The solution here addresses the difficulties encountered when suppliers outside of India need to be paid in currencies ranging from USD and JPY to EUR and KRW. Furthermore, complex Indian exchange control regulations compound the problems. The digital solution took just under a month to implement.
Photo of Dino Albuquerque, Bank of America Merrill Lynch, collects the award on behalf of BorgWarner Morse Systems India Private Limited, with Sophie Jackson.
BorgWarner Morse Systems employs over 2,800 employees globally and operates in 13 locations in seven countries.
in partnership with
Quick implementation transforms the way suppliers are paid in different currencies
Making international payments to suppliers was a time-consuming and difficult process for BorgWarner Morse Systems India.
As a subsidiary of automotive components manufacturer BorgWarner, which has 62 factories in 17 countries, the business needs to transact with a wide variety of suppliers outside India, who need to be paid in currencies varying from USD and JPY to EUR and KRW.
However, complex Indian exchange control regulations meant that three documents, including a bill of entry, the matching invoice and an exchange control form (ie Form A1 for trade payments or Form A2 for non-trade payments) had to be supplied for every overseas payment made by the company.
Since these documents had to be physically presented to the bank with each payment, a BorgWarner employee had to make the 50km journey from the company’s office on the outskirts of Chennai to its bank’s branch office in the city centre to deliver the documents before each payment could be processed.
Prabakaran Achuthan, Finance Controller explains, “With BorgWarner making around 50 such payments every month, this time-consuming and error-prone process was clearly inefficient.”
BorgWarner turned to its banking provider, Bank of America Merrill Lynch to address the situation.
The result is CashPro® India Documentation System, a new process in which supporting documents are scanned and uploaded, and the payments authorised, through the bank’s CashPro® Online electronic banking system. Form A2 can also be automatically generated with the authorised signatory’s facsimile signature. BorgWarner will be notified at every stage of the transaction via email. If changes are needed, they can be flagged and actioned through CashPro®, so that the entire process is handled through the online portal.
The new system took just under a month to implement, with BorgWarner Morse Systems India working closely with a bank representative, and the solution has transformed the way overseas suppliers are paid.
Best practice and innovation
The new system has taken a time-intensive, manual process and replaced it with a fast, digital one. It has made same-day processing possible for cross-border payments, saved hours of travel time for payments and treasury staff, reduced the potential for errors and improved the accessibility of historical records.
“It is fantastic to get an external recognition for the solution we implemented. We strongly believe digitalisation of processes will improve the overall governance in the organisation and improve the effectiveness of the controls.”
The system was implemented in under a month and is already resulting in overseas suppliers receiving funds one, or sometimes two, days earlier than before, with benefits in terms of time and costs saved and better supplier relationships.
Achuthan concludes, “This comprehensive replacement of a paper-based system by a digital one is an excellent example of the benefits that digitisation can bring to older processes based on physical documents and manual signatures.”
BorgWarner Morse Systems India employees no longer have to make a three-hour roundtrip journey by bus or train each time an overseas payment needs to be made.
Overseas suppliers are paid one to two days earlier than before, simply by removing the physical transport and presentation of comments from the process.
Authorised signatories no longer have to physically sign documents – authorisation can be done through CashPro® so payments can be initiated even when key executives are travelling away from the office.
Greater visibility and control:
Email notifications are configurable at each stage of the transaction and BorgWarner can view and search for transactions anytime via the online enquiry tool.
Easier record keeping:
Historical payments, and their associated documents, can be viewed in the system for up to two years after they were made – effectively replacing manual filing of documents.