Photo of Calvin Yeo, J.P. Morgan and Lay Perk Toh, Kulicke & Soffa Pte Ltd.
As Kulicke & Soffa expanded its business it accumulated over 130 bank accounts with multiple banks globally, built across different technology platforms and formats. The fragmentation caused by incompatible file formats created significant challenges for K&S’s IT infrastructure. Application of cutting-edge technology to address the problem has been a success, with benefits for K&S that include increased security in transacting payments; reduced risk of errors; greater operational efficiency and nearly 100% of payment flows now automated and sent securely.
Lay Perk Toh
Group Treasurer
Singapore
Founded in 1951 and headquartered in Singapore since 2010, Kulicke & Soffa (K&S) is a leading provider of semiconductor packaging and electronic assembly solutions (EAS) supporting the global automotive, consumer, communications, computing, and industrial segments. Listed on NASDAQ, K&S reported a net income of US$112m on revenues of US$809m in 2017.
in partnership with
Managing multiple bank accounts made dramatically easier at Kulicke & Soffa
The challenge
As Kulicke & Soffa Pte Ltd (K&S) expanded its business, it accumulated over 130 bank accounts with multiple banks globally, built across different technology platforms and formats. The fragmentation caused by incompatible file formats created significant challenges for K&S’s IT infrastructure, which had to contend with developing and maintaining payment files with different bank-proprietary formats. Increased global regulations and compliance checks only exacerbated the situation.
The transformation arising for K&S’s business and global operations under the existing regime meant it needed to rethink its approach, to identify a more compelling solution.
The solution
K&S contemplated a few banking options and a decision was finally made to go with J.P. Morgan’s Host-to-Host ERP Global Adapter (ERP Adapter). Based on K&S’ overall assessment, the ERP Adapter is a ‘first-of-its-kind’ cutting-edge technology solution in the market for Oracle ERP that adopts ISO 20022 XML industry standard and can support K&S’s coverage globally while catering to local regulatory and requirements in different markets.
A distinctive feature of the ERP Adapter is its ability to support K&S’s requirements for country-specific payment parameters (ie regulatory, payment purpose codes, clearing, local language, remittance advice requirements) to expedite straight through processing. With close partnership between K&S and J.P. Morgan, K&S IT was able to generate its first ISO 20022 XML payment file within two weeks – a significant improvement from its previous experience which took six months.
Best practice and innovation
Quick adoption was a key consideration for K&S, given its global coverage across 20+ countries. If K&S were to work on the development of ISO 20022 XML format with all of its previous banking partners, it would have been a multi-year project which could have taken up significant IT and finance resources to work through development and user acceptance testing.
In partnership with J.P. Morgan, K&S’s treasury and IT departments further expanded into other organisation-wide process improvements and innovation initiatives. This includes working with accounting, audit, finance controllership and global shared services to review and enhance workflow approvals, vendor master data clean-up, automate bank reconciliation, process standardisation, elimination of manual payments, improved risk governance controls, procedure and consistency to drive a holistic overview of its treasury, IT systems and business operations.
Key benefits
The adoption of J.P. Morgan’s ERP Adapter translated to an estimated US$1m in productivity benefits for K&S. By working with a single global banking partner, K&S’s IT department is now only required to maintain one global file format, reducing cost and efforts associated with IT development and systems maintenance across multiple platforms.
The implementation was by far the most straightforward for the firm’s IT department and allows it to deploy and scale in the most time and resource-efficient manner. Other benefits include:
- A truly global and scalable solution with local payment rules embedded into the ERP Adapter.
- Adoption of global ISO 20022 XML industry format in all jurisdictions.
- Improved productivity and efficiency. Improved straight through processing rates from approximately 50% to nearly 100% for over US$1bn worth of payments.
- Increased security when initiating and transacting payments. The solution enabled K&S to run various payment types across multiple currencies through a single payment file, in comparison to ten separate payment runs conducted daily under its previous banking set up.
- Reduced risk of errors arising from payments through use of multiple banking platforms; and decreased the need to manage and maintain multiple e-banking platforms.
- Enhanced operational efficiency. With nearly 100% of its payment flows now automated and sent securely, it eliminates the need for manual intervention.
