This solution has improved the company’s business travel management model and was introduced to 51 subsidiaries involving approximately 33,000 employees across Malaysia. According to MasterCard, “PETRONAS’ programme is the ‘best managed central travel account (CTA) programme globally’ for achieving 100% data excellence and straight through automated reconciliation process.”
Photo of Swati Mitra, Citi and Rabijan A. Rahim, Petronas.
Arnold John Devadason
Head Accounts Payable, Finance Shared Services
Founded in 1974, Petroliam Nasional Berhad or more widely known as PETRONAS, is Malaysia’s fully integrated oil and gas multinational corporation. Since 1995, it has been ranked amongst the largest corporations on Fortune Global 500®.
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Central travel account delivers solution for oil and gas giant
With its rapid growth potential against the fast-evolving world and fluctuating global economic backdrop, PETRONAS continuously seeks new and innovative ways to increase its resilience. Business travel need is one of the pivotal areas identified to support this aim.
In 2015, PETRONAS explored a model to streamline the end-to-end processes and standardisation of its business travel guidelines. With 14 travel agents serving the travel needs of its employees, PETRONAS was looking to achieve operational efficiencies and cost effectiveness.
A complex web of transactions needed to be reviewed and a cross-functional project team was formed to analyse, review and reengineer its end-to-end procure-to-pay processes for business related travel. This included the chain of travel approval processes, transaction booking, invoicing, payment or re-imbursement as well as adherence to policies, controls and governance.
PETRONAS identified Citi’s Central Travel Account (CTA) as an integral solution for its new and improved business travel management model, with the aim of achieving straight through processing (STP) and straight through reconciliation (STR) for its travel-related payments and claims of around 150,000 transactions and 100,000 bookings from more than 50 subsidiaries annually.
The new business travel management model was implemented in early 2016 in multiple phases. This new model was introduced to 51 subsidiaries involving approximately 33,000 employees across Malaysia.
The solution had the following objectives:
To streamline the procure-to-pay process and reduce manual administrative hours of managing travel agent invoices for payment and staff reimbursements.
To ensure vendors receive payments within two days instead of the standard 30 days payment terms to enhance supplier relationship via funding and cash flow management.
To systematically capture travel related expenses for Goods and Services Tax (GST) Input Tax Claim and improve visibility of spend data.
Best practice and innovation
Central to the success of the new model was the use of Citi’s CTA solution. CTA is a centrally billed payment system that integrates with Citi’s Corporate Card programme by capturing group, employees and non-employee business travel bookings anywhere across the globe. Bookings made through the designated travel management company are captured to one central payment card for ease of reconciliation at the company level. In addition, online statements provide detailed travel information, while data-rich reports allow for trip, spend, designated cost centre and PETRONAS operating units analysis. This included new data fields, as well as the systems and technology required in achieving STP and STR.
According to MasterCard, “PETRONAS’ programme is the ‘best managed CTA programme globally’ for achieving 100% data excellence and straight through automated reconciliation process.”
Arnold John Devadason, Head Accounts Payable, Finance Shared Services concludes: “All in all, PETRONAS has achieved 60% improvement reaching a 100% automation of processes including reconciliations, thereby enhancing our compliance and control processes, enhancing governance and achieving significant operational efficiency gains and cost effectiveness to better meet our business requirements.”
90% improvement in payment cycle turnover from 30 days to two days.
Process governance improvement – integration with existing SAP pre-trip approval process.
Enhanced vendor relationship through automated timely payments whilst enjoying up to 60 days credit terms.
Reduced hardcopy printouts of documents and reports required for manual reconciliation, thus realising a greener workplace and environmental friendly culture.
Systematic capture of travel related expenses for GST Input Tax Claim.
Availability of data analytics for real-time reporting and spend visibility.
Reduction of 70% manpower in invoice processing, payment and reconciliation.