Payment Automation for Cost Savings and Efficiency
by Harish C S Pai, Manager, Treasury Operations, Tourism Development & Investment Company
As a business responsible for building the vision of economic, social and cultural prosperity in Abu Dhabi, we pride ourselves at Tourism Development & Investment Company (TDIC) on being a leader in the region for identifying and driving best practices across all aspects of our business practices. Enhancing efficiency and control are important priorities for treasury and finance. Supported by our partner bank, Abu Dhabi Commercial Bank, we have become the first company in the United Arab Emirates (UAE) to implement a customised, automated procure-to-pay process. In this article, we describe the solution that we have implemented, which is based on our ERP, and leverages industry best practices and innovative technology. The project has delivered considerable financial savings resulting from operational efficiency, resource savings and enhanced risk management; at the same time, our suppliers and employees have a more positive experience of working with TDIC.
Background to TDIC’s payments project
Tourism Development & Investment Company (TDIC) is a master developer of major tourism destinations in Abu Dhabi. Government funding for infrastructure and other development projects in Abu Dhabi requires segregated funds for each project to avoid comingling of funds and enable reporting and accounting to be produced at a project level. At TDIC, we have managed this requirement through a call account structure for each project, with fixed interest tiers for calculating daily interest, paid on a monthly basis. Currently, we have 99 principal-protected call accounts with same-day access to funds.
With a large number of accounts and the need to demonstrate a high degree of accountability for cash held for each project, TDIC recognised that improvements needed to be made to its existing payment processes. In particular, the process was entirely manual, with up to fifteen separate, physical documents required to support each payment. Each invoice took a minimum of ten days to process, with no ability to track the status of each payment e.g., where an invoice has been sent to an approver but not yet approved. Payment cycles were performed twice each month, potentially resulting in late payment, and therefore damage to supplier relationships and risk to the supply chain.
Identifying a solution
TDIC was implementing a new ERP as part of a wider government initiative for financial optimisation. While this incorporated some existing workflow tools for payments, such as automatic generation of payment messages, it did not fully support our payment approval requirements or enable users to track the progress of payments. Consequently, we made the decision to customise and enhance the payment functionality available through our ERP, and integrate the solution with our partner bank, Abu Dhabi Commercial Bank (ADCB).
Although we worked closely with ADCB, we made the decision not to implement a bank-proprietary electronic banking platform to design and deliver our payment solution. By remaining bank-neutral, we were able to maintain flexibility in our choice of banking partners in the future, and enable the solution to be structured to meet our needs exactly. Similarly, we opted to enhance our ERP as opposed to implementing a separate, specialist payment system as the cost and integration effort would have been greater, and we would need additional technical resources to implement another system. ADCB provided the required payment formats, including advice on encryption, in order to ensure accurate, robust and secure straight-through processing.