EuroFinance

As the world’s largest bearing manufacturer, SKF Group found itself grappling with an intricate challenge, operating in 130 countries, it dealt with an array of manual payment procedures, each unique to its local entity and largely dependent on local bank accounts. This not only made payments tedious but also led to inconsistency and lack of standardisation across their global operations. 

Coupled with a complex system landscape and the need to meet stringent compliance and security standards, SKF’s treasury team realised that a drastic transformation was necessary – a global, standardised, and digitised process that could revamp their entire purchase-to-pay journey.

Embarking on a transformation journey

Embarking on this transformation wasn’t an easy task. The scale was vast – the first phase of implementation involved 44 countries, 75 legal entities, and 220 users, numbers that further escalated in the second phase. Along with navigating the complexity of different legal frameworks across countries, the team faced a crucial challenge – managing the change at every level of the organisation and ensuring a seamless transition to the new payment system. This was where a third-party vendor came into the picture, providing SKF with the much-needed solution, a global payment factory.

The treasury team undertook a comprehensive upgrade of the end-to-end purchase-to-pay process. They had to redesign and control upstream data, such as master data and invoice matching, to enable a seamless digital payment process within their ERP system. In an insightful move, the scope of the transformation was expanded to include different types of payments and the treasury team started managing salary, and even tax payments through the newly established payments hub.

The transformation resulted in several remarkable improvements. SKF shifted from a patchwork of manual processes to a unified, automated, global process, experiencing a ‘no-touch’ payment flow. This move yielded numerous benefits such as process standardisation, improved IT integration, significant cost savings through the closing of numerous bank accounts, a globally compliant payment process, and enhanced work efficiency.

“Payment Factory is one of the cornerstones in SKF digitalization journey in the Finance area. It is a solution that supports the centralised organisation as well as using the latest technology and best practices.” SKF Payment Factory project team told EuroFinance. 

In addition, the process while challenging, offered several valuable insights. The treasury team realised the importance of a well-assembled project team, the right implementation partner, and a detailed project plan. They learned the criticality of open communication, the readiness to adapt and experiment, and the significant role that change management plays in a transformation of such scale. Furthermore, they understood that not all banks are the same, and that effective master data management is critical for project success, especially when dealing with multiple integrations and systems.

Future Prospects

What made SKF’s project unique wasn’t just the ambitious scale of implementation, but also the dedication and perseverance of the treasury team. Despite numerous hurdles like different legal requirements, cultural differences, and the restrictive environment of a global pandemic, the team was successful in their endeavour. They managed to digitalize the global payment process across 50 countries, covering 132 companies and 300 users, all within less than three years.

“We are delighted to be recognized for our Payment Factory solution. This is strong evidence that we are on the right track in our digitalization journey and encourages us to continue to carry out the work in future digitization projects” Niclas Rosenlew, SKF Group CFO told EuroFinance. 

Looking towards the future, SKF’s treasury team sees a path of expansion and continuous improvement. The established payment hub solution will ease the addition of new entities. The vision includes transitioning from a PINO (payment-in-the-name-of) solution to a POBO solution, connecting all legal units, ERPs, and banks, and supporting all types of payments. The treasury team is geared up towards their ultimate goal – achieving a 100% STP adoption rate across all units. 

The journey of SKF serves as an inspirational tale of transformation, demonstrating how challenges can be navigated to achieve a revolutionary change in operations.

Step outside of the day-to-day, benchmark your operations and future-proof your strategy alongside 2,000 senior treasury leaders this September 27th-29th in Barcelona. On the theme of “Navigating a new world,” this year’s agenda will empower treasurers to tackle today’s new and complex challenges and optimise treasury for the new economic cycle. Hear from 150 world-class speakers including treasurers from eBay, JTI, Under Armour, Booking Holdings Inc., Airbus, News Corp, L’Oreal, Anglo American, Dr Martens and many more. Find out more