aib global treasury services achieving greater efficiencies from your accounts payable processes...

AIB Global Treasury Services

Achieving greater efficiencies from your Accounts Payable processes

John Hand, Senior Relationship Manager,Corporate Cash Management.

24th February, 2009


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


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


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


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


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


The Customer Challenges ?

Foreign Exchange ?

BankRelations ?

Funding ?

ABC Limited

Investments ?

CashManagement ?

Risk Management ?


Cash Management Environment

Collect Funds

CustomerAccount

Disburse Funds

Track Transactionsand Balances

Manage Funds Excess/ Shortfall


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


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 ?


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


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


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


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


Contacts

For further information please contact

Corporate Cash Management

John Hand

Senior Relationship Manager

Tel: 01 – 6417790Dedicated Line for Corporate Cash Management Sales Team


Thank you for listening!

Any questions?

AIB Global Treasury Services is a registered business name of Allied Irish Banks, p.l.c. Allied Irish Banks, p.l.c. is regulated by the Financial Regulator. Registered Office: Bankcentre, Ballsbridge, Dublin 4.

aib global treasury services achieving greater efficiencies from your accounts payable processes...

Documents

corporate cash management

management of liquid

risk management

banking services

management environment

day cash control money

funds excess shortfall

foreign credit