One of the market leaders in cement production across Europe, Australia, Asia and Latin America, this company manufactures, distributes, and markets cement, ready-mixed concrete, and other products and services for the construction industry.

At a glance

  • J.P. Morgan Mexico solved the firm’s reconciliation problems, helping the client to migrate its over-the-counter collections into electronic receivables. This resulted in improved product delivery times and service.
  • J.P. Morgan Host-to-Host offers clients an advanced cash management solution through a single, secure online portal that seamlessly integrates all treasury activities using a single authentication process.
  • J.P. Morgan implemented a host-to-host receivables delivery information system by which the company receives updates every 15 minutes.

The challenge

The organization was looking to streamline its account receivables (AR) process and to substantially reduce non-identified payments, decreasing days sales outstanding (DSOs) and positively impacting its working capital. In addition, the company wanted to reduce checks and cash deposits by migrating these collections into electronic wire transfers so as to reduce costs and improve client experience.

Mexico landscape

J.P. Morgan includes the payer name, tax identification number and the remitter account in each transaction in order to help the beneficiary to identify the payment and determine the payer.

The J.P. Morgan solution

customer collections
  • Virtual Reference was the solution provided by J.P. Morgan, streamlining the collections process and expediting product delivery.
  • This solution included a range of unique reference numbers (RNs) assignable to each payer. These unique RNs were in the Mexican interbank account CLABE format for electronic fund transfers in Mexico. This format is 100% compatible with both Mexican clearing houses. Incoming funds are credited into a collections demand deposit account (DDA). The company can then clearly identify individual payers based on the uniquely assigned RN. That unique reference is the firm's deposit account for their clients.
  • J.P. Morgan also assisted the company with a fully automated information file delivery via Direct Transmission every 15 minutes.
  • Virtual Reference allowed the company’s clients to pay electronically instead of using cash and checks or over-the-counter payments via branches.

Neither the local nor global banks in Mexico have a similar host-to-host receivable solution that would cover the company’s semi-online operations.

The impact

  • J.P. Morgan’s solution helped the corporation facilitate faster decision-making when releasing goods or extending further credit to its payers. Additionally, the Virtual Reference solution helped reduce the time and administrative costs resulting from reconciliation problems.
  • Dedicated time by the accounts receivables team to identify payments was reduced to ~3% from ~40%, and non-identified payers have fallen to 7% from 20%.
  • Once the company solved the payer identification issue, it started a campaign to migrate collections from checks and cash into wires and ACH payments.

This webpage was prepared exclusively for the internal use of the J.P. Morgan client to whom it is addressed (including the client’s affiliates, the “Company”). This webpage is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan.

This webpage is confidential and proprietary to J.P. Morgan and is not intended to be legally binding. J.P. Morgan makes no representations as to the legal, regulatory, tax or accounting implications of the matters referred to in this presentation. The products and services described in this webpage are ordered by Banco J.P.Morgan, S.A., Institución de Banca Múltiple, J.P.Morgan Grupo Financiero and/or its affiliates, subject to applicable laws, regulations and service terms.

J.P. Morgan is a marketing name for the Treasury Services businesses of JPMorgan Chase Bank, N.A. and its affiliates worldwide.