Photo of Mahesh Kini, J.P. Morgan and Hariharan Subramanian, Cognizant Technology Solutions.
Nasdaq-listed, US based Cognizant is a world-leading IT consulting and services firm that helps clients modernise their businesses and serves a large part of the Fortune 500 companies. It posted approximately US$18.5bn revenue in 2021.
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Cognizant operates its APAC treasury function from Kuala Lumpur, Malaysia and Chennai, India, which, for the most part, is efficiently run via a cash pooling structure that connects almost all its markets in the region – including Singapore, Hong Kong, Malaysia, Australia and New Zealand – to a global header pool in London.
The only country excluded from the APAC cash pool, however, is Japan, which is a key revenue contributor in the region. This was because Cognizant’s treasury system was unable to support the unique local language requirements necessary in Japan’s local clearing system, whereby all payments, must be made in local phonetic language (called Katakana) instead of the alpha-numeric standard used in Cognizant’s ERP. This impacted the 1,500 plus beneficiaries in Japan receiving payments from its global payments team (GPT) in India, comprising vendors, employees and local municipals.
Hence, Cognizant was relying on a third-party accounting firm to handle all its account payables and receivables via a local bank, resulting in the following pain points:
Expensive service fees paid to the accounting firm every year.
Highly manual process where payment files had to be manually extracted, uploaded and approved.
Lack of control and visibility over local bank accounts due to the third-party accounting firm.
Idle surplus funds in the local bank account.
“We needed a solution to resolve the local language barrier we were facing in Japan and one that could bring about straight through processing of payments and integrate the entire structure into our global cash pool,” explains Hariharan Subramanian, Senior Manager, APAC Treasury.
Cognizant looked to J.P. Morgan with whom they had a long-time relationship for help. This resulted in a bespoke vendor code mapping solution through a new bank account set-up with J.P. Morgan Japan, where unique alpha-numeric codes were assigned to the 1,500 plus beneficiary names and saved within ISO files at Cognizant’s GPT in India.
When a payment is made to a beneficiary, the corresponding assigned vendor code will be transmitted from the GPT to the bank in Japan via the existing host-to-host connectivity, then converted into local language and sent to the local clearing system. This solution automates the entire payment process including reporting and reconciliation.
By harnessing a simple but powerful innovation, Cognizant has been able to fully digitise, automate and migrate its entire accounts payables and receivables operation in Japan. The solution is unique in the sheer volume of 1,500 plus vendor codes it’s been able to map, which is unheard of in the market, and will be able to scale to support more unique vendor payments as Cognizant grows its business in Japan.
Furthermore, the company is also able to finally integrate its Japan account into its global pooling ecosystem, given the key market has been sitting outside of its integrated cash management structure in APAC since 2008.
Process efficiencies and improved visibility.
Manual intervention and errors reduced.
Greater control and governance over payments.
Maximised liquidity and utilisation of cash.
The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2022 awards attracted a record-breaking 416 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia