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Best AR Solution Winner: United Parcel Service Philippines

Published: Jan 2020

 

Photo of Monika Nelwan, United Parcel Service Philippines and Erica Gong, J.P. Morgan.

Monika Nelwan

Asia Treasury Director
United Parcel Service Philippines

Singapore

Founded in 1907 as a messenger company in the United States, United Parcel Service (UPS) has grown into a multi-billion dollar package delivery and supply chain management firm. Headquartered in Atlanta, it now serves more than 220 countries and territories worldwide and reported a revenue of US$71.8bn in 2018.

in partnership with

Delivering the goods across the Philippines

The challenge

The Philippines consists of more than 7,600 islands. For a logistics business, this can be a challenging market, not just for delivering packages, but also for collecting payments.

Prior to August 2018, UPS was receiving payments from its customers via various modes such as cash, cheques or wire transfers, from multiple banks which came in as deposits without unique identifiers. This meant that UPS required several full-time employees to call its customers directly in order to manually reconcile the payments to the invoices. Swift reconciliation for custom and duty payments is important because if payments are unidentified, it causes delays in the release of parcels to customers.

UPS also faced additional challenges, as it maintained 17 bank accounts across six banks used for banking requirements such as disbursements, collections, liquidity and foreign exchange. Overseeing the accounts and associated activities on a regular basis was also time consuming and inefficient.

What UPS needed was a centralised platform for its day-to-day activities.

The solution

UPS awarded the mandate to J.P. Morgan in the second half of 2018 to provide it with an end-to-end account receivables solution in the Philippines. The comprehensive solution involved UPS consolidating all of its banking relationships and accounts with J.P. Morgan Philippines’s Manila branch, which already had in place existing partnerships with three of the biggest local banks in the country – Bank of the Philippine Islands, BDO Universal Bank and Union Bank of the Philippines. The rigorous rationalisation process reduced UPS’s banking partners from six to three, and the number of accounts from 17 to ten.

As the three banks collectively had more than 2,100 branches nationwide, it provides UPS access to an extensive domestic branch network with extended banking hours, as well as weekend banking, there to support any over-the-counter requirements, such as cash and cheque deposits, without the need to maintain accounts with these local banks. UPS customers also now have a variety of payment methods to choose from, spanning in-person, to online, to pick-up services.

Aside from expanding coverage, the solution also greatly improved the reconciliation process by assigning all payments that come through with unique reference numbers. These are captured via a daily report generated by J.P. Morgan which UPS can use to seamlessly match payments with invoices, reducing manual intervention.

Best practice and innovation

The solution broadened UPS’s coverage area in terms of collections by providing the logistics firm access to an extensive domestic banking network of 2,100 branches belonging to three key local banks, without UPS having a relationship with these banks.

With one point of contact, UPS has managed to reduce the number of banking partners by 50% and the number of accounts by 40%, reducing the costs of maintaining bank accounts as well as centralising reporting. The solution involves assigning all payments that come through via the various collection methods with unique reference numbers, significantly speeding up the reconciliation process.

Key benefits

  • Streamlined its banking relationships by 50% from six partners to three.
  • Reduced the number of accounts by 40% from 17 to ten.
  • Banking relationships with the three largest local banks in the Philippines.
  • Increased collection coverage by 99%.
  • Provided ability to view intraday collections from the Bank of the Philippine Islands, BDO Universal Bank and Union Bank of the Philippines in real time, even though it does not have banking relationships with them.
  • Once UPS is aware a particular customer has paid, arrangements are made to release the parcel, facilitating faster delivery.

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