Photo of Lynda Ihenacho, Easa Saleh Al Gurg Group.

Purchasing card solution delivers savings for this UAE conglomerate

The challenge

The vast majority of Easa Saleh Al Gurg Group’s (ESAG’s) supplier payments are managed through HSBC’s Host2Host Connect, which is an automated solution for secure electronic data transfers that are sent between the banks and corporates. For onsite payments to vendor through cash and/or cheques; the entities were using petty cash or personal credit cards. The challenge here was to identify a solution that would enable ESAG to fully bridge the gap and create a process that aligned with the Group’s 2025 vision of achieving complete digitisation.

In 2021, the treasury team undertook a review of its payment processes, to optimise and streamline the overall supplier payment process and move to a more robust model which could support the size and scope of the operations. The team’s approval process required original copies of invoices to be approved by each department head. Then payments above a certain limit needed further approval from the Group CFO before being signed by the authorised signatories.

Cheques needed to be individually signed by authorised signatories. The overall process was limiting, time-consuming and not suitable for on-site and online merchant payments. To overcome these challenges, ESAG was looking for a solution that would facilitate the process and bridge the gaps in order to get much needed visibility and control over payments, while also helping to optimise the Group’s working capital.

The solution

Working with its banking partner HSBC, ESAG’s treasury team designed a process flow for making vendor payments that embedded a plastic card solution. For supplier payments, the bank’s purchasing card (P-Card) can now be used to make payments without the need for time-consuming workflow approvals.

ESAG now uses P-Cards for utility bills and large value payments, through merchant point of sale terminals, where a physical swipe of the card is required or through online payment gateways.

P-Cards are restricted at the merchant level to ensure that cards are only used at the agreed merchants, thereby giving ESAG additional security and avoiding any approval process. Furthermore, users receive notification of transactions in real-time for control over purchases. Group treasury can also view transactions in end-of-day online statements, which are generated for each P-Card. This gives the treasury team enhanced visibility and control over transactions, as well as streamlined reconciliation.

Best practice and innovation

This adaptable and flexible solution has helped ESAG digitalise its payment process in preparation for the future. With this, they can easily implement the solution across different markets and currencies. Furthermore, they are leading the way with a solution that challenges existing traditional set-ups, while keeping continual improvement at the core of their treasury operations.

The overall migration of supplier and ancillary payments from traditional cheques to P-Cards has automated the overall process, helping ESAG’s treasury team allocate their staff members to more strategic and value-adding initiatives.

Beyond this, savings in resource hours and lower overall costs have also been achieved, leading to:

Key benefits

• Working capital optimisation (cost savings).
• Quicker turnaround of transactions and processing times.
• Enhanced visibility and control over payment processes.
• Mitigation of risks associated with manual payments.

“The solution gives us a 58-day credit free window that eliminates the overdraft facility costs we were previously incurring,” explains Werner Flaig, Group CFO.