Published: April 01, 2014
As a multinational business with subsidiaries worldwide, sustained growth and a strong heritage of international acquisition, the number of bank relationships, accounts and connectivity channels at DACHSER has proliferated. At the same time, as the business has grown and become more complex, the need for process automation and control has increased. In 2009, DACHSER implemented SAP FI (financial accounting) and CO (controlling) modules, initially in Germany, and the solution is now being rolled out globally. While SAP has proved effective in supporting transaction management and reporting, the company needed a straightforward solution to streamline bank communication and increase payments efficiency and control. In this article, Michael Haas, Group Manager, System Design & Interfaces – Finance, Legal & Tax at DACHSER describes how the company has achieved these objectives working with TIS (Treasury Intelligence Solutions).
DACHSER works closely with local customers and suppliers, so we have maintained a decentralised approach to payments and cash management. We have 17 payments processing locations in Dachser GmbH & Co. KG in Germany alone, with payments conducted also locally by each of our subsidiaries worldwide. Before implementing the recent bank connectivity project, the payments process itself was relatively arduous. When a payment run was triggered in the financial accounting system, a file was created. The internal EDI department then converted the file into the relevant format and forwarded it to the bank with an accompanying fax.
This process was replicated in every country in which we operate, across multiple banking channels and formats creating a significant administrative and technical workload. Furthermore, in some countries, such as Sweden and Norway, the payments process still relied on a number of manual steps.
Both DACHSER and our banks recognised the need to improve our payments process and bank communication, a project which was ultimately triggered by the need to migrate to SEPA. As well as complying with the new SEPA payment instruments, our objective was to implement a cost-effective, easily implemented bank communication solution that would achieve the following:
We first approached SAP, but realised that we would need to acquire and implement the bank communication module and customise the formats required to comply with each bank’s requirements. This would have added considerable cost and complexity to our installation.
We also considered using SWIFT for bank communication. We recognised that SWIFT would satisfy our bank connectivity requirements in that it offers multi-bank connectivity, but it does not address the challenge of dealing with multiple file formats.[[[PAGE]]]
We first made contact with TIS (Treasury Intelligence Solutions) in 2011. One of the services that TIS offers is an outsourced solution for bank connectivity which can be integrated with SAP (TIS Bank Transaction Manager – BTM). BTM would allow us to send payment files in SAP’s IDoc format to a single location. These files would then be converted to the relevant format by TIS and forwarded to the relevant bank in any country. By doing so, we could eliminate our individual banking systems in each location, and free up our EDI department and respectively our SAP customising team from defining and supporting disparate formats.
Initially, we were not confident that this service would meet our needs, and we had limited resources available, so we set up a pilot project for two countries (Netherlands and USA) to understand the TIS solution more fully in our own business context.
We set up a pilot project for two countries to understand the TIS solution more fully in our own business context.
This proved a very positive experience and gave us the confidence that we could integrate with all of our global banks, and that TIS had the expertise and contacts at the right level with our banking partners. An important benefit we were keen to leverage by working with an outsourcing partner was to avoid the need for technical discussions with our banks which is not our core business, and it quickly became clear that we would achieve this.
We implemented the TIS solution alongside our SEPA migration. For countries in Europe making SEPA payments, we channelled payments through accounts in Germany while collections would continue to be made into local accounts. For countries outside Europe, entities would send files from TIS in the same way, but local accounts would still be used for payments and collections.
We had already opened accounts in Germany for some of our European entities and we were channelling payments through these accounts via our bank’s electronic banking system. This presented a number of challenges, however:
Firstly, we had for Dachser GmbH & Co. KG in Germany 120 authorised users for making and approving payments, each of whom had to be identified individually within the electronic banking system. This resulted in a considerable workload both upfront and on an ongoing basis to reflect changes in staffing or responsibility. With TIS, however, we could manage user rights in the Bank Transaction Mangager (BTM) of TIS, but set up a single master user ID for transmission to our banks. Therefore approvals and user validation take place in the BTM with straight-through processing of payment files through to our banks. By using a master user ID in TIS, we avoid the need to maintain duplicate access rights or to interact with our banks over changes to signatories.
Secondly, in Germany we have the particular case of decentralised bookkeeping sites for the legal entity Dachser GmbH & Co. KG: although we are using a single channel for our payment files, each of our payments processing centres remain autonomous and should have visibility only over their own data. At the same time, consolidated information needs to be available at headquarters level. This segregation of information was not achievable using our bank’s electronic banking system unless we set up separate installations in each payments location, which was not feasible. We now do this in TIS using virtual accounts for each payments centre, each of which has access only to their own virtual account. This is then mapped to the physical bank account as part of the bank transmission process.
The implementation was straightforward, relying on the resourcing and expertise of TIS, our banks and DACHSER. We agreed jointly the architecture and business processes that would be put in place and had regular teleconferences to monitor the progress of the project. One of the most significant challenges, and time consuming tasks during the project was to complete contracts with our banks. In the past, these may have been drawn up between a subsidiary and the bank, which needed to be replaced with contracts between the bank and signatories from all the relevant DACHSER entities. Another challenge was the varying degree of experience of payment formats amongst our banks, which took time to address in some cases. While EBICS in Germany is straightforward and allows ‘plug and play’ connectivity, this is not the same in every country.
From a technical perspective, the implementation was very straightforward. We needed to customise in SAP only the methods of payments in order to forward the relevant information via meta format IDoc to TIS, including reflecting BIC and IBAN codes on supplier settlement instructions. The connection between SAP and TIS was very easy, however, and did not require any technical support from TIS: as TIS is a cloud-based solution, we could simply use the documentation provided by TIS to set up the service, with telephone support available as required. However, the interface is very straightforward and intuitive, and offers a consistent look and feel to a personal ebanking system.
In addition to making payments, we receive MT940 (end of day statements) through TIS which then synchronises with SAP (either daily or on demand) so that we have full visibility over global balances. Again, this was straightforward to set up and could be done by our SAP administrators without technical assistance.[[[PAGE]]]
The benefits of implementing TIS’ solution have been manifold and we have achieved our core objectives in a cost-effective way without an extensive implementation:
Looking ahead, from a technology perspective, we will be completing our SAP rollout. We have three countries in Europe still to implement (Hungary, France and Slovakia) and then we will extend into Asia and other regions. TIS is now a core part of our rollout model so we will continue to derive additional benefits from the solution.
The relationship with TIS, and the use of their cloud-based bank connectivity and formatting solution has proved very successful at DACHSER. Not only have we addressed our SEPA migration, bank connectivity and formatting needs, but we also have a platform to support further evolution and growth.
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