Quick implementation transforms the way suppliers are paid in different currencies
The challenge
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.”
The solution
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.
