Published: August 01, 2013
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.
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.
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.[[[PAGE]]]
Having identified the drivers, priorities and plans for a new payment process, we then presented the concept to Executive Management. As the first company in the region to create a customised, automated payment process, this was a major step. The solution we recommended (see box, New payments process at TDIC) won considerable support, particularly as a result of the quality of the audit trail. At any point, a payments report can be produced from the ERP, with information on the originator, checker and approver for each payment. Invoices are automatically archived at an individual invoice and payment level, avoiding the need for manual archiving.
The implementation proceeded smoothly with a high quality approach to project management, including extensive testing. Our internal solution is now closely integrated with TDIC, with transmission of new payment files every 15 minutes to ADCB’s designated file location. These are then retrieved and validated prior to payment, with prompt notification of rejections or queries, allowing us to make any necessary corrections without creating delays in the payment value date.
Implementing a customised payment process at TDIC based on our ERP has enabled considerable improvements in the automation, accuracy and timeliness of payment processing. Some of the specific benefits we have received include the following:
Dematerialisation
Payments are completely paperless (replacing an average of 15 documents per payment) resulting in more rapid processing, and avoiding errors and delays due to misplacement or inaccurately completed documentation. The need to file documents has been eliminated, and invoices are archived automatically, reducing our manual resource requirement significantly.
Process efficiency and convenience
Each step in the payment process, including approvals and signatures, is conducted promptly, and passed automatically to the next step. Invoices no longer need to be filed, as these are archived automatically. Signatures on payments are completed digitally, accelerating and streamlining the process, whilst still providing signatories with full information on the invoice.
Auditability
Payments can be tracked throughout the procure-to-pay lifecycle, allowing key performance indicators to be measured, and ensuring full transparency and accountability of the payment process. Delayed items can be identified and remedied quickly.
Cash positioning and forecasting
An associated benefit of our enhanced payment processes is that we are now in a better position to provide timely, accurate cash flow forecasting. We now forecast cash flow over a 12-month time horizon, and continue to focus on improving automation and accuracy, therefore improving our financial metrics considerably.
Supplier and employee satisfaction
Suppliers receive payments on time and are automatically notified when a payment is released with all details of the payment, improving relationships. Employees have also responded very positively to the new process, as they no longer need to deal with large volumes of paperwork, and are able to provide a better service to other TDIC departments.
Financial benefits
TDIC has calculated that the value of savings and efficiencies, including consumable resources, staffing, process enhancements and reduction in operational risk is equivalent to approximately $5m per annum.
TDIC is uniquely positioned as an economic linchpin in Abu Dhabi and is an important role model more widely in UAE and the Middle East. Not only has TDIC been the first company to create a customised, automated payment process in the region, but our experiences provide a blueprint for other government departments and commercial organisations in the region. This is particularly timely bearing in mind the Abu Dhabi government’s focus on enhancing standards of financial responsibility, accountability and transparency across both government and private organisations. The partnership with ADCB illustrates how local banks can provide services that would only have been provided by central banks or foreign international banks in the past. This is valuable in promoting local partnerships and solutions and therefore contributing to sustainable economic success in the region.
As a result of the project, we are now in a position to implement further enhancements to our infrastructure, such as electronic bank account management (eBAM) and automated reconciliation. We are also considering implementing SWIFT connectivity in the future in order to standardise communication and formats, and permit greater bank-neutrality. By automating and streamlining our operational processes more fully, we are able to focus on treasury priorities such as liquidity management.
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