aib global treasury services achieving greater efficiencies from your accounts payable processes...
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AIB Global Treasury Services
Achieving greater efficiencies from your Accounts Payable processes
John Hand, Senior Relationship Manager,Corporate Cash Management.
24th February, 2009
AIB Global Treasury Services
Agenda
Cash Management definition
objectives
benefits
challenges today
cash management environment
what’s the best fit Best fit for an Accounts Payable Function? Working Example Benefits of a single bulk payments solution Benefits of centralising the payables function Summary
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Definition of Cash Management
“Effective Planning, Monitoring and Management of Liquid/ Near Liquid Resources”
Includes:
Day to day cash control Money at the bank Receipts Payments Short term investments Short term borrowings
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Cash Management Objectives
Maximize value on incoming funds Maximize return on excess funds Integrate banking services with accounting and treasury functions Process information quickly and accurately Move it, manipulate it, report it and transmit it
AIB Global Treasury Services
Cash Management Objectives
Centralised Administrative, Treasury and Accounting Functions for :- distribution
invoicing
receivables
payables - domestic and foreign
credit and collections
FX dealing and Investments
information processing
analysis and reporting
Maintain optimum number of bank accounts reduce number of banking relationships to optimum level
improve bargaining position and therefore pricing
reduce costs
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Benefits of Good Cash Management
Better control of financial risk Opportunity for profit Strengthened balance sheet Increased confidence with customers, suppliers, and shareholders. Achieve administrative savings and synergies for individual
operations and group as a whole
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The Customer Challenges ?
Foreign Exchange ?
BankRelations ?
Funding ?
ABC Limited
Investments ?
CashManagement ?
Risk Management ?
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Cash Management Environment
Collect Funds
CustomerAccount
Disburse Funds
Track Transactionsand Balances
Manage Funds Excess/ Shortfall
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Cash Management Structures - What is Best Fit for a Company?
Depends on Industry e.g. Manufacturing / Retail / Service ?
Market e.g. Domestic and or International
Customer base e.g. 3rd party, inter company
Product range
Receivables and Payables - domestic and or foreign currencies
AIB Global Treasury ServicesCash Management Structures - What is Best Fit for a Company?
Method for handling Collections /Receivables
Cash
Cheque
Bank Draft
Credit Card
Direct Debit
Standing Order
EFT via local automated clearing
system (EMTS)
Incoming International Payment in Euro
or foreign currency
Method for handling Payables / Disbursements
Cash
Cheque
Bank Draft
Credit Card / Purchasing Card
Direct Debit
Standing Order
EFT via local clearing system (EMTS)
Outgoing International Payment in Euro
or foreign currency
Mix of payment options available
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Ideal scenario?
All accounts payable activities for all areas/ entities are centralised through a single area within a company / or Group structure
Electronic payment becomes the norm for both domestic and international suppliers
Establish a single payments interface between a Company’s AP/ Enterprise Resource Planning (ERP) system and its bank - allowing the upload in a single file of all domestic and international vendor payments with remittance data.
Cash Management Structures - What’s the best fit for an Accounts Payable function with volumes of domestic and international payments ?
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Accounts Platform
A/P Processes
Foreign Currency & Euro Drafts
1. Cheques sent both locally & internationally
2. Direct Debits3. Payroll via EFT
International Payments sent on paper
International Payments keyed individually via iBB
Example of ABC Limited - Pre introduction of AIB Credits
Payroll
Module
A/C No 12345678
Receipts
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Accounts Platform –
Vendor Payments & Receipts
AIB Credits1. Domestic Vendor payments2. International Payments – paper 3. International Payments - keyed
manually via iBB4. Foreign Currency Drafts5. Euro Drafts
Payroll via EFT
Example of ABC Limited - Position following introduction of AIB Credits
Direct Debits
Payroll Package
Receipts
A/C No 12345678
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Secure and controlled mechanism for the disbursements of funds with remittance data locally and overseas
Enforces clear segregation of duties and employs latest Smartcard technology protecting authorisation and integrity of confidential data
Minimises risk of transcription errors by uploading payment files directly form AP/ ERP system Internal capture of vendor data and up front payment validation ensures that supplier payments are
delivered consistently on time Allows greater control over cash flows by allowing you to determine when payments are effected Warehousing of payments allows you to avail of full credit terms granted by suppliers Ultimately helps strengthen relationships with trading partners
Benefits of AIB Credits as a single bulk payments solution?
AIB Global Treasury ServicesPotential benefits of centralising the payables function
1. Centralise all your domestic and international payables to build consistency and knowledge
• “Intermittent” users of banking services in corporate accounts departments are the main drivers of errors and rework
• Specialisation can help facilitate automated reconciliation on a national / pan-EU basis
• There are other significant benefits e.g. remote units with an ability to disburse and reconcile company cash are never popular with auditors, SOX etc.
• Many companies already pay the fixed overheads of running an ERP system without fully exploiting all its existing built-in capabilities
AIB Global Treasury ServicesPotential benefits of centralising the payables function
2. If you are centralising the processing of incoming invoices ensure you integrate the assembly of a bulk global payments file for your bank
• Adopt electronic payment as your default method of payment
• ERP systems (SAP, Oracle, Agresso, MS Navision etc.) are often the route to the benefits of centralised invoice processing, such as supplier consolidation, full use of credit terms, payment warehousing etc.
• ERP systems can also be used to drop enterprise-wide global payment batches into a bank’s bulk payables service to reduce labour costs and transcription errors
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3. Watch the hidden costs of inaccuracy and uncertainty
• We see some companies less focused on repairing consistently faulty data on their beneficiaries’ banking details.
• This faulty data causes recurring queries and errors and can lead to weakened vendor relationships and possibly increased bank fees
• If you are consistently accurate and efficient in instructing payments, you can consistently pay very close to the end of your agreed credit terms
• Monitoring the number of payments that cause a subsequent query allows you challenge your bank to help you eliminate such queries
Potential benefits of centralising the payables function
AIB Global Treasury ServicesSummary
To cut your costs and achieve greater efficiencies in Accounts Payable processes
1. Centralise all your payables via a single bank and channel
2. Integrate payables with centralised invoice processing
3. Identify and eliminate any hidden costs
4. Aim for a single enterprise-wide operational account (s)
5. Benchmark your bank(s) current offerings versus industry standards
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Contacts
For further information please contact
Corporate Cash Management
John Hand
Senior Relationship Manager
Tel: 01 – 6417790Dedicated Line for Corporate Cash Management Sales Team