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Building a Better
SAP® Payment Process
Identifying the right tools for
payment success

www.accuity.com/sapinsider
 Integrate Data to Optimize
Payment Processing in
your SAP® System
Today, corporate treasury professionals face a greater set
of challenges than ever before. Reduced liquidity and
enhanced volatility means firms must manage cash and
financial risk more efficiently, while higher costs, fewer
resources and more complex transactions require greater
transparency and control to drive better financial results.
In addition to these challenges, often firms must also contend with inefficient, fragmented
processes and policies that result from maintaining multiple banking relationships.
Despite a wealth of powerful financial processing capabilities available to companies
deploying SAP, issues such as Single Euro Payments Area (SEPA) / International Bank
Account Number (IBAN) compliance, payment rejections and repairs and the manual
research necessary to reconcile payment orders and electronic bank statements can
still result in higher processing costs and lower productivity.

The key to managing these issues within SAP lies in securing the right banking data while
ensuring access to the relevant information when needed. Without the correct data or
necessary access, payments can grind to a halt, costing thousands of dollars in repair fees,
staffing hours or lost or delayed vendor services. Worse, for time-sensitive, high value
transactions such as accounts payable receipts, securities transactions or supply chain
financing, the damage can be upwards of hundreds of thousands—or even millions—
of dollars.

In order to take advantage of all of the benefits SAP offers in providing payment flow
transparency, seamless payment and settlement processing, the necessary resources
within the application must be populated and updated with the most complete and
up-to-date bank master data.

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Meeting the Update Challenge
As a sophisticated, powerful enterprise master can require considerable effort. As
resource planning (ERP) solution used by companies today seldom rely on a single
companies and treasury professionals around banking institution, firms must also maintain
the world, SAP offers the ability to maximize relationships with several banking partners
payment flow, gain greater insight into payment that can require a myriad of communications
processing and settlement and provide real- based on a variety of protocols, proprietary
time analysis of intraday or end-of-day bank standards and processes, further adding
balances. Multiple applications are available to existing complexities. Payments within
for SAP to help achieve these goals, including SEPA, for instance, need to comply with the
SAP Treasury and Risk Management, Payment European Payment Council’s SEPA directive
Engine, Bank Communication Management, requiring provision and maintenance of IBAN
Cash and Liquidity Management, Integration and SWIFT/BIC with other bank details in
Package for SWIFT and more. vendor and customer records. In some banking
countries, to leverage the benefits of low-cost
Within these solutions, a wide range of core national clearing systems, payments require
modules, including those relating to vendors, data in a local language, such as Chinese,
customers and personnel management, which can require access to non-Latin character
rely on access to critical bank-related data sets to process payments.
to set up payments initiated throughout the
system. Reference information about financial Taken together, these and other challenges
institutions required to create payments, such require access to the highest quality payments
as an institution’s bank code, SWIFT/BIC, data to drive complex accounting, financial
bank name and more, are housed in the bank supply chain, treasury, and managerial
master table, or BNKA. In addition, bank accounting functions.
references also appear in individual documents
stored throughout the system, or in third-party,
industry-specific solutions, such as utility,
telecommunications or insurance applications
attached to the ERP platform.

The BNKA data is often manually or

automatically updated and can be maintained
by treasury professionals, accounting clerks
or IT staff, while entering and updating
larger amounts of data requires a separate
upload program. For many firms, however,
maintaining a correct and up-to-date bank

Building a Better SAP® Payment Process /3

 The Importance of the Right Data at the Right Time
Even with the right data in place, payments Due to its potentially sensitive nature, many
within SAP can prove less efficient and more SAP customers have the underlying BNKA
costly than necessary if the information is not data “locked down” and managed exclusively
consistently available within the solution to by a Master Data Management Policy
those departments and resources that rely on Administrator, Data Protection Management
bank data to perform. group or equivalent. While such a process may
be advantageous for a number of reasons, it
Take, for example, the scenario of creating a
can also introduce a number of challenges to
vendor record within SAP for a new supplier
normal day-to-day operations such as supply
relationship a company has gained. As an
chain management. When attempting to create
employee captures information such as the
a vendor record and facilitating payment for
vendor’s name, address, bank account and
a new supplier, for example, the process can
banking routing information into the relevant
be halted if the associated bank details for the
SAP table, that data is often taken directly
supplier are missing from the BNKA. Often,
from an invoice or other documentation
this requires an employee to stop and create
supplied by the vendor itself. However,
a “work order request” to be sent to the
should relevant information about that
appropriate authority, who then research and
bank not already exist in the BNKA, SAP will
add a bank record before the payment set up
prompt the employee to manually create the
can continue.
necessary information in the BNKA. Even if the
information is able to be added successfully, For firms with central database management
lacking access to a definitive table of bank controls, such “adds” may be reserved only
routing data could result in partial BNKA for specialized teams to address. This would
records with only BIC fields populated, missing inevitably drive delays in the process, additional
an ability to have the associated national work flows and the firm may need to hold off
routing code. For a SWIFT/BIC or local bank conducting business with the vendor.
code for cross-border or local payments,
respectively, the process may need to be
repeated, leading to duplicated data entry.

In such a scenario, multiple inefficiencies can

abound. For example, treasury staff can spend
considerable time rekeying data, handling
exceptions, and reconciling information to
resolve payment issues. For some firms, these
costs can be substantial. In addition, whenever
a payment instruction is created based on
incorrect BNKA data, bank reconciliation or
repair fees can be levied on the firm to process
those payments. All this can quickly lead to a
decline in overall payment efficiency.

/4 Building a Better SAP® Payment Process

 Inefficient, Costly Payments without Correct Bank Data

Payment 1 – Invoice Received

Employee inputs customer Employee sets up vendor Bank code from invoice does
data from invoice master record not exist in SAP Bank Master
Data Table (BNKA)

DELAY

Payment
$$$
Employee must enter bank Data management
Processed
data in the BNKA manually administrative cost

Payment 2 – Cross-border Payment

Bank rejects
the payment
Employee initiates Payment requires SAP processes the
payment request from missing SWIFT code payment without the
prior vendor record in BNKA SWIFT code

$$$
Bank processes payment Bank fees
with repair fee

Data Management
Administrator enters $$$ Payment
SWIFT code Data management Processed
administrative cost

Successful Cross-border Payment with Accurate,

Up-to-Date Bank Data

Employee inputs customer SAP attempts to verify bank Bank and SWIFT data Payment
data from invoice, bank data data with Bank Master Data verified with accurate,
already existing in BNKA Table (BNKA) up-to-date bank data
Processed

Building a Better SAP® Payment Process /5

 A Limitless Ceiling on Costs
The costs associated with delays in processing Delayed payments can present challenges for a
payments—for both inbound and outbound number of critical corporate functions:
transactions—can be substantial.
Production: If bad routing data causes broken
Any inefficiencies or delays in payment payments and subsequent delays in the
processing can significantly impact treasury supply chain, critical facets of the production
professionals on a number of levels. For one, process can be negatively impacted and
result in declining revenue. One corporation
treasury professionals often spend considerable
that experienced a 24-hour delay in a critical
time researching information, keying and
payment being settled with a repair shop
rekeying data and reconciling information,
resulted in a $250,000 miss on revenue. For
placing a heavy burden on productivity and
this company, a rejected transaction that
staffing costs. As a result, internal costs from caused a delay of four days meant a loss of $1
human resources necessary to repair or resolve million in revenue.
those payments, along with additional costs
Receivables: Bad routing data impedes the
for research, can begin to accrue. At the same
ability to collect receivables via direct debit.
time, for corporates that consistently set up
When critical inbound flows of money are
new vendor or payee relationships, new bank
delayed, corporations often have to tap into
details must be manually researched and more expense lines of credit. Debt financing
entered into the system, representing further can cost hundreds of thousands of dollars.
man-hours.
Treasury: For firms engaged in time-sensitive
The potential also exists for costs much higher securities transactions designed to help
than repair fees or staffing hours in the form of manage liquidity or funding, such as the
lost revenues resulting from delayed payments. overnight repo or short-term commercial
paper markets, bad routing data on
For many corporates, an efficient and effective
transactions can have an immense cost in
treasury function requires hour-by-hour
higher interest payments, increased transaction
management of liquidity issues and a precise
costs or more critical liquidity issues.
balancing of cash flows and funding sources.
In such an environment, opportunity costs In short, incorrect or missing bank data can
from broken payments that result in delayed affect transactions across the entire financial
transactions can be upwards of 10 or more supply chain, and result in hundreds of
times greater than any bank fees for fixing non- thousands or even millions of dollars lost in
STP transactions. diminished funding capacity, costly production
delays or lost revenue.

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Delayed Payments Can Mean Lost Opportunities
Opportunity costs like these are often 10 times greater than any bank fees for fixing non-STP
transactions, and can be more disruptive to day-to-day operations than enhanced staffing costs or
increased bank fees.

Slowed or stopped supply chains

A payment to purchase a critical part essential
for a production assembly line is delayed by
several days, resulting in a severe hit to revenue
potential as products are not brought to market
as expected.

Delayed and uncollected

accounts receivable
A broken payment as part of a collection effort
for accounts receivable means the treasury
department may need to access more expense
credit lines to sustain day-to-day operations.

Missed opportunities
and lower liquidity
Delays in a payment to fund a substantial
securities purchase of even a few hours could
mean a significant shift in price or availability of
a sought-after security, compromising the goals
of treasury operations.

Building a Better SAP® Payment Process /7

 Hidden Costs Made Visible
Given the power and sophistication of the Annual Cost of Failed Payments
many financial management functions and
tools SAP provides, it is not surprising that annual cost of incorrect
$600,000 payment instructions
process inefficiencies, bank fees or excess annual cost of correcting
staff costs can seem hidden or difficult for + $140,000 payment instructions

corporates to identify.

While it can be difficult to identify opportunity $740,000 annual costs

costs associated with broken payments in

areas such as production, receivables or The annual cost of correcting returned
treasury, costs associated with bank fees payment instructions, including reject fees
and human capital needs are often more and time spent, is $740,000. However, by
quantifiable. Based on Accuity’s experience improving payment set-ups by even a small
helping global corporates of all sizes improve percentage, corporate treasurers can cut
their payment operations, we illustrate below costs and improve payment efficiency. While
some of the potential costs associated with a challenge to quantify, opportunity costs can
a corporate deploying SAP but failing to be 10 times greater or more than bank fees or
optimize bank master tables with correct FTE expenses for fixing incorrect transaction
and up-to-date information. data. When critical inbound flows of money
are delayed, however, the final costs of lost
In the following example, a corporate making
opportunity can be immeasurable.
500,000 payments reported a 10% failure rate
on payments. The cost for these payments Annual Costs of Failed Payments
along with the cost involved for new BNKA Including Opportunity Cost
manual data updates were determined to be:

Annual Cost of $740,000 known annual costs

Returned Payment Instructions opportunity costs

+ $$$$$$$ due to delays
1. 10% of 500,000 payments a 2. The firm’s bank charges
firm submits a year fail. $12.00 per rejected item:

500,000 annual payments 50,000 items rejected $LIMITLESS annual costs

x 0.10 items rejected annually x $12.00 bank fee per transaction

50,000 items rejected $600,000 annual cost of incorrect

payment instructions

Annual Cost of
Correcting Payment Instructions
1. The firm required three full- 2. Setting up 2,500 bank 3. A company would need four
time equivalent staff positions records per year for new FTE staff positions to correct
(FTEs) per year to dedicate vendor/customer relationships payment instructions.
time to investigate these issues. requires an additional FTE.

$35,000 annual FTE salary $35,000 annual FTE salary $105,000 cost to investigate

x3 positions x1 position + $35,000 cost to setup bank records

$105,000 annual cost to $35,000 annual cost to setup annual cost of correcting
investigate issues bank records
$140,000 payment instructions

/8 Building a Better SAP® Payment Process

How Can Accuity Help
At the heart of improved payment efficiency is the need for accurate payment data at the point of
origination. For corporates experiencing less-than-optimal payment STP, the key to the success of
improving efficiency and reducing transaction costs in payment processing lies in increasing the
quality of payments processing data.

Accuity has more than 175 years’ experience enabling organizations to maximize efficiency and
facilitate streamlined transactions. As the official registrar of American Association (ABA) Routing
Numbers and official provider of both the European Banking Authority (EBA) Priority Payments
Scheme central registry and the European Payments Council (EPC) SEPA adherence database,
Accuity maintains the most authoritative and comprehensive databases globally. As a result, we
provide all the necessary payment routing data required to ensure payment messages are created
with complete and up-to-date information.

Accuity offers a range of solutions and services to help corporates tackle the challenge of achieving
high payment process optimization including:

Global Payment File™-ERP (GPF-ERP) IBAN Complete

This solution provides essential and readily- Designed to provide complete information
accessible payment information for banks for SEPA and IBAN compliant payment
and financial institutions worldwide in an XML messages, IBAN Complete can be used
format that can easily be deployed within to validate and convert IBANs and identify
any ERP system. The file facilitates vendor connected SWIFT/BICs for outgoing
payments, cash aggregation and payroll payments and customer and vendor
operations and supplies invaluable payment master lists.
data including:
Professional Services Group (PSG)
Bank information for all countries worldwide
Drawing on a solid foundation of
Head office and branch addresses technological and business experience, PSG
National bank codes for over 150 countries can assess corporates’ individual system
and territories requirements to develop the most efficient
100% coverage of SWIFT/BICs approach for integrating Accuity solutions
into existing software and business platforms.
Bank Master Update Program PSG can also assist with full solution
Our exclusive load program for SAP systems integration, platform migration or system
allows you to quickly and efficiently deploy upgrades and maintenance, while providing
our GPF-ERP data. Easy to install, the Bank ongoing consultative and testing support.
Master Update Program automatically loads
GPF-ERP, retrieves data files and populates
the SAP BNKA. As a result, corporates can
avoid utilizing internal resources to design,
create and test a load application.

Building a Better SAP® Payment Process /9

 Only Accuity has the
following strategic alliances:

Accuity is the official provider of the

EBA Euro Priority Payment Scheme
central registry.

Accuity is the official provider of the

European Payments Council SEPA
adherence database.

Accuity is the official registrar of

American Bankers Association
routing numbers—a role we’ve held
for over 100 years.

Accuity is the official provider

of the Irish Payments Services
Organisation’s directory of
National Sort Code database.

/10 Building a Better SAP® Payment Process

Building a Better SAP® Payment Process /11
 Getting Started
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02.20.14