Payment factory for a complex company structure
Lufthansa is the world’s largest aviation group by turnover, and the leading airline group in Europe.
The group is split across three strategic divisions: Hub Airlines, Point-to-Point Business and Service Companies. To enable central control of the global payment transactions of all Lufthansa’s companies, and to reduce complexity, the group relies on a payment factory. This is based on an automated integration solution with Hanse Orga, the system provider, and Deutsche Bank.
With the large number of group companies and approximately 1,500 bank accounts worldwide, cash management at the Lufthansa Group originally involved heterogeneous processes and a wide range of e-banking solutions. SAP is used in most cases. However, smaller subsidiaries, in particular, use various versions of SAP or entirely different Enterprise Resource Planning (ERP) systems.
By introducing electronic receipt of account statements from all its banks, Lufthansa aimed to create transparency around liquidity in bank accounts. In addition, considering the increasingly complex and heightened regulatory requirements for payment transactions, it became necessary to establish a standardised payment factory solution and to centrally manage global payment transactions of all group companies.
In collaboration with Deutsche Bank and system provider Hanse Orga, a Host-to-Host connection was established. This connection is used for all integrated accounts of participating group companies.
On the one hand, account information is transmitted daily via a central interface and, on the other, payment orders are received in a global format and forwarded for processing.
Wherever possible, with regard to the legal and taxation regulations, “on behalf” payments are made, which enable the processes to be standardised and optimised as far as possible. This ensures central management of the payment flows and, as a result, the liquidity of the group.
Benefits for the client
The Lufthansa Group obtains a central overview of liquidity across all accounts, including those not integrated into a cash pool, via receipt of the MT940 files. These are channelled to the Hanse Orga system and are then available for further processing and distribution to the ERP systems of the group companies.
Using the payment management module, payment orders are transmitted centrally in the standard ISO 20022 CGI-MP (Common Global Implementation Market Practice) XML format via the Host-to-Host (H2H) interface to Deutsche Bank. The payment orders themselves are created using payment optimisation in the “Finance Suite Payment Management” which is integrated into SAP.
In the case of predefined formats (such as in-house, IDOC or various pain.001 formats) which originate from diverse upstream systems in the Lufthansa Group, these are converted to XML format with the Hanse Orga solution and then transmitted directly to Deutsche Bank.
The payments are approved with a “Corporate Seal”. From the bank’s perspective, there is no longer a requirement to set up individual authorisation profiles and the payment releases within the Deutsche Bank systems are also no longer required. Personalised release processes are carried out in advance in the payment factory. Thanks to the seamless integration of systems, companies and their accounts, as well as the centralisation and harmonisation of the payment transaction processes, media disruptions are avoided.
The Lufthansa Group is benefitting from this global cash management solution which provides the ideal conditions for continued development towards an in-house bank.
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