The challenge

With a dozen entities throughout China and a shared service centre (SSC) in Shanghai, Autoliv China has the challenge of simplifying payment flows for its 420+ overseas suppliers from more than 35 markets with invoices in more than nine different currencies. With high frequency of orders and delivery to meet production timings, this has resulted in more than 1,000 cross-border transactions per month, all handled manually.

Autoliv China’s factories have to prepare all the paperwork, such as contracts, invoices, custom declaration forms and tax declaration forms for cross-border payments, and then send the hard copies to Autoliv’s Shanghai SSC which consolidates the documents and mails them to the bank to process the payments.

Besides open account payments, a significant portion of these cross-border payments comprise supply chain finance (SCF) maturity payments, which were payments made by Autoliv to banks that had financed its suppliers ahead of the payments due date. Invoices and supporting documents were couriered to the banks, which is time-consuming, labour-intensive, and subject to a greater likelihood of human error.

The solution

As a first step to automate the payment flows process, host-to-host (H2H) connectivity was established between J.P. Morgan and Autoliv’s own in-house built Supply Chain Finance Management middleware, allowing the direct transmission of payments instructions via an industry-approved format and supporting documents such as invoices via secure file transfer protocol (SFTP).

This also enables Autoliv to tap into China’s single-window system for custom clearance using J.P. Morgan’s API technology. Be it cross-border payments under open account trades, or cross-border SCF maturity payments in different currencies to overseas J.P. Morgan branches, all Autoliv has to do is upload a simple spreadsheet with customs declaration numbers via the bank’s virtual branch module, and the system will retrieve all the relevant data and documents from the customs’ official database, automatically fulfilling the compliance checks and requirements.

It is a great honour to receive this award and a big recognition to us as well. The award inspires our company and team to continue this kind of innovation and transformation in more processes.

Yang Liu, VP Finance

Autoliv has centralised the onboarding of suppliers. By categorising suppliers by regions and currencies, J.P. Morgan helped centralise all European suppliers in Frankfurt, all North and Latin American suppliers in New York and all Asia-Pacific suppliers in Hong Kong. As such, Autoliv’s global suppliers, even if they sell to Autoliv entities in multiple markets, will only need to be onboarded once. With this solution, the volume of transactions was streamlined to twice a month to these three locations for SCF maturity payments, reducing the number to about 100 transactions in 2022 while ensuring the company’s suppliers are still being paid in a timely manner.

In addition, Autoliv has also utilised the bank’s payment tracker, a DIY service tool that leverages the bank’s network in clearing and participation in the Swift gpi initiative, to monitor the payment status of its suppliers in almost real-time, online.