Driving predictability and efficiency in Accounts Payable process through automation and simplification

Mayank Mishra Head Client Access Solutions HSBC Global Transaction Banking
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HSBC worldwide services and SAP ERP technology

HSBC is one of the largest banking and financial services organisations in the world: over 9,700 offices in 77 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. HSBC offers a comprehensive range of services through an international network linked by advanced technology, including significant on-line banking capability.

Internal factors in your landscape that need to be considered

Coverage
Global

Set-Up
In House Bank

Formats
IDOC

SAP versions
6

SSC Regional

ISO20022

4.7

RTC Local Local

MT 4.6

Paymul

R3

Current Market Trends in Treasury and Finance

External Drivers Impact and Outcome
External sources of funding have become scarce and expensive Corporate expansion into new and challenging markets Demands end to end process visibility and control Extra focus on cost & on project profitability. Operational efficiency is key to business sustainability & in driving new initiatives Business profitability, faster execution of projects, Focus on information

Implications to Treasury and Operational Finance

Requires greater working capital optimization, real time liquidity management Need to ensure standardization, visibility and control over remote and disparate arrangements Requires standard automated processes with minimal interfaces and solutions Requires end-to-end automation and ability to scale-out (more countries) and scale-up (centralized) seamlessly Requires ready made productized solutions, timely information to manage business priorities effectively

Credit Crunch Extended enterprise Compliance

Margin pressures

Competition

Integrated, real-time solutions help address needs

NEED: Information visibility; visibility of treasury related financial information to support working capital management

NEED: Control over payment process and risk management related workflows and the ability to control and enforce treasury policies throughout the enterprise

NEED: Automation and demystification of Banking process use of traditional banking products for collecting funds, hedging exposures, investing surpluses and funding to meet short, medium and long-term needs
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Integration is needed across the entire value chain

Vendor record Capture payment Authorise Payment Send Payment File Reconcile Acknowledg ements Receive Statement Reconcile Update GL

ACH Payments & Collections

Services

Priority Payments Cheque Outsourcing Email Advising

Reconciliation

End of Day Statements Intra Day Statements In country reporting Debit and Credit Advices

Domestic solutions

Country Coverage

Regional Solutions - Europe Regional Solutions Middle East

Regional Solutions - Asia Regional Solutions - Americas Global Solutions 6

Payment process flow illustration

HSBC Connect to SAP client integration, not just corporate connectivity

Creation of easier, standardized yet flexible corporate-tobank integration

Linking into HSBCs worldwide banking network via a End to Ed single point

Building on emerging global standards such as XML/ISO20022

Exploiting new network solutions for corporate-to-bank connections such as SWIFTnet

Complementary service to HSBCs other global transaction banking customer connection services, such as HSBCnet

Customer As case study, real life business case

Corporate As previous payment process Areas for improvement

Corporate country 1, 2,3 (semi automated) File Upload Authorisation Banks back office system Internet

Extraction IDOC messages SAP-BANK Adaptor

Encryption Bank proprietary message format

Corporate SAP

Manual reports download Manual reconciliation against SAP

Single instance

Corporate 4, 5, 6,7 (Manual) 1. Manual creation of payments online Banks back office system Authorisation

Manual reconciliation against bank statements $

Corporate SAP

2. Manual submission of hardcopy forms Manual reconciliation against bank statements

Bank

Single instance

Corporate
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Bank A

HSBC Connect to SAP. 2-way Automation

Preparation of payment instruction for submission to Bank

Bank acknowledgement

Exception monitoring and reprocessing

Data transmissi on status monitoring

Authorisation via HSBCnet if Required

Payment Advising

Bank statement Reconciliation

Authorisation

Internet (optional)
Interoperable (For file upload and contingency)

IDOC

Payment File Creation Conversion into ISO20022 XML industry format

HSBC
HSBC Connect to SAP Automated data transfer HSBC Connect to SAP

Automated exception reporting and reprocessing

Bank acknowledgment

Corporates Multiple SAP

Single PI
Automated bank statement/report upload and reconciliation

Single PI

Back office system

Data transmission monitoring and reprocessing

Automated bank statement and report download

Payment Advising (2 advices) Email, fax, mail

Corporate
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HSBC

Key Benefits of HSBC Connect to SAP. Seamless 2-way automation

A leading-edge SAP solution for seamless integration with bank

HSBC Connect to SAP links your SAP ERP system with HSBCs banking network. This communication channel allows efficient, automated and secure delivery of information between Corporates SAP ERP and HSBC. The complete payment process flow, from the generation of payment instructions by your SAP ERP to reconciliation of account payables using bank statements is fully automatic and seamless.

HSBC Connect to SAP

HSBC Connect to SAP consists of 2 main components

NetWeaver Customer Process Integrator (PI): Corporates component of the solution which is responsible for data exchange between your SAP ERP and HSBCs PI. Data enrichment to convert the IDOC file format into ISO 20022 XML before being securely sent to HSBC. NetWeaver Bank PI: HSBCs component of the solution responsible for data exchange with Corporates PI and our back-end systems.

Flexible in supporting authorisation and payment creation per your requirements

HSBC Connect to SAP accepts payment files preauthorised in your SAP ERP or files authorised online via our e-banking platform, HSBCnet. It is also a dual channel solution where you can submit payment instructions via HSBC Connect to SAP or create manual payments (for urgent adhoc payments or payroll which does not use SAP ERP) online on HSBCnet.

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HSBC Connect to SAP. Significant time savings

Benefit analysis for Customer A

Time savings across 7 countries: 2,152 mandays annually Annual man-days saved Payment initiation: 1,729
Man-days (p.a)
3000

Time Comparison across 7 Countries - recurring

2500

2000

Recurring IT costs: 36 Collections: 309

1500

1000

500

MI Data: 78
0

Existing structure Payment SAP - Integration - recurring

HSBC Solution Collection MI Data

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HSBC Connect to SAP. Significant recurring operational cost savings

Benefit analysis for Customer A

Net operational savings across 7 countries: USD287,000 annually

400 350

Cost comparison across 7 countries - recurring cost

Annual cost savings Payment initiation: USD230,000 Recurring IT costs: USD7,200 Collections: USD41,200 MI Data: USD10,400
USD'000 (p.a)

300 250 200 150 100 50 0

Existing structure

HSBC Solution

Payment Initiation MI Data

SAP - Integration - recurring Risk Provision

Collection Annual HSBC Maintenance Fee

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Delivering your objectives. Our priority

Information visibility HSBC Connect to SAP allows visibility of payments within your SAP environment. HSBCnet can provide your HQ with full visibility of your HSBC accounts globally. Processing efficiency Reduction in manual payments and reconciliation process. HSBC Connect to SAP provides 2-way automation of payments and full audit trail. XML ISO20022, being an industry payment format, leads to standardization and uniformity across countries. SAP version upgrades can be implemented faster without impacting your connectivity to HSBC as HSBC Connect to SAP allows payment file creation outside your SAP ERP system. Cost savings Significant Project cost and time savings derived from HSBC Solution, single infrastructure that is independent of SAP E Compliance, audit and control Automated nature prepares you better for SOX 404 and other compliance Straight through processing removes latency from the process and reduces the risk of data theft or leakage

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Copyright. The Hongkong and Shanghai Banking Corporation Limited. 2009. ALL RIGHTS RESERVED.

No part of this publication document or related presentation may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of The Hongkong and Shanghai Banking Corporation Limited. The information in this document and related presentation is of general comment only. It is not offered as advice nor are we soliciting or recommending any action based on it and it should not be taken as such. We expressly disclaim all liability to any person for any reliance placed on the contents of this document and related presentation. No client or other reader should act or refrain from acting on the basis of the contents of this document or related presentation without seeking specific professional advice.

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Thank you ! Email : mayankmishra@hsbc.com.sg

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