Boosting Automated Cash Application Performance 23rd May Citi Transaction Services Hanse Orga

Transcription

1 Boosting Automated Cash Application Performance 23rd May 2012 Citi Transaction Services Hanse Orga

2 Introducing the Speakers Basak Toprak is the Europe, Middle East and Africa (EMEA) senior market manager for Citi Transaction Services (CTS), responsible for the market development of end-to-end receivables and channel services solutions. Toprak held product management roles in EMEA payments and liquidity management, and was responsible for developing and commercialising best-in-class liquidity and investments solutions for clients in EMEA. Prior to her current position, Toprak was EMEA senior cash management sales manager. She holds an MBA from Cass Business School in London. Frank Gastl is managing director of Hanse Orga International, the international subsidiary of the German financial software specialist Hanse Orga AG. He joined Hanse Orga in 2002 and has since 2004 led the significant international expansion of Hanse Orga's activities. Gastl and his international sales team, which is based in the Netherlands, drive the business development in Europe, Middle East and Africa (EMEA) and contribute to the ever-increasing number of over 500 satisfied customers worldwide. Prior to joining Hanse Orga, Gastl worked over 20 years for a number of renowned national and international companies in the sector of financial and controlling software. 2

3 Agenda Receivables Best Practices Hanse Orga AutoBank Cash Application Honeywell Case Study Conclusion 3

4 Receivables Best Practices

5 The End to End Receivables Proposition The E2E receivables proposition goes beyond the traditional offering as data management & analytics have become key for SSCs. Only a combination of banking solutions, adoption of market practices and ERP integration lead to STR. Efficient Cash Application Virtual Accounts ARMS Autobank for SAP ERP Integrator Trade and FX Linkage Receivables financing FX for receivables Financing and FX Reconciliation Visibility Collections Instruments Cash Cheques, Lockbox Electronic transfers Direct debits SEPA Cards Channels Mobile Branches Partner banks Post offices ATMs POS Web/e-Commerce 5 Information and Data Management Citi electronic bank statements Citi STR Third party bank statements Customized reports -lockbox, network collections etc. Receivables Vision

6 Citi Straight Through Reconciliation (STR) Straight Through Reconciliation concerns both Financial Reconciliation and Operational Reconciliation. The objective is to automate both as much as possible, reducing manual efforts involved. Financial Reconciliation Operational Reconciliation Reconciliation of bank statement balances with GLs / other internal accounts Confirm Cash position and forecasts to support treasury decisions on funding, investment, FX Bank transaction codes to collate and post statement entries efficiently Check all initiated payments / Direct Debits have been accepted and executed Locate batch & transaction references Identify rejects and reject reasons promptly to repair and reprocess failed transactions in a timely manner Utilise tools to further automate cash application 6

7 Intraday End of day Citi STR Financial Reconciliation Financial Reconciliation is typically the responsibility of the Treasury management area, where the focus is on reconciliation of bank balances. The reconciliation rates are generally high. Statements Financial Reconciliation ISO XML camt.052 / 053 / 054 EDIFACT FINSTA BAI2, SAP MT940/MT942 Custom formats SWIFTNet FIN MT940 SWIFTNet FIN MT942 Citi Treasury Vision TMS ERP SAP MT942 7

8 Citi STR Operational Reconciliation Operational reconciliation involves the reconciliation of Initiated Transactions (which are under the control of the corporate and have a typically large matching rate) and Uninitiated Transactions (such as incoming payments) which is where most of the challenge and therefore the opportunity for improvement lies. Initiated Transaction AP and Direct Debits Statements with Itemisation and enrichment Rejects and Returns Status Reports ERP BANSTA / DEBMUL Operational Reconciliation Uninitiated Transaction AR Cash Application Lockbox Remittance Advices Accounts Receivables Matching Services Autobank for SAP 8

9 STR through Itemised Statements for Initiated Transactions Citi STR offers you the ability to receive the break down (itemisation) of these payments on your statement or the option to pass a unique batch reference for your payment, to support your reconciliation. Non Itemised Statement Opening Balance 1,000,000 DD Bulk Credit 3,000,000 Itemisation Itemised Statement Opening Balance 1,000,00 Direct Debit 1 1,000,000 Ref 123 Direct Debit 2 1,000,000 Ref 124 Direct Debit 3 1,000,000 Ref 125 Payments Bulk Debit 2,000,000 Payment 1-1,000,000 Ref 126 Payment 2-1,000,000 Ref 127 Closing Balance 0 Closing Balance 0 Bulk credits and debits on statements make it difficult for companies to achieve STR. The reconciliation of the bulked payments would need to be done manually. Itemisation can be enabled on the actual bank statements Itemisation also include the End to End Reference ID to enable reconciliation back to the ERP 9

10 Citi s Accounts Receivables Matching Services (ARMS) Citi ARMS is a file based solution that integrate receivables data consolidation, enrichment and matching services in an automated fashion. Citi ACH Citi Wires Citi Checks Citi Cash 3 rd Bank Account Statements Citi Lockbox Citi Direct Debits Invoices Consolidation Incoming Payments and Remittance Data from all Payment Modes and channels Data Enrichment Improving the quality of the data consolidated ARMS Data Matching Data is matched at individual invoice against payment info received at Consolidation/Enrichment step 10 Consolidated Output File to ERP Citi ARMS solution consolidate, enrich and deliver the receivables information using Citi and third party bank statements as well as other information such as client tables (including unique customer codes, customer account numbers etc). ARMS enhanced receivables data is delivered via a single file to the ERP. Citi ARMS can also carry out data matching using the same enhanced receivables information and invoice data, through flexible matching rules, and providing matched and unmatched items output files

11 Integrating Bank Data and Cash Application Optimisation Software Companies have the following choice of tools in the market: Standard ERP Cash Application Using the standard features of the ERP, which is often rigid and doesn t allow for flexible matching. External Vendors Cash application software developed by technology companies or a bank that sit outside the ERP and work through file transfers of data. However some corporates are not comfortable with exchanging data in this manner. Tailor Made Software In-house developed software, which relies on in-house programmers and, over time, could become difficult to maintain and upgrade. Integrated Software from External Vendor This solution sits within the ERP but developed specifically as a cash application module which allows for easy algorithm programming by the business user and user-friendly screens for manual processing. In order to support corporates with the challenges in improving cash application processes, Citi is working, Hanse Orga, that has solutions and expertise in corporate financial technology platforms, particularly SAP. Hanse Orga s FinanceSuite AutoBank Automatic Cash Application is fully embedded within SAP. 11

12 Hanse Orga AutoBank Cash Application

13 Hanse Orga Group Organisation HQ in Hamburg, international offices in Netherlands, France, UK and USA Proven sustainable growth and profitability Privately owned, no external investors Hanse Orga AG is SAP Software Solution Partner since 2008, our Solutions are certified by SAP as FinanceSuite 4.3. People 150 people and strong employee retention Deep understanding of products, bank reconciliation / cash application, bank communication, payments, treasury, cash management and liquidity planning International consulting team added with strong partners SWIFT AllianceLite Wholesale Partner since SWIFT awarded Hanse Orga the official "Cash Management Consultancy" label SWIFT certified consultants. Clients Proven implementation, execution with 500+ clients Clients across all industries including: industry, oil & chemicals, financial services, retail, telecom, logistics, governments etc Client size ranges from global tier-1 clients to local organisations Deployment in 40+ countries 13

14 Hanse Orga Clients (500+) 14

15 Overview of Autobank Functionalities Overview Increases the automated booking and reconciliation of bank statements, lockbox and remittance advices and input from Citi ARMS in SAP Sophisticated tools to optimise manual clearing efficiency A complete, real-time overview of the reconciliation process Analytics to actively manage improvements in the reconciliation process Key Features Fully integrated in SAP and using standard SAP functions when possible Users adapt their own business rules Independent of SAP release changes Multiple subledgers, not just SAP general ledger A) Optimised Automatic Posting and Matching Citi ARMS Receivables Reports Bank statement data Remittance advices Cheque payments Lockbox information Connection of SAP, non-sap subledger systems Posting of foreign currency payments Evaluation of sending bank details Analysis of number ranges B) Optimised Manual Post-Processing Easy handling due to one selection screen Identification and processing of data from note to payee Integrated dispute management For internal and external communication C) Performance Cockpit Control and overview over processes Extensive analytics 15

16 Optimised Automatic Posting and Matching Bank communication Standard Import Routine Posting Step 1 USER EXIT Posting Step 2 Manual Postprocessing Import of bank statements in different country formats Posting from bank account to bank sub account Option to leave for the user exit Posting from bank sub account to corresponding target account Manual matching of all unassigned items Flexible and Powerful booking rules More appropriate cases can be defined - not just the bank transaction code More fields are available for matching than just the invoice number and client number E.g. document number, contract, contract account, business partner, etc. Flexible and human-like way to search/interpretation of text fields Autobank treats many special cases Payments for items in a different currency implied (bank) costs Finding reasons why a transaction could not be posted Analysis of incorrectly posted items made easy Auto-learning function for customer information Customer bank information is associated automatically with the client number It learns from automatic and manual postings 16

17 Deduction Types Retail companies often provide deductions to their customers on the invoice amount. This creates a challenge for reconciliation as the incoming amount is different from the invoiced amount. Autobank has a solution for deductions to help with reconciliation. 17 Remittance Advice Invoice Item XYZ Processing of different deduction types Bonus Flat rate marketing charges Flat rate freight charges Flat rate advertising costs Flat rate packaging costs Central agent fee (del credere) Returns Floor-space management Automatic posting of remittance advices in SAP Posting SAP R/3 Open Items AutoBank Automatic Cash Application On-line validation for Sales & Distribution (SD) tables possible Validation possible by percentage and by absolute figures Generation of specific reporting Autobank provides an additional table for storing unlimited terms and conditions for deductions types within SAP environment Sales and Distribution Table of Conditions AutoBank Table of Conditions

18 AutoBank Manual Post-processing Autobank provides a user-friendly manual processing module that is fully embedded in SAP and has split screens to aid manual reconciliation. All in one screen, instead of 4-6 screens in standard SAP Flexible selection capabilities Possible posting suggestions make manual matching faster and less tedious Correct typing errors in the note to payee info Refunding of unknown receipts Internal messages 18

19 Performance Cockpit Clear overview of all processes within AutoBank Automatic Cash Application Status is visualised by a performance traffic light: green, yellow, red Maximum Performance Optimisation Achieve maximum transparency of all processes Measure performance Identify optimisation potentials, and Initiate further optimisation Ensure no backlog is faced + clear monitoring and customized display of Import of accounts Automatic posting Post-processing Sub-ledgers Flexible exports (archive) Drill down from the company code group level to company code and account level 19

20 Order to Cash Process Improvement Business Case Corporates with the largest potential to gain efficiencies from cash application optimisation project are those that have a regional Shared Service Centre (SSC). And when it comes to SSCs, Key Performance Indicators provide critical data points for monitoring the performance of the SSC. Monitor the following KPIs to best understand the potential for improvement: 1. Volume What is the absolute number of invoice items you reconcile on a daily or monthly basis? 2. Automation What is your true automated daily matching rate? Do you start each day fresh with no matching items rolled over from the day before? 3. Headcount How many FTEs do you have dedicated to closing out invoices? Diagnostic (2-3 days onsite analysis) Description of current processes Data volumes and quality Technical environment Time effort and results of current processes Optimisation potential of the current processes Results Description of the solution scenario to the Management Expected results of the proposed solution based on customer s live data Benefits of the proposition Implementation Budget ROI return on investment calculation Rough time tables for implementation 20 Implementation methodology

21 Honeywell Case Study

22 Autobank Case Study Fortune 100 industrials company with sales over 34 billion USD and 128,000 employees in 100 countries has implemented Autobank for Cash Application. The Challenge Labour intensive cash application process Low degree of automation Long cycle time Process inconsistency across businesses The Solution Complete coverage of cash application process - Bank statements, Lockbox, Remittances Advices Global roll-out by division in Shared Service Centre organization Currently 80% of incoming cash is processed through Autobank (100% target by end of 2012) In India, Honeywell worked with Citi to achieve optimal feed to Autobank The Result Overall 30+ FTE saves to date Productivity gains realised within 1 month after go-lives Increased automation by 50% Overall automated matching average is 75% Ease of implementation Phased implementation approach Honeywell fully self-sufficient in roll-outs Stable application with a great deal of scalability great potential also on the AP/GL side. 22

23 Summary Reconciliation Challenges Tools Mentioned Today Many corporates have significant potential to improve their reconciliation processes through an efficient, integrated reconciliation solution, reaping more benefits from their existing SSC setup. Cost savings from reducing the manual efforts for reconciling against bulk items on the statements and for post-processing. Reducing the time to post funds against customer invoices free up customer credit lines and allows for sales to sign more business. Citi STR Financial Reconciliation through Bank Statements Operational Reconciliation through bank statements, itemization, remittance advices Accounts Receivables Matching Services Hanse Orga Autobank Cash Application software 23

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