There are two issues – and two solutions – at stake here. The German head office of Würth uses SWIFT to process its payments traffic, including SEPA Credit Transfers (SCTs). It does so for almost 70 subsidiaries and nearly 150 accounts through a variety of banks. The company connects to SWIFT via an MA-CUG (Member Administered Closed User Group) facilitated, among others, by Commerzbank. Würth hosts the infrastructure and software for this in-house.
Claus Wild
Project Manager SAP Financial – Payments and Cash Management
In the first six months of its 2012 financial year, the Würth Group generated sales of €5 billion as a major player in the assembly and fastening materials business. Its product range covers both craft and industry and comprises over 100,000 products including screws, screw accessories, anchors, tools, chemical-technical products and personal protection equipment. The family-run business based in Germany and Switzerland consists of more than 400 companies located in over 80 countries, employing in excess of 65,000 people. It has more than 3m customers worldwide.
Problem…
The first problem was in supplying the correct BIC and IBAN codes for its master data file of vendors and customers. The BIC codes were filled in manually because the company could not find a cost-effective and easily implementable electronic directory to integrate with its systems.
Secondly, Würth’s SWIFT account statements (MT940s) are processed electronically in its SAP ERP system. This involves an average of 13,000 payment receipts per day. Although around 90% of all bookings are fully automated, all exceptions must be manually input. The next problem then is that as the number of payments using the SEPA format increases, the straight through processing (STP) rate is dropping. This is due to the fact that, alongside MT940s, Würth also uses summary bank reports in local bank data (for Germany ‘DTI’) to process its payment receipts.
At present, some banks do not provide SEPA payment receipts in these summaries. As the German DTI format does not display the whole content of the SCT, Würth does not have the luxury of processing SEPA payment receipts automatically. The SEPA equivalent to these summaries in local formats is a separate file, submitted in the ISO 20022 XML format (CAMT). This is all compounded by the uncertainty around the European Commission’s intention to impose a mandatory conversion date for account statements for corporates (in Article 5 for XML extracts covering SEPA cash management messages). Corporates are mandated to switch to XML by 1st February 2014.
Würth needed to be ready for every eventuality, but with the number of messages received increasing, the lack of clarity around message format was a serious issue. Should the company set up its multiple bank accounts for XML? And if so, how will it integrate messages in its ERP system? These were among the questions posed to Commerzbank.
…Solved
“We have a strong partnership between Commerzbank and our company,” says Claus Wild, Project Manager SAP Financial – Payments and Cash Management at Würth. It is this bond with its banking partner that has helped Würth to find a solution for these two payments issues.
Firstly Commerzbank provides its corporate customers with a SWIFT BIC directory on a regular basis. This enables Würth to obtain the right data for its cross-border payments, including SCTs. “We get all the BICs we need and now there is the opportunity in SAP to fully automate the process,” says Wild. “It takes only a few minutes to update all the necessary information.” Wild is surprised that Commerzbank’s specific SWIFT BIC service is not known more widely in the corporate community. “You get the BIC file with electronic access into the Commerzbank Corporate Banking Portal. An updated version of the download file is available every two months,” he adds.
Würth is also making preparations to receive CAMT format messages, collected by Commerzbank and processed in SAP. At this point, the solution is still a work in progress, with Würth, Commerzbank and SAP working towards the test phase, the implementation having been completed. The solution, once it goes live (possibly summer/autumn 2012) will see Würth as its first ever user. “When it works, we will have solved this problem for all European companies which use SAP,” says Wild.
