Working with J.P. Morgan, Siemens established a MXN cash pooling structure and a multibank sweep agreement for the seven entities across 18 accounts. This structure centralises all balances daily under Siemens Capital as the header account. The treasury team implemented host-to-host connectivity EBICS for straight through processing of supplier and payroll payments, reducing manual payment creation while integrating with Siemens’ global treasury systems and local ERP systems.

For collections, Siemens implemented a VRN solution that assigns each customer a unique identifier. The VRN system allows Siemens to identify who is paying, even without standardised remittance information.

Siemens paired this banking infrastructure with a proprietary cash application tool that connects incoming payments to open invoices in its ERP system. The tool uses the VRN identifiers to recognise payment sources automatically. This cash application tool is already operational across Siemens, having been previously implemented in the United States and other regions.

However, in Mexico customers often share remittance information through commonly used communication channels such as phone calls, rather than via standardised formats. This can present challenges for automation. To support these practices and enhance processing efficiency, the treasury team is piloting an additional AI component for the cash application tool. This enhancement will help match incoming funds to the correct open invoices despite limited reference information. Siemens expects the base cash application solution to automate 80% of the process, with the AI enhancement potentially increasing this further.

Siemens also implemented real-time payment notifications and API-based connections for intraday balance reporting, moving away from traditional end-of-day reporting. This provides immediate visibility into cash positions and supports more timely financial management.

The treasury team rolled out these changes in phases, starting with payroll payments, then adding taxes and vendor payments. Siemens completed the full banking transition in November 2024 and is currently finalising the AI implementation to optimise its collections process.