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Case Studies

Bridgestone Wheels in Digital Treasury

Automated cash solutions simplifies domestic and import payments in India


About

Headquartered in Tokyo, Japan, Bridgestone Corporation is the largest tire manufacturer in the world1 generating global sales revenue of $32.8 billion in 2018. Its subsidiary, Bridgestone India, has been operating in India for the last 20 years, developing a network of 3,000 dealers across the country. The company also has two manufacturing facilities in Indore and Pune. 

The Challenge

As a leading supplier of tires, Bridgestone imports majority of its raw materials from global suppliers and distributes final goods to its wide network of local dealers in India. However, prior to August 2018, the company’s cash management processes were extremely manual.

In order for import payments in India to be processed, all corporates are required to submit physical supporting documents to its bank for every transaction – in the form of invoices, shipping documents and payment request letters – to comply with regulations by the Reserve Bank of India. For Bridgestone, which receives 1,800 invoices from overseas suppliers each year, this meant putting in 2,260 man-hours a year for the paper-based process, which impacted the firm’s overall efficiency and translated into higher processing costs.

Separately, Bridgestone also faced challenges in optimizing its cash domestically. The company processes its collections from 3,000 local dealers across a range of traditional payment methods such as cheques, and also had to reconcile each collection against the outstanding invoices in its SAP system. Moreover, the firm needed to reconcile a large number of bank statements across different banks and file formats. The entire process was extremely manual, often resulting in delays in collection and longer order-to-cash cycles that impacted its working capital efficiency.

Bridgestone needed a comprehensive solution to manage invoices and reconcile its receivables efficiently so it can better manage its liquidity in India.

The J.P. Morgan Solution

Bridgestone partnered with its global banking partner J.P. Morgan to implement a comprehensive cash management solution to effectively digitize the company’s end-to-end process for cross-border payments, domestic collections and reconciliation.

Cross-border payments

The firm implemented J.P. Morgan’s paperless imports solution where payment instructions can now be transmitted digitally to the bank via host-to-host integration with Bridgestone’s ERP. The solution also fully integrates J.P. Morgan’s online banking platform with the Reserve Bank of India’s Import Data Processing and Monitoring System (IDPMS), where Bridgestone can provide the bank access to the relevant imports trade data on IDPMS by simply submitting two data points from its invoice and shipping documents through J.P. Morgan’s Virtual Branch platform to validate and process Bridgestone’s cross-border transactions. Bridgestone is also able to pay the invoices via the Virtual Branch to completely digitizing the cross-border payment process.

With access to information on IDPMS, J.P. Morgan is also able to ascertain the FX exposure of Bridgestone’s cross-border transactions. By combining the information with Bridgestone’s FX hedging policies, J.P. Morgan is able to apply them to import payment instructions, strengthening Bridgestone’s controls to manage FX exposures.

Domestic collections and reconciliation

To better manage its domestic collections, Bridgestone implemented J.P. Morgan’s innovative invoice reconciliation solution. The cloud-based platform facilitates the electronic sharing of invoices, handling of payments and comprehensive management of transaction information between B2B buyers and sellers. The fully-automated self-service portal allows dealers to pay invoices directly via the portal’s web or mobile platforms, while also enabling dealers to use incentives such as cash discounts and credit notes against outstanding invoices. Bridgestone on the other hand can get sophisticated analytics and detailed insights into its receivables collection at a granular level to help optimize working capital.

To ease reconciliation, Bridgestone tapped into J.P. Morgan’s Treasury Services application programming interface (API) solution to retrieve bank statement reporting in real-time directly on the firm’s own platform. The firm also piloted J.P. Morgan’s Virtual Assistant, a bot-based and artificial intelligence (AI) enabled tool that facilitates queries around daily treasury operations like transaction status, cash positions and other account and banking activities. The combined solutions provide Bridgestone with increased transparency and real-time view of its treasury data to facilitate better cash management decisions.

The Result

The comprehensive cash management solution has delivered significant benefits for Bridgestone. The paperless imports solution has enabled Bridgestone to:

  • Reduce manual intervention by fully digitizing the cross-border payment and FX booking and reconciliation processes
  • Enhance controls with the ability to validate import data in real-time through the Reserve Bank of India’s IDPMS system
  • Reduce man-hours spent on import payment processing from 2,260 to 100 hours annually
  • Improve turnaround times when making cross-border payments for imports

At the same time, the automated invoice reconciliation solution allowed Bridgestone to:

  • Accelerate collections from local dealers to reduce days sales outstanding through electronic invoice presentment and enhanced collection methods
  • Reduce volume of disputes, reconciliation and billing adjustments
  • Increase sales productivity by reducing time spent on manual collection of funds
  • Deploy an integrated and seamless transaction and collection process
  • Improve working capital utilization
  • Leverage data analytics to devise effective customer management strategies

“J.P. Morgan has been instrumental in helping us centralize control and gain full visibility into our global liquidity; allowing us to optimize cash to meet working capital needs in our growth markets.”

Nitin Sethi
Treasury Head, Bridgestone India Private Limited

Bridgestone is an overall winner of the Treasury Today 2019 Adam Smith Awards Asia in the category of Best in Class Solution in India.

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