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Best Working Capital Management Solution Highly Commended: Continental Tire Korea Co., Ltd

Young Wook Kim, Continental Tire Korea Co., Ltd and Jeffrey Ngui, BNP Paribas

Photo of Young Wook Kim, Continental Tire Korea Co., Ltd and Jeffrey Ngui, BNP Paribas.

When Continental Tire Korea found itself handling dozens of incoming transactions every day from hundreds of retailers, it became increasingly challenging for it to reconcile account receivables manually. With objectives such as automating AR reconciliation processes and improving its overall working capital management, it worked with banking partner BNP Paribas to create a customised and scalable nostro-virtual accounts set-up for local customers, using multiple local partner banks.


Young Wook Kim

Financial Manager

Seoul, Korea

Continental AG, with sales of €44bn in 2017, is one of the world’s leading automotive suppliers. Leveraging Continental’s proven technology and brand is Continental Korea with eight entities in eight locations in Korea. While most entities are 100% owned by Continental AG, Continental Automotive Systems is a joint venture with 65%-owned by the parent.

in partnership with



A multi-faceted custom nostro virtual account solution

The challenge

Continental Tire Korea was established to distribute Continental tyres in the domestic market through local service centres or dealers. It is required to collect funds from a number of retailers on a daily basis. With Continental Tire Korea handling multiple incoming transactions every day from hundreds of retailers, it was becoming increasingly challenging for it to reconcile account receivables manually. Moreover, it was difficult to accommodate the differing requirements of local dealers. It also needed to reduce the massive manual and reconciliation efforts and to secure yield enhancements on its entire operating balances.

The solution

Solution objectives included the automation of AR reconciliation processes to reduce time spent and minimise operational risk caused by manual reconciliation. It also sought to improve overall working capital management by freeing up funds in inventory/working capital. Further, it wanted improved collections through various instruments to accommodate customers’ specific local banking service requirements, the efficient control and management of huge volumes, and maximisation of yield.

The solution was to assign nostro-virtual accounts to local customers, issued at multiple local banks through a banking partnership with BNP Paribas. The bank offered a nostro-virtual account service with virtual accounts issued at local banks through the agreement with multiple local banks and transferred them to Continental Tire Korea.

While Continental Tire Korea assigns local bank accounts to customers when they request, when the funds are credited to the virtual account, they will be passed to the BNP Paribas master account automatically, on a real-time basis.

As Continental Tire Korea assigned local bank accounts, it was able to support fund incomings through various instruments, such as ATM, cash and cheque. Considering that global banks in Korea are limited when collecting the funds through an ATM, it was a local feature that BNP Paribas applied on top of its global banking capabilities.

By having MT940 reports from BNP Paribas for all the incoming transactions through virtual accounts, Continental Tire Korea could automate AR reconciliation processes, developing auto set-off processes for outstanding AR through its ERP system.

Through BNP Paribas’ e-banking system, Continental Tire Korea has been enabled to set up conditions of virtual accounts at any time without limitation of frequency: a minimum or maximum amount of virtual accounts, cut-off time, and beneficiary name can be managed by BNP Paribas’s e-banking system. With this capability of pre-setting virtual account conditions, Continental Tire Korea can control the incoming transactions from customers with low risk and less manual work.

As the timing of receiving funds can impact on customer communication, Continental Tire Korea required real-time alerts when the funds were credited to its virtual accounts. BNP Paribas notifies incoming funds via email and mobile SMS. By having this real-time notification through multiple channels, Continental Tire Korea can confirm collections without logging into either its banking system or ERP system.

Best practice and innovation

The solution has a number of key features. These include assigning nostro-virtual accounts to local customers, issued at multiple local banks through a banking partnership with BNP Paribas, sending MT940s for all incoming transactions through virtual accounts to help automating AR reconciliation process, and managing conditions of virtual accounts set up to control incoming transactions from customers. It also gave Continental Tire Korea real-time alerts to help monitor incoming funds.

Key benefits

  • Improved operational efficiency and communication.

  • Enhanced visibility and liquidity yield.

  • Reduced manual work and operational risk.

  • Improved customer satisfaction.

  • Control incoming transactions.

  • Reduced financing costs substantially.

  • Interest optimisation by concentrating the funds to master account.

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