AIB Global Treasury Services
Achieving greater efficiencies from your
Accounts Payable processes
John Hand,
Senior Relationship Manager,
Corporate Cash Management.
24th February, 2009
Agenda
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Cash Management
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definition
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objectives
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benefits
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challenges today
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cash management environment
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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
AIB Global Treasury Services
AIB Global Treasury Services
Definition of Cash Management
“Effective Planning, Monitoring and Management of Liquid/ Near
Liquid Resources”
Includes:
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Day to day cash control
Money at the bank
Receipts
Payments
Short term investments
Short term borrowings
AIB Global Treasury Services
Cash Management Objectives
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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
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Centralised Administrative, Treasury and Accounting Functions for :
distribution
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invoicing
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receivables
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payables - domestic and foreign
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credit and collections
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FX dealing and Investments
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information processing
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analysis and reporting
Maintain optimum number of bank accounts
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reduce number of banking relationships to optimum level
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improve bargaining position and therefore pricing
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reduce costs
AIB Global Treasury Services
Benefits of Good Cash Management
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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
AIB Global Treasury Services
The Customer Challenges ?
Funding ?
Foreign
Exchange ?
Investments ?
ABC Limited
Bank
Relations ?
Cash
Management ?
Risk
Management ?
AIB Global Treasury Services
Cash Management Environment
Collect Funds
Disburse Funds
Customer
Account
Track Transactions
and Balances
Manage Funds
Excess/ Shortfall
AIB Global Treasury Services
Cash Management Structures
- What is Best Fit for a Company?
Depends on
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Industry e.g. Manufacturing / Retail / Service ?
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Market e.g. Domestic and or International
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Customer base e.g. 3rd party, inter company
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Product range
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Receivables and Payables - domestic and or foreign currencies
AIB Global Treasury Services
Cash Management Structures
- What is Best Fit for a Company?
Mix of payment options available
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Method for handling Collections
/Receivables
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Cash
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Cheque
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Bank Draft
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Credit Card
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Direct Debit
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Standing Order
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EFT via local automated clearing
system (EMTS)
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Incoming International Payment in Euro
or foreign currency
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Method for handling Payables /
Disbursements
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Cash
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Cheque
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Bank Draft
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Credit Card / Purchasing Card
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Direct Debit
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Standing Order
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EFT via local clearing system (EMTS)
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Outgoing International Payment in Euro
or foreign currency
AIB Global Treasury Services
Cash Management Structures
- What’s the best fit for an Accounts Payable function with volumes of
domestic and international payments ?
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Ideal scenario?
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All accounts payable activities for all areas/ entities are centralised through a
single area within a company / or Group structure
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Electronic payment becomes the norm for both domestic and international
suppliers
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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
Example of ABC Limited - Pre introduction of AIB Credits
A/C No 12345678
1. Cheques sent
both locally &
internationally
2. Direct Debits
3. Payroll via EFT
Payroll
Module
Foreign
Currency &
Euro Drafts
International
Payments
sent on paper
Accounts Platform
A/P Processes
International
Payments
keyed
individually
via iBB
Receipts
AIB Global Treasury Services
Example of ABC Limited - Position following introduction of AIB Credits
A/C No 12345678
Payroll
via EFT
Payroll
Package
AIB Credits
1. Domestic Vendor payments
2. International Payments – paper
3. International Payments - keyed
manually via iBB
4. Foreign Currency Drafts
5. Euro Drafts
Accounts Platform –
Vendor Payments & Receipts
Direct
Debits
Receipts
AIB Global Treasury Services
Benefits of AIB Credits as a single bulk payments
solution?
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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
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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
Potential benefits of centralising the payables function
1.
AIB Global Treasury Services
Centralise all your domestic and international payables to build consistency
and knowledge
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“Intermittent” users of banking services in corporate accounts departments
are the main drivers of errors and rework
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Specialisation can help facilitate automated reconciliation on a national /
pan-EU basis
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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.
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Many companies already pay the fixed overheads of running an ERP
system without fully exploiting all its existing built-in capabilities
Potential benefits of centralising the payables function
AIB Global Treasury Services
2.
If you are centralising the processing of incoming invoices ensure you integrate
the assembly of a bulk global payments file for your bank
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Adopt electronic payment as your default method of payment
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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.
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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
Potential benefits of centralising the payables function
Watch the hidden costs of inaccuracy and uncertainty
3.
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We see some companies less focused on repairing consistently faulty data
on their beneficiaries’ banking details.
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This faulty data causes recurring queries and errors and can lead to
weakened vendor relationships and possibly increased bank fees
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If you are consistently accurate and efficient in instructing payments, you
can consistently pay very close to the end of your agreed credit terms
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Monitoring the number of payments that cause a subsequent query allows
you challenge your bank to help you eliminate such queries
Summary
AIB Global Treasury Services
To cut your costs and achieve greater efficiencies in Accounts Payable processes
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Centralise all your payables via a single bank and channel
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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
AIB Global Treasury Services
Contacts
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For further information please contact
Corporate Cash Management
John Hand
Senior Relationship Manager
Tel: 01 – 6417790
Dedicated Line for Corporate Cash Management Sales Team
AIB Global Treasury Services
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.