Cash & Liquidity Management
Payment Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
Hanse Orga International Corp.
AFP of Arizona 2013 Annual Southwest Expo
Payment Factory: Leveraging Best Practices in Treasury
1
Payment Factory Presentation
AFP
of AZ
Payment
Management
Cash 6/7/2013
& Liquidity Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
Mary Ann Rydel – Director of Product Mgmt and Customer Support
Hanse Orga International Corporation
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
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2
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
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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.
Cash & Liquidity Management
3
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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.
Cash & Liquidity Management
4
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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.
Cash & Liquidity Management
5
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
Treasury Management
eBAM
Who is Hanse Orga?
The Hanse Orga Group
Organization
 HQ in Hamburg, international
offices in the Netherlands,
France, the UK and the USA
People
 200 people
Clients
 500+ clients

Strong employee retention

Strong client retention

Proven sustainable growth and
profitability



Privately owned, no external
investors
Clients in all industries
including: Oil & Gas,
Chemicals, Insurance, Retail,
Manufacturing, Logistics,
Government

Solutions are certified by SAP®
under “FinanceSuite 4.3”
Functional experts with deep
understanding of
cash management and
liquidity planning, bank
communications, payments,
treasury, cash application,
account reconciliation, eBAM

Client size ranges from
Fortune 500 to mid-size
companies

Worldwide deployments

Dual product strategy: Solutions
for SAP® and non-SAP® ERP
(Oracle, JD Edwards,
PeopleSoft, …)
Cash & Liquidity Management
6
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP

International consulting team

Strong global partners
AutoBank Automatic Cash Application
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eBAM
Hanse Orga FinanceSuite for SAP®
AutoBank
Bank Statements
Remittance Advices
Lockboxes
Optimized Post-Processing
Dispute Management
Performance Cockpit
eBAM
Bank Account Administration
Bank Performance Analysis
Bank Relationship Management
eBAM Messaging
Bank Scoring & Conditions
Workflows
FI
BW
Finance
Suite
SD
CO
Cash & Liquidity Management
Cash Management
Cash Pooling & Concentration
Intragroup Workflow
Cash Position Worksheet
Cash Forecasting
Variance Analysis vs. Actuals
Cash & Liquidity Management
7
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
Payment Management
ISU
HR
MM
Payment Monitor
Payment Factory
Bank Statement Management
Bank & SWIFT Connections
Ad-hoc Payments
Payment Workflows
FSCD
Treasury Management
Loan Management
Derivatives (FX, IR, Swaps etc.)
Treasury Accounting
Limit Management
In-House Banking
Intercompany Netting
AutoBank Automatic Cash Application
Treasury Management
eBAM
Hanse Orga’s Clients (500+)
Cash & Liquidity Management
8
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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 crossborder 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
Cash & Liquidity Management
9
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
Treasury Management
eBAM
Payment Factory Structure
Payment
SAP®2
run file
RFC
Payment
SAP® FS-CD
run file
Paymen
Paymen
CC
1 CC
2
t run
t run file
file
CC 3
Paymen
CC
t run4
CC 5
CC…
Non-SAP®
Companies
Payment
file
Payment
® HR
SAP
run file
run file
Payment
® IS-U
SAP
Payment Factory
Bank 1
Bank 2
Protected
Company Network
run file
Bank 3
Bank 4
Payment Management
Cash & Liquidity Management
10
6/7/2013
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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 Management
Cash & Liquidity Management
11
6/7/2013
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
Treasury Management
eBAM
How Does In-House Banking Relate to a Payment Factory?
Intragroup
All Payment Files
Sent Externally
Subsidiary 2
Subsidiary 1
Bank 1
Subsidiary 5
Bank 2
Subsidiary 4
Bank 3
Subsidiary 3
Without IHB
With IHB
Subsidiary 2
Subsidiary 1
Bank 1
Subsidiary 5
Holding
Subsidiary 4
Bank 2
Bank 3
Subsidiary 3
Cash & Liquidity Management
12
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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
Treasury Management
Cash & Liquidity Management
13
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
eBAM
Payment Factory: Building a Business Case
Treasury Management
Cash & Liquidity Management
14
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
eBAM
What Strategy is Right for my Organization?
Objectives
Maximize
Group’s
Return
Ensure
Liquidity
Control Lost
Opportunity
Costs
Manage
Working
Capital
Optimized
Use of Cash
Manage
Commercial
Payments/
Collections
Typical Large Corporate
Manage
Liquidity/ Cash
Flow Forecasting
Manage
Bank
Relationships
Visibility Over
Bank Accounts/
Balances
Integrated Finance
SSC & Treasury IHB
Payment Factory and IHB
Centralized (IHB)
Manage
Cash & Bank
Infrastructure
Control
Link WCM to
Performance
Central Treasury
Decentralized
Sophistication
Cash & Liquidity Management
15
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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
Cash & Liquidity Management
16
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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
Cash & Liquidity Management
17
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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
Cash & Liquidity Management
18
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
Treasury Management
eBAM
Payment Factory: Other Items of Note
Cash & Liquidity Management
19
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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
Cash & Liquidity Management
20
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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
Cash & Liquidity Management
21
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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>
Cash & Liquidity Management
22
6/7/2013
Payment Management
Payment Factory Presentation – MN AFP
AutoBank Automatic Cash Application
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.
Cash & Liquidity Management
23
07.06.2013
SEPA
Payment Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
SEPA – New Formats
Payment Formats
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.)
Incoming Messages
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
pain.002.00x.0x (Payment Status Report)
National Transfer Protocol
(examples: DTI, etc.)
(examples: PTK, etc.)
Cash & Liquidity Management
24
07.06.2013
SEPA
Payment Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
SEPA – Most Important Contents of SEPA Regulation
Content:
Valid As Of:
Reachability for Euro countries for SCT
31.March.2012*
(previously not yet regulated)
Reachability for non-Euro countries for SCT
31.October.2016
(previously not yet regulated)
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
31.March.2012*
•
Uniform pricing regulation without amount restriction
*EU regulation comes into effect
Cash & Liquidity Management
25
07.06.2013
SEPA
Payment Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
BIC & IBAN,
SEPA Manates
SEPA Affected Processes
Processing of
R-Messages
pain.008.001.0x
per Country
Master Data:
BIC & IBAN
Debtors
Change Direct
Debit Processes
Debit Payment
Runs
Decreasing
Assignment
Rate?!
Creditors
Credit Payment
Runs
pain.001.00x.0x
per Country
Manual
Payments
Cash Allocation
Approval
Splitting
Electronic
Signature
pain.001.00x.0x
per Country
Validation
Bank Communication
Payments & Bank Statements
Bank Protocols
Banks
Cash & Liquidity Management
26
06/02/2013
Payment Management
Hanse Orga Business Briefing in Brussels
AutoBank Automatic Cash Application
New Formats:
camt.052/053/054
Significantly
Increased
Volumes
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
Cash & Liquidity Management
27
07.06.2013
SEPA
*no guarantee for completeness
Payment Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
Cash & Liquidity Management
Payment Management
AutoBank Automatic Cash Application
Treasury Management
eBAM
Questions?
Thank you for your time.
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
m.rydel@hanseorga.com
28
Payment
Management
Cash 6/7/2013
& Liquidity Management
Payment Factory Presentation
– MN
APF
AutoBank Automatic Cash Application
Treasury Management
eBAM