SEPA & beyond: Preparing for camt. December 2013 by Michaela Quademechels, Product Manager, Hanse Orga AG

Transcription

1 SEPA & beyond: Preparing for camt December 2013 by Michaela Quademechels, Product Manager, Hanse Orga AG

2 SEPA & beyond: Preparing for camt Companies today are busy with preparations for meeting the SEPA regulations in time for the deadline: As of 1 February 2014, credit transfers and direct debit payments will have to be made using the standardised ISO XML SEPA formats, which will replace the national payment formats. Following in the wake of SEPA is another international standard: camt. The cash management (camt) message is designed to standardise the account information delivered by banks to their customers and to achieve straight-through processing also for the reconciliation management. The camt format is not (yet) obligatory for companies in Europe. So, why is it that companies increasingly ask their banks for the new format? This paper will look at what camt is all about and how it can be of strategic value to companies. SEPA is leveraging mandatory harmonisation to payment processes across Europe. Companies and banks will have to change the existing payment formats to the standardised ISO XML SEPA formats by 1 February The aim of the harmonisation is to achieve greater efficiency for all participants and to achieve straight-through processing in the area of payments. SEPA delivers clear regulations for initiating payment transactions. When it comes to sending the different types of account information from the bank to their customers there are also standardised XML formats available as defined by ISO These cash management (camt) messages, however, are not (yet) obligatory for companies. Nevertheless, already one third of the participants of a recent Hanse Orga webinar stated that they plan to switch their cash application to the new camt formats, whereas one third will stick to the existing MT940 format and another third had not decided which road to take. When asked whether they view camt as a means for optimising their cash application, the great majority of respondents said they hope or expect to be able to improve their receivables management with camt formats. Only every eighth participant did not see any added value in switching formats to camt. This shows the growing interest in the further standardisation of the accounts payable and accounts receivable processes. Companies recognise the value of standardised XML formats beyond the mere SEPA compliance. So, what exactly is camt and what are the benefits? What is camt? The word camt stands for Cash Management and contains all the information needed for corporate reconciliation management. The camt messages form part of the format family for payments as defined and certified by the International Organization for Standardization. The key advantages of camt over local formats include the fact that local formats are isolated and are not always compatible and interoperable with other formats. Maintenance costs are thus rather high for companies that are globally active and have operations in many different countries. Globally active companies will be the first to benefit from standardised formats that will help streamline their international business. Cash Management with camt the Formats The ISO XML camt message formats enhance the bank-to-customer communication and provide standardised message formats for the different types of communication. They are a powerful alternative to existing formats such as SWIFT MT message formats. The three most relevant formats for payment processes are the following: camt.052 Bank-to-Customer Account report (as an alternative to MT941 Balance Report, and MT942 Interim Transaction Report) camt.053 Bank-to-Customer Statement (as an alternative to MT940 Customer Statement Message, and for banks: MT950 Statement Message) camt.054 Bank-to-Customer Debit/Credit Note (as an alternative to MT900 Confirmation Debit, and MT910 Confirmation Credit) The formats for cash management messages are not (yet) obligatory in the bank to customer communication. For SEPA payments, however, the European Central Bank has issued a recommendation on the reporting of SEPA transactions from banks to customers. In Germany, for example, this recommendation has been translated into an obligation to banks to deliver camt.054 on SEPA payments from 1 February 2014 should the bank s customers request the format. A number of banks are front runners and are offering camt formats to their customers already today. Why are ISO Standard Formats on Their Way to the Top of the Agenda? A growing demand from the corporate side for more standardised formats that enable true straight-through processing, the involvement of global players in the development process of ISO standard formats and regulations such as SEPA are certainly key drivers for an increasing use of the ISO formats. New technology such as XML significantly helps the global harmonisation process which would not have gained such momentum in the past without XML, web-based communications and services

3 As one of the key drivers, SEPA has provided significant push to help move standardised XML formats. The SEPA subset of the ISO XML pain messages will have to be used for European payments from 1 February In the run up to SEPA, companies increasingly look at further opportunities to optimise their processes. They ponder that while standardising the payment formats, they may as well harmonise the cash management side, too, and replace the currently widely used MT formats for cash management with the new ISO XML camt formats. By implementing the camt formats for the processing of SEPA and other payments, companies can benefit from harmonised formats for both the accounts payable and receivable management and achieve a true end-to-end processing of all their payments. Although the existing MT formats have been updated and extended in order to transfer all SEPA-relevant data fields, the information is not as structured and complete as is the case with a camt message. Why Change to camt? The Strategic Advantages Reporting practices are currently diversified across the banking sector. Each country has its own specific format for sending account information to customers. Additionally, banks often have their own characteristics for reporting formats. All this leads to inefficiencies in processes at corporate level and also on the bank side. In order to resolve these inefficiencies in the electronic communication from bank to customer, standard XML formats have been developed for cash management messages and certified by ISO In an effort to promote further harmonisation, the European Central Bank (ECB) published a recommendation in 2009 for enhancing the straight-through processing of SEPA CT and SEPA DD through standardised bank-to-customer messages (camt) as mentioned above. The camt format can thus be seen as a great opportunity for achieving a true end-to-end processing of all SEPA payment transactions from their origin to their reconciliation in corporate accounts. A uniform mapping of SEPA transactions on the account statement will enable companies to further optimise their accounts reconciliation. Let s have a look at how such an optimisation can be achieved and what the key differences between legacy formats and camt are: More detailed and better structured information The information resulting from SEPA payments cannot always be fully displayed with legacy account reports, typically MT940 or local message formats. SWIFT, for example, has made provisions so that its MT formats can transport the richer SEPA information, so that account reporting on SEPA is enabled with MT. The new camt format, on the other hand, can transport the more detailed information, e.g. which is sent with SEPA payments, and the information is provided in a more structured way. Better compatible with SEPA The camt XML formats for account reporting correspond to the pain XML fields of the SEPA transactions so that all SEPA payment data can be better reflected in the account statements. Consequently, companies can streamline the processing of the account information, provided they use systems that are capable of handling camt formats. Moreover, the camt account statement (camt.053) can display all individual items in case of collective postings. All information is thus available in just one format and no separate account report is required as would be necessary in case of other reporting formats. Should a company, however, require a separate display of individual account items, such information can be transmitted via the camt.054 format. Additionally, optional fields for payments on behalf of can be included in the reporting thereby supporting a company s processes streamlined in a payment factory. An International Standard The camt messages form part of the XML format structure for payment transactions and will be a key component for companies that will help them further streamline their straight-through processing. When both payment initiation and account reporting are done in the same format, payments can automatically be processed from one end to the other. As a prerequisite to benefiting from these advantages, companies will need to ensure that their systems are up-to-date and that their banks do provide these formats. Increasing demand from the customer side will be an incentive to banks to offer the camt format. This is likely to help push the international standard format further The Advantages of camt Formats More details can be sent with camt Information in a structured format Easier end-to-end processing of the camt format Supporting automatic cash application Optimising account reconciliation Straight-through processing - 2 -

4 Are My Banks and My Software Solutions Ready for camt? Banks, in fact, increasingly offer ISO XML camt formats for account reporting which is due to a growing interest on the customer side that has been fostered by the recommendation of the European Central Bank to all stakeholders in the SEPA payment transactions to make widespread use of the standard format for the bank-to-customer reporting. Companies should check with their banks, if they already deliver camt formats for the account reporting. In the migration phase towards SEPA, companies had to review their existing IT systems and ensure that their technology is capable of processing SEPA payments. However, are the systems also ready to cope with camt messages? Companies wishing to implement camt should first check their existing systems as for their camt-processing capability. What a Cash Application Software Should Offer to Handle the Processing of camt and Other International Formats Not all systems are, yet, fully ready for processing camt and other international formats efficiently. In order to avoid ad-hoc and make-shift solutions, companies should check the market for a specialised solution that will deliver future-proof functions and processes. The following features will help companies achieve true end-to-end processing for their payment transactions and should be covered by the system: It should enable the processing of data from the central and from decentralised systems of a company It should be directly integrated in the central ERP system for optimal security and process efficiency One solution that enables true Straight Through Processing for bank statements Fully automated processing from the receipt of the camt reporting messages to forwarding them to further applications Process controls through status overview (where am I in the process?) Automatic conversion and correction steps Automated handling of exceptions, e.g., notifications in case of errors Conclusion The standardised ISO XML camt formats will significantly help companies to streamline their account reconciliation processes, particularly where international and particularly SEPA payments are involved. Specialised and integrated software will enable automated processing of camt and other international formats and will be an important factor for companies in achieving true straight-through processing for their accounts receivable and payable. When looking for such specialised software, companies should make sure that the solution is capable of delivering integrated, automated and streamlined processes in order to derive the full strategic advantages for their finance and accounting. How Hanse Orga Can Help with Your camt Processing: FinanceSuite Account Statement Manager Specifically for the processing of ISO XML camt and also for other international formats such as BAI2, Hanse Orga has developed the FinanceSuite Account Statement Manager. The Account Statement Manager provides SAPintegrated functions that enable companies to process the new XML formats for account statements efficiently and to benefit from the end-to-end processing for global accounts receivable and payable. The Account Statement Manager imports and logically verifies account statements in camt or other formats. Where required, the module can automatically convert the formats received into other formats, e.g. MT940. The statements can be split by any category of information in the statement and not just by account. Should an account statement be erroneous, the Account Statement Manager detects this, logs the statement and moves it to a separate directory for further processing. The module enables companies to quickly search statements for specific data, produce reports on the statements and automatically correct any erroneous fields, if necessary. Thus, the Account Statement Manager is a key programme for companies that seek to achieve straight-through processing for their account statements including the new formats such as ISO XML camt

5 About Hanse Orga Hanse Orga is one of the leading providers of specialised financial software solutions for SAP. We are certified as a SAP Software and Technology Partner. With over 180 dedicated employees, we successfully completed over 90 projects in 2012 to the benefit of our customers. Our customer base consists of 500+ worldwide companies, spanning all industries including: Oil and Gas, Chemicals, Insurance, Retail, Manufacturing, Consumer Goods, Telecom, Logistics, Government, etc. Hanse Orga offers fully integrated SAP software solutions for optimising all processes along the Financial Supply Chain. For more information about Hanse Orga and our solutions for cash application, payments, treasury management, cash and liquidity management, bank account management, or our consultancy services, please contact us at Hanse Orga AG Head Office Oldesloer Straße Hamburg Tel: +49 (0) Fax: +49 (0) office@hanseorga.de Hanse Orga France SARL 36 Avenue de la République Issy Les Moulineaux France Tel: +33 (0) Fax: +33 (0) info@hanseorga.fr Hanse Orga International B.V. Nieuwe Prinsenkade VC Breda The Netherlands Tel: +31 (0) Fax: +31 (0) info@hanseorga.com Hanse Orga International Corp. 220 East Huron Street Ann Arbor, MI USA Tel: +1 (0) Fax: +1 (0) info@hanseorga.com Copyright 12/2013 Hanse Orga AG. All rights reserved. SAP is a registered trademark of SAP AG