Accounts Payable and Bank Reconciliation Automation

Project Details

A multinational retail corporation with a presence in over 30 countries approached Neevista with a pressing issue: their manual accounts payable process was causing significant delays and errors and hindering their ability to maintain healthy vendor relationships. With thousands of invoices processed monthly, the inefficiencies impacted their bottom line and overall operational efficiency.

Project Goals

To modernise and streamline the client's accounts payable process, we developed a solution that focuses on two main areas:

1. Automating Accounts Payable:

• Implemented automated payment execution and approval workflows to reduce manual efforts and errors.
• Enhanced vendor communications with automated notifications and electronic invoicing.

2. Automating Bank Statement Integration:

• Enabled automated import of bank statements into the client's ERP system in various formats (e.g., OFX, MT940, BAI2).
• Facilitated automated bank reconciliations within the ERP to ensure accurate financial reporting.

This solution not only improved processing times and reduced errors but also integrated seamlessly with the existing ERP system, enhancing vendor relationships through more efficient and reliable transactions.

Project Completion

Neevista initiated the project by conducting a comprehensive analysis of the client's accounts payable workflow, identifying inefficiencies, bottlenecks, and areas for improvement. Detailed process maps were created to visualise the current "As-is" and future "To-be" states, ensuring alignment with all relevant stakeholders.

Using Robotic Process Automation (RPA) technology, Neevista developed a custom solution tailored to the client’s specific needs. This solution automates invoice data extraction, approval workflows, payment processing, and the importation of bank statements for automatic reconciliations. It also supported a wide range of payment types, including local ACH, cross-border, and priority payments, both domestic and international, enhancing the efficiency and reliability of the client's financial operations.

Project Challenges

The project presented several challenges, including:

● Managing Integration Complexity: Seamlessly integrating the automated solution with the client's existing ERP system and the associated regional bank demanded meticulous planning and execution. This ensured smooth data flow and compatibility between systems, despite the inherent complexities.

● Choosing the Right File Format:
The variety of payment file formats used by global banks depends significantly on regional banking standards, specific national regulations, and the diverse needs of financial systems. To streamline your payment operations, it's essential to select a file format that is not only universally accepted but also user-friendly. Some of the available options were:

Payment file formats:
○ SWIFT MT101: Utilized for global payment instructions via the SWIFT network.
○ ISO 20022 XML: An emerging standard for electronic data interchange across finance sectors, set to replace older systems like SWIFT MT.
○ ACH Formats: Including NACHA for U.S. domestic payments and SEPA for transactions within the Eurozone.
○ RTGS Formats: Used for high-value, urgent transactions in numerous countries.
○ Cheque Image Clearing System (CICS) Formats: Employed for processing cheque images electronically in markets like the UK.
○ FPS (Faster Payments Service): A UK initiative for rapid payment processing.
○ EFT (Electronic Funds Transfer): Formats such as CPA 005 in Canada and Direct Entry in Australia and New Zealand.

Bank statement file formats:
o MT940: A standard structured SWIFT document format used internationally by banks. It is designed for the electronic transmission of statement information and is widely used for corporate banking.

o BAI and BAI2 (Bank Administration Institute): Formats used primarily in the U.S. for cash management and to provide detailed financial transaction data.

o CAMT (ISO 20022 Cash Management): A set of XML-based message formats that are part of the broader ISO 20022 standard. It is increasingly being adopted for bank statements and financial reporting.

o STA (SWIFT Statement Message): A SWIFT format used for providing concise statement information in a standardised format.

Choosing an appropriate format helps prevent the complexity and confusion associated with managing multiple, diverse systems, ensuring smoother financial transactions.

● Addressing Country-Specific Payment Complexity: By comprehensively understanding each country's unique requirements, we successfully navigated complex payment landscapes. This included implementing specialised mechanisms like split payments tailored to regions like Poland.

● Addressing Bank-Specific Payment File Requirements: We encountered diverse specifications from various banks, each with its own unique format and sequence number requirements for payment files. Additionally, differences in requirements were observed even within different regions of the same global bank. Our approach involved meticulous customisation to meet these varied specifications, ensuring seamless compliance across all banking partners and regions.

● Enhancing Global Banking Efficiency: By consolidating operations under a single global bank, we've streamlined payment file formats across various banking systems. This consolidation has significantly reduced the complexity of creating payment files, leading to greater efficiency and smoother transactions worldwide.

● Data Accuracy Challenge: Extracting accurate invoice data presented a considerable hurdle, compounded by the inconsistent quality of supplier information within the Client's ERP system. To enable automation, extensive data cleansing was necessary prior to implementation.

● Change Management: Ensuring buy-in from stakeholders across regions was crucial for successfully implementing and adopting the automated solution.

Project Results

Despite the challenges, Neevista delivered the automated accounts payable solution within the agreed timeline and budget. The results were transformative.

● Efficiency Gains: The automated solution reduced processing times by 50%, allowing the client to process invoices faster and optimise resource allocation.

● Error Reduction: Automation significantly reduced the incidence of errors, leading to improved data accuracy, fewer payment discrepancies, and a lower risk of financial losses.

● Enhanced Vendor Relationships: With timely payments, improved accuracy, and streamlined communication, the client strengthened vendor relationships, leading to preferential treatment and better terms.

● Cost Savings: The client realised substantial cost savings by eliminating manual processes, reducing late payment penalties, and optimising cash flow management.

Overall, Neevista's automated accounts payable solution empowered the client to achieve operational excellence, drive efficiency, and maintain a competitive edge in the retail industry.

Contact us for tailored automation solutions that drive efficiency and savings.