In this article, we explore this stablecoin payments trial, examine the advantages of digital currencies and how they could provide a matching solution to tackle the hurdles of international transactions.  

Cross-border payment challenges 

While cross-border payments form an essential part of our globalized economy today, they have their own set of challenges. For example, cross-border payments often involve various intermediaries, such as banks and payment processors, which can result in significantly higher costs compared to domestic payments. The involvement of multiple parties and regulations can lead to longer processing times, often combined with a lack of transparency, making it difficult to track the progress of a transaction. This can lead to uncertainty and potential disputes, especially when dealing with unfamiliar payment systems or intermediaries. Last but not least, organizations must ensure they meet the different regulations and compliance requirements set by different countries, as failure to comply can result in penalties or delays in payment processing. 

Advantages of digital currencies 

Digital currencies have gained significant interest in recent years and are rapidly adopted, both globally and nationally. The impact of digital currencies on treasury is no longer a question of ‘if’ but ‘when’, as such it is important for treasurers to be prepared. While we address the latest developments, risks and opportunities in a separate article, we will now focus on the role digital currencies can play in cross-border transactions.  

The notorious volatility of traditional crypto currencies, which makes them less practical in a business context, has mostly been addressed with the introduction of stablecoins and central bank digital currencies. These offer a relatively stable and safe alternative for fiat currencies and bring some significant benefits. 

These digital currencies can eliminate the need for intermediaries such as banks for payment processing. By leveraging blockchain technology, they facilitate direct host-to-host transactions with the benefit of reducing transaction fees and near-instantaneous transactions across borders. Transactions are stored in a distributed ledger which provides a transparent and immutable record and can be leveraged for real-time tracking and auditing of cross-border transactions. Users can have increased visibility into the status and progress of their transactions, reducing disputes and enhancing trust. At a more advanced level, compliance measures such as KYC, KYS or AML can be directly integrated to ensure regulatory compliance. 

SAP Digital Currency Hub 

Earlier this year, SAP launched its Digital Currency Hub as a pilot to further explore the future of cross-border transactions using crypto or digital currencies. The Digital Currency Hub enables the integration of digital currencies to settle transactions with customers and suppliers. Below we provide a conceptual example of how this can work. 

1. Received invoices are recorded into the ERP and a payment run is executed. 
2.  The payment request is sent to SAP Digital Currency Hub, which processes the payment and creates an outgoing payment instruction. The payment can also be entered directly in SAP Digital Currency Hub. 
3. The payment instruction is sent to a crypto exchange, instructing to transfer funds to the wallet of the supplier. 
4. The funds are received in the supplier’s wallet and the transaction is confirmed back to SAP Digital Currency Hub.  

In a second example, we have a customer paying crypto to our wallet: 

1. The customer pays funds towards our preferred wallet address. Alternatively, a dedicated wallet per customer can be set up to facilitate reconciliation. 
2. Confirmation of the transaction is sent to SAP Digital Currency Hub. Alternatively, a request for payment can also be sent. 
3. A confirmation of the transaction is sent to the ERP where the open AR item is managed and reconciled. This can be in the form of a digital bank statement or via the use of an off-chain reference field. 

Management of the wallet(s) can be done via custodial services or self-management. There are a few security aspects to consider, on which we recently published an interesting article for those keen to learn more. 

While still on the roadmap, SAP Digital Currency Hub can be linked to the more traditional treasury modules such as Cash and Liquidity Management or Treasury and Risk Management. This would allow to integrate digital currency payments into the other treasury activities such as cash management, forecasting or financial risk management. 

Conclusion  

With the introduction of SAP Digital Currency Hub, there is a valid solution for addressing the current pain points in cross-border transactions. Although the product is still in a pilot phase and further integration with the rest of the ERP and treasury landscape needs to be built, its outlook is promising as it intends to make cross-border payments more streamlined and transparent. 

Additionally, business partners are essential in SAP for recording information related to securities issues, such as shares and funds. 

The SAP Treasury Business Partner (BP) serves as a fundamental treasury master data object, utilized for managing relationships with both external and internal counterparties across a variety of financial transactions; including FX, MM, derivatives, and securities. The BP master data encompasses crucial details such as names, addresses, contact information, bank details, country codes, credit ratings, settlement information, authorizations, withholding tax specifics, and more. 

Treasury BPs are integral and mandatory components within other SAP Treasury objects, including financial instruments, cash management, in-house cash, and risk analysis. As a result, the proper design and accurate creation of BPs are pivotal to the successful implementation of SAP Treasury functionality. The creation of BPs represents a critical step in the project implementation plan. 

Therefore, we aim to highlight key specifics for professionally designing BPs and maintaining them within the SAP Treasury system. The following section will outline the key focus areas where consultants need to align with business users to ensure the smooth and seamless creation and maintenance of BPs. 

Structure of the BPs: 

The structure of BPs may vary depending on a corporation's specific requirements. Below is the most common structure of treasury BPs: 

Group BP – represents a parent company, such as the headquarters of a bank group or corporate entity. Typically, this level of BP is not directly involved in trading processes, meaning no deals are created with this BP. Instead, these BPs are used for: a. reflecting credit ratings, b. limiting utilization in the credit risk analyzer, c. reporting purposes, etc. 

Transactional BP – represents a direct counterparty used for booking deals. Transactional BPs can be divided into two types: 

   - External BPs – represent banks, financial institutions, and security issuers. 

   - Internal BPs – represent subsidiaries of a company. 

Naming convention of BPs 

It is important to define a naming convention for the different types of BPs, and once defined, it is recommended to adhere to the blueprint design to maintain the integrity of the data in SAP. 

Group BP ID: Should have a meaningful ID that most business users can understand. Ideally, the IDs should be of the same length. For example: ABN AMRO Group = ABNAMR or ABNGRP, Citibank Group = CITGRP or CITIBNK. 

External BP ID: Should also have a meaningful ID, with the addition of the counterparty's location. For example: ABN AMRO Amsterdam – ABNAMS, Citibank London – CITLON, etc. 

Internal BP ID: The main recommendation here is to align the BP ID with the company code number. For example, if the company code of the subsidiary is 1111, then its BP ID should be 1111. However, it is not always possible to follow this simple rule due to the complexity of the ERP and SAP Treasury landscape. Nonetheless, this simple rule can help both business and IT teams find straightforward solutions in SAP Treasury. 

The length of the BP IDs should be consistent within each BP type. 

Maintenance of Treasury BPs 

1. BP Creation: 

Business partners are created in SAP using the t-code BP. During the creation process, various details are entered to establish the master data record. This includes basic information such as name, address, contact details, as well as specific financial data such as bank account information, settlement instructions, WHT, authorizations, credit rating, tax residency country, etc. 

Consider implementing an automated tool for creating Treasury BPs. We recommend leveraging SAP migration cockpit, SAP scripting, etc. At Zanders we have a pre-developed solution to create complex Treasury BPs which covers both SAP ECC and most recent version of SAP S/4 HANA. 

2. BP Amendment: 

Regular updates to BP master data are crucial to ensure accuracy. Changes in addresses, contact information, or payment details should be promptly recorded in SAP. 

3. BP Release: 

Treasury BPs must be validated before use. This validation is carried out in SAP through a release workflow procedure. We highly recommend activating such a release for the creation and amendment of BPs, and nominating a person to release a BP who is not authorized to create/amend a BP.  
BP amendments are often carried out by the Back Office or Master Data team, while BP release is handled by a Middle Office officer.  

4. BP Hierarchies: 

Business partners can have relationships as described, and the system allows for the maintenance of these relationships, ensuring that accurate links are established between various entities involved in financial transactions. 

5. Alignment: 

During the Treasury BP design phase, it is important to consider that BPs will be utilized by other teams in a form of Vendors, Customers, or Employees. SAP AP/AR/HR teams may apply different conditions to a BP, which can have an impact on Treasury functions. For instance, the HR team may require bank details of employees to be hidden, and this requirement should be reflected in the Treasury BP roles. Additionally, clearing Treasury identification types or making AP/AR reconciliation GL accounts mandatory for Treasury roles could also be necessary.  

Transparent and effective communication, as well as clear data ownership, are essential in defining the design of the BPs. 

Conclusion 

The design and implementation of BPs require expertise and close alignment with treasury business users to meet all requirements and consider other SAP streams.  

At Zanders, we have a strong team of experienced SAP consultants who can assist you in designing BP master data, developing tools to create/amend the BPs meeting strict treasury segregation of duties and the clients IT rules and procedures. 

But the adoption of ISO 20022 XML messaging goes beyond SWIFT’s adoption in the interbank financial messaging space – SWIFT are currently estimating that by 2025, 80% of the RTGS (real time gross settlement) volumes will be ISO 20022 based with all reserve currencies either live or having declared a live date. What this means is that ISO 20022 XML is becoming the global language of payments. In this fourth article in the ISO 20022 series, Zanders experts Eliane Eysackers and Mark Sutton provide some valuable insights around what the version 9 payment message offers the corporate community in terms of richer functionality.  

A quick recap on the ISO maintenance process?

So, XML version 9. What we are referencing is the pain.001.001.09 customer credit transfer initiation message from the ISO 2019 annual maintenance release. Now at this point, some people reading this article will be thinking they are currently using XML version 3 and now we talking about XML version 9. The logical question is whether version 9 is the latest message and actually, we expect version 12 to be released in 2024. So whilst ISO has an annual maintenance release process, the financial industry and all the associated key stakeholders will be aligning on the XML version 9 message from the ISO 2019 maintenance release. This version is expected to replace XML version 3 as the de-facto standard in the corporate to bank financial messaging space.

What new functionality is available with the version 9 payment message?

Comparing the current XML version 3 with the latest XML version 9 industry standard, there are a number of new tags/features which make the message design more relevant to the current digital transformation of the payment’s ecosystem. We look at the main changes below:

• Proxy: A new field has been introduced to support a proxy or tokenisation as its sometimes called. The relevance of this field is primarily linked to the new faster payment rails and open banking models, where consumers want to provide a mobile phone number or email address to mask the real bank account details and facilitate the payment transfer. The use of the proxy is becoming more widely used across Asia with the India (Unified Payments Interface) instant payment scheme being the first clearing system to adopt this logic. With the rise of instant clearing systems across the world, we are starting to see a much greater use of proxy, with countries like Australia (NPP), Indonesia (BI-FAST), Malaysia (DuitNow), Singapore (FAST) and Thailand (Promptpay) all adopting this feature.
• The Legal Entity Identifier (LEI): This is a 20-character, alpha-numeric code developed by the ISO. It connects to key reference information that enables clear and unique identification of legal entities participating in financial transactions. Each LEI contains information about an entity’s ownership structure and thus answers the questions of 'who is who’ and ‘who owns whom’. Simply put, the publicly available LEI data pool can be regarded as a global directory, which greatly enhances transparency in the global marketplace. The first country to require the LEI as part of the payment data is India, but the expectation is more local clearing system’s will require this identifier from a compliance perspective.
• Unique End-to-end Transaction Reference (commonly known as a UETR): This is a string of 36 unique characters featured in all payment instruction messages carried over the SWIFT network. UETRs are designed to act as a single source of truth for a payment and provide complete transparency for all parties in a payment chain, as well as enable functionality from SWIFT gpi (global payments innovation)¹, such as the payment Tracker.
• Gender neutral term: This new field has been added as a name prefix.
• Requested Execution Date: The requested execution date now includes a data and time option to provide some additional flexibility.
• Structured Address Block: The structured address block has been updated to include the Building Name.

In Summary

Whilst there is no requirement for the corporate community to migrate onto the XML version 9 message, corporate treasury should now have the SWIFT ISO 20022 XML migration on their own radar in addition to understanding the broader global market infrastructure adoption of ISO 20022. This will ensure corporate treasury can make timely and informed decisions around any future migration plan.

Notes:

1. SWIFT gpi is a set of standards and rules that enable banks to offer faster, more transparent, and more reliable cross-border payments to their customers.

Today, we engage in a conversation with Brecht van den Driessche, a new addition to the Zanders team, to explore his motivations for joining Zanders and his vision for the future of risk management.

Q: Why did you choose Zanders?

A: I've been familiar with Zanders for over a decade, and what has consistently impressed me is the professionalism and deep expertise in Risk Management demonstrated by its people. Consultancy is inherently a people-centric business, and the combination of professionalism with an engaging and enjoyable working environment was a key factor in my decision to join the Zanders team.

Q: What are your focus areas and goals for the short term and long term?

A: The landscape of expectations for Risk Managers and their regulators is rapidly evolving. Recent events such as the collapse of Silicon Valley Bank and the takeover of Credit Suisse by UBS have highlighted the critical importance of proper Risk Management. Financial institutions must invest in a centralized risk function and supporting systems to enhance transparency and real-time Risk Management. Worldwide, there is a clear trend among banks to centralize data, improve Risk Management systems, and perform more frequent, granular, and standardized risk calculations and disclosures. Regulators are increasingly pushing banks to move away from spreadsheets and manage their financial risks with professional, often vendor-based systems. As a result, banks are moving away from legacy systems and heavily investing in new Risk Management Systems.

My primary focus is to assist our customers in embracing further digitalization to maximize the benefits of these investments. This includes strategic benchmarking, optimization, selection, and the implementation of fit-for-purpose Risk Management systems. To achieve this, we collaborate closely with a select group of world-leading suppliers of risk technology.

The ultimate goal is for Zanders to become the go-to expert for our clients, providing them with robust Risk Management systems to effectively manage financial risks and make informed decisions.

Q: How were your first weeks at Zanders?

A: Right from day one, I felt the positive energy and warmth that characterizes the Zanders team. Simultaneously, around 20 new colleagues embarked on their Zanders journeys across Europe, and the onboarding process was exceptionally smooth. I've already had the pleasure of meeting many colleagues, clients, and partners, and I am genuinely convinced that my decision to join Zanders was the perfect career move.

Q: Anything you want to share with the outside world about this career move?

A: If you're curious about our ambitions and how we can help you achieve yours, don't hesitate to reach out. Drop me a message, and let's connect.

In a world of ever-evolving risks and escalating expectations in risk management, Zanders plays a pivotal role in helping organizations navigate these challenges, propelling them toward success. With our unwavering focus on professionalism, expertise, and a commitment to embracing digitalization, we stand as a trusted partner for those in the finance industry. To learn more about us, please visit our About Zanders page.

SWIFT now supports the exchange of ISO 20022 XML or MX message via the so-called FINplus network. In parallel, the legacy MT format messages remain to be exchanged over the ‘regular’ FIN network; The MT flow for message categories 1 (customer payments), 2 (FI transfers) and 9 (statements) through the FIN network will be decommissioned per November 2025. 

As such, between March 2023 and November 2025, financial institutions need to be able to receive and process MX messages through FINplus on the inbound side, and optionally send MX messages or MT messages for outbound messaging. After that period, only MX will be allowed.  

CBPR+ and HVPS+ 

Another important aspect of the MX migration is the development of the CBPR+ and HVPS+ specifications within the ISO20022 XML standard. These specifications dictate how an XML message should be populated in terms of data and field requirements for Cross Border Payments (CBPR+) and Domestic High Value Payments (HVPS+). Note that HVPS+ refers to domestic RTGS clearing systems and a number of countries are in the process of making the domestic clearing systems native ISO20022 XML-compliant.  

Impact for Corporates 

As of today, there should be no immediate need for corporates to change. However, it is advised to start assessing impact and to start planning for change if needed. We give you some cases to consider: 

1. A corporate currently exchanging e.g. MT101/MT103/MT210 messages towards its house bank via SWIFT FIN Network to make cross border payments, e.g. employing a SWIFT Service Bureau or an Alliance connection. This flow will cease to work after November 2025. If this flow is relevant to your company, it needs attention to be replaced. 
2. Another case is where, for example, an MT101 is exchanged with a house bank as a file over the FileAct network. Now it depends purely on the house bank’s capabilities to continue supporting this flow after 2025; it could offer a service to do a remapping of your MT message into an MX. This needs to be checked with the house banks. 
3. The MT940 message flow from the house bank via FIN also requires replacement. 
4. With respect to the MT940 file flow from house bank via FileAct, we expect little impact as we think most banks will continue supporting the MT940 format exchange as files. We do recommend to check with your house bank to be sure. 
5. High Value Payments for Domestic Japanese Yen using Zengin format; the BOJ-NET RTGS clearing system has already completed the migration to ISO20022 XML standard. Check with your house bank when the legacy payment format will become unsupported and take action accordingly.  

These were just some examples and should not be considered an exhaustive list.  

In addition, moving to the ISO20022 XML standard can also provide some softer benefits. We discussed this in a previously published article. 

Impact on your SAP implementation 

So you have determined that the MT/MX migration has impact and that remediating actions need to be taken. What does that look like in SAP? 

First of all, it is very important to onboard the bank to support you with your change. Most typically, the bank needs to prepare its systems to be able to receive a new payment file format from your end. It is good practice to first test the payment file formatting and receive feedback from the banks implementation manager before going live with it.  

On the incoming side, it is advisable to first request a number of production bank statements in e.g. the new CAMT.053 format, which can be analyzed and loaded in your test system. This will form a good basis for understanding the changes needed in bank statement posting logic in the SAP system.  

PAYMENTS 

In general, there are two ways of generating payment files in SAP. The classical one is via a payment method linked to a Payment Medium Workbench (PMW) format and a Data Medium Exchange (DME) tree. This payment method is then linked to your open items which can be processed with the payment run. The payment run then outputs the files as determined in your DME tree. 

In this scenario, the idea is to simply setup a new payment method and link it to a desired PMW/DME output like pain.001.001.03. These have long been pre-delivered in standard SAP, in both ECC and S/4. It may be necessary to make minor mapping corrections to meet country- or bank-specific data requirements. Under most circumstances this can be achieved with a functional consultant using DME configuration. Once the payment method is fully configured, it can be linked to your customer and vendor master records or your treasury business partners, for example. 

The new method of generating payment files is via the Advanced Payment Management (SAP APM) module. SAP APM is a module that facilitates the concepts of centralizing payments for your whole group in a so-called payment factory. APM is a module that’s only available in S/4 and is pushed by SAP AG as the new way of implementing payment factories. 

Here it is a matter of linking the new output format to your applicable scenario or ‘payment route’.  

BANK STATEMENTS 

Classical MT940 bank statements are read by SAP using ABAP logic. The code interprets the information that is stored in the file and saves parts of it to internal database tables. The stored internal data is then interpreted a second time to determine how the posting and clearing of open items will take place. 

Processing of CAMT.053 works a bit differently, interpreting the data from the file by a so-called XSLT transformation. This XSLT transformation is a configurable mapping where a CAMT.053 field maps into an internal database table field. SAP has a standard XSLT transformation package that is fairly capable for most use cases. However, certain pieces of useful information in the CAMT.053 may be ignored by SAP. An adjustment to the XSLT transformation can be added to ensure the data is picked up and made available for further interpretation by the system. 

Another fact to be aware of is the difference in Bank Transaction Codes (BTC) between MT940 and CAMT.053. There could be a different level of granularity and the naming convention is different. BTC codes are the main differentiator in SAP to control posting logic.  

SAP Incoming File Mapping Engine (IFME) 

SAP has also put forward a module called Incoming File Mapping Engine (IFME). It serves the purpose as a ‘remapper’ of one output format to another output format. As an example, if your current payment method outputs an MT101, the remapper can take the pieces of information from the MT101 and save it in a pain.001 XML file.  

Although there may be some fringe scenarios for this solution, we do not recommend such an approach as MT101 is generally weaker in terms of data structure and content than XML. Mapping it into some other format will not solve the problems that MT101 has in general. It is much better to directly generate the appropriate format from the internal SAP data directly to ensure maximum richness and structure. However, this should be considered as a last resort or if the solution is temporary. 

As the first conference in the US since its 4-year hiatus, there was good attendance among corporates and partners. The SAP Treasury conference is an excellent opportunity for customers to see the latest developments within the S/4 HANA Treasury suite.  

Christian Mnich, VP and Head of Solution Management Treasury and Working Capital Management at SAP, gave the opening keynote titled: "SAP Opening Keynote: Increase Financial Resiliency with SAP Treasury and Working Capital Management Solutions." 

 Corporate Structure changes  

Ronda De Groodt, Applications Integration Architect at Leprino Foods, presented a case study that covered how Leprino Foods embarked on a company-wide migration from SAP ECC to S/4HANA, specifically implementing SAP Treasury, Cash Management, and Payments solutions in a 6-month time frame. The presentation also had a focus on leveraging SAP S/4HANA Cash Management and SAP machine learning capabilities while migrating to S/4 HANA. 

Trading Platform Integration 

 In a joint presentation, Justin Brimfield from ICD and Jonathon Kluding from SAP discussed the strategic partnership between the two companies in developing a streamlined Trading Platform Integration. This presentation went into detail on how SAP leverages Trading Platform Integration between SAP and ICD and the efficiencies this integration can create for Treasury. 

 Multi-Bank Connectivity (MBC) 

Another area of focus at the conference was the capabilities of SAP Multi-Bank Connectivity and how it can simplify and automate financial processes associated while having multiple banks. This was presented by Kweku Biney-Assan from HanesBrands. The presentation focused on answering some crucial questions corporates may have about SAP MBC, ranging from the possible improvements MBC can make to your Treasury Operations and Cash Management processes, to the typical timeline for an implementation. 

 Cash Management & Liquidity Forecasting 

Renee Fan from Freeport LNG, gave a presentation overviewing the challenges the company faced in terms of cash management, reporting, and analytics. She gave an overview of Freeport LNG’s Treasury Transformation Journey and insights into the upgrades they had made, as well as a further focus on the benefits they have seen as a result of their new cash and liquidity solution. 

In addition, the conference offered attendees the opportunity to share ideas, build networks, and discuss topics face-to-face. All this made this edition of the event a success!

Of the many attending corporates and partners were offered the opportunity to hear the latest ins and outs of treasury transformation with S/4HANA.  

Next to the enhancements in S/4HANA Treasury, customers had a clear need to understand what it could means for their Treasury and how they could achieve it. The conference provided an excellent opportunity to exchange ideas with each other and learn from the many case studies presented on treasury transformation.  

Treasury Transformation with SAP S/4HANA 

Alongside Ernst Janssen, Digital Treasury and Banking Manager at dsm-firmenich, Zanders director Deepak Aggarwal presented the value drivers for treasury in an S/4HANA migration. The presentation also included the different target architecture and deployment options, as Ernst talked about the choices made at dsm-firmenich and the rationale behind them in a real-life business case study. Zanders has a long-standing relationship with DSM going back as far as 2001, and has supported them in a number of engagements within SAP treasury. 

In addition, there were similar other presentations on treasury transformation with S/4HANA.  BioNTech presented the case study on centralization of their bank connectivity via APIs for both inbound and outbound bank communication. They are also the first adopters of the new In-House Bank under Advanced Payment Management (APM) solution and integrate the Morgan Money trading platform for money market funds. ABB and PwC talked about their treasury transformation journey on centralization of cash management in a side-car, functionality enhancement through APM, and integration with Central Finance system for balance sheet FX management. Alter Domus and Deloitte presented their treasury transformation via S/4HANA Public Cloud including integrated market data feed and Multi-Bank Connectivity. 

Digital and Streamlined Treasury Management System 

Christian Mnich from SAP laid out the vision of SAP Treasury and Working Capital Management solution as an agile, resilient and sustainable solution delivering end-to-end business processes to all customers in all industries. Christian referred to the market challenges of high inflation and rising interest rates calling for a greater need of bank resiliency and cash forecasting to reduce dependencies on business partners and improve cash utilization while avoiding dipping into debt facilities. The sustainability duties like ESG reporting and carbon offsetting appear to be more relevant than ever to meet global assignments. SAP’s 2023 product strategy was presented with Cloud ERP (public or private) at the core, Business Technology Platform as integration and extension layer, and the surrounding SAP and ecosystem applications, delivering end-to-end integrated processes to the business. 

Trading Platform Integration 

Another focus area was SAP Integration with ICD for Money Market Funds (MMFs) through Trading Platform Integration (TPI) application. MMFs are seen as an attractive alternative to deposits, yielding better returns and diversifying risk through investment in multiple counterparties. Quite often the business is restricted on MMF dealing as a result of system limitations and overhead due to the manual processes. Integration with ICD via TPI offers benefits of single sign on, automated mapping from ICD to SAP Treasury, auto-creation of securities transaction in SAP, email notification and integrated reporting in SAP Treasury. 

Embedded Receivables Finance 

Lastly, SAP integration with Taulia was another focus area to facilitate liquidity management in the companies. Taulia was presented as driving Working Capital Management (WCM) in the companies through its WCM platform and Taulia Multi Funder for efficient share of wallet or discovery of new liquidity. The embedded receivables finance solution in Taulia automates the receivables sales process by automating the status updates of all invoices in Taulia platform and the seller ERP.  

If you are interested in joining SAP Treasury conferences in future, or any of the topics covered, please do reach out to your Zanders’ contacts. 

The SAP Business Technology Platform (BTP) is not just a standalone product or a conventional module within SAP's suite of ERP systems; rather, it serves as a strategic platform from SAP, serving as the foundational underpinning for all company-wide innovations. In this article, we will delve deeper into some of the key offerings of SAP BTP for treasury and explore how it can contribute to driving innovation within treasury. 

The platform is designed to offer a versatile array of tools and services, aiming to enhance, extend, and seamlessly integrate with your existing SAP systems and other applications. Ultimately enabling a more efficient realization of your business objectives, delivering enhanced operational efficacy and flexibility. 

Analytics and AI 

One of the standout features of SAP BTP for treasury is its analytics and planning solution, SAP Analytics Cloud (SAC). This feature seamlessly connects with different data sources and other SAP applications. It supports Extended Planning & Analysis and Predictive Planning using machine learning models.  

At the core of SAC, various planning areas – like finance, supply chain, and workforce – are combined into a cloud-based interconnected plan. This plan is based on a single version of the truth, bringing planning content together. Enhanced by predictive AI and ML models, the plan achieves more accurate forecasting and supports near-real-time planning. Users can also compare different scenarios and perform what-if analysis to evaluate the impact of changes on the plan equipping organizations to prepare for uncertainties effectively. 

Application Development and Integration 

An organization's treasury architecture landscape often involves numerous systems, custom applications, and enhancements. However, this complexity can result in challenges related to maintenance, technical debt, and operational efficiency. 

Addressing these challenges, SAP BTP offers a solution known as the SAP Build apps tool. The tool enables users to adapt standard functionalities and create custom business applications through intuitive no-code/low-code tools. This allows that all custom development takes place outside your SAP ERP system, thereby preserving a ‘clean core’ of your SAP system. This will allow for a simpler, more streamlined maintenance process and a reduced risk of compatibility issues when upgrading to newer versions of SAP. 

In addition, SAP BTP facilitates seamless connectivity through a range of connectors and APIs integrated within the SAP Integration Suite. Enabling a harmonious integration of data and processes across diverse systems and applications, whether they are on-premise or cloud-based. 

Process Automation and Workflow Management 

Efficient process automation and workflow management play a pivotal role in enhancing treasury operations. SAP BTP offers an efficient solution named SAP Build Process Automation which enables users to design and oversee business processes using either low-code or no-code methods. It combines workflow management, robotic process automation, decision management, process visibility, and AI capabilities, all consolidated within a user-friendly interface.  

A significant advantage of SAP BTP's  workflow approach over conventional SAP workflows is the unification of workflows across diverse systems, including non-SAP systems and increased flexibility, enabling smoother interaction between processes and systems. 

The integration of SAP BTP for workflow with different SAP modules such as TRM, IHC, BAM is facilitated through the SAP Workflow Management APIs within your SAP S/4 HANA system. 

In the context of treasury functions, SAP Build Process Automation proves invaluable for automating and refining diverse processes such as cash management, risk management, liquidity planning, payment processing, and reporting. For instance, users can leverage the integrated AI functionalities for tasks like collecting bank statements/account balance information from different systems, consolidating information, saving and/or distributing the cash position information to the appropriate people and systems. Furthermore, the automation recorder can be employed to mechanize the extraction and input of data from diverse systems. Finally, the SAP Build Process Automation can also be utilized to create workflows for complex payment approval scenarios, including exceptions and escalations. 

Extensions to the Treasury Ecosystem 

SAP BTP extends the treasury ecosystem with multiple treasury-specific developed solutions, seamlessly enhancing your treasury SAP S/4 HANA system functionality. These extensions include: Multi-Bank Connectivity for simplified and secure banking interactions, SAP  Digital Payment Add-On for efficiently connecting to payment service providers. Trading Platform Integration for streamlined financial instrument trading, SAP Cloud for Credit Integration to assess business partner credit risk, SAP Taulia for Working Capital Management, Cash Application for automatic bank statement processing and cash application, and lastly, SAP Market Rates Management for the reliable retrieving of market data. 

Empowering organizations with extensive treasury needs by enabling them to selectively adopt these value-added capabilities and solutions offered by SAP. 

Alternatives to SAP BTP 

The primary driving factor to consider integrating SAP BTP as an addon to your SAP ERP is when there is an integrated company-wide approach towards adopting BTP. Furthermore, if the standard SAP functionalities fall short of meeting the specific demands of the treasury department, or if the need for seamless integration with other systems arises. 

It's important to prioritize the optimization of complex processes whenever feasible first, avoiding the pitfall of optimizing inherently flawed processes using advanced technologies such as SAP BTP. It is worth noting that the standard SAP functionality, which is already substantial, could very well suffice. Consequently, we recommend conducting an analysis of your processes first, utilizing the Zanders best practices process taxonomy, before deciding on possible technology solutions. 

Ultimately, while considering technology options, it's wise to explore offerings from best-of-breed  treasury solution providers as well – keeping in mind the potential need for integration with SAP. 

Getting Started 

The above highlights just a glimpse of SAP BTP's capabilities. SAP offers a free trial that allows users to explore its services. Instead of starting from scratch, you can leverage predefined business content such as intelligent RPA bots, workflow packages, predefined decision and business rules and over 170 open connectors with third-party products to get inspired. Some examples relevant for treasury include integration with Trading Brokers, S4HANA SAP Analytics Cloud, workflows designed for managing free-form payments and credit memos, as well as connectors linking to various accounting systems such as Netsuite Finance, Microsoft Dynamics, and Sage. 

Conclusion 

SAP BTP for Treasury is a powerful platform that can significantly enhance treasury. Its advanced analytics, app development and integration, and process automation capabilities enable organizations to gain valuable insights, automate tasks, and improve overall efficiency. If you are looking to revolutionize your treasury operations, SAP BTP is a compelling option to consider.  

Royal FloraHolland is a cooperative of flower and plant growers. It connects growers and buyers in the international floriculture industry by offering unique combinations of deal-making, logistics, and financial services. Connecting 5,406 suppliers with 2,458 buyers and offering a solid foundation to all these players, Royal FloraHolland is the largest floriculture marketplace in the world.

The company’s turnover reached EUR 4.8 billion (in 2019) with an operating income of EUR 369 million. Yearly, it trades 12.3 billion flowers and plants, with an average of at least 100k transactions a day.

The floriculture cooperative was established 110 years ago, organizing flower auctions via so-called clock sales. During these sales, flowers were offered for a high price first, which lowered once the clock started ticking. The price went down until one of the buyers pushed the buying button, leaving the other buyers with empty hands.

The floriculture market is changing to trading that increasingly occurs directly between growers and buyers. Our role is therefore changing too.

Wilco van de Wijnboom, Manager Corporate Finance

Challenge

The Floriday platform

Around twenty years ago, the clock sales model started to change. “The floriculture market is changing to trading that increasingly occurs directly between growers and buyers. Our role is therefore changing too,” Wilco van de Wijnboom, Royal FloraHolland’s manager corporate finance, explains. “What we do now is mainly the financing part – the invoices and the daily collection of payments, for example. Our business has developed both geographically and digitally, so we noticed an increased need for a platform for the global flower trade. We therefore developed a new digital platform called Floriday, which enables us to deliver products faster, fresher and in larger amounts to customers worldwide. It is an innovative B2B platform where growers can make their assortment available worldwide, and customers are able to transact in various ways, both nationally and internationally.”

The Floriday platform aims to provide a wider range of services to pay and receive funds in euros, but also in other currencies, and across different jurisdictions. Since it would help treasury to deal with all payments worldwide, Royal FloraHolland needed an international cash management bank too. Van de Wijnboom: “It has been a process of a few years. As part of our strategy, we wanted to grow internationally, and it was clear we needed an international bank to do so. At the same time, our commercial department had some leads for flower business from Saudi-Arabia and Kenya. Early in 2020, all developments – from the commercial, digital and financing points of view – came together.”

Solution

RfP track record

Royal FloraHolland’s financial department decided to contact Zanders for support. “Selecting a cash management bank is not something we do every day, so we needed support to find the right one,” says Pim Zaalberg, treasury consultant at Royal FloraHolland. “We have been working together with Zanders on several projects since 2010 and know which subject matter expertise they can provide. They previously advised us on the capital structure of the company and led the arranging process of the bank financing of the company in 2017. Furthermore, they assisted in the SWIFT connectivity project, introducing payments-on-behalf-of. They are broadly experienced and have a proven track record in drafting an RfP. They exactly know which questions to ask and what is important, so it was a logical step to ask them to support us in the project lead and the contact with the international banks.”

Zanders consultant Michal Zelazko adds: “We use a standardized bank selection methodology at Zanders, but importantly this can be adjusted to the specific needs of projects and clients. This case contained specific geographical jurisdictions and payment methods with respect to the Floriday platform. Other factors were, among others, pre-payments and the consideration to have a separate entity to ensure the safety of all transactions.”

Strategic partner

The project started in June 2020, a period in which the turnover figures managed to rebound significantly, after the initial fall caused by the corona pandemic. Van de Wijnboom: “The impact we currently have is on the flowers coming from overseas, for example from Kenya and Ethiopia. The growers there have really had a difficult time, because the number of flights from those countries has decreased heavily. Meanwhile, many people continued to buy flowers when they were in lockdown, to brighten up their new home offices.”

Together with Zanders, Royal FloraHolland drafted the goals and then started selecting the banks they wanted to invite to find out whether they could meet these goals. All questions for the banks about the cooperative’s expected turnover, profit and perspectives could be answered positively. Zaalberg explains that the bank for international cash management was also chosen to be a strategic partner for the company: “We did not choose a bank to do only payments, but we needed a bank to think along with us on our international plans and one that offers innovative solutions in the e-commerce area. The bank we chose, Citibank, is now helping us with our international strategy and is able to propose solutions for our future goals.”

The Royal FloraHolland team involved in the selection process now look back confidently on the process and choice. Zaalberg: “We are very proud of the short timelines of this project, starting in June and selecting the bank in September – all done virtually and by phone. It was quite a precedent to do it this way. You have to work with a clear plan and be very strict in presentation and input gathering. I hope it is not the new normal, but it worked well and was quite efficient too. We met banks from Paris and Dublin on the same day without moving from our desks.”

Van de Wijnboom agrees and stresses the importance of a well-managed process: “You only have one chance – when choosing an international bank for cash management it will be a collaboration for the next couple of years.”

We have been working together with Zanders on several projects since 2010 and know which subject matter expertise they can provide.

Pim Zaalberg, Treasury Consultant

Performance

Future plans

The future plans of the company are focused on venturing out to new jurisdictions, specifically in the finance space, to offer more currencies for both growers and buyers. “This could go as far as paying growers in their local currency,” says Zaalberg. “Now we only use euros and US dollars, but we look at ways to accommodate payments in other currencies too. We look at our cash pool structure too. We made sure that, in the RfP, we asked the banks whether they could provide cash pooling in a way that was able to use more currencies. We started simple but have chosen the bank that can support more complex setups of cash management structures as well.” Zelazko adds: “It is an ambitious goal but very much in line with what we see in other companies.”

Also, in the longer term, Royal FloraHolland is considering connecting the Floriday platform to its treasury management system. Van de Wijnboom: “Currently, these two systems are not directly connected, but we could do this in the future. When we had the selection interviews with the banks, we discussed the prepayments situation – how do we make sure that the platform is immediately updated when there is a prepayment? If it is not connected, someone needs to take care of the reconciliation.”

There are some new markets and trade lanes to enter, as Van de Wijnboom concludes: ”We now see some trade lanes between Kenya and The Middle East. The flower farmers indicate that we can play an intermediate role if it is at low costs and if payments occur in US dollars. So, it helps us to have an international cash management bank that can easily do the transactions in US dollars.”

So how exactly did the European market leader in bicycles achieve these goals? Accell Group is the European market leader in the mid- and upper-segments for high-quality bicycles and associated parts and accessories (XLC). Employing over 3,000 people across 18 countries, Accell Group manages a strong portfolio of national and international (sports) brands, each with its own distinctive positioning.

In 2018 the company sold 1.1 million bicycles, realizing a turnover of €1.1 billion and a net profit of €20.3 million. The bicycle brands in the Accell Group stable include Haibike, Winora, Ghost, Lapierre, Babboe, Batavus, Sparta, Koga, Diamondback and Raleigh. They are manufactured in several locations in the Netherlands, Hungary, Turkey and China. 

Bicycles, and particularly e-bikes, are increasingly being seen as a key contributor in addressing issues such as urban congestion, hazardous city traffic, rising CO₂ emissions and our desire to live healthier lifestyles. For this reason, the bicycle market represents excellent potential for further worldwide growth. 

“Given that we focus on new, clean and safe mobility solutions, we are certainly in the right business in terms of market potential,” agrees Jonas Fehlhaber, Treasurer at Accell Group, “Furthermore, there is a growing trend for large cities to adapt their infrastructures to offer cyclists more space and make them safer.”

Given that we focus on new, clean and safe mobility solutions, we are certainly in the right business in terms of market potential.

Jonas Fehlhaber, Treasurer at Accell Group

Omnichannel approach

Initially, Accell Group was a small holding company with decentralized management. Fehlhaber joined the Group in 2013 as its first treasurer, but his responsibilities soon expanded to encompass cash management, currency risk management and credit insurance. At the same time, the structure of the company changed. Based on a new strategy defined in 2016, the most important change was that the company wanted to shift from a manufacturing-driven approach to a consumer-centric one. In other words, everything must revolve around the consumer. 

“In the past our sales channel was mainly defined by the dealers but now, thanks to experience centers and the use of e-commerce, this is changing into an omnichannel approach,” says Fehlhaber. “The dealers still play the most important role, but with more and more functions being provided centrally, the size of the holding has grown substantially. For the past two-and-a-half years we have had a strong supply chain organization, and our finance team, just like the Treasury, has expanded.”

Challenge

Treasury roadmap

After centralizing several components and rationalizing the bank portfolio, Accell asked Zanders to carry out a quick scan of the Treasury department. In the context of this scan, the treasury function was examined and several potential risks and possible improvement areas were identified. 

“To further professionalize the Treasury, we worked with Zanders to start a project in 2017 to establish a treasury roadmap,” adds Fehlhaber. “In this project our strategic goals, along with what we wanted to achieve with them, were laid out. All in all it was an intensive undertaking in which all the respective processes were documented.”

The outcome was reconciled into three pillars: organization, systems and treasury policy. To limit the organizational vulnerability of what would otherwise have been a single-person department, Accell used Zanders’ Treasury Continuity Service (TCS) and appointed an additional treasury employee. An element of the Treasury Continuity Service is a TMS, Integrity, with which processes can be automated and standardized, while risks are simultaneously minimized. 

“The Treasury Continuity Service allowed us to implement the system quickly, without the need to go through an RfP [Request for Proposal] process,” says Fehlhaber. “Zanders had already made advance agreements with the supplier, FIS, giving us a partially pre-configured system that could be quickly implemented. Moreover, the support days that we are allocated can be used for advice, for example, or if there is temporary understaffing. We acted on the advice to start up our new payment hub, from the RfP to the actual selection and, if necessary, the implementation too.” 

The final improvement was to set up a comprehensive treasury policy, which has injected more structure and transparency into the daily treasury activities. 

Solution

More Complete and more interactive

The new TMS and the extra support have meant that Accell’s treasury department is now less vulnerable. “While Excel allows you to work flexibly, sharing information is more difficult because it is much more personal,” continues Fehlhaber. “The owner of the Excel file will be aware of all the details, but issues can quickly arise during transfer. A complicating factor is that there is no audit trail in Excel, making it generally more risky to work with. A TMS, on the other hand, is more complete and interactive, and the transfer is much easier. It has more functionalities and provides daily bank updates, so you always have a good overview of your latest cash positions. What’s more, it records all transactions, such as FX instruments and bank- and inter-company loans, with settlements being done from within Integrity. Above all, though, the TMS offers the option of creating bespoke reports, which in itself saves a lot of time.”

Payments via TIS

A key requirement of Accell was for the payment landscape to be organized more efficiently and controlled more centrally. What we tend to see is that corporates have masses of bank cards, for everyone involved in the authorization of payments. Not only is this very inefficient, it also makes it difficult to effectively manage these processes centrally. This is why Accell decided to implement a payment hub solution [TIS; Treasury Intelligence Solutions]. The payment hub serves as an interface, to replace the banking applications. A further advantage is that TIS offers the option of single sign-on, greatly improving the on-and off-boarding process for users.

Rolling out a TIS project takes between 18 and 24 months. It is a separate system to FIS Integrity, but they are connected in terms of infrastructure. “Bank statements arrive through the payment hub and then interface software distributes them to the systems that need the information, such as the ERP system and Integrity,” explains Fehlhaber. “Furthermore, all systems are fed current market data from our terminal, while payment files, for example, are sent from Integrity via TIS to the bank.”

The once-humble bicycle has evolved into a true lifestyle product.

Tjitze Auke Rijpkema, Treasury Team

Performance

The road to the future

The increasing need to reduce exhaust emissions in major urban areas is fuelling further growth potential for the bicycle market. “The market is still growing,” agrees Fehlhaber, “especially when it comes to e-bikes. We are focusing on the mid- and upper-market segments and doing particularly well with the so-called e-performance bikes, the power-assisted mountain bikes catered for by brands such as Haibike, Ghost and Lapierre.”

In 2018, Accell acquired Velosophy, a fast-growing innovative player in e-cargo biking solutions that serves both consumer and business markets. The Velosophy stable includes Babboe, the market leader in Europe for family cargo bikes, CarQon, the new premium cargo bike brand, and Centaur Cargo. The latter of these three is a specialist in B2B cargo bikes for the so-called ‘last-mile deliveries‘. These are typically to locations that are either impossible or very difficult to reach by car, such as city centers, for example. The acquisition of Velosophy has enabled Accell Group to accelerate its innovation strategy, which is focused, among other things, on the development of urban mobility solutions.

Bicycles are becoming increasingly bespoke products, reveals Fehlhaber. Mobility as a service (offering a service concept rather than just a bicycle), lease options or special, self-selected elements are all maintaining the current momentum in the bicycle market. 

“The once-humble bicycle has evolved into a true lifestyle product,” insists Tjitze Auke Rijpkema, who joined the treasury team in 2018. “Smart internet technology and handy connectivity apps are further enriching the cycling experience and making bicycles better and safer in all kinds of ways. Just like treasury, the bicycle is constantly moving with the times.”