Challenges for Birla Carbon compounded by pandemic lockdown

With several in-country finance teams located across the Americas, EMEA and APAC managing operations independently, disparate payment methods and fragmented banking relationships began to create challenges for Birla Carbon to manage the transactions.

Coinciding with the onset of the pandemic – where its in-country teams faced lockdowns and unprecedented challenges – Birla Carbon realised that its decentralised model for treasury operations like payments, hedging and reconciliation had become inept, especially for the firm’s scale and size.

Transformation begins

In September 2022, Birla Carbon embarked on a multi-region treasury transformation across the key markets of Brazil, Canada, China and the US, and digitised its payment operation, FX and reconciliations. Instead of working on the project country-by-country, Birla Carbon ambitiously overhauled is treasury infrastructure in all four markets simultaneously, completing the transformation within an impressive timeframe of just six months.

“Collaborating closely with multiple internal and external stakeholders across teams and markets, we adopted new-age treasury solutions and industry best practices to automate three critical areas of its treasury – payments, FX and reconciliation,” says Jugnesh Mundra, Treasury Head.

Payments automation

Birla Carbon adopted SAP multi-bank connectivity (MBC) – a multi-channel connectivity between SAP and banks – that helps Birla Carbon realise faster connectivity with all its banking providers to streamline and speed up global payments processing. SAP MBC allows Birla Carbon to seamlessly connect with global banks such as J.P. Morgan through host-to-host (H2H), while integrating single-country banks via Swift.

ISO XML payment file format based on the latest ISO 20022 industry standards was also adopted across Birla Carbon’s key markets to standardised payment initiation to banks. Further leveraging SAP’s bank communication management (BCM) tool, Birla Carbon brought its payments approval process in-house and enabled payment tracking via its own ERP, removing the need to access multiple e-banking platforms.

With the support of J.P. Morgan, Birla Carbon also leveraged BAI2 file formats – a cash management reporting standard – to auto-reconcile payments across all regions directly to its ERP. In addition, Swift Multibank Reporting and MT940 messages received from other banks were consolidated at J.P. Morgan and further transmitted to Birla Carbon’s SAP over H2H.

FX automation

To automate its FX hedging process, the team implemented a digital platform called 360T. With close to 2,500 FX transactions a year spanning 15 markets and nearly ten currencies, 360T provides a transparent price discovery platform for Birla Carbon’s entities to request quotes from various banks through an online platform. This reduces the need to manually call up banks for the latest FX rates, while also ensuring proper controls for every single FX transaction.

Multi-payments reconciliation

Through the SAP MBC infrastructure, Birla Carbon receives bank statements electronically in multiple file formats ranging from standard MT940 and BAI2, to specific country reporting formats and facilitates auto reconciliation.

By fully automating the payments process across all transaction types including wires, automated clearing house (ACH), cheques and country-specific payment types such as Boletos in Brazil, the new workflow enables Birla Carbon to reduce the time, cost and potential errors associated with manual reconciliation, as well as reducing overall financial risk.

The streamlined global process translates to less administration work, increased accuracy, faster error and fraud detection, up-to-date invoice payment and collection, faster financial closing, enhanced cash flow clarity, scalability and higher compliance rates for Birla Carbon.

Harnessing technology

Birla Carbon effectively harnessed new-age technology tools and selected powerful solutions that enable its lean global treasury team to complete a synchronised multi-region treasury transformation within a notable six-month timeframe.

Working with SAP, Birla Carbon established H2H connectivity with global banking provider, J.P. Morgan, while consulting firm, PwC helped streamline transaction files across regions and payment types. Bank-agnostic tools such as SAP MBC establish seamless multi-bank connectivity for secure file transfers, adopts the latest ISO XML payment file formats for unified payment processing and 360T provides end-to-end automated FX hedging.

Key benefits

• Cost savings.

• Number of banking partners/bank accounts reduced.

• Process efficiencies.

• Increased automation.

• Risk mitigated.

• Improved visibility.

• Errors reduced.

• Manual intervention reduced.

• Increased system connectivity.

• Future-proof solution.

• Exceptional implementation (budget/time).