The challenge
Visteon has over 40 facilities in 18 countries and India is one of its key overseas manufacturing locations. It imports from vendors across the globe, and maintaining good relationships with these vendors is of utmost importance for ensuring continued seamless production, as well as securing critical supplies during a production crunch. Key to maintaining these relationships is timely payment to its vendors, which can be an uphill task for Visteon which processes close to 5,000 invoices and makes approximately 320 payments to 400 suppliers on average every month.
Its cross-border payment process was paper-based and involved scanning and sending all the required documents to its banks two days in advance. The scanning process alone took eight hours and required two full-time equivalent (FTE) staff to do the job. Once the documents have been validated by the banks, Visteon initiates debit instructions for making these payments. The end-to-end process took ten hours over four days from the date of scanning the documents.
Given the regulations and rigorous guidelines governing import payment in India, Visteon was looking for an import payment solution that would enable it to achieve the following strategic objectives:
- Improve on-time payment to vendors.
- Optimise payment efficiency by reducing its cycle time.
- Streamline and automate its payment processes leveraging technology.
The solution
Working with Bank of America, Visteon was able to establish host-to-host (H2H) connectivity between its ERP system and the bank’s systems while going paperless and having updated access to Reserve Bank of India’s Import Data Processing and Monitoring System (IDPMS). The solution provided was recently enhanced to enable an even higher degree of data capture from existing data in RBI’s IDPMS, thereby significantly reducing the need for data input by Visteon and consequently, errors from manual data entry. Visteon is now able to validate the enriched captured data before it goes to IDPMS.
Additionally, Bank of America has established a middleware which uses a combination of manual input and interface with RBI’s IDPMS to ensure a paperless experience for Visteon, even for items which would typically not appear in RBI’s IDPMS system.
Best practice and innovation
Digitisation has been a key focal area for the Government of India and the Reserve Bank of India in recent years and IDPMS is a good example of a system aimed at facilitating the ease of processing and monitoring of import transactions. Bank of America was one of the few banks with a H2H solution for supporting cross-border import payment.
Key benefits
Increased the operational efficiency of its payment team by almost 75%. Besides improving workflow efficiency, the solution also helped Visteon gain 15 working days per month among other benefits including:
- Improved on-time vendor payments from 85% to 98% (15% improvement).
- Reduced queries from vendors from 70 to 18 per month (down 87%).
- Improved cycle time to process payment from 10.33 hours per week to 5.33 hours (~50% improvement).
- Reduced printing of invoices while supporting the company’s sustainability and green initiatives.
- Improved cost efficiency with the number of FTE required.
Moreover, Visteon can now assess transaction status on the RBI database, updated each day, for more timely reporting purposes.
“From a process improvement point of view, the H2H solution helped us gain tangible results that met/exceeded the goals set by our management. But this solution is not just for our benefit, it also goes toward helping support our vendors optimise their receivables management. Moreover, with lower number of queries, we are further improving our relationships with our vendors,” says Jessica Cao, APAC Treasury.
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