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India is a highly regulated market for cross-border payments and collections. Companies face strict trade controls when executing import and export trades, including defined timelines.
Watson Pharma makes regular domestic and cross-border payments to its suppliers and receives significant collections for its export of goods and services. However, the firm’s existing accounts payables (AP) and accounts receivables (AR) processes remain extremely manual.
Watson Pharma processes an average of 600 invoices per year, each containing multiple pages of underlying documentation and processes that remain heavily paper based.
The process is a mammoth operational task requiring extensive coordination, consuming critical management time and often leading to delays in reconciliation.
“This impacts our ability to obtain timely eBRC (electronic bank realisation certificate) receipts, resulting in delays in claiming export benefits that directly impacts our profit before tax,” explains Vivek Saraf, Director Treasury.
Similar challenges are faced on the imports and domestic payments front, where Watson Pharma manages approximately 500 cross-border transactions and over 20,000 domestic payments a year, but AP processes remain heavily manual and prone to operational risks.
Watson Pharma embarked on a transformation project to fully digitise its payments and collections, to support its goals of achieving treasury efficiencies and real-time regulatory compliance.
Watson Pharma conducted a detailed study of the banks’ offerings in India before selecting its cash management bank J.P. Morgan’s solution which delivers consistency and complete automation across its various business divisions and processes, by integrating the bank’s system to Watson Pharma’s ERP system through host-to-host (H2H) connectivity.
The solution includes:
Paperless imports and exports payments processing – H2H connectivity enables Watson Pharma to transmit exports data and imports payments instructions directly to the bank, digitally and in real-time.
Real-time visibility into exports and imports data – the banking portal is integrated into the Reserve Bank of India’s imports and exports data processing and monitoring systems. Watson Pharma can now leverage its online banking platform to keep track of outstanding payments data.
Automatic initiation of domestic payments – the company can now initiate domestic payments directly via H2H for a range of domestic payment methods, including real-time gross settlement (RTGS), national electronic funds transfer (NEFT), cheques and direct debits.
Enhanced customer experience – with the process fully automated at both ends, the solution delivers tightened controls and audit trails across the entire payment processing lifecycle.
Improved data security – the solution offers data security for processes where data is transmitted across multiple departments; this is especially critical amid the current COVID-19 operating environment, where employees continue to work remotely.
Best practice and innovation
Watson Pharma has fully digitised the entire treasury and operational process for AP and AR, including the process to transmit exports data via H2H. This unique and customised solution is designed to integrate Watson Pharma’s diverse and complex business structure.
Frees up precious working hours.
Improved data security and audit process.
Fully eliminates paper-based documentation.
“The transformation is a massive accomplishment for our firm – in terms of the results, the journey and the circumstances in which it was implemented. Our exports, imports and domestic payments processes will now be fully automated, providing our teams with enhanced treasury efficiencies, while ensuring real-time regulatory compliance and superior data security controls that improve overall business efficiency and position us well for future business growth. We look forward to implementing this solution for other entities in India,” says Saraf.