Schüco, a leading supplier of windows, doors and façades, joined forces with Deutsche Bank and BELLIN to standardise its cash management processes across 40 subsidiaries in 30 countries. Implementing harmonised payment processes for a host of different local standard formats is no mean feat, but the rewards are considerable – including a heavily reduced manual workload and drastically improved transparency
Having grown organically across Europe, the US and South East Asia, Schüco’s worldwide treasury operations incorporated a varied set of local cash management processes, with the company running several different online banking systems across 40 subsidiaries in 30 countries.
This arrangement posed a number of challenges – including high levels of manual processing for the treasury team. The different systems were often incompatible, requiring manual intervention to transfer information from one to another, while a handful of systems were still manual-based. This level of manual operation not only put a strain on the team in terms of workload, but also introduced numerous opportunities for human error.
The use of disparate systems also caused problems in terms of transaction processing. Smaller subsidiaries, for instance, would often have just one or two salespeople authorised to prepare and send payment instructions – creating issues when they were unavailable, given the company’s “four eyes” review policy (requiring two officials to review every transaction).
An integrated solution
To resolve these issues, Schüco engaged Deutsche Bank and software provider, BELLIN, to build an integrated solution, centralised via BELLIN’s tm5 Treasury Management System (TMS). The solution uses standardised ISO 20022 XML messaging across the entire company’s cash management operations, with all data transmitted via automated and secure processes.
The vast majority of outgoing payments start with Schüco’s Enterprise Resource Planning (ERP) system, which generates an instruction in XML format for the respective subsidiary and passes it on to the tm5 system for authorisation in line with the four-eyes principle. Once this is complete, the instruction is then forwarded from the central treasury to Deutsche Bank for execution.
Still in its original XML format, the instruction is received and validated by Deutsche Bank’s systems and forwarded accordingly. The bank sends the result of its verification processes to the tm5 system, which displays the outcome in a user-friendly format. Dedicated reference fields and standard ISO codes mean these items can be reconciled quickly and easily – a process that is concluded via an electronic account statement in SWIFT MT940 format.
The challenge of implementation
Integrating the Deutsche Bank and tm5 processes proved a straightforward and simple job – with the bank already using MT940 electronic messages that transfer seamlessly to the tm5 system. However, handling and converting the messaging standards used by subsidiaries in the other countries Schüco serves into the required XML format proved a more sizable task.
Overall, there are five parties incumbent in the payment process: the local Schüco subsidiary initiating the payment, the central Schüco treasury, the central Deutsche Bank team in Germany, the local branch of Deutsche Bank in the relevant country, and, of course, BELLIN. Crucially, the process requires a comprehensive understanding of each country’s regulations and format requirements, which then have to be reconfigured within the ERP system for each country and payment type.
There is no magic solution for carrying out this process – it is a question of careful planning and research, coupled with patience and persistence- especially considering the several rounds of format testing required before any of the countries or payment types can go live. Once up and running, however, the result is permanent performance at a high level.
Reaping the rewards
With cash management processes rationalised in this way, Schüco has experienced a number of benefits. The new system has significantly reduced the treasury’s manual workload – with at least 90% of payments now covered by ERP-based straight-through processing and the remaining 10% consisting of manual payments captured via tm5 and local stand-alone online banking tools.
Deutsche Bank’s integration with tm5 also means Schüco can quickly and easily manage and change user authorisation and permissions (using an integrated digital version of the company’s corporate seal), without having to visit a bank branch.
The new solution provides full transparency over all of the company’s accounts. This means Schüco can optimise its liquidity, partially achieved by combining the solution with Deutsche Bank’s cash pooling services. Especially in countries with substantial interest rates, this transparency illuminates further potential for optimisation, such as replacing local discounting of Letters of Credit with internal funding.
The comprehensive view over payments and collections also enables Schüco to identify other avenues for improving efficiency – whether this be with respect to expenses or account rationalisation (which has helped reduce account charges by around a third). There are also potential benefits on a business level – with greater oversight into spending fuelling more intelligent decisions about how to allocate funds moving forward.
In terms of cybersecurity, the transparency granted by the solution allows treasurers to see which accounts are no longer needed and can be shut down, reducing the number of entry points for criminal activity. Schüco is keen to take further steps in this regard, including eliminating all paper-based instruments such as direct debits, cheques and cash so that treasury has full oversight of all funds and transactions, however small.
Plans for the future
Thanks to this implementation, Schüco now has an effective, harmonised system for handling its cash management business worldwide. Nevertheless, it continues to keep an eye on future developments. While there is currently no clear business case for it to implement real-time booking for instant payments, for example, the team continues to monitor the possibilities and the needs of the team and the clients with a view to implementing further upgrades as and when they are needed. One interesting option, for example, is the possibility of opening a cryptocurrency wallet.
Whatever new tools Schüco chooses to implement, it will have a strong foundation to build upon, thanks to its collaboration with Deutsche Bank and BELIIN to create a rationalised and automated cash management platform across its many offices and subsidiaries.
"Rationalising our cash management processes across our many international subsidiaries has saved us considerable effort and expense – increasing straight-through processing to around 90% and cutting account costs by about a third."
Thomas Schlesing, Head of Group Treasury at Schüco International KG
"Schüco’s transformation shows the importance of understanding local regulations and format requirements around the world. Adapting a centralised system to work with these in a seamless way is a complex process, but one that yields significant benefits in the long run – including reduced error rates and manual workloads and increased transparency."
Martin Küsterameling, GTB Product Specialist, Deutsche Bank AG
Head of Group Treasury at Schüco International KG
GTB Product Specialist, Deutsche Bank AG
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