Fast moving collections for a fast moving business
The challenge
As a corporate in the fast-moving consumer goods (FMCG) segment, Mondelēz is required to collect a large volume of payments from its distributors, primarily in the form of pre-signed cheques. These cheques are held in inventory by the bank and then, on the due date, sent to the clearing house for presentation.
This method posed numerous challenges and process complications for both Mondelēz and the banks it worked with.
Mondelēz therefore decided that the best course of action was to move to an electronic mode of collection in a phased manner. Its main objective was to drive consistency in the collection process to ensure that file formats exchanged with the bank and MIS received from the bank are standard across cheques and direct debit.
The solution
To meet its objectives, Mondelēz teamed up with Deutsche Bank to develop electronic solutions for streamlining collections and import payments.
On the collections side, Mondelēz leveraged a unique solution which allowed them to initiate the migration of collection from cheques (paper-based collection) to direct debit. To do this, Mondelēz generates a single collection file that it shares with the bank which uses its application to separate the cheque and direct debit payments before being sent to the clearing house.
The application used by the bank stores the mapper which identifies the distributors who have given the direct debit mandate to Mondelēz. Each mandate is assigned a unique reference number by the clearing house, which is relayed back to Mondelēz in a consolidated MIS with the complete details of the transactions. Reconciliation is automated as each transaction is tracked by a unique reference number on an end-to-end basis.
To conclude the process, an SMS notification is sent to each distributor capturing details of the amount to be debited and the date of ACH debit is sent to ensure that the accounts are adequately funded. In the last five months, more than 150 distributors have been successfully migrated and nearly 150 distributors are in the process of being migrated.
Best practice and innovation
This is a truly first-rate example of how paper-based forms of payment can be efficiently and effectively moved onto electronic platforms. As a result, Mondelēz has met its objectives and achieved end-to-end visibility over its transactions and standardised many processes driving further efficiency.
