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Transcript of Janko Hahn
J. Hahn / Head Treasury Operations, July 2014
Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
Agenda
1. Autoneum at a glance
2. Project POWER: a centralized gateway
• Starting Point• Project DRIVE: standardized business processes with SAP• Via SAP & FIDES to the banks (and back)
3. Outlook: the years ahead
• Inhouse bank & payment-on-behalf• Collection-on-behalf• Virtual Accounts• SAP Treasury enhancements• Formats
4. Lessons learned
5. Contact
3Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
1. Autoneum at a glanceProduct lines
• Broad range of technologies
• Innovative materials and processes
• Customized systems and components
• Cost effective and lightweight solutions
• Total vehicle optimization
• Simulation tools and measurement systems
Engine Bay
Interior Floor
Underbody
Body Treatment
4Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
1. Autoneum at a glanceKey Facts & Figures
Net Sales 2013: 2’053.3 million CHF
Represented in more than 20 countries
About 45 locations worldwide
Operating result before interest and taxes* (EBIT) Some 9’600 employees
Stock listed company (SIX Swiss Exchange)
* before one-time expenses
5Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
1. Autoneum at a glanceWell-diversified global customer base
* Share in net sales 2013
42%*
BG North America
6Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
2. Project POWER: a centralized gatewayStarting point
Status Quo 2012: • Centralized Treasury Operations, 2 FTEs• Autoneum Group in a net debt position• Larger positions of local based cash• Large number of bank accounts with broad variety of banks
Goals:• Full daily overview over cash & liquidity• Better transparency of cash flows globally (…where possible)• Cost savings
System landscape: • Out-dated Treasury Management System (TMS)• Independent / outdated ERP landscape
7Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
2. Project POWER: a centralized gatewayProject DRIVE: standardized business processes with SAP
July 2012: Board decision for global project («DRIVE») of process re-engineering by using SAP as instrument (global roll-out of SAP FI, CO, SD, MM, etc)
Agenda: 2 – 3 Roll-Outs / year, starting with CH Legal units time frame until2017 for Project DRIVE
Group Treasury – Project POWER:• TMS evaluation 2nd half of 2012, SAP selected as new TMS in 11/2012• In-House Cash licensed for future use Benefit of integration into DRIVE landscape Consulting partner for SAP Treasury:
Key changes short term:• Centralized transmission of payment runs & bank statements• Single gateway to the banks & local benefits of TRM use
8Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
2. Project POWER: a centralized gatewayVia SAP & FIDES to the banks (and back)
Status Quo:• FIDES already in place: daily collection of MT940 & MT942• Payment runs executed locally in numerous systems & following different
processes
Goals: • Single gateway for statements AND payments globally• SWIFT connectivity for non-CH / non-EUR zone Go-Lives• Increased transparency of payments released• Profiting from choosing «the right format»: ISO 20022 / XML
Evaluation:• Comparison of a few service providers (e.g. «classical» SWIFT Service
Bureaus)• FIDES solution chosen as result
9Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
2. Project POWER: a centralized gatewayVia SAP & FIDES to the banks (and back)
Approach before SAP / BCM & FIDES
10Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
2. Project POWER: a centralized gatewayVia SAP & FIDES to the banks (and back)
New approach with SAP / BCM & FIDES
Middle-ware
11Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadInhouse bank & payment-on-behalf
Status Quo 2012:• Decentralized payment execution• SAP In-House Cash module licensed• Inhouse bank Roll-Out planned to start in 2014
Goals:• Replace monthly IC netting (managed outside SAP so far)• Move to payment-on-behalf for CHF and EUR
Benefit of ISO 20022 format Start with CH legal units followed by France; cover all legal units in Business
Group Europe (BG EU) over the years Extend to other currencies used in BG EU & corporate centre
12Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadCollection-on-behalf
Status Quo:• EUR and CHF accross Europe: centralized access via daily Zero-
Balancing, but still larger EUR balances locally (ca. EUR 8 MIO)• «Large» number of local bank accounts (over 100 globally)• Variety of bank relations (ca. 45) globally
Goals:• Reduce local cash & (not supportive) bank relations + number of accounts• Get access to cash faster & without delay readyness for next downturn
(Automotive industry!)• Reduce interest costs 3rd / bank charges & leverage bank relations
Extend In-House Cash also to collection on-behalf (again for BG Europe)
13Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadVirtual accounts
Challenges implementing an on-behalf approach:• On-behalf solution still requires several bank accounts for cash collection
(difficulty to apply cash legal unit by legal unit)• Leads to replacement of old EUR Cash Pool with a new one
Solution:• Maintain one bank account to cover on-behalf payments & collections
across Europe• Easy application of cash & mapping such movements to in-house bank
account for each legal unit
Implement on-behalf solution in combination with a virtual account setup
14Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadVirtual accounts – payment-on-behalf
SAP
FIPa
rty
Invo
lved
Transfers payment run to Bank stating virtual account in EUR
Autoneum X AG
SAP
In-H
ouse
C
ash
Aut
oneu
mX
AG
ph
ysic
al b
ank
acc.
Books IC receivable + calculates interest + charges bank fees
Physical account debited, pmt. shows LU Virt. account number as payment account
Legal Unit (LU)
Executes payment runs
Inhouse bankaccount of LU showsnew balance; sendsinhousebankstatement
Beneficiary
Receives payment, text shows LU as counterpart & Autoneum X AG as executing party
Reconciles daily inhouse bank statements
1 2
34
45
6
15Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadVirtual accounts – collection-on-behalf
SAP
FIPa
rty
Invo
lved Autoneum X AG
SAP
In-H
ouse
C
ash
Aut
oneu
mX
AG
ph
ysic
al b
ank
acc.
Identifies credit andbeneficiary LU, books IC liability toLU
Physical account credited, ref. Text shows LU virtual account
Legal Unit (LU)
Inhouse bankaccount of LU shows new balance, statement sent toLU
Customer
Reconciles previous day bank statement
1
32
4
16Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadSAP Treasury Enhancements - overview
Automated confirmation of FX Deals with the banks via MT300 (TRM / New Correspondence Framework)
Treasury «Cockpit» for easier navigation across the Treasury Transactions in SAP
EMIR compliance (Dodd-Frank TBD)
Graphical analysis of data & improved reports: SAP LUMIRA
Timeline for implementing further Enhancements: Q4/2014 – Q2/2015
17Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadSAP Treasury Enhancements – Treasury Cockpit
18Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadSAP Treasury Enhancements – LUMIRA
19Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
3. Outlook: the years aheadFormats
Bank Statements:• Move from MT940 / MT942 to CAMT.053 / CAMT.052• Currently not an option due to missing bank readiness
Payments:• Evaluate change to CGI• Depending on acceptance by banks
ACK/NAKs (pain.002):• Currently received from FIDES by e-mail• Target to implement into SAP BCM
Timeline for implementation of ACK/NAKs: Q4/2014 (depends on FIDES)
20Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
4. Lessons learnedGo-Live CH Legal Units 2013 (bank-connectivity)
Manage external dependencies• FIDES (e.g. testing windows, converter settings)• Banks - format definitions• Knowledge of FI consultants in regards to Treasury needs
Manage internal dependencies• Accounting team (e.g. creation of test files) • Manage setup of several developement and testing mandates & impact on
bank connectivity in SAP (e.g. middleware configuration)
Thorough testing a MUST
Thorough training of ALL people involved well in advance (IT, Accounting, etc) clear definition of processes (Treasury as «black-box» for other teams)
21Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
4. Lessons learnedGo-Live preparation USA & CA 2014
Sufficient time calculated for preparation / planning / testphases• US/CA project involved 2 timezones and 4 different parties (bank, FIDES,
Autoneum team and SAP consultants) multiplication of time needed due to complexity
• Bank internal project guidelines lead to additional time needs (e.g. severalUAT cycles, testing freeze, cheque Go-Live schedules)
• Definition of ACH formats (CTX, CCD, PPD, etc.)
Don’t rely on local knowledge: ACH requirements («don’t know, we alwayspaid by cheque»)
Complexity to get reduction of cheques agreed on vs. timing to get reductionof cheque payments implemented
22Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
4. Lessons learnedPlanned implementation of In-House Cash & Virtual Accounts
Intensive legal & tax review required for on-behalf approach
Virtual account solution: importance of clarifying which names will show upin payments to suppliers (ordering entity vs. executing entity)
Instrument benefits mainly for EUR zone (SEPA payments) – costs ofadditional implementation for GBP, PLN, CZK and USD might mitigate thebenefits
Product is a new solution also for bank side – not all processes 100% clearly defined in pre-project discussions
No progress doable when ERP Roll-Out delayed (project DRIVE delayimpacts schedule for project POWER)
23Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts
5. Contact
Contact details: Janko HahnHead Treasury Operations
Autoneum Management AG T +41 52 244 82 [email protected]