Photo of Lillian Sim, J.P. Morgan and Manish Modi, Pfizer Limited.
This end-to-end receivables solution, together with consolidated reporting powered by bots, has transformed Pfizer’s cash management in the paper-dominated payments processes of the Indian pharmaceutical sector.
New York Stock Exchange listed Pfizer Inc. is one of the world’s largest pharmaceutical companies. It develops and produces medicines and vaccines for a wide range of medical disciplines. Pfizer launched operations in India in 1950, becoming a leading multinational in the country’s pharmaceutical industry. Listed on the Indian Stock Exchange, today its comprehensive portfolio of products and medicines support wellness and prevention, as well as treatment and cures for diseases across a broad range of both acute and chronic therapeutic segments.
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How Pfizer transformed the paper-dominated payments system of the Indian pharmaceutical sector
Prior to 2017, optimising cash was a challenging task for Pfizer in India. With paper cheques making up over 85% of its collections (c.265,000 cheques each month) across all regions of India, its treasury function needed to manually reconcile multiple reports to track cheque status and forecast cash flows at the start of each day.
Throughout 2017, Pfizer in India shifted its treasury processes to its shared services centre (SSC) in China and migrated its ERP system to SAP, a task that had to be completed by October 2017. While the move would introduce efficiencies through centralisation, the time zone differences between India and China meant the China SSC would only receive collection reports around midday when India begins its workday, resulting in delays in reconciling balances and making accurate end-of-day cash flow forecasts.
Automation of receivables management in India and streamlining reporting and reconciliation were needed to better manage cash flows.
Pfizer teamed up with regional banking partner J.P. Morgan to implement a tailored end-to-end automated receivables management solution, leveraging robotics and data analytics.
Pfizer used J.P. Morgan’s network of partner banks and third-party logistic providers in India to expedite cheque collection, processing and reporting. By deploying robotics (bots) to decipher the status of cheques across partner banks, J.P. Morgan can consolidate all of Pfizer’s cheque transactions into a single, customised report. Due to the time zone difference between India and China, the reports are sent to Pfizer’s treasury teams before India starts work, so the China SSC can facilitate timely reconciliation and cash flow forecasting.
Pfizer also implemented a customised virtual reference solution (VRS) to streamline its electronic collections in India. Pfizer’s distributors can now make payments to a set of unique alpha-numeric virtual reference numbers (VRNs), enabling Pfizer to automate reconciliation, easing identification of its collections in intra-day and end-of-day bank reports. Distributors also receive real-time payment status updates.
Pfizer leveraged J.P. Morgan’s data analytics capabilities, running quarterly transaction analysis to identify payment patterns across different customer groups. This helps identify distributors that can be moved from paper to electronic payments.
To ensure smooth integration with Pfizer’s new SAP system, J.P. Morgan designed customised MT940s, enabling end-of-day balances in India to be automatically reconciled into its China SSC. J.P. Morgan coordinated with Pfizer’s local teams in India and China, its regional hub in Singapore and its IT teams in the US to scope out the requirements, conduct system tests and go-live.