21
Merrier Customers
Setting up a standard policy on how
reconciliation issues or clients’ complaints
should be addressed, whether by phone, email,
fax or other means, ensures customer service is
offered in a timely and satisfactory manner. This
in turn moves client relationship up a notch, and
can be managed centrally from the SSC.
Capable Banking Partner Needed
To overhaul the collections process, a banking
solution that works for both the front end and
back end is essential.
With extensive collections points across Asia
and a vast correspondent bank network in the
region, Citi has the widest network allowing
collections from the doorsteps of merchants,
even in rural areas of India and Indonesia.
Physical distance is no longer an issue with Citi’s
mobile collections solutions which can tap into
the wallets of small businesses and allow
payments to be sent from the finger tips. Since
the depth of mobile penetration is higher than
bank accounts in some countries, together with
clearing systems becoming 24/7, Citi is at the
forefront of embracing this change by allowing
customers to use mobile, cards (including virtual
cards solution) to transact easily and in real-time.
In addition, our full receivables suite, such as
Accounts Receivables Lockbox create a
harmonized, single front-end system making the
collection process simpler and customer-friendly.
In the back end, a banking partner with robust
technology capabilities to perform auto-matching
of invoice data and provide reporting that
supports different formats is essential. Once the
payment is received by Citi, our collection
solutions can send out MT940 or BA12 messages
directly to your ERP system — making manual
reconciliation a thing of the past.
Straight-Through Reconciliation
By channelling statements in a harmonized
format into ERP, together with intelligent
matching and posting rules, treasury teams can
reconcile account statements and post credits
to their customer accounts automatically, thus
freeing up customer credit limits quicker.
That said, the level of straight-through
reconciliation (STR) that is achievable hinges on
how detailed information is allowed to be put on
the bank statement. In countries such as Korea,
fewer than 10 characters can be used for
identifying information (such as invoice
numbers); whereas in nations such as India, 35
characters can be used to record this data,
enabling greater reconciliation accuracy.
Problems associated with diverse formats
used across Asia will be gradually improved
as more domestic clearing networks become
SWIFT-compliant as well.
Mitigate Operational and Commodity Risks
Furthermore, ensuring prompt payment can
help mitigate operational and commodity risks.
From the time an invoice is issued till payment is
received, a company is exposed to not only
credit risk but also payment settlement risk of
its own and its clients’ banks, especially in
countries where cheques are common place.
Since many banks in Asia are not internationally
rated, if cheques are drawn on and processed by
small local lenders, the cheque clearing process
can be extended into days.
Deliver Balance Sheet Impact
As business models continue to evolve and
competitive pressures squeeze profit margins,
companies should review their collections
processes: firstly, by achieving economies of
scale, such as setting up a SSC for receivables;
secondly, choosing a bank that can mitigate
settlement risk and provide technology platform
to automate, harmonize and reduce manual
work; thirdly, by collecting faster using new
channels such as direct debit, mobile collections,
e-commerce and cards that best fit their needs.
The benefits of optimizing receivables collection
are evident. By shortening DSO, companies can
monetize receivables quicker, optimize their
balance sheet and increase return on investments,
which make the buyers, sellers and their investors
all merrier.
With extensive
collections
points across
Asia and a vast
correspondent
bank network in
the region, Citi
has the widest
network allowing
collections from
the doorsteps of
merchants, even
in rural areas
of India and
Indonesia.
Asia Pacific Sector Insights
| Fast and Furious: Optimizing Collections for Consumer and Healthcare Sectors
