mandate Management
» Creditor Identifier
» Submission Deadlines
» Return Messages
SEPA 27 07.06.2013
*no guarantee for completeness
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Questions?
Thank you for your time.
Payment Factory Presentation – MN APF 28 6/7/2013
Mary Ann Rydel
Director of Product and Customer Service, North America
Hanse Orga International Corp.
Office: +1 734 302 3000
Cell: +1 847 650 2926