When UGI International, a supplier of liquid gases across Europe and in the US, faced challenges in obtaining real-time visibility on its cash positions, they partnered with Zanders to elevate the performance of their Kyriba system. This started with the transition to the Swift banking system.  

A quest for transparency

UGI International (UGI) is a leading supplier of liquid gases, operating under 6 brands across 16 countries. Every day, the business generates a consistent stream of high value and high volume in-country and cross-border transactions. This feeds into a complex network of disparate, multinational cashflows that the business’ treasury team is responsible for managing. When Nuno Ferreira joined as Head of Treasury in 2021, Kyriba was already in place, but it quickly became apparent that there was considerable scope to increase the use of the treasury management system to tackle persistent inefficiencies in their processes.  

“Lack of visibility was one of our key issues,” says Nuno. “We didn't have access to accurate cash positions or forecasts, so we were lacking visibility on how much cash we had at the end of each specific day. The second thing was that the payment flows were very decentralized. In the majority of countries, payments were still being done manually.” 

Lack of centralization was something that needed to be addressed and this demanded an overhaul of UGI’s approach to bank connectivity. The company’s use of the EBICS (Electronic Banking Internet Communication Standard) protocol had become a significant obstacle to them improving cash transparency and automating more of their payment processes. This was due to EBICS only allowing file exchanges with banks in a limited number of UGI European countries (France). Payments and transactions that extended beyond these geographies had to be managed separately and manually.  

“We had Kyriba but because it was only connected with our French banks with EBICS it wasn’t able to serve all of the countries we operate in,” Nuno explains. “We recognized that going forward, to get the full software benefits from Kyriba, to reduce operational risk, and to get more visibility and control over our cashflows, we needed to connect our treasury management system to all of our main banks. These were the drivers for us to start looking for a new bank connectivity solution.”

The transition to Swift 

The Swift (Society for Worldwide Interbank Financial Telecommunication) banking system offered broader international coverage, supporting connectivity to all of UGI’s core banks across Europe and in the US. But making the transition to Swift was a substantial undertaking, requiring a multi-phased implementation to bring all of the company’s banks and payments onto the new protocol. Recognizing the knowledge of Swift and resource to oversee such a large project wasn’t available in their internal treasury team of 6 people, UGI appointed Zanders to bring the technical knowledge and capacity to support with the project. 

“In this day and age, where a lot of technology is standard technology, what you get out of a TMS system depends on who helps you implement it, how much they listen to you, and how they adapt it to meet your needs,” explains Nuno. “You can find technical people easily now, but what we needed was an advisor that not only provides the technical implementation, but also helps with other areas—even if they are outside of the project. There is a lot of knowledge in Zanders about Swift and Kyriba but also about treasury in general. I knew if there were problems or issues, or even questions that fell outside of what we were implementing, there would always be someone at Zanders with knowledge in that specific area.”  

This access to wider expertise was particularly relevant given there was not only a complex implementation to consider but also the compulsory Swift security attestation and assessment. The Swift Customer Security Controls Framework (CSCF) was first published in 2017 and is updated annually. This outlines a catalogue of mandatory and advisory controls designed to protect the Swift network infrastructure by mitigating specific cybersecurity risks and minimizing the potential for fraud in international transactions. Each year, all applicable users of the banking system must submit an attestation demonstrating their level of compliance with Swift’s latest standards, which must be accompanied by an independent assessment. This spans everything from physical security of IT equipment (e.g., storage lockers for laptops) and policies around processes (e.g., payment authorization) to IT system access (e.g., two-factor authentication) and security (e.g., firewall protection). 

“We were not just talking about technical and system controls—we also needed to ensure that there were process controls in place,” says Nuno.  “We didn’t have the right skillset to undertake this security assessment ourselves and we needed consultants to help us to provide the standalone reports showing that UGI follows best practices and has controls in place. This is where the second project came in. Zanders helped ensure everything was in place - the technical parts and the process parts - for the security assessment.”  

Driving change, unlocking efficiency 

With the migration to Swift, Zanders has been able to work with the UGI team to centralize their treasury processes, unlocking new functionality and elevated performance from their Kyriba system. This has dramatically reduced the manual effort demanded from the team to administer cash management. 

“While before I was getting information from all the legal entities over Excel spreadsheets, now we don't need to reach out to our local entities to request this information – this information is centralized and automated,” explains Nuno. “This reduces operational risk because instead of uploading files or creating manual transfers within the online banking systems, it is fully integrated and so fully secured. Which also means we don't need to continuously monitor this process. This also reduces the manual activities and hence the number of FTEs required locally to run daily cash management processes. The intention was to have a secure straight-through processing of payments.” 

The Swift security assessment facilitated by Zanders, not only ensured UGI achieved the baseline standards set by Swift, it also helped to raise awareness of Kyriba and the importance of security protocols both within treasury and in the IT and Security teams. 

“Kyriba isn’t just a system to provide a report - if something goes wrong, it really goes wrong and creating this awareness was an added benefit,” says Nuno. “Doing this assessment forced us to make time to really look at our approach to security in detail. Internally, this prompted us to start discussing points that we would never normally address - simple things like closing your laptop when you’re away from your desk. This then starts to become part of the culture.”  

The initial drivers behind the project were to tackle lack of visibility in UGI’s treasury systems. These outcomes were accomplished. The transition to Swift and the integration with the business’ Kyriba system has provided the accurate, real-time visibility on cash positions Nuno and the wider treasury team needed. 

“When you don't have this visibility, you can’t manage your liquidity properly. There is value leakage and this impacts your P&L negatively on a daily basis,” says Nuno. “I now have this control and my cash position is accurate, so any excess cash or even FX exposure can be properly managed and generate higher yield to our shareholders.”  

There is a lot of knowledge in Zanders about Swift and Kyriba but also about treasury in general. I knew if there were problems or issues, or even questions that fell outside of what we were implementing, there would always be someone at Zanders with knowledge in that specific area.

Nuno Ferreira, Head of Treasury at UGI

Advice delivered with commercial empathy 

Overall, this project underscores the value of having an advisor that not only brings deep technical expertise to a project but also understands the realities of implementing treasury technology in a large, international corporate environment.  

“One of the things I really liked was the flexibility of the Zanders team,” says Nuno. “They have a very structured approach, but it’s still flexible enough to take into account things that you cannot control - the unknown unknowns. They understand that within the corporate space, and with banks, it’s sometimes hard to predict when things are going to happen.” 

This collaborative approach also unlocked additional unexpected benefits for the UGI team that will help them to continue to build on the Kyriba system performance and efficiency improvements achieved. 

“The technical capability of our team has grown with these projects,” says Nuno. “From a technical standpoint, we now understand what we can do ourselves and how to do it, and when we need to go to Zanders for help. This knowledge transfer has enabled us to do a lot of things by ourselves that before we needed to go to an external partner for help with, and at the end of the day, this saves us costs.”  

For more information, please contact our Partner Judith van Paassen. 

There are risks in undertaking any big treasury transformation project, but the risks of not adjusting to the changing world around you can be far bigger. Recognizing the potential pitfalls of relying on an outdated (and soon to be unsupported) SAP ECC system, Alliander embarked on a large-scale, business-wide transition to SAP S/4HANA. Zanders advised on the Central Payments and Treasury phase of this project, which completed in May 2024.

A future-focused perspective

Network company, Alliander, is the Netherlands’ biggest decentralized grid operator, responsible for transporting energy to households and businesses, 24 hours a day, 7 days a week. As a driving force behind the energy transition, the business is committed to investing in innovation - and this extends to how they are future-proofing their business operations as well as their contribution to shaping the sustainable energy agenda.

With their SAP ECC system approaching end of life, Alliander embarked on a company-wide switch to SAP S/4HANA. However, transitioning to SAP’s newest ERP platform is not just another simple upgrade, it’s a completely new system built on top of the software company’s own in-memory database HANA. For a business of Alliander’s size and complexity, this is a huge undertaking and a lengthy process. In order to minimize the disruption and potential risks to mission-critical business systems, Alliander has started the transition early, breaking down the implementation into a series of logically ordered phases. This means individual business areas are migrated to S/4HANA as separate projects.

“In finance, this transition started about four years ago with the transition of Central Finance to S/4—that was the first stepping stone,” says Thijs Lender, Financial Controller and Alliander’s Project Owner for SAP S/4HANA in Finance. “The second major project was Central Payments and Treasury. From a business point of view, this was the first real business finance process that we implemented on S/4.”

Central Payments and Treasury was selected as a critical gateway to moving other business areas to the new target infrastructure, for example, purchasing. It was also an ideal test ground for the migration process from ECC to S/4HANA as Alliander’s cash management processes operate in relative isolation, therefore presenting a lower risk of collateral damage across other business operations when the department moved to the new system. ''Treasury and Central Payments is at end of the of the source-to-pay and order-to-cash process—it’s paying our invoices and collecting money,” explains Guido Tabor, Digital Lead Finance at Alliander. “This means it could be moved to the target architecture without impacting other areas.”

Greenfield or brownfield?

The two most common pathways to SAP S/4HANA are a greenfield approach and a brownfield approach. For a brownfield migration a company’s existing processes are converted into the new architecture. In contrast, the greenfield alternative involves abandoning all existing architecture and starting from scratch. The second is a far more extensive process, requiring a business to often make wide-ranging changes to work practices, reengineering processes in order to optimally standardize their workflows. As Alliander’s business had changed significantly over the period of running SAP ECC, they recognized the benefit of starting from a clean slate, building their new ERP system from scratch to meet their future business needs rather than trying to retro fit their existing system into a new environment.

“We really wanted to bring it back to best practices, challenging them and standardizing our processes in the new system,” adds Thijs. “In the old way, we had some ways of working that were not standard. So, there were sometimes tough discussions, and we had to make choices in order to achieve standard processes.”

A collaborative approach

While the potential benefits of greenfield migrations are substantial, untangling legacy processes and building a new S/4HANA system from scratch is a complex undertaking. Success hinges on the collaboration of various stakeholders, including experts with understanding of the inner workings of the SAP architecture.

“From the very beginning, we didn't see this as an IT project,” Guido says. “IT was involved but also the business - in this case, finance from a functional perspective, and also Zanders and the Alliander technical team. It was really a joint collaboration.”

Zanders worked alongside Alliander right from the early stages of the Central Payments and Treasury project. ­From helping them to strategically assess their treasury processes through to planning and implementing the transition to SAP S/4HANA. Having worked with the business previously on the ECC implementation for Central Payments and Treasury, Zanders’ knowledge of Alliander’s current environments combined with their specialist knowledge of both treasury and SAP S/4HANA meant the team were well placed to guide the team through the migration process. The strength of the partnership was particularly important when the timing of the deployment was brought forward.  

“Initially we wanted to go live shortly before quarter close” Guido recalls “Then at the beginning of January, we had a discussion with our CFO about the deployment. With June 1 being very close to June 30 half year close, we decided we didn't want to take the risk of going live on this date, and he challenged us to move it back to the middle of May.”

What became really important was having a partner [Zanders] who helps you think out of the box. What's the possibility? How can you deal with it? While also being agile in supporting on fast changes and even faster solutions.

Guido Tabor, Digital Lead Finance at Alliander.

Adopting a 'Fix It' mindset

With the new deadline set, the team were encouraged by the CFO to adopt a ‘fix it’ mindset. This empowered them to take a bold, no compromises approach to implementation. For example, they were resolute in insisting on a week-long payment freeze ahead of the transition, despite pleas for leniency from some areas of the business. This confident, no exceptions approach (driven by the ‘fix it’ mentality) ensured the transition was concluded on time leading to a seamless transition of Central Payments and Treasury to the new S/4HANA system.

“This was a totally new perspective for us,” says Guido. “With go live processes or transitions like this, there will be some issues. But it didn't matter what, it didn't matter how, we just had to fix it. What became really important was having a partner [Zanders] who helps you think out of the box. What's the possibility? How can you deal with it? While also being agile in supporting on fast changes and even faster solutions.”

Central Payments and Treasury project went live on S/4HANA in May 2024, on time and with a smooth transition to the new system.

“I was really happy on the first Monday after go-live and in that early week that there weren't big issues,” Guido says. “We had some hiccups, that's normal, but it was manageable and that's what is important.”

This project represented an important milestone in Alliander’s transition to SAP S/4HANA. Successfully and smoothly shifting a core business process into the new architecture clearly progressed the company past the point of turning back. This reinforced momentum for the wider project, laying robust foundations for future phases.

To find out how Zanders could help your treasury make the transition from SAP ECC to SAP S/4HANA, contact our Director Marieke Spenkelink.

In countries worldwide, associations of credit information providers play a crucial role in registering consumer-related credits. They are mandated by regulation, operate under local law and their primary aim is consumer protection. The Dutch Central Credit Registration Agency, Stichting Bureau Krediet Registratie (BKR), has reviewed the validity of the credit registration period, especially with regards to the recurrence of payment problems after the completion of debt restructuring and counseling. Since 2017, Zanders and BKR are cooperating in quantitative research and modeling projects and they joined forces for this specific research.

In the current Dutch public discourse, diverse opinions regarding the retention period after finishing debt settlements exist and discussions have started to reduce the duration of such registrations. In December 2022, the four biggest municipalities in the Netherlands announced their independent initiative to prematurely remove registrations of debt restructuring and/or counseling from BKR six months after finalization. Secondly, on 21 June 2023, the Minister of Finance of the Netherlands published a proposal for a Credit Registration System Act for consultation, including a proposition to shorten the retention period in the credit register from five to three years. This proposition will also apply to credit registrations that have undergone a debt rescheduling.

The Dutch Central Credit Registration Agency, Stichting Bureau Krediet Registratie (BKR) receives and manages credit registrations and payment arrears of individuals in the Netherlands. By law, a lender in the Netherlands must verify whether an applicant already has an existing loan when applying for a new one. Additionally, lenders are obligated to report every loan granted to a credit registration agency, necessitating a connection with BKR. Besides managing credit data, BKR is dedicated to gathering information to prevent problematic debt situations, prevent fraud, and minimize financial risks associated with credit provision. As a non-profit foundation, BKR operates with a focus on keeping the Dutch credit market transparent and available for all.

BKR recognizes that the matter concerning the retention period of registrations for debt restructuring and counseling is fundamentally of societal nature. Many stakeholders are concerned with the current discussions, including municipalities, lenders and policymakers. To foster public debate on this matter, BKR is committed to conducting an objective investigation using credit registration data and literature sources and has thus engaged Zanders for this purpose. By combining expertise in financial credit risk with data analysis, Zanders offers unbiased insights into this issue. These data-driven insights are valuable for BKR, lawmakers, lenders, and municipalities concerning retention periods, payment issues, and debt settlements.

Problem Statement

The Dutch Central Credit Registration Agency, Stichting Bureau Krediet Registratie (BKR) receives and manages credit registrations and payment arrears of individuals in the Netherlands. By law, a lender in the Netherlands must verify whether an applicant already has an existing loan when applying for a new one. Additionally, lenders are obligated to report every loan granted to a credit registration agency, necessitating a connection with BKR. Besides managing credit data, BKR is dedicated to gathering information to prevent problematic debt situations, prevent fraud, and minimize financial risks associated with credit provision. As a non-profit foundation, BKR operates with a focus on keeping the Dutch credit market transparent and available for all.

The research aims to gain a deeper understanding of the recurrence of payment issues following the completion of restructuring credits (recidivism). The information gathered will aid in shaping thoughts about an appropriate retention period for the registration of finished debt settlements. The research includes both qualitative and quantitative investigations. The qualitative aspect involves a literature study, leading to an overview of benchmarking, key findings and conclusions from prior studies on this subject. The quantitative research comprises data analyses on information from BKR's credit register.

External International Qualitative Research

The literature review encompassed several Dutch and international sources that discuss debt settlements, credit registrations, and recidivism. There is limited research published on recidivism, but there are some actual cases where retention period are materially shortened or credit information is deleted to increase access to financial markets for borrowers. Removing information increases information asymmetry, meaning that borrower and lender do not have the same insights limiting lenders to make well-informed decisions during the credit application process. The cases in which the retention period was shortened or negative credit registrations were removed demonstrate significant consequences for both consumers and lenders. Such actions led to higher default rates, reduced credit availability, and increased credit costs, also for private individuals without any prior payment issues.

In the literature it is described that historical credit information serves as predictive variable for payment issues, emphasizing the added value of credit registrations in credit reports, showing that this mitigates the risk of overindebtedness for both borrowers and lenders.

Quantitative Research with Challenges and Solutions

BKR maintains a large data set with information regarding credits, payment issues, and debt settlements. For this research, data from over 2.5 million individuals spanning over 14 years were analyzed. Transforming this vast amount of data into a usable format to understand the payment and credit behavior of individuals posed a challenge.

The historical credit registration data has been assessed to (i) gain deeper insights into the relationship between the length of retention periods after debt restructuring and counseling and new payment issues and (ii) determine whether a shorter retention period after the resolution of payment issues negatively impacts the prevention of new payment issues, thus contributing to debt prevention to a lesser extent.

The premature removal of individuals from the system of BKR presented an additional challenge. Once a person’s information is removed from the system, their future payment behavior can no longer be studied. Additionally, the group subject to premature removal (e.g. six months to a year) after a debt settlement registration constitutes only a small portion of the population, making research on this group challenging. To overcome these challenges, the methodology was adapted to assess the outflow of individuals over time, such that conclusions about this group could still be made.

Conclusion

The research provided BKR with several interesting conclusions. The data supported the literature that there is difference in risk for payment issues between lenders with and without debt settlement history. Literature shows that reducing the retention period increases the access to the financial markets for those finishing a debt restructuring or counseling. It also increases the risk in the financial system due to the increased information asymmetry between lender and borrower, with several real-life occasions with

increased costs and reduced access to lending for all private individuals. The main observation of the quantitative research is that individuals who have completed a debt rescheduling or debt counseling face a higher risk of relapsing into payment issues compared to those without debt restructuring or counseling history. An outline of the research report is available on the website of BKR.

The collaboration between BKR and Zanders has fostered a synergy between BKR's knowledge, data, and commitment to research and Zanders' business experience and quantitative data analytical skills. The research provides an objective view and quantitative and qualitative insights to come to a well informed decision about the optimal registration period for the credit register. It is up to the stakeholders to discuss and decide on the way forward.

Treasurers dealing with multiple jurisdictions, scattered banking landscape, and local requirements face many challenges in this regard. Japan is one of the markets where bank connectivity is indeed a challenge, especially when it comes to connecting with local banks.

Traditional options

The initial reaction from treasurers not familiar with local market conventions might be to seek connection through the SWIFT network. However, in Japan only a handful of banks offer SWIFT connectivity. Second natural choice is the Host-to-Host connection (H2H). This is the classic File Transfer Protocol (FTP), or preferably the secured version (sFTP) setup. Some will say old fashioned, rather than classic, since it is as old as the internet. Nonetheless, it is still popular, and frankly quite often the best fit for the purpose. However, if there are dozens of local banks to connect to, it can be difficult to be expected to connect to each of them with a direct H2H. While this could be technically feasible, it would be nothing short of a nightmare to maintain, with the initial setup being time-consuming in the first place.

Other solutions

There is an answer, or should we rather say ANSER, to this question. ANSER, an abbreviation of ‘Automatic answer Network System for Electrical Request’, is a data transfer system provided by NTT Data Corporation since 1981, which links banks with firms.[1] ANSER then is a way to connect a corporate client to the bank. The system has been around for a while, and together with Cash Management Service (CMS) centers it is a part of the so-called Firm Banking solution in Japan. Since its inception, ANSER offered a wider range of services, through which corporates could access their banking information. Among the offered channels are telephone, fax, firm banking terminal, and personal computer. With the ever-increasing need for speedy and accurate information exchange, the more traditional ways, such as telephone and fax, gave way to the more sophisticated and automated solution, namely eBAgent.

eBAgent making use of API

The said eBAgent is a proprietary middleware platform offered by NTT Data. The solution establishes an automated connection with banks through the above-mentioned ANSER network. In short, eBAgent offers a gateway to multiple local banking partners in Japan utilizing the ANSER network. The remaining part for the corporate is then to establish a connection between the TMS and eBAgent, and secure appropriate contracts with the eBAgent provider, NTT Data, as well as the banks.

As for the connection protocol, the choice is between the classic sFTP, or Application Programming Interface (API). The latter has the real-time advantage, with less lag between the pick-and-drop sFTP connection. API seems to be a choice for an increasing number of corporates these days in this area. What is also interesting, apart from the API connection, are the supported formats for transfers and bank statements. In addition to the local Japanese ZENGIN, the protocol also offers data transmission in a proprietary XML format. This XML format is actually quite simple, with a very limited amount of tags. In addition to this, unlike the ISO 20022 standard, it contains only one level of tags, without the nesting function. Depending on the exact ERP/TMS infrastructure, eBAgent can also provide conversion services from and to the IS 20022 standard. As for the connection to eBAgent, the whole setup seems easier said than done. However, some TMS providers, in response to the demand from the market, started offering off-the-shelf solutions for a plug-and-play connection to eBAgent. Kyriba and Reval already offer it, with SAP set to roll out its solution on the S/4HANA and Multi Bank Connectivity (MBC) platform in early 2024.

Various ways to connect TMS / ERP with banks in Japan

How to connect with local banks in Japan?

It all depends on the exact landscape of banks and systems. It may just as well turn out that a hybrid solution would be best suited. There is no one-size fits all, as each corporate is unique, thus careful consideration and design will be paramount for a stable and reliable connection with banks. One thing is certain, solutions that involve obtaining bank statement information and enact payments by telephone or fax are simply no longer sufficient. In this day and age, when much sensitive information is exchanged between corporates and banks, having a reliable, automated solution is indispensable.

If you would like to know more, do not hesitate to get in touch with Michal Zelazko via m.zelazko@zandersgroup.com or via + 81 (0) 8 3255 9966

[1] https://www.boj.or.jp/en/paym/outline/pay_boj/pss0305a.pdf

When the multinational pharma company Sanofi set out to implement a global payment factory based on SAP, the sheer size and scope of the project made it seem a Herculean task. But with meticulous planning, the right expertise and skilled team-building, the treasury team achieved a very successful outcome.

After a decade of expansion through M&A, Sanofi, the pharmaceuticals company headquartered in Paris, France, with part of its group treasury – the in-house bank team – based in Brussels, decided it was time to bring greater centralization to its payments function. With sales of €37 billion in 2015 and operations in more than 100 countries, the company, active in the research & development, manufacturing, and marketing of pharmaceutical drugs, vaccines, and animal health products, began its journey towards a global payment factory based on SAP.

Need for control and security

This decision was part of an overall initiative to increase centralization in the finance function, according to the company’s head of in-house bank, finance & treasury, Wolfgang Weber. He says: “The reasons for the project went beyond the pharmaceutical industry – the need for control over cash flow, greater security and the pressure for increased efficiency are global trends.”

He explains that Sanofi hoped to gain several benefits from the centralization project, including: lower bank fees and bank connectivity cost; greater transparency over outgoing payments; and an increased level of compliance and control.

Following a selection process to appoint an external consultant, Zanders was asked to work on the SAP global payment factory project at the end of 2012. Mark van Ommen, director at Zanders, explains that the firm used its proprietary design methodology, based on best market practices and years of implementation experience, to design the global payment factory, which included a ‘payments on behalf of’ (PoBo) structure.

Sanofi’s decentralized payments structure presented risks that required attention. The company operated with multiple payment processes, leading to inefficiencies and potential security vulnerabilities. This highlighted the need for global standards and a centralized, harmonized payments system. The project involved issuing a request for proposals (RfP) to select four banking partners.

PoBo and PiNo

The global SAP-based payment factory, currently implemented in the largest countries in Europe and with roll-out almost complete in the US, includes PoBo functionality. This allows Sanofi to channel its payments through a single legal entity, which has obvious benefits for a multinational with a presence in numerous countries. The structure enables treasury to rationalize its bank accounts and simplify cash management structures. Zanders consultant Pieter Sermeus explains that PoBo was a key factor for Sanofi in achieving efficiency and business security. He says: “Payments are now routed to one or (in the case of the euro) very few centralized bank accounts, which are mostly in-country so that cross-border fees can be avoided.”

However, PoBo isn’t practical or possible in some jurisdictions with more complex payments environments, so another solution was needed. Together, Sanofi and Zanders worked on what was internally known as the ‘central forwarding model’, which in effect was a ‘Payments in the Name of’ (PiNo) structure. This model is mainly used in countries with monetary restrictions, such as China, Malaysia and Thailand, as well as in African and Latin American and some eastern European countries. Such countries require the payee to initiate payments from its own bank account. While this does not result in a reduction in the number of bank accounts, the company is able to process payments through a single platform, which brings compliance/security benefits and also allows the harmonization of processes to an extent that makes them more efficient.

The additional security provided by the PiNo structure means there are compelling reasons to extend the use of the payment factory to more countries. Sanofi is currently working on implementing a pilot PiNo structure in Turkey. Weber adds: “Based on Zanders expertise they were well equipped to help us on setting up and designing the PiNo structure.”

Knowledge tranfer and team building

One of the key parts of the project was the transfer of knowledge from the small group of consultants appointed to work on the project to the members of staff in Sanofi’s central treasury and IT departments. Laurens Tijdhof, a partner at Zanders, explains: “Our main goal was to transfer knowledge to key members of staff. We set up training sessions and provided training on the job. This enabled them to really develop their in-house capabilities.”

During the project, there was an emphasis on collaboration between the consultant and the client and preparing Sanofi to become self-sufficient.

Zanders used a ‘train the trainer’ approach, providing training in this way for upwards of 30 key members of staff. The training aspect of the project was a success – an outcome that Weber ascribes in part to the expertise and teaching methods and in part to having the ‘right people’ on Sanofi’s team. He points out that the timing of the training was also important: “We needed to transfer knowledge and IT/SAP expertise to the different departments. This was valuable from two angles: it guarantees stability of the operations and reduces consulting costs over time. The timing of this was crucial because, in a project of this size and scope, you spend a lot of time simply ‘firefighting’ – and you forget about the training. This didn’t happen and Zanders did a good job.” While training was an important part of the project, Sanofi also had to focus on building up its internal team. Weber says: “When hiring for the project, we looked for project management skills and SAP In-House Cash technical skills. We found some very good people. We looked internally – Sanofi has 110,000 employees – as well as externally. We now have a team of 22 hard-working, committed experts. It took a while to get the right team together but I am very pleased with the result.”

Handling the complexity

The nature of the project and the sheer size of Sanofi’s organization meant that planning and coordinating the approach to the global payment factory implementation was no mean feat. Weber says: “It’s easy to underestimate the complexity and size of such a project in such a large organization. The major difficulty is to coordinate internal resources so that people don’t get lost in the complexity of the project.”

There were three defining factors to the project, namely: the size of Sanofi’s organization; the geographical scope of the project (worldwide); and the complexity of Sanofi’s requirements.

Weber underlines that, along with meticulous planning and a very capable team, a flexible approach is also needed to manage an endeavor of this size: “The initial roadmap needs to be adjustable because you may have to reset priorities. Resources may have to be shifted to another area of the project.”

Van Ommen agrees that taking care of the details can be one of the most important aspects of such a complex project: “Sanofi did this really well and they recognized their need for change management – they took a realistic view on the planning and timelines. Wolfgang and his colleague Isabelle really brought the project to the ground, providing a lot of practical input.”

Weber adds: “It’s important to have proper project governance, including senior management support up to board level, in our case represented by the group CFO.”

Security and compliance

The implementation of the payment factory also enables Sanofi to keep tighter control and visibility over its global payments. Regulations around payments are continually changing as problems and conflicts arise or dissipate in different parts of the world. Companies need to be able to react to the ever-evolving regulatory environment. Having a global payment factory in place helps to address these challenges. Cybercrime is also an increasing problem for treasury and the payment factory enables corporates to react quickly, with a centralized, secure platform.

Weber notes that the project will also help his company to keep abreast of regulatory requirements for monitoring third parties: “The implementation of ‘restricted party screening’ – an essential compliance requirement to ensure that Sanofi does not make payments to blacklisted parties – was added to the team’s responsibilities in late 2014. Although it covers master data screening and therefore is only partly related to the payment factory activities, in the Sanofi context the in-house bank team has been identified as the most appropriate place in the organization to both implement the screening as well as carry out the ongoing operations. I believe that we will hear a lot more about restricted party screening in the corporate world going forward.”

Successful outcome

Since the global payment factory was rolled out in Europe and the US, it now processes more than 30,000 fully automated payments each month, from more than 50 affiliates, with an equivalent value of more than €1 billion per month, in 30 different currencies. To help reduce the number of payment rejections, Sanofi also centralized the management of the bank key tables: the master data is constantly updated to avoid rejection due to wrong bank master data.

Weber concludes by expressing his satisfaction with the outcome of the project: “We have really succeeded in implementing a sustainable process that is safer, cheaper, more efficient, providing higher transparency, and which we can roll out across our different areas of operation.”

Would you like to know more about the challenges of implementing a global payment factory? Contact us.

Canada’s largest railway set out to simplify its payments and improve reconciliation with enhanced remittance data, while also reducing IT support costs. The project will run parallel with the Canadian Payments Association’s (CPA’s) initiative to modernize the system and introduce ISO 20022 formats. So, following a thorough request for information (RFI) and request for proposal (RFP) process with the banks, the Canadian National Railway Company (CN) now has its future vision for bank connectivity and global-standard payments, as well as a multi-year roadmap to establish best practices.

‘North America’s Railroad’

CN operates approximately 20,000 route miles of transcontinental railroad from Vancouver in the west to Halifax in the east, and all the way down to New Orleans on America’s southern coast. Its market cap of US$43bn (C$57bn), as of February 2016, makes ‘North America’s Railroad’, as it’s known, the biggest rail company in Canada in terms of both network and value. The majority of business, consisting of freight, takes place in North America, but CN’s reach extends much further, with operations and transport services in Asia and South America.

The group treasury, centralized in Montreal, takes care of cash management functions and does all FX hedging and cash pooling with the two main operating currencies, Canadian dollar and US dollar. This business model meant that CN needed a bank with a strong presence in the US and Canada, as well as an international footprint. In 2015, therefore, the company started to look into streamlining its banking relationships.

European perspective on Canada

Zanders was asked to provide guidance on both the RFI and RFP phases of the bank selection process. The aim was to choose one or two relationship banks for domestic and global operations. Due to the specifics of the Canadian market, the company chose one bank for its North American operations and one for the rest of the world. Zanders was an active ‘sparring’ partner in this process and supported CN throughout the RFP, during the evaluation of responses, decision-making, and selection phases.

The vision

Paul Tawel, who was senior manager of treasury operations at CN during the RFI and RFP process, explains how the project began: “Our main goal was to get a vision of best practices in different areas of treasury, so it originally started as a ‘quest for knowledge’. On our side, we had a lot of good processes in place but we wanted to learn more about protocols for bank communication.”

The project group at CN went through a questioning process, looking at all outsourced services and how it communicated with its banks. While they recognized that many of the protocols in place were already working well, there were areas that could be improved. Tawel, who has now retired from CN, adds: “We really wanted an internal vision and we now have that – we have put in place a cross-functional task force, including treasury, accounting, procurement, marketing, and IT to implement the vision and roadmap that we have developed. We have a timeline of three years to put these changes into practice. There are separate plans for AP, collections, and treasury. On the payables side, the vision can be implemented quite quickly.”

The job is ongoing, and CN is currently drawing up an action plan for three areas: payments and collections, payment format harmonization, and bank connectivity.

World-class payments and collections

During the research phase, which took place in mid-2015, running alongside the bank RFI and RFP, it became apparent that there were areas of payments and collections that could be optimized. Cheques are still a mainstay of CN’s collections in both Canada and the US, representing 43 per cent and 62 per cent of collections volume, respectively. Meanwhile, on the payments side, there was far less reliance on cheques (seven per cent of volume of payments in Canada, 10 per cent in the US), although there was still an opportunity to reduce volumes. Another factor on the collections side was the wide variability of remittance data sent by customers. “We want to eliminate cheques as much as possible. However, in North America, they are part of the culture, and suppliers demand them. The right communications strategy will be a key part of successfully encouraging suppliers and customers to accept another digital payment,” says Tawel.

Another important consideration was the unique payments environment in Canada, explains Mark van Ommen, associate director at Zanders: “We had to take the nature of the Canadian payments system into account. One of the challenges is that they are still very much cheque-driven, mainly on the receivables side, so that is a big difference in the Canadian environment.”

CN’s overall vision for payments and collections is to rationalize payment/collection methods and reduce cheques in receivables, while also increasing the level of pre-authorized debits. On the outbound payables side, as well as further reducing cheque usage, it was decided to leverage SAP technology.

Formats harmonization

CN also wished to simplify the way it communicates transaction data with its banks. The company currently uses a large number of formats, some of which were customized, and this increases payment and IT costs. Moreover, the Canadian clearing system doesn’t permit payment messages to contain all the data necessary, so that separate files are required for remittance.

However, the Canadian Payments Association (CPA) has now launched an initiative to modernize Canada’s core payments infrastructure, gradually replacing multiple formats – often based on Electronic Data Interchange (EDI) formats – with the international ISO 20022 standard payment formats. The design phase of the initiative is expected to be completed by the end of 2016, but implementation will take several years. The CPA will also adopt Extended Remittance Information (ERI), which will enable the reconciliation of payment remittances to be automated, saving companies such as CN significant resources.

Despite the CPA’s initiative to introduce standardized XML payment formats by 2020, CN had to consider the best option in the current environment. They chose to adopt CGI payment formats that provide combined payment and remittance info, enabling more efficient reconciliation and less complexity from an IT point of view. Van Ommen adds: “We were able to provide advice based on our experience of European XML standardized payment formats. Although the non-standard payments environment in Canada is a challenge, the CPA is intent on bringing this in line with global standards.”

Bank connectivity

The multiple payment format types, along with the company’s multiple host-to-host interfaces with various e-banking systems, mean there is a raised cost in terms of IT support – the so-called ‘cost of ownership’. The more systems and types of format are used, the greater the cost of making any modification to each system. CN wanted more independence.

Zanders partner Judith van Paassen worked closely with CN on this issue. She explains that: “The ‘cost of ownership’ of maintaining the current multiple types of file formats and bank connectivity was too high. CN needed more standardization to reduce this cost and to ‘future-proof’ its treasury and payments operations. But first, treasury and IT needed to convince other departments that this would be both necessary and beneficial.”

The solution put forward in CN’s vision and roadmap was to simplify the systems landscape and number of interfaces. CN already had Swift’s Alliance Lite2.0 in place but this was only used for treasury payments and wires and, in any case, was unsuitable for the volume of commercial payments for a company of CN’s size.

Tawel explained that the aim is to adopt a standardized, bank-agnostic communication channel for all bank communications: “We want to leverage our Swift communication platform, but in future we may need a Swift Service Bureau. This will take time, and as we are already on Swift, we see it as primarily an IT project.”

A communication strategy was needed across the organization to get all departments aligned with the best practice identified by treasury and IT in the areas of bank connectivity and payment formats harmonization. Van Paassen adds: “We advised the treasury and IT teams to view this project as a long-term strategy. It was a challenge to get departments such as A/R and A/P to support this vision, but CN’s treasury succeeded.”

CN was vindicated in its long-term strategy for banking relationships, bank connectivity, and payment formats. It has already been able to reduce its banking fees significantly via the bank RFI and RFP phase and in future expects to improve security and simplify the process of making commercial payments.

Vision and roadmap

Having already selected two relationship banks and with its vision for future bank connectivity and payments firmly established, CN is now planning the initial steps along its roadmap, which will take it up to 2021. In early 2016, treasury began looking at document solution design and payment formats. Van Paassen says: “The challenge will be in the implementation, but we are confident that we helped treasury see the bigger picture, which will enable them to make the necessary changes.”

A factor that was vital to the project’s success was getting buy-in from several different teams. While some departments initially questioned the need for the proposed changes, they reached a consensus, helped by the objective, fact-based methodology used during the RFI and RFP phase and the bank communication standardization project. Irene Kwan, senior manager, treasury operations, at CN, said that at the end of the project, treasury’s vision was shared and supported across all departments. She says: “The project was well received in the company. Everyone was on board and everyone was clear about what we wanted to achieve. In my view, it would be really beneficial to carry out projects on best practices more frequently.”

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A transfer to a new system is usually a complicated and time-consuming process. This particularly rings true for a company like GlobalCollect, which processes hundreds of thousands of online transactions for banks all over the world on a daily basis. How did this payment service provider (PSP) tackle the complicated challenge of adopting SWIFT as its new system?

In 1994, the current GlobalCollect was set up as a division within the old TPG Post company to ensure a well-organized payment system for parcel deliveries. Back then it was dealing with offline payments, such as cash on delivery, but when digitalization took off, the postal company decided to go online with its payment services. Now, GlobalCollect is a fast-growing company, independent of TPG Post, which processes worldwide online payments for retailers operating internationally. This PSP offers them one platform so that they do not have to deal with the complexity of various foreign banks and their payment systems.

Connections and conversions

Michael Roos, vice president of merchant boarding at GlobalCollect, says that the market for PSPs has quickly become ‘professionalized’. “The industry has developed enormously over the past 10 years, also as far as legal and statutory regulations are concerned. We fall under the supervision of the Dutch central bank, De Nederlandsche Bank, and are affected by the EU’s Payment Services Directive (PSD). Companies who conduct business abroad, such as airlines or online retailers, need to receive payments from abroad. That adds to the complexity as it is a huge challenge setting up all the connections. You not only have to deal with the local banker, but also with all sorts of foreign banks.” A PSP not only has all those necessary local connections but is able to offer the client various payment methods via one point of access. “As a company you then have not only the local payment method, such as iDeal in the Netherlands, but also those in other countries where you have customers.”

Since GlobalCollect processes many millions of transactions each month, it is able to compete on price – something a single company cannot do with only several hundred transactions. Customers enjoy a more favorable rate – despite working with an intermediary – than they would with a bank. Besides dealing with the complexity of connections, GlobalCollect’s clients enjoy large-scale benefits for other services, such as currency conversion. “Collection of foreign currency can be outsourced,” Roos adds. “If you get paid in Brazilian real, which is not freely convertible, we do the conversion. Clients then have quicker access to their money in their own currency.”

New for corporates

 When GlobalCollect was starting up, it began with a few bank interfaces. “But after about 15 years we had more than 50 interfaces within an out-of-date infrastructure. In order to bring this infrastructure up to a technological standard that was market compliant, we decided that SWIFT was the best solution. But to get started we didn’t have the required know-how and manpower. So when we looked around for a company with plenty of expertise we hit on Zanders. I had spoken to Sander van Tol about three or four years ago and remembered that Zanders knew a lot about SWIFT. In the spring of 2012 I met Jill Tosi and in October the project kicked off.” Zanders taught GlobalCollect about the possibilities and impossibilities of SWIFT. “And Zanders was the right choice,” says Roos. Originally, SWIFT was a connectivity channel for banks, and since 2000 it has also become available to corporates. When GlobalCollect decided to start using SWIFT’s Alliance Lite2, a new cloud-based SWIFT communication tool, it was new to the market. Roos says: “As one of the first adopters, we were working with a completely new SWIFT system.

The interfaces particularly were new and unknown.” GlobalCollect’s reason for acquiring SWIFT was twofold. On the technical side, the number of interfaces had to be reduced. On the other hand, SWIFT had to standardize formats and the provision of information. Roos adds: “In order to be able to profit from the systems we had to have good information. Good information is standardized in IT, and so we ended up with SWIFT. The way information was shared with banks had to be standardized as much as possible. This was our starting point with a kick-off on various workflows.”

Fully-fledged tool

The challenge for GlobalCollect was mainly in connecting to banks. The old interfaces had to be replaced with new ones. Whereas SWIFT has everything standardized, it appeared that the banks did not. Roos explains: “Banks who want to connect via SWIFT each send their own technical implementation document; where one sends a single Excel-sheet with technical details, another sends a 20-page contract.” Roos noticed that SWIFT, banks, and corporations were not necessarily used to dealing with each other in this context. “Particularly outside of developed markets, the banks have not come that far yet and there is a good deal of indifference. This makes project-based work and estimation of turnaround times difficult. We approached a number of banks and looked to see which ones reacted the fastest and in the most professional way, and we started with them. This is not what you would normally do. I think we got off to a good start, but the migration path will take a number of months to complete.” The time required for testing individual connections and carrying out test cases can be very long. Roos says: “SWIFT is a fully-fledged tool and the parties used to working with it are large financial institutions. For us as a young, upcoming, dynamic industry, we really have to adapt to the banks – it’s a completely different culture.”

Change of format

With the huge amount of transactions involved, a transfer to another system is risky. “Therefore we ran the two systems in parallel during the migration,” he explains. “We also deliberately decided to link the largest parties first, leaving the legacy system running as we integrated SWIFT into the organization.” This means that a back-up is not necessary. “SWIFT is a unique system, with relatively large numbers of redundancy channels and recovery scenarios, so that it can guarantee unique processing.”

According to Zanders consultant Jill Tosi, this is because SWIFT is owned by the banks: “They have so much trust in their system that they assume responsibility for payments. SWIFT has such a robust system with minimal failure percentages, that customers can put complete trust in its information process.”

At the time of transferring to the new system, GlobalCollect had a lot of IT projects on the go. The SWIFT implementation was also part of a much larger project, Process Excellence, where several systems had to be modernized in order to meet market standards. “There was a lot of pressure on the IT department at GlobalCollect,” Tosi says. “The electronic banking systems were all stand-alone, i.e. not integrated into the daily processes. There were about 50 electronic banking systems, and someone had to log into each one separately with a different token each day. For one or two that is feasible, but 50 is too many.” And Roos adds: “The whole idea was to continue with significantly fewer interfaces – preferably one. And we are still very busy with that.”

While GlobalCollect was carrying out the migration to the new system, the banks were right in the middle of the SEPA migration. “That had consequences for the introduction of new formats within SWIFT,” Roos says. “We had to make a decision: do we go for MT940, the old standard for bank statements, or do we go for CAMT 053, the XML-successor of MT940? XML is a future-proof format but is not offered by all banks. As a consequence of SEPA, some banks will have to be migrated twice: firstly to MT940 and then to XML. An interesting aside is that where SWIFT offers the version 2.0 solution to corporations, many banks are just not ready for SWIFT connectivity with businesses. A number of large Anglo-Saxon banks have indicated that MT940 interfaces are not yet available for a direct connection to SWIFT Alliance Lite2 with corporates.”

Business as usual

The SWIFT migration to large banks is over and this year other banks will follow. After the first three banks, Zanders withdrew from the process. "It is now more like business as usual,” says Roos. "Zanders not only did the implementation, but was also responsible for the learning curve in our company. We have become self-supporting as far as SWIFT is concerned.” After the SWIFT project, Zanders also helped GlobalCollect with the selection and implementation of a new treasury management system (TMS) and a reconciliation tool. "Messages coming from SWIFT could be uploaded to our TMS straight away,” Roos says. "The same goes for our reconciliation system. If we didn’t have the standardization of the SWIFT system, it would have been much harder. In the banks’ own technical file formats there is a degree of standardization, but it’s not complete. It is clear to us that getting the standard functionality working would not have been possible without the successful implementation of SWIFT Alliance Lite2.”