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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

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  • 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 companys 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

    http://upload.wikimedia.org/wikipedia/de/5/59/SAP_2011_logo.svg

  • AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM

    Hanse Orgas 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

    SAP2

    Payment Factory Presentation MN AFP 10 4/18/2012

    http://upload.wikimedia.org/wikipedia/de/5/59/SAP_2011_logo.svg

  • 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

    Groups

    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

    http://en.wikipedia.org/wiki/File:ISO_english_logo.svg

  • AutoBank Automatic Cash Application Cash & Liquidity Management Payment Management Treasury Management eBAM

    ISO 20022 - What is XML?

    090128349

    2009-01-28T08:52:13

    1

    203.00

    MIXD

    1234512345

    TRF

    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

    [email protected]

    Scott Williams

    Director of Consulting, North America

    Hanse Orga International Corp.

    Office: +1 734 302 3000

    Cell: +1 847 7691448

    [email protected]