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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
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
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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
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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
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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
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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
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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
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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
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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
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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
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AutoBank Automatic Cash Application Cash & Liquidity
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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]
