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.
Minnesota AFP's 30th Annual Conference - OWN YOUR FUTURE
Payment Factory 2.0: Reshaping Treasury Efficiency
Payment Factory Presentation MN AFP 1 4/18/2012 Scott Willams – Director of Consulting
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
» ISO 20022 Format
» Connectivity Interfaces & SWIFT for Corporates
Payment Factory Presentation – MN AFP 2 4/18/2012
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 4/18/2012
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
A payment factory is one of the necessary components in achieving these strategic requirements.
Payment Factory Presentation – MN AFP 4 4/18/2012
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
A payment factory is one of the necessary components in improving these operational inefficiencies.
Payment Factory Presentation – MN AFP 5 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Organization
HQ in Hamburg, international
offices in the Netherlands,
France, 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
150 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 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Hanse Orga FinanceSuite for SAP®
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
Payment Factory Presentation – MN AFP 7 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Hanse Orga’s Clients (500+)
Payment Factory Presentation – MN AFP 8 4/18/2012
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 4/18/2012
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 4/18/2012
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 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
How Does In-House Banking Relate to a Payment Factory?
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
Payment Factory Presentation – MN AFP 12 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management
Treasury Management
eBAM
Benefits of In-House Banking (IHB)
Management of Intracompany Payables and Receivables
» Without an IHB, intracompany 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 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
What Strategy is Right for my Organization?
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
Payment Factory Presentation – MN AFP 14 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Payment Factory: Building a Business Case
Payment Factory Presentation – MN AFP 15 4/18/2012
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 4/18/2012
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 4/18/2012
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 4/18/2012
AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM
Payment Factory: Other Items of Note
Payment Factory Presentation – MN AFP 19 4/18/2012
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 Standards
» 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, FEDI, 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 20 4/18/2012
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 21 4/18/2012
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
SWIFT
» MA-CUG, SCORE
» Alliance Lite, Alliance Lite2
» Service Bureaus
Payment Factory Presentation – MN AFP 22 4/18/2012
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 23 4/18/2012
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
Scott Williams
Director of Consulting, North America
Hanse Orga International Corp.
Office: +1 734 302 3000
Cell: +1 847 7691448