Bank accounts are the crux of every treasury department; central to every key process. At the end of the day, every financial transaction is reflected on a bank account. Which is why large corporates generally have dozens, if not hundreds of accounts, that their head offices and subsidiaries have to manage and check.
These accounts are distributed around the globe, denominated in various currencies and held at numerous banks, which makes retaining an overview no easy task. Then there’s the question about the number, status and purpose of accounts? Are the account signatory permissions still up-to-date?
Dieter Worf, Head of Treasury at Schott AG, is very familiar with these challenges: “With over 60 group entities and more than 200 bank accounts, managing these accounts takes a lot of time. That’s why our top priority is for as much work as possible to be dealt with by our IT systems.”
Attention to detail has always been a core element of SCHOTT’s DNA. This technology group is currently manufacturing glass-ceramic segments for the Extremely Large Telescope (ELT) which is being constructed in Chile’s Atacama Desert. It is therefore no surprise that SCHOTT also insists on maximum transparency when it comes to managing its bank accounts. The group is playing a pioneering role here because, what may sound logical is still rare in practice: an automated reconciliation process that forms a bridge between treasury departments and banks. The challenge here is enabling corporate IT systems and those of banks to automatically communicate with each other in a standardised language.
Fig. 1: An image of the Extremely Large Telescope (ELT) which will be searching for extra-terrestrial life from 2024. SCHOTT is supplying 798 hexagonal glass-ceramic segments which will be combined to form the 39-metre diameter primary mirror.
SCHOTT implemented the treasury software TIP as early as 2002; a solution which is designed specifically for integrating different systems. In the course of a brainstorming session with the software developer TIPCO, the treasury team at SCHOTT decided in 2018 to manage the first element of its bank account management processes by means of a workflow and to handle bank communication via automatically generated messages. The idea behind this: completely automatically checking whether certain accounts at the bank are active and which individuals have signatory rights to these accounts.
Jochen Alt, Treasury Manager at SCHOTT, highlights the biggest advantage of this approach: “We liked the idea of being able to automatically check the status of our accounts at the bank not only because of the time-savings. The option of checking who has signatory rights to an account at the press of a button also helps us in terms of compliance with our policies.”
The right bank as the key to moving from BAM to eBAM
While this idea is not a new one, in the past, one of the reasons why implementations failed was a lack of willingness on the part of many banks to get to grips with the issue. At SCHOTT, however, this not the case, and full backing was obtained.
This support was helped by the fact that investment had already been made in the relevant technology and tools. The company’s treasury information platform (TIP) meant that a suitable tool was already available in which all of SCHOTT’s bank accounts had been captured.
The only missing element therefore was a banking partner who was prepared to allocate resources to the project. The treasury team at SCHOTT, however, was able to convince Deutsche Bank, one of its core banks for many years, that this was the best way forward. The foundations were therefore complete, and the project could be launched.
Request, status message and account report: from concept to workflow
The first step was for the project team to jointly define the target process for account confirmations, because only processes which adhere to clear rules can be translated into a workflow. Given that this was literally a greenfield project, it was necessary to precisely coordinate everything on the drawing board. TIPCO moderated the drafting of flow diagrams in order to clearly define the end-to-end process.
This is where years of experience in the areas of system integration and data exchange really paid off. “We liked the fact that TIPCO focussed not only on its own system but on the entire process,” commented Worf. “And Deutsche Bank was totally committed from the outset to jointly implementing this solution despite a few minor stumbling blocks along the way.”
Fig. 2: The account confirmation process used by SCHOTT. The exact reconciliation of the messaging process and the resulting, various workflow statuses formed the basis for implementing the project.
After several rounds of coordination, the process steps had been defined and TIPCO was able to set up the first prototype of the workflow. The first acmt messages were generated and sent to Deutsche Bank to be checked. After some fine-tuning, Deutsche Bank achieved a breakthrough: its system was able to receive and respond to a request captured in the acmt format and transferred via the SWIFT network in a fully automated fashion.
The outcome: More automation and transparency
The TIP workflow and the automated exchange of data now mean that SCHOTT can have its active accounts checked and confirmed by the bank at the press of a mouse button. An error message is generated if the bank cannot identify the accounts delivered in its systems. If the accounts can be identified but the signature authorisations aren’t correct, then the accounts are flagged in the workflow for clarification with the bank. If all the data are 100% correct, the status of the accounts changes to ‘confirmed’ and the date of the confirmation is added.
Fig. 3: Confirmation workflow in TIP: the confirmation for the relevant accounts can be initiated on an overview screen by means of a simple mouse click. After being transferred to Deutsche Bank, the import of both acknowledgement and account report takes place completely automatically. Accounts with discrepancies in terms of signature authorisations are flagged for further processing while successfully confirmed accounts are moved to the status ‘confirmed’.
When the entire workflow goes live as planned in February, the treasury software TIP will forward the account report request to Deutsche Bank automatically via the SWIFT network and the acknowledgement, any rejections and as well as the account reports will be processed without any manual inputs. This will make sending emails redundant and avoid any communication and transfer-related errors as well as any security loopholes.
The next steps?
With the aid of the workflow, SCHOTT will initially be able to reconcile account numbers, currencies and signature authorisations. A further aim is to automate the annual account balance confirmation process which is part of annual closings. In future, it could also be possible to check the lower and upper amount limits of authorised signatories.
The enormous potential of this solution, however, lies elsewhere: the technical basis and the experience gained in the course of this innovative project can be leveraged to automate other processes related to opening, amending and closing bank accounts. Features which are currently only available in connection with Deutsche Bank accounts in Germany will in future also be available for international accounts.
Worf explains: “This project in cooperation with TIPCO and Deutsche Bank has successfully digitalised an important area of bank account management. We are also convinced that far more is possible. We aim to keep focussing on this and invite all others working in treasury to do as we have done. This is the only way that completely digitalised bank account management can become reality.”
The vision for the future is for other banks to do what Deutsche Bank has done and to make their systems ready for eBAM so that corporates can soon check and manage the majority of their accounts, both domestic and international, at the press of a button.
Alt summarises the outlook from the perspective of SCHOTT: “We have made a start and now further steps can be taken. By the time the Extremely Large Telescope enters service in 2024, our view of our bank accounts will also be a lot clearer.”
About SCHOTT AG
SCHOTT is a leading international technology group in the areas of speciality glass and glass-ceramics. Further information on the company’s activities can be found here. The parent company, SCHOTT AG, has its headquarters in Mainz (Germany) and is solely owned by the Carl Zeiss Foundation. This is one of the oldest private and one of the largest foundations supporting scientific research in Germany. As a foundation-based company, SCHOTT assumes special responsibility for its employees, society and the environment.
Its more than 15,500 employees worldwide, of whom 5,500 are based in Germany, most recently generated revenues of EUR 2.08bn, 86% of which was generated abroad.
TIPCO is a leading provider of digital solutions for Corporate Treasury departments. Whether the focus is on cash visibility, cash flow forecasting, risk management, guarantee management or bank fee analysis, the web-based Treasury Information Platform TIP leverages data from various source systems, supplements these with information provided by local subsidiaries and offers a comprehensive toolbox for data analysis and reporting. TIP empowers Treasury departments to digitalise their processes and do away with manual data capturing and endless e-mail exchanges. No matter if requests for intercompany financing, guarantees or bank accounts: TIP workflows engage the right people and the right systems at the right time, resulting in a smarter and more efficient Treasury. By combining IT-skills with many years of treasury expertise, TIPCO has made TIP the solution of choice for some of the leading companies in Europe across various industries. More than 120 clients trust in TIP and in TIPCO’s ability to provide market-leading treasury innovation.