The production entities of the two Boehringer Ingelheim (BI) divisions – Human Pharma and Animal Health – do not sell drugs directly to customers, but to the group’s local distribution entities who then trade with the end customers. This means intercompany (IC) payments are extremely important for BI as they represent almost the entire business volume. IC invoices are in local currency to centralise FX risk in Germany.

A meaningful share of revenues is generated in restricted currency markets across Asia such as South Korea, the Philippines, Vietnam, Taiwan, Malaysia, Indonesia and Latin America (eg Brazil). Here, selling the local currency for a distribution entity to perform cross-border payments to Ingelheim is regulated. The payment bank will ask for physical invoice copies, associated customs references, import license numbers, tax IDs and more – whatever the respective regulator prescribes. Unfortunately, each market is different. This breaks the efficient payment process BI is operating in non-regulated markets. Invoices due must be identified, collected and manually married with information from customs tools and/or other sources.

The payment bank needs to review and approve the documentation. Depending on the bank and the location, this process can take a week or longer. After this the ‘sell regulated currency’ amount is clear and FX can be managed. This is when the payment file can be sent. As a result, BI has disjointed cross-border payment workflows across regulated currency markets that create cost and manual labour in the shared service centre (SSC), as well as multiple decentralised processes unique to each regulated market, each of which is deviating from the global standard. Due to long lead cycles in preparing the documentation and having it reviewed by the payment bank, BI today only processes IC payments monthly.