Autoneum

What does payment factory mean? To Autoneum it means the centralization of payment flows for treasury and AP payments and a process involving the transmission from legal entities ERP to a central connectivity solution. Moreover, it means centralizing execution of file transfers in a way that is
effective and low cost and enabling transfers via one central bank connection or interface to the appropriate bank relation and account.

Autoneum is a global market and technology leader in acoustic and thermal management solutions for vehicles. As a partner for light vehicle manufacturers around the world, Autoneum provides multifunctional and lightweight technologies and components for noise
and heat protection. Autoneum’s customers are the leading automobile manufacturers in the key markets of Europe, North America, South America and Asia. The company, which is headquartered in Winterthur, Switzerland operates and conducts research and development on a global scale: Autoneum is represented at around 50 locations in over 20 countries and has a workforce of more than 10,000 employees worldwide.

This is the story of the rationale behind the Autoneum Group setting up a payment factory, its own definition of a payment factory, the centralization required before the roll out, the use of SWIFT/EBICS, the importance of the ERP system and the future plans to extend to other countries. Autoneum’s payment factory is a response to the company’s need to have better visibility and oversight of cash and liquidity and to go for standardized and centralized processes for payment file transmission and execution. Technology employed includes SAP and the service bureau Fides to access SWIFT, EBICS or Alternative channels in regards to bank connectivity for payment transmission and execution. In 2012 the company centralized treasury operations within its head office in Winterthur and had two full time equivalents globally for treasury operations.

The problem Autoneum treasury faced was that although it had centralized treasury operations, it had more than 100 bank accounts globally and more than 45 bank relationships. Furthermore, Autoneum had large positions of local-based cash with many non-core banks. In terms of systems and IT landscape it had an outdated treasury management system and an outdated ERP. And last but not least a lack of standardization for processing their payment files or receiving bank statements.

The local business was responsible for the preparation and release of payments, with no transparency for the head office in Winterthur.

There was no common standard for payments or reporting, e.g. an MT940, which is the SWIFT international format used to receive bank account information for processing in financial software applications, available. Bank statements were paper based and booked manually.

Before the start of the project, AP payments or treasury transfers were paid via local structured host-to-host connections, via individual e-banking systems, or even by using fax. In short, there was little alignment of payment processes.

Autoneum’s Treasury Team implemented SAP where the implementation of the payment factory was one of the core elements. The idea was based on a desire for greater daily visibility of their cash and liquidity as well as payment outflows through a standardized format and channel.

For reporting purposes the treasury team decided to use the MT940 format. Furthermore, streamlining the connectivity’s to their banks, reducing the number of bank accounts and creating a more aligned approach in order to connect their legal entities using a single interface and a standardized process.

The treasury project evolved out of the global project of process re-engineering to roll out standardized business processes globally using SAP as the new global ERP. As a result of the earlier management analyses, SAP TRM, which is the treasury module of SAP, was selected in September 2012. The in-house cash module was licensed for future use.

The decision was made to use SAP given the benefits of the high integration into the ERP landscape and, facing a Greenfield project where a log of treasury needs and ideas could be implemented in the global design. The changes needed for the short term were centralizing transmission of payment runs and bank statements and forming a single gateway to banks. Treasury modules have been made available to the local entities in case they could benefit from those.

Autoneum had a history with the Swiss service bureau Fides for daily collection of MT940 and MT942 statements. Furthermore, Fides is offering for payment execution a hybrid approach: either a connection to the banks via SWIFT, via EBICS, H2H or any alternative Channels.

EBICS member countries include Germany and France, Switzerland and other countries most likely will join soon. Using EBICS doesn’t lead to additional transactional fees, as is the case by using SWIFT, has lower implementation costs for the banks involved and lets Autoneum get payment files forwarded within the banks to other countries outside of EBICS, e.g. UK or China. On top of that, Autoneum has found that so far EBICS projects seem to be by far less complex to get established.

Autoneum decided to use Fides as a hybrid service bureau solution. That means AP and treasury payments go via SAP’s Bank Communication Manager to the middleware and from there via Fides out to banks via SWIFT or e.g. the EBICS network.

The payment factory was rolled out in Switzerland in 2013. In 2014 the payment factory was rolled out to the US and Canada and in 2015 in France. Spain and Portugal will also follow in 2015. All entities were connected via Fides, three Swiss banks and one Euro bank via EBICS and US/Canadian bank via own Autoneum BIC, also hosted by Fides.

The project achieved bank connectivity with one single gateway to the banks from and to SAP TMS in a straight through process setup. There is a stable SWIFT connection for the US/Canadian bank. Local payment formats have been avoided. The number of cheque’s issued in US and Canada has gone down from 1000 a month to roughly 200. The process is considerably more transparent with direct upload of bank statements to the TMS and ERP. There is now a uniform approach to approve and release payment runs. In terms of bank relationships there is a focus on core banks with respect of business such as payment execution and once all rollouts are complete there is a target for seven to eight core banks, not including local banks. Local bank relationships have been cut. Transaction costs have come down as fewer banks get more volume leading to better pricing. Avoiding or reducing local instruments such as cheque’s has cut bank fees even further.

And how much money has been saved? The quick wins are obvious: The cost per cheque in the US is easily five times as high compared to ACH payments. With a reduction of the cheque volume by 80% the savings are enormous.

Autoneum evaluates payments on behalf and collections on behalf. This is an interesting approach for the entities located in the Eurozone, but the tax and legal investigations have to be done first, what has been the main reason to postpone this piece of the project.

Bank statements should be moving from MT940/942 format onto CAMT.053/CAMT.052 if the benefits apply for Autoneum. However, not all banks are ready yet and some banks also charge more for using those formats.

SAP Treasury enhancements should also lead to further benefits. These include automated confirmation of FX deals with banks, a treasury cockpit which will mainly assist the local end users to find their way through the various relevant treasury transactions in SAP easier. On top of this, requirements to comply with several new local regulations should be implemented.

Fides is the world leader in multibank connectivity, payments and transaction communications. A market leader for more than a century, Fides is committed to making financial operations as efficient, transparent and secure as possible for all organizations. More than 3,500 clients rely on Fides for efficient cash and liquidity management, through connectivity to more than 13,000 banks and comprehensive workflow, reporting, conversion, validation and security services. Whether you access via the secure Fides Multibanking Suite or leverage our seamless integration with third-party ERP, TMS and other backend systems, Fides is the only platform you need.