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.
Manish Modi
Finance Controller
Mumbai, India
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
The challenge
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.
The solution
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.
The Adam Smith Awards are widely known for their quality, credibility, objectivity and rigorous criteria for selection globally across business segments as the ultimate benchmark of excellence. In view of the same, getting this award is very special for us as a winner.
For both me and the company, winning the Adam Smith Award for the Best A/R solution is a result of great teamwork between the teams at Pfizer and J.P. Morgan to deliver a solution that has resulted in automation of receivables management for Pfizer in India.
– Manish Modi, Finance Controller
Best practice and innovation
The deployed solution leverages new technologies to automate reporting and reconciliation processes in an industry where payments are largely paper-based. By fully eliminating manual intervention, Pfizer’s treasury can now focus on improving cash flows and optimise yields. Data analytics has enabled it to craft strategies to gradually shift customers to electronic payments.
Pfizer had to meet a strict implementation timeline as it was switching its ERP system and migrating regional treasury processes into its China SSC, demanding an extraordinarily high level of collaboration between multiple partners.
Key benefits
- Reduces manual intervention through full automation of end-to-end reporting and reconciliation processes.
- Enhances productivity and efficiencies as the treasury function leverages a single report to manage cash flow forecasts.
- Optimises yields on end-of-day balances as a result of more precise cash forecasts.
- Improves visibility over cheque and electronic collections.
- Delivers ability to use data analytics to devise effective customer management strategies.
Key learning points
- Leveraging the ERP integrated system at Pfizer and J.P. Morgan to deliver data analytics at granular level to ensure efficient and effective customer management.
- This solution helps simplification by eliminating time consuming and error prone manual processes by fully automated reporting and reconciliation processes with embedded controls.
- Enhanced Pfizer’s productivity and efficiencies to manage cash flow forecasts and helps proactive decision making.
