As an automotive supply industry, Autoneum faced circumstances typical of this market: low margins, high cost pressure and tough, credit-related discussions with its banks. This was exacerbated in 2019 when Autoneum’s cash pool bank threatened to remove its zero-balancing intraday limits, which would have created significant operational risk along with an added workload burden for the treasury team.
This led to the need for a new treasury development: the move to payments-on-behalf of and collections on-behalf of its subsidiaries. The goal here was to further reduce complexity, further streamline bank relationships and bank account landscape, and ultimately further optimize processes. The company decided to start with the entities located in the Euro zone.
In 2020, Autoneum held a feasibility study with one of the big four consultancies, to verify from a tax and legal perspective if the on-behalf-of approach (payment & collection-on-behalf-of; “POBO/COBO”) would work, and if so, what hurdles might be linked to such a project. Once the company got the green light, it began to prepare internally, working with the key stakeholders such as Tax, Legal, Sales, and Purchasing, and also working with IT on the SAP in-house bank solution setup. All this took another 18 months.
By late 2022, Autoneum was ready to identify the best bank partner for its “POBO/COBO” needs, and should be able to begin the rollout in the second half of 2023.