Alfa Laval unlocks cross-border payments efficiencies to fortify global supply chains

Cross-border payments out of mainland China has been a longstanding pain point for Alfa Laval. With over 3,000 cross-border transactions to 50-plus overseas counterparties executed a year, more than 120 manhours a year were spent collating underlying documentation to settle payments for imports of supplies.

To initiate payments, these paper-based supporting documents had to be affixed with its company chop, scanned and emailed to banks – a highly labour-intensive and tedious process. Balance of Payments (BoP) forms were also manually prepared by its local finance teams, and the BoP codes for each cross-border payment emailed to the corresponding bank, to comply with regulatory reporting.

But with each of Alfa Laval’s Chinese entities operating different Enterprise Resource Planning (ERP) systems, the cross-border payment process varied across sites. As each entity maintained its own banking relationships, the verification of these paper documents also differed significantly across banks – with some providers taking up to five working days to complete cross-border payments. Any back-and-forth communication and resubmission due to errors or missing documents, also further delayed payments to Alfa Laval’s overseas counterparties.

With a desire to standardise its treasury and finance practices via its Finance Shared Services Centre (FSSC) in Shanghai, Alfa Laval opted to consolidate its banking relationships in mainland China with HSBC.

To streamline the cross-border experience, Alfa Laval adopted HSBC’s SpeedX solution – a reengineered process approved by the State Administration of Foreign Exchange (SAFE) that enables qualified corporates to tap into a simplified end-to-end cross-border payment experience. Alfa Laval underwent a thorough assessment with HSBC China, providing assurance of its trade flows to qualify for the bank’s program.

Key to the solution is the ability to initiate cross-border payments without the need for any supporting documents, eliminating manual paperwork and checks from both Alfa Laval and the bank’s end. The automated approach shortens payment processing time to just 10 minutes, from five working days in the past, enabling beneficiaries to receive payments quicker.

By integrating Alfa Laval’s ERP system with HSBC, BoP data can now be captured and embedded directly within the firm’s ISO 20022 XML V3 payment files. This allows digital BoP codes to be sent directly to the bank via host-to-host for reporting purposes, further automating and simplifying the overall process.

Over 3,000 cross-border transactions a year across the various entities will now be centralised into Alfa Laval’s FSSC and processed with automation and immediacy via SpeedX. This supports the firm’s broader centralisation efforts, improves overall visibility and strengthens controls over treasury and finance processes.

With the solution, Alfa Laval can now also rely on the bank’s robust post-transaction monitoring system that leverages machine learning technologies, to identify and flag any irregularities in transactions processing.