The challenge
Bridgestone imports the majority of its raw materials from global suppliers and distributes final goods to its wide network of local dealers in India. Prior to August 2018, the company’s cash management processes were extremely manual.
In order for import payments in India to be processed, all corporates are required to submit supporting documents to their bank for every transaction, according to Central Bank regulations. For Bridgestone, which receives 2,200 invoices from overseas suppliers each year, this meant putting in 2,260 working hours per year for the paper-based process, which impacted the firm’s overall efficiency and translated into higher processing costs.
Bridgestone also faced challenges in optimising its cash domestically. The company processes its collections from 5,000 local dealers across a range of traditional payment methods and had to reconcile each collection against the outstanding invoices in its SAP system. Moreover, the firm needed to reconcile a large number of bank statements across different banks/file formats. The process was extremely manual, often resulting in delays in collection and longer order-to-cash cycles that impacted its working capital.
The solution
Bridgestone partnered with J.P. Morgan to implement a comprehensive cash management solution to digitise the company’s end-to-end process for cross-border payments, domestic collections and reconciliation.
The firm implemented the bank’s paperless imports solution, where payment instructions are transmitted digitally to J.P. Morgan via host-to-host integration with Bridgestone’s ERP. The solution also fully integrates J.P. Morgan’s online banking platform with the Reserve Bank of India’s Import Data Processing and Monitoring System (IDPMS), where Bridgestone can provide the bank access to the relevant imports trade data on IDPMS by simply submitting two data points from its invoice and shipping documents through J.P. Morgan’s Virtual Branch platform. This means J.P. Morgan can now validate and process Bridgestone’s cross-border transactions, without requiring the firm to submit physical documents. Bridgestone is also able to pay the invoices via the Virtual Branch, completely digitising the cross-border payment process.
With access to IDPMS, J.P. Morgan is also able to ascertain the FX exposure of Bridgestone’s cross-border transactions. By combining the information with Bridgestone’s FX hedging policies, the bank is able to apply them to import payment instructions, strengthening Bridgestone’s controls to manage FX exposures.
Bridgestone implemented Freepay, an innovative invoice reconciliation fintech solution. The cloud-based platform facilitates electronic sharing of invoices, handling payments and comprehensive management of transaction information between B2B buyers and sellers.
Bridgestone uses J.P. Morgan’s API solution to retrieve bank statement real-time reporting and the bank’s Virtual Assistant, a bot-based and AI enabled tool that facilitates queries.
Best practice and innovation
Bridgestone is among the first automotive companies in India to leverage new technologies such as cloud and API to digitise cross-border payments, domestic collections, reconciliation and reporting processes, becoming a pioneer in an industry that largely continues to rely on manual processes in cash management.
Key benefits
Paperless imports solution:
- Reduced manual intervention by fully digitising the cross-border payment and FX booking and reconciliation processes.
- Enhanced controls with the ability to validate import data in real-time through the Reserve Bank of India’s IDPMS system.
- Reduced man hours spent on import payment processing from 2,260 to 100 hours annually.
Automated invoice reconciliation solution:
- Accelerated collections from local dealers to reduce DSO through electronic invoice presentment and enhanced collection methods.
- Increase in sales productivity by reducing time spent on manual collection of funds.
- Improvement in working capital utilisation.
