Treasury Practice

Problem solved: Claus Wild, Adolf Würth

Published: Sep 2008

With the introduction of SEPA, Würth’s electronic banking software was not able to support the new SEPA formats. This made it necessary for the company to review its technology needs in order to maintain and extend the service level provided to the subsidiaries.

Claus Wild

Project Manager Introduction for Payments

Würth Group started as a family business that has grown to a trading group of 420 companies in 86 countries. Würth Group’s core business is the trade of fastening and assembling materials such as screws, screw accessories, dowels, plugs, furniture and construction fittings and stock-keeping and picking systems. In 2007 the Group, which employs 65,000 people and is headquartered from Künzelsau in Germany, generated a turnover of €8.49 billion.

Problem…

Würth’s treasury and payment processes are not currently centralised. While a shared service centre provides payment services to the majority of the group’s German domestic subsidiaries, a lot of other international network companies use the services of a payment factory operated by Würth Finance International B.V. in Switzerland.

The German headquarters manages payments for approximately 60 subsidiaries and nearly 200 bank accounts with 18 different banks. Payments are initiated either directly in the company’s SAP system or, in the case of urgent payments, via partially integrated electronic banking software.

The new solution had to meet the company’s compliance requirements and raise the level of automation and straight through processing. “Automation is a major issue for us as we have to handle approximately 200 outgoing files and 15,000 incoming payments per day,” says Claus Wild, Project Manager at Würth. “The faster processing of payments represents a competitive advantage for the group. If, for example, a customer with a high dunning level (ie a customer we are already chasing for overdue payment) orders new materials and we have not received or reconciled the payment for a previous order we will not be able, for credit risk reasons, to process the new order until the payment is received. As a consequence, there is a risk that the customer may place the order with one of our competitors.”

…Solved

After evaluating all the available solutions appropriate for a company of its size, Würth opted for a SWIFT connection in combination with SAP’s new application (Bank Communication Management). The Bank Communication Management application enables the company to link its ERP system directly to all relationship banks through one single interface.

Wild views the new payment solution and SWIFT connection as a long-term investment. “Over the past decade we had to update the software used in our payment processes five or six times, which has been comparatively expensive in terms of new interfaces and overall time and costs. We therefore decided to undertake a major investment in our payment processes in order to be positioned for the future,” he explains. “With SWIFT’s FileAct or FIN messages we are no longer bound by country specifications or by our software.”

Würth is connected to SWIFT via a MA-CUG (Member Administered Closed User Group) provided by Commerzbank. The selection of the bank was critical for the success of the project and the solution’s timely implementation. “If you start a large project it is necessary to have clearly assigned responsibilities and a dedicated account manager. The long-standing, reliable relationship that we have with Commerzbank – I have been working with the same relationship manager for 14 years now – was certainly a reason that worked in the bank’s favour,” states Wild. “Moreover, Commerzbank is in our opinion very well positioned in terms of technology and innovation in payments and cash management. We counted on the bank’s know-how and experience.”

The company decided to host the necessary infrastructure and software for the SWIFT connection in-house and relied on the close co-operation of its partners – Commerzbank, SAP, CSC Germany (Computer Sciences Corporation Germany) and SWIFT – for the implementation of the different components of the solution. The implementation itself was smooth. “Despite the complexity of the project and a tight schedule, the co-operation between our partners and ourselves was so excellent that we were able to realise the project targets within the planned timescale,” recalls Wild. “Surprisingly we also had practically no issues with the implementation.”

In January 2008, Würth became one of Commerzbank’s first customers to effect the new SEPA credit transfer, generating the payment message in its ERP system and sending it to the bank via a SWIFT connection. Once the solution has been rolled out to the subsidiaries, the company will in time be able to reduce the large number of bank interfaces, ultimately using only the SWIFT connection for all payments. In addition, the accelerated information flow gives Würth new opportunities to consolidate bank statements and improve liquidity management.

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