Sap Bank Communication Management
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SAP Bank Communication Management
Overview and Strategy
Christian Mnich Suite Solution Management Business Suite Technology Group SAP AG
Agenda
1. Trends & Challenges 2. Solution Offering 2.1. Introduction – Treasury Applications from SAP 2.2. SAP Bank Communication Management 2.3. SAP Integration Package for SWIFT
3. Benefits & Summary 4. Wrap-up
© SAP AG 2009. All rights reserved. / Page 2
Market Trends and Key Challenges in Cash Management Key Challenges
Market Trends
Increasing centralization of Treasury and managing cash on a global basis
Increase cash flow transparency and visibility of working capital across the whole group
Managing counter party risks
Cost savings
Cash flow forecasting as an increasingly important area for corporates
Ability to communicate with multiple cash management banks through a single channel
Regulations and standards, such as Single Euro Payments Area (SEPA) or ISO20022 payment formats
Gaining reliable and timely information from business units
Standardize formats, technologies and processes
Global Financial Crisis and the importance of transparency
Corporate Cash Managers need to reconcile cash flows across multiple banks to determine the group’s cash position in short time © SAP AG 2008 2009. / Page All 3rights reserved. / Page 3
Multiple Formats & “Standards”
Banks
Corporate client
IDOC Host to Host
Accounts Payable
Domestic
e-banking
Accounts Receivable
Treasury
Other
© SAP AG 2009. All rights reserved. / Page 4
SAP NetWeaver PI
SAP Integration Package for SWIFT
Edifact
MT101 and SEPA CT
ISO20022
Challenges Compliance, Security & Efficiency Issues High Maintenance Costs For Communication Interfaces
Corporates typically deploy several different bank communication interfaces that each use various technologies and file formats
Over EUR 25,000 and more per year for each proprietary interface
Cumbersome Interfaces Hinder Compliance Efforts
Payment data is highly sensitive in nature and requires sophisticated security processes to meet ever-increasing regulatory mandates
Process Inefficiencies
High levels of manual processing, productivity losses, excessive exception handling, and an overall lack of transparency into payment flows
Missing straight-through processing and separate handling of payment orders or bank statements for each bank
© SAP AG 2009. All rights reserved. / Page 5
Challenges Increased Costs, Dependencies & Lack of Transparency Cost of Working Capital
Errors in payment orders are identified too late
Certain level of liquidity must be kept on transaction accounts due to lack of information
Need for global visibility to cash
Security Issues
Security gaps during payment file transfer (authorization, signature, and encryption often not part of the solution)
Dependency on House Banks
Proprietary interfaces create dependency on single bank due to cost of changing bank relationship
During the financial crisis the Counterparty Risk Management becomes more important
Lack of Payment Transaction Transparency
Most proprietary interface applications cannot process incoming status messages from banks
© SAP AG 20082009. / Page All 6rights reserved. / Page 6
SEPA promise end-to-end interoperability. SAP is on both sides New Message Standards…
Based in UNIFI (ISO 20022) XML Message standards available for complete end-to-end communication XML Bulk payments & FIN Category 1 & 2
Beneficiary Customer’s Financial Institution
(I N T E R B A N K) P A Y M E N T S
Ordering Customer’s Financial Institution
REPORTING
XML Payment initiation & FIN MT 101
I N I T I A T I O N
R E P O R T I N G
XML Cash management & FIN Category 9
R E P O R T I N G
XML Portfolio FIN Portfolio
Ordering Customer © SAP AG 2009. All rights reserved. / Page 7
Beneficiary Customer
SEPA – Single Euro Payments Area Update 2009
SEPA Credit Transfer is live in Europe since Jan 28th 2008, SEPA Direct Debit planned for Q4/2009
Volume for SEPA transactions currently pretty low – only about 4% of the total credit transfer volume
There is currently no official end date for national credit transfers and direct debit schemes officially announced
SEPA is just a European initiative – more challenges to be expected in order to allign a global ISO20022 format
* Source ECB - http://www.ecb.int/paym/sepa/timeline/use/ © SAP AG 2009. All rights reserved. / Page 8
SEPA Package from SAP
SAP appreciates and supports the SEPA framework of the European Payment Council, improving straight-through processing and allowing increased transparency into payment flows
SAP’s Business Suite is already enabled to help customers to benefit from the new regulatory
A dedicated SEPA package for the SAP Business Suite is available since the end of 2007.
SAP’s SEPA Package is available for all SAP customers with maintenance contract free of charge (R/3 Enterprise onwards)
Support of new payment formats and instruments in SAP ERP
XML enablement of the new standard European SEPA payment formats
SEPA Credit Transfer based on EPC Rulebook 3.2
SEPA Direct Debit based on EPC Rulebook 2.3.
Management of SEPA direct debit mandates
Support of IBAN and BIC
SEPA Support of MT940 Bank Statements
© SAP AG 2009. All rights reserved. / Page 9
Agenda
1. Trends & Challenges 2. Solution Offering 2.1. Introduction – Treasury Applications from SAP 2.2. SAP Bank Communication Management 2.3. SAP Integration Package for SWIFT
3. Benefits & Summary 4. Wrap-up
© SAP AG 2009. All rights reserved. / Page 10
Financial Excellence with Treasury Applications from SAP Treasury applications from SAP SAP Treasury and Risk Management Risk Analyzers
Manage Global Financial Risks
Credit Risk Analyzer
Market Risk Analyzer
Exposure Management
Optimize Debt and Investment Strategies
Manage Cash and Liquidity
Portfolio Analyzer
Hedge Management
Transaction Manager Money Market
Foreign Exchange
Derivatives
Debt Mgmt
Securities
Commodities
SAP Cash and Liquidity Management Cash Management
Liquidity Planning
SAP In-House Cash Optimize Payments and Bank Communication
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SAP Bank Communication Management
End-to-end integration of processes in Finance
Banks
Suppliers
Customers
Credit2Cash Check Credit
eInvoice
Invoice2Pay
Treasury
Resolve disputes
Collect cash
Accounts Receivable
Manage Invoices Manage cash
Manage Risk
Transmit Payments
Accounts Payable
Financial Supply Chain Physical Supply Chain
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Approve Payments
Monitor Payments
What’s The Topic? Optimize Payments and Bank Communication
Initiate payments
Processing by InHouse Bank
Batch & Approve payments
Create payment media
Send payment media
Update status monitor
Process Bank Statements
SAP In-House Cash
SAP In-House Cash is a solution for global operating companies to manage their intra-group and external payment transactions more efficiently
The In-House Cash Center is a virtual bank set up at the group headquarter where subsidiaries have current accounts
SAP In-House Cash allows companies to minimize the actual flow of cash and therefore reduce the number of bank accounts and save bank fees
SAP Bank Communication Management
SAP Bank Communication Management enables customers to track the entire payment life cycle, and significantly improve straight-through processing rates and internal compliance
SAP Bank Communication Management enables corporate customers connecting via SAP NetWeaver® Process Integration to the SWIFT Net Interface
SAP Bank Communication Management includes SAP Integration Package for SWIFT and is available since SAP ERP 6.0, Enhancement Package 2
© SAP AG 2009. All rights reserved. / Page 13
Agenda
1. Trends & Challenges 2. Solution Offering 2.1. Introduction – Treasury Applications from SAP
2.2. SAP Bank Communication Management 2.3. SAP Integration Package for SWIFT
3. Benefits & Summary 4. Wrap-up
© SAP AG 2009. All rights reserved. / Page 14
Streamline Payments and Bank Communications
Improved Cash Transparency Status Monitoring
Open Interfaces and Standards
Streamlined Payments and Bank Communications
SAP ERP Financials
Compliance Approval Workflow
© SAP AG 2009. All rights reserved. / Page 15
Payment Solution provided by SAP New since SAP ERP 6.0, Enhancement Package 2
SAP Bank Communication Management Status Monitor
SAP ERP GL Payroll Treasury In house
cash
Payment Medium Workbench
Payment Run
Aggregate Payments
Approval Workflow
Digital Signatures
Workflow
© SAP AG 2009. All rights reserved. / Page 16
Transmit Payment
Receive Status Report
SAP Integration Package for SWIFT
Situation without SAP Bank Communication Management 3rd Party System
SAP ERP
Execute Payment Program
Upload File
Create Payment Order
File Server
Send Payment Order to Bank
Import Bank Statement
Collect Bank Statement
Post/Processing and Clearing
Security
© SAP AG 2009. All rights reserved. / Page 17
Download File
Bank
Security: Authorization Encryption Digital Signature
Process Flow with SAP Bank Communication Management SAP ERP
Execute Payment Program Create Payment Order
SAP Bank Communication Management
SAP NetWeaver Process Integration
Create Batch
Routing
Payment Approval Work List
Mapping
Security (Approval Workflow, Authorization, Digital signature)
Import Bank Statement
Receive Status Messages
Post/Processing and Clearing
Bank Statement
© SAP AG 2009. All rights reserved. / Page 18
SWIFTNet Security Encryption Digital Signature
SAP Integration Package for SWIFT
Resource Adapter
SWIFT Alliance Access / Gateway
Features: Batching & Exception Handling
Batching of payments
Logical structuring of payment files
Flexible batching rules that can be enhanced
Automatic creation of unique identifiers
Exception handling
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Visibility of errors in payment status monitor
Automatic generation of alert workflow items
Features: Compliance
Increased compliance
Multi-eye release procedures for payment approvals
Personal digital signatures for outgoing payments for internal audit
Release of individual payments or entire batches
Flexible approval rules (low-value payments = only one approver, for example)
Approval, rejection, or resubmission of payments
Flexible sorting and structuring of approval work list
© SAP AG 2009. All rights reserved. / Page 20
Features: Integration to SWIFT and Banks & Transparency Integration to SWIFT and banks
Real-time integration with SWIFT via SAP Integration Package for SWIFT
Optional integration with banks with the adapters in SAP NetWeaver Process Integration on a project basis
Increased payment-flow transparency
Payment status monitor with full status history
Processing of new ISO20022 payment status report and other status messages (ACK/NACK)
Drill-down to documents and master data
Display of generated payment formats
© SAP AG 2009. All rights reserved. / Page 21
Enhancing SAP Bank Communication Management with Central In-House Bank and Payment Factory Corporate Client
SAP ERP
Subsidiary
Accounts Payable Accounts Receivable Subsidiary
HCM
SAP Bank Communication Management
Treasury
SWIFTNet
SAP In-House Cash Subsidiary
SAP NetWeaver PI
SWIFTNet Interface
Payments
SAP Integration Package for SWIFT Compliance
© SAP AG 2009. All rights reserved. / Page 22
Quick Facts – SAP In-House Cash
SAP In-House Cash provides payment-related services for a group of affiliated companies
Features
© SAP AG 20082009. / Page All 23 rights reserved. / Page 23
Central dispatching, routing, and processing of payments
Creation of account statements to account holders
Tracking of payment statuses
Support of various corporate group structures
Routing of payment orders to local subsidiaries to replace cross-border payments
Internal bank accounts in any currency
Flexible condition and limit concept
Full integration with SAP Cash Management and SAP Treasury and Risk Management
Business Benefits
© SAP AG 2009. All rights reserved. / Page 24
Reduce physical cash transfers by internal netting
Reduce number of bank accounts
Reduce administrative overhead
Minimize netting process times
Save bank fees for bank accounts and payment transactions
Avoid cost for external cross-border payments
Reduce float and value date losses
Gain more interest keeping cash within the group
Reduce hedging cost using economies of scale
Improve competitive position in external money markets
Lower internal cost
Lower external cost
Agenda
1. Trends & Challenges 2. Solution Offering 2.1. Introduction – Treasury Applications from SAP 2.2. SAP Bank Communication Management
2.3. SAP Integration Package for SWIFT 3. Benefits & Summary 4. Wrap-up
© SAP AG 2009. All rights reserved. / Page 25
What is SWIFT?
SWIFT stands for Society for Worldwide Interbank Financial Telecommunications
A co-operative organization serving the financial industry
A provider of highly secure financial messaging services
The financial standardization body
2.5 billion messages/year
8,830 financial institutions
209 countries
More than 400 corporates connected
Latest peak day: 16.5 m messages
(Status from 06/2009)
Country coverage © SAP AG 2009. All rights reserved. / Page 26
Integration to SWIFTNet with SAP Bank Communication Management Business Strategy & Initiatives Simplification
Reduce the number of proprietary payment standards and bank-specific e-banking products and setting up a single communication channel to SWIFTNet
Reduce maintenance cost by communicating with all the banking partners through this one channel
Bank Communication Yesterday
© SAP AG 2009. All rights reserved. / Page 27
Compliance
Cost Reduction
Enhance straight-throughprocessing (STP) rates and ensure traceability of the whole business process
Bank Communication Today
Status — Corporates on SWIFT
Registered corporates
441 402
Profile
471 441
402 282 282 181 181 108
2006 © SAP AG 2009. All rights reserved. / Page 28
2007
2008
1Q2009
2Q2009
Geographic spread EMEA, Americas, Asia Traffic The Americas is the leading generator Increasing number Of smaller and medium size corporations With fewer banking relationships (even 1) Using SWIFT for domestic transactions
Features: SWIFT Integration and ISO 20022 support SWIFTNet integration
Inbound and outbound support of FileAct and FIN Integration with SWIFT architecture (SWIFTAlliance Access and Alliance Gateway) Management of local authentication and integrity between SAP NetWeaver Process Integration and SWIFTAlliance access and gateway
Standard mappings in SAP NetWeaver Process Integration for ISO20022 messages
Customer credit transfer initiation Customer direct debit transfer initiation Payment status report Cash Management Statement Cash Management Advice Tight integration with SAP software Available for SAP R/3 4.6C and above (SAP Integration Package for SWIFT only)* Easy adoption of mapping possible to support various of status messages in conjunction with SAP Bank Communication Management (prerequisite: SAP ERP 6.0) *SAP NetWeaver PI required © SAP AG 2009. All rights reserved. / Page 29
SWIFT Connectivity Options
© SAP AG 2009. All rights reserved. / Page 30
Agenda
1. Trends & Challenges 2. Solution Offering 2.1. Introduction – Treasury Applications from SAP 2.2. SAP Bank Communication Management 2.3. SAP Integration Package for SWIFT
3. Benefits & Summary 4. Wrap-up
© SAP AG 2009. All rights reserved. / Page 31
SAP Bank Communication Management / SAP Integration Package for SWIFT – Benefits Improved communication between corporates and banks
SAP Bank Communication Management helps increase efficiency, lower costs, and streamline processes
Single communication channel to SWIFTNet
Standardized and uniform Payment Gateway
More cash flow transparency and visibility of working capital
Enhanced straight-through processing (STP) rates
Companies get accurate and real-time view of their payment transactions
Enhanced security and compliance
Transparent management of outgoing payments with no breaches on internal controls
Reduced maintenance costs by using global payment standards
© SAP AG 2009. All rights reserved. / Page 32
Independency from proprietary payment standards and bank-specific e-banking products
Readiness for SEPA and UNIFI/ISO20022 standard
Adolf Würth GmbH & Co. KG Streamlines Bank Communication with SAP ERP QUICK FACTS Company
Name: Adolf Würth GmbH & Co. KG
Location: Künzelsau, Germany
Industry: Global trade
Products and services: Fastening and assembly technology
Revenue: € 814 million in 2006
Employees: 4.500 (Germany)
Web site: www.wuerth.com
SAP® solution and services: SAP Ramp-Up program, SAP enhancement package for SAP ERP 6.0
Implementation partner: SAP Consulting
Challenges and Opportunities
Why SAP?
Standardization and automation of Corporate to Bank communication Optimization of processes and increased payment flow transparency through status monitoring
Objectives Fewer bank connections and enhanced straight-through processing rates with end-to-end SWIFTNet integration Support systematic tracking during the whole payment life cycle
Implementation Highlights
“SAP Bank Communication Management and the SAP Integration Full implementation within 6 months including SWIFT infrastructure Package for SWIFT have streamlined our banking communications into a Complete support from SAP single, efficient channel that makes Consulting in deploying the new payments and deposits to our functionality throughout the accounts simple and direct.” organization Claus Wild Project Manager Financials Adolf Würth GmbH & Co. KG
© SAP AG 2009. All rights reserved. / Page 33
End-to-end integration paradigm Most relevant functionality available on the market High attention and support due to ramp-up program Ease of integration with existing SAP software
Benefits Enhanced straight-through processing (STP) rates More cash flow transparency and visibility of working capital Reduced maintenance costs by using global payment standards Increased security and compliance Readiness for SEPA and UNIFI/ISO20022 standard
Current Release Enhancement Package 4 for SAP ERP 6.0
Simplification Indicate urgent payments in
the payment monitor Automated triggering of
follow up activities
ENTERPRISE SOA Improved Service Enabling Enhanced ISO20022 /
SEPA support
Functional Enhanced reporting
capabilities Integration to Cash
Management
Security Capability to assign
additional approval users for dual control Enhanced encryption
capabilities
© SAP AG 2009. All rights reserved. / Page 34
Outlook Enhancements planned for 2010 and beyond Payment Formats and Instruments SEPA Credit Transfer Update according to EPC Rulebook 3.2 (see SAP Note 1305012) SEPA Direct Debit Update to EPC Rulebook 3.3 (Core) and 1.2 (B2B) IDOC Enhancements Enhance PEXR200x with new segment for SEPA related fields In-House Cash – SEPA Enablement
Evaluation of global ISO20022 shipment for payment initiation based on pilot customers / banks feedback Focus countries outside EURO zone Enhanced support of CAMT messages Evaluate direct import of XML messages to SAP ERP Evaluation of additional ISO20022 message services such as Electronic Bank Account Management - EBAM SEPA E-Mandates
© SAP AG 2009. All rights reserved. / Page 35
Outlook - Current Output of Portfolio Planning In-House Cash and Bank Communication Management
Initiate payments
Processing by In-House Bank
Management of Bank Web Channel Account Strategy Signatures
SEPA Support
Import payment files from external systems
Reversal Postings on payment rejection
© SAP AG 2009. All rights reserved. / Page 36
Batch & Approve payments
Support of IDOC payment format
Enhanced monitoring capabilities
Create payment media
Support of ISO20022 standards
Send payment media and Update Status Monitor
Improve security capabilities
Bank connectivity w/o SAP NetWeaver Process Integration
Process Bank Statements Integration of non-SAP systems, support of MT messages
Agenda
1. Trends & Challenges 2. Solution Offering 2.1. Introduction – Treasury Applications from SAP 2.2. SAP Bank Communication Management 2.3. SAP Integration Package for SWIFT
3. Benefits & Summary 4. Wrap-up
© SAP AG 2009. All rights reserved. / Page 37
7 Key Points to Take Home Treasury
applications from SAP are an integrated part of SAP ERP Financials
SAP
provides comprehensive applications to manage your payment and cash processes
Using
an integrated treasury solution supports the overall IT trend of harmonizing the system landscape and the application variety
The
application SAP Bank Communication Management helps streamline payment processing, strengthen compliance, and achieve straight-through processing across multiple banks.
It
enables the standardization and automation of corporate-tobank communication and helps increase payment flow transparency through status monitoring
You
can reduce maintenance costs by using global payment standards and if the application is ready for SEPA and ISO20022
Implementing
SAP’s treasury applications leverages your overall SAP investments you have made
© SAP AG 2009. All rights reserved. / Page 38
Further Information
SAP Public Web
http://www.sap.com/treasury
SAP Service Marketplace (log-on required)
https://service.sap.com/erp-treasury
Enterprise Services WIKI (BCM)
http://wiki.sdn.sap.com/wiki/display/ESpackages
Documentation on SAP Help Portal
http://help.sap.com (SAP ERP >> SAP ERP Central Component >> SAP ERP Enhancement Packages)
Training / SAP Education
http://www.sap.com/education
User Groups
http://www.dsag.de
http://www.sap.com/communities/usergroups.epx for more
Contact
Your SAP Account and Consulting Engagement Manager
© SAP AG 2009. All rights reserved. / Page 39
Thank you!
© SAP AG 2009. All rights reserved. / Page 40
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