D1 S1 16.00 Janko Hahn

J. Hahn, Head Treasury Operations . May 2015
Payment factory: a worthwhile disruption?

Agenda
1. Autoneum at a glance
2. The Autoneum approach to a payment factory
• Starting point
• Goals
• Project DRIVE: standardized business processes with SAP
• Via SAP & FIDES to the banks (and back)
3. Outlook: the years ahead
• Formats / «on behalf-structure»
• SAP Treasury enhancements
4. Obstacles & lessons learned
5. Project benefits
6. Q & A

4Eurofinance Miami 05/2015: Payment factory: a worthwhile disruption?
Autoneum at a glance
Product lines
• Broad range of technologies
• Innovative materials and
processes
• Customized systems and
components
• Cost effective and lightweight
solutions
• Total vehicle optimization
• Simulation tools and
measurement systems
Engine Bay
Interior Floor
Underbody
Body
Treatment

Key Facts & Figures
Net Sales 2014:
1’954.7 million CHF
Represented in more
than 20 countries
Around 50 locations
worldwide
EBIT margin 2014: 6.9% Over 10’000 employees
Stock listed company
(SIX Swiss Exchange)

Well-diversified global customer base
Share in net sales 2014:
42%*
BG North America

Not impressed yet?
42%*
BG North America

The Autoneum approach to a payment factory
Starting point
Status Quo 2012:
• Treasury organization
− Centralized Treasury Operations
− 2 FTEs (globally); based in HQ in Winterthur
• Cash management landscape:
− Larger positions of local based cash
− Large number of bank accounts globally (> 100)
− with broad variety of banks (> 45)
• System / IT landscape:
− Out-dated Treasury Management System (TMS)
− Independent / outdated ERP landscape («BPCS»)
− No standardization in transmission of payment files & bank statements

Starting point
Status Quo 2012 – execution of payments & posting of bank statement items:
• Preparation & release of payment runs
− Local
− No transparancy for HQ
• Connection to banks for transmission
− No standard approach
− Heterogeneous systems
− E.g. «Mammut», e-banking portals, local solutions
• MT940 for «Electronic Bank Statement» functionality in ERP
− None
− Manual booking of bank statement items; paper based

Starting point
Approach before start of project POWER

Goals
Goals:
• Full daily overview over cash & liquidity
− MT940 for Treasury for (major) bank accounts
− Parallel for Accounts Receivable use locally
• Better transparency of cash flows globally (…where possible)
• Cost savings
− Choosing «the right» banks
− Reduction of number of bank accounts
• Aligned approach to connect legal units to their banks
− One interface
− Standardized process
−  «Payment Factory» as target
What is
a
Payment
Factory?

Goals
Definition payment factory:
• Centralization of payment flows for Treasury & AP payments
• Process:
− Transmission from legal unit ERP system to central connectivity solution
− Centralized execution of file transfers in a cost & process optimized approach
− Transfer via one central bank connection / interface to appropriate bank
relation & bank account

Project DRIVE: standardized business processes with SAP
• July 2012: Board decision for global project («DRIVE») of process re-
engineering by using SAP as instrument (global roll-out of SAP FI, CO,
SD, MM, etc)
• Agenda: 2 – 3 Roll-Outs / year, starting with CH Legal units  original time
frame until 2017 for Project DRIVE
• Group Treasury – Project POWER:
− TMS evaluation 2nd half of 2012, SAP TRM selected as new TMS in 11/2012
− In-House Cash licensed for future use
 Benefit of integration into DRIVE landscape
 Consulting partner for SAP Treasury: EPROX Consulting, Switzerland
• Key changes / requirements short term:
− Centralized transmission of payment runs & bank statements
− Single gateway to the banks & local benefits of SAP TRM use

Via SAP & FIDES to the banks (and back)
• Autoneum history with FIDES:
− FIDES already in place
− Daily collection of MT940 & MT942
• Potential approach for payments:
− SWIFT connectivity for non-CH / non-EUR zone Go-Lives
− Potentially «EBICS» where available  avoid SWIFT
− Profiting from choosing «the right format»: ISO 20022 / XML
• Evaluation:
− Comparison of a few service providers (e.g. «classical» SWIFT
Service Bureaus)
− Alternative: would SWIFT solution «Alliance Light» fit to our needs?

EBICS – Electronic Banking Internet Communication Standard:
“...we need an interoperable communication standard able to exchange common
ISO 20022 formats and to transfer messages securely from customers to banks.
EBICS meets these requirements” (source: www.ebics.org)
• Member countries: e.g. Germany and France, other countries to follow (e.g.
Switzerland)
• Advantage (corporate Treasury view): cost savings compared to SWIFT
approach
− Lower / no implementation costs vs. SWIFT setup on bank side (different
from bank to bank)
− No transactional fees charged vs. SWIFT
− Allows us also to get payment files forwarded «bank-internally» to other
countries outside the EBICS countries (e.g. UK, potentially China)

• Alliance Light:
− Offers easy and cloud based linkage to the SWIFT network
− No complex and expensive IT investments required
− Allows independence from 3rd party providers
• Assessment Autoneum: approach ideal if
− only a few banks to be connected
− utilization of single standard file format possible (e.g. only MT101)
− inhouse capacity to maintain format variations if necessary
− limited number of countries approached for payments

Autoneum case:
• Broad(er) variety of banks
• Complete bank landscape not yet known at project start
• Global roll-out: includes banks in «complex» countries
• (Potential) variety of formats
• Limited SAP business analyst capacity in-house
 Doubts if Alliance Light «plug-in» would work for us
 Unknown consulting costs for implementation
 Decision to go for «hybrid Service Bureau» approach provided by FIDES

Middle-
ware
New approach with using SAP / BCM & FIDES

Payment factory roll-out until 05/2015:
• 2013: Switzerland, 3 x Headquarter/management entities,
1 x operational entity with one plant
• 2014: USA & CA, 2 x entities with 7 (!) plants
• 2015: France with 4 plants
 All entities connected via FIDES:
− Swiss banks (3) via EBICS
− EUR bank (1) via EBICS
− USA & CA bank (1) via own Autoneum BIC

Outlook: the years ahead
Formats / «on-behalf» structure
• Optional:
− Evaluate Payment-on-behalf («POBO») and Collection-on-behalf («COBO»)
− Interesting approach for EUR entities
− BUT: large tax and legal questions to clarify first!
• Bank Statements:
− Move from MT940 / MT942 to CAMT.053 / CAMT.052
− Currently not an option due to missing bank readiness
• ACK/NAKs (pain.002):
− Currently received from FIDES by e-mail
− Target to implement into SAP BCM

Outlook: the years ahead
SAP Treasury enhancements
• Automated confirmation of FX Deals with the banks via MT300 (SAP TRM/
New Correspondence Framework)
• Treasury «Cockpit» for easier navigation across the Treasury
Transactions in SAP
• EMIR & FinfraG compliance (Dodd-Frank TBD)
• Improved reports & graphical analysis of data: Microsoft BI solution
• Implementing SAP In-House Cash module

Obstacles & lessons learned
Go-Live CH Legal Units 2013 (bank-connectivity)
• Manage external dependencies
− FIDES (e.g. testing windows, converter settings)
− Banks - format definitions
• Manage internal dependencies
− Accounting team (e.g. creation of test files)
− Manage setup of several developement and testing mandates & impact on
bank connectivity in SAP (e.g. middleware configuration)
• Correct and uniform Masterdata is key for successful payment execution

Go-Live US & CA Legal Units 2014 (formats)
• Sufficient time calculated for preparation / planning / testphases
− US/CA project involved 2 timezones and 4 different parties (bank, FIDES,
Autoneum team and SAP consultants)  multiplication of time needed due to
complexity
− Bank internal project guidelines lead to additional time needs (e.g. several
UAT cycles, testing freeze, cheque Go-Live schedules)
− Definition of ACH formats (CTX, CCD, PPD, etc.)
− MT940 used for statements – BAI2 can be avoided!
• Don’t rely (only) on local knowledge: ACH requirements («don’t know, we
always paid by cheque»)
• Hypercare phase must not be underestimated
• «Pushback» against reduction of payments by cheque

Main challenges
Change Management! Change Management! Change Management! Change
Management! Change Management! Change Management! Change Management!
Change Management! Change Management! Change Management! Change Mgmt!

Project Benefits
Achievements (so far)
• Bank connectivity:
− One single Gateway to the banks from & to SAP/TMS established
− Stable SWIFT connection for US & CA bank
• Payment formats & standardization:
− Avoidance of local payment formats (e.g. in France «Bill of Exchange»)
− Reduction of number of cheques issued in US & CA (1’000 cheques / month
 200 cheques / month) (!!!)

Project Benefits
Achievements (so far)
• Transparency & Risk reduction:
− Direct upload of bank statements into the TMS & ERP – no manual entering
of bank statement data
− Uniform approach to approve (Legal Unit) & release (Group Treasury)
payment runs
• Bank relationships:
− Focus on core banks in regards to «side business» (payment execution):
targeted 7-8 core banks once all roll-outs completed (ecxl. Local banks)
− Reduction of local bank relationships (e.g. US & CA: one remaining bank
targeted by 06/2015 down from 5 banks in the past)
• Transaction costs:
− Less banks  more volume  better pricing
− Avoidance / reduction of local instruments reduces bank fees (cheques)

Q & A
Contact details:
Janko Hahn
Head Treasury Operations
Autoneum Management AG
T +41 52 244 82 13
Janko.Hahn@Autoneum.com

D1 S1 16.00 Janko Hahn

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