Here is the title of your presentationJohn Hand,
Best fit for an Accounts Payable Function?
Working Example
Benefits of centralising the payables function
Summary
“Effective Planning, Monitoring and Management of Liquid/ Near Liquid Resources”
Includes:
Money at the bank
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
distribution
invoicing
receivables
reduce number of banking relationships to optimum level
improve bargaining position and therefore pricing
reduce costs
Opportunity for profit
Strengthened balance sheet
Achieve administrative savings and synergies for individual operations and group as a whole
AIB Global Treasury Services
Depends on
Market e.g. Domestic and or International
Customer base e.g. 3rd party, inter company
Product range
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Method for handling Collections /Receivables
Cash
Cheque
Incoming International Payment in Euro or foreign currency
Method for handling Payables / Disbursements
Cash
Cheque
Outgoing International Payment in Euro or foreign currency
Mix of payment options available
AIB Global Treasury Services
Cash Management Structures
- What’s the best fit for an Accounts Payable function with volumes of domestic and international payments ?
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.
AIB Global Treasury Services
Direct Debits
International Payments keyed individually via iBB
Example of ABC Limited - Pre introduction of AIB Credits
Payroll
Module
Foreign Currency Drafts
Example of ABC Limited - Position following introduction of AIB Credits
Direct
Debits
Benefits of AIB Credits as a single bulk payments solution?
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
AIB Global Treasury Services
Potential benefits of centralising the payables function
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 Services
Potential benefits of centralising the payables function
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
AIB Global Treasury Services
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
AIB Global Treasury Services
Summary
To cut your costs and achieve greater efficiencies in Accounts Payable processes
Centralise all your payables via a single bank and channel
Integrate payables with centralised invoice processing
Identify and eliminate any hidden costs
Aim for a single enterprise-wide operational account (s)
Benchmark your bank(s) current offerings versus industry standards
AIB Global Treasury Services
Corporate Cash Management
AIB Global Treasury Services
Thank you for listening!
Any questions?