Photo of Chen Yun, Anna Löfstedt and Johan Larsson, Volvo Car Group and May May Pang, J.P. Morgan.
The challenge of upgrading treasury processes across its operations in India, Thailand and Taiwan saw Volvo Cars implement initiatives including SWIFT, and a virtual branch solution to centralise and digitise workflows for its tax payments. Benefits include cost savings; faster account reconciliation and cash application; and much improved cash visibility.
Johan Larsson
Senior Cash Manager, Group Treasury
Anna Löfstedt
Director and Head of Treasury APAC
Shanghai, China and Gothenburg, Sweden
Headquartered in Gothenburg, Sweden, Volvo Cars is a luxury vehicle manufacturer with a focus on sports utility vehicles, station wagons and sedans. It employs 38,000 and in 2017 sold over 570,000 vehicles in more than 100 countries.
in partnership with
Volvo Cars brings treasuries up to date with the aid of SWIFT connectivity
The challenge
In 2010, Volvo Cars became a subsidiary of Chinese automotive company Geely Holdings. Under its ownership, Volvo embarked on a firm-wide overhaul of its cash management practices, aimed at standardising and automating its global treasury processes. It began updating its processes in 2012, starting with Europe, the US and the UK.
In 2017 the focus shifted to India, Thailand and Taiwan where treasury processes had not been upgraded for years. In each country, the company worked with several local banks that had different platforms to process transactions, resulting in a cash management process that wasn’t standardised. Transactions were manually processed and liquidity management was handled by local finance teams instead of Volvo’s treasury team in Shanghai – a decentralised approach which resulted in limited visibility.
Volvo Cars also wanted a solution that could adhere to the strict regulations applied to cash management in these markets.
Volvo Cars sought two key solutions in the upgrade:
- Automating the transfer of payment files from SAP to its core bank through SWIFTNet FileAct data exchange, and integrating bank statements into SAP for auto-clearing of payments and collections.
- Leveraging SWIFT connectivity (FIN/FileAct) and ISO file formats to standardise transaction formats and processes.
The solution
Volvo Cars mandated J.P. Morgan as its core cash management bank in early 2018 for its India, Taiwan and Thailand markets. The comprehensive solution integrates three components to streamline and simplify Volvo Cars’ cash management.
The company tapped into the bank’s expertise to implement SWIFT connectivity to standardise and automate treasury processes via its ERP system. It also leveraged the bank’s Virtual Branch solution to centralise and digitise workflows for its tax payments and facilitate online submission of supporting documents, making it easier for Volvo Cars to meet strict regulatory requirements.
To address the challenge of manual reconciliation, Volvo Cars deployed J.P. Morgan’s Virtual Reference Numbers (VRNs) to enable automatic identification of customers making payments, removing the need for manual reconciliation when funds are credited to their account. This helped to automate and accelerate the firm’s receivables reconciliation process.
The migration of its host-to-host to SWIFT through SWIFTNet FileAct has enabled Volvo Cars to, for instance:
- Apply ISO 20022 XML Standards – a common language that financial institutions use to communicate.
- Adhere to CAMT.053 – an ISO payment message definition that facilitates bank-to-customer statements for all account information from the previous day.
- Send MT101s – request for transfer – and receive MT940 bank statements through its TMS system.
Best practice and innovation
To simplify treasury operations in India, Thailand and Taiwan, Volvo Cars wanted to incorporate best in class solutions and practices that would drive greater efficiencies, modernise its cash management processes and enable the company to transact through its global ERP platform using ISO 20022 XML standards.
It recognised the complexities of the three markets and understood the importance of improving efficiencies through automation and standardisation whilst taking into account the strict regulations around transactions. By combining the SWIFT and Virtual Branch solutions, Volvo Cars was able to immediately optimise processes while meeting regulatory requirements.
Key benefits
SWIFTNet and Virtual Bank has enabled Volvo Cars to:
- Digitise its document submission process for cross-border and statutory payments.
- Generate cost savings through the use of standard file formats across the region, reduced infrastructure and maintenance spend.
- Take advantage of automation to speed up account reconciliation and cash application processes.
- Leverage centralisation of account information to improve cash visibility and enable Volvo Cars to better manage treasury payments and information.
