The challenge

Collection service is key to this “one-stop service platform”, involving thousands of different industries, trade patterns, buyers and millions of transactions from different countries and currencies. Alibaba needed to develop a set of cash management solutions that met its demands and that could deliver a seamless non-traditional model of collection and payment services.

A large number of merchants operate on Alibaba.com, which comprises vastly distributed and diversified business models. In such a vibrant, prosperous and diverse market, Alibaba.com constantly meets these merchants’ needs through technological innovation and service upgrade, and at the same time continuously adopts a variety of methods to improve risk management and control mechanisms to ensure the compliance and safety of its business.

The solution

Alibaba partnered with Citi to introduce a new receivables reconciliation API designed to transform the company’s global supply chain, providing more robust and timely reconciliation services for Alibaba’s customer base. This next-generation digital tool improves transparency, certainty and trust in Alibaba’s digital marketplace, enabling the company to achieve long-term strategic goals of fulfilment within 24-hours for domestic and 48-hours for cross-border delivery.

Best practice and innovation

This ground-breaking receivable reconciliation API is an important addition to the bank’s integrated solution suite, enabling Alibaba to automate manually intensive processes, optimise working capital, manage exceptions quickly and support business growth. This innovative solution combines Payer ID, a value-added service, along with the bank’s flagship assets, CitiConnect API, and Big Data infrastructure, as well as SWIFT gpi. The solution allows Alibaba to reconcile and assess the efficiency of payments in real-time, providing invaluable visibility on which supplier is being paid, what the payment is for, where the payment is along its journey, and the deductions and time taken by each processing bank.

Importantly, from a risk management perspective, Alibaba.com has formed a full-time risk management team with more than 100 professionals and experienced specialists with compliance management experience, to build up a set of unique control mechanisms with the help of big data for cross-border B2B business. This management mechanism applies to merchant and goods management, transaction monitoring and funds compliance, which makes full use of big data analysis, and adopts various external risk analytics data as well as other partners data (SWIFT gpi projects with Citi for example) and internal historical trading data. The mechanism focuses on monitoring high-risk customers and transactions, paying close attention to the authenticity of trade, and adopts a variety of ways to deal with business risks, so as to achieve a win-win risk reduction solution.

In recent years, Alibaba has paid increasing attention to the control of fund risks. Through comprehensive analysis of internal trading data and settlement information, Alibaba.com focuses on fund flows without reasonable trading background and identifies high-risk customers and transactions, which contributes to fraud being reduced significantly. In terms of anti-money laundering, Alibaba.com has set up a trade-based money laundering prevention system based on a merchant management system. This helps Alibaba to identify, monitor and control sanctions and trade-based money laundering risk from three dimensions – people, goods and funds. It has also established a risk appetite on a merchant and trade activities rating model, which focuses on monitoring transaction price and rationality of business.

Key benefits

• Digitalised cross-border collections in real-time, gaining transparency and data-rich information needed to meet long-term strategic goals.
• Risk management model recognised by the relevant regulatory authorities.

“In today’s world of hyper-connected digital economies, our solution improves visibility and delivers a state-of the-art cash application solution that easily integrates into any account receivables programme. We are able to streamline our receivables, manage financial risk much better and support business growth,” concludes Liao Sheng, Foreign Exchange Expert, International Settlement Dept., ICBU.