VitaDairy achieves a winning formula for sustaining growth by transforming treasury

VitaDairy is a Vietnamese corporation involved in the production of dairy products, and general nutrition products in Vietnam and Australia.

Established in 2005 by a group dedicated medical professionals, VitaDairy was a pioneer in leveraging scientific nutrition to improve the health and quality of life of millions of Vietnamese consumers. Once an emerging player in this field, they have gone through a period of explosive growth to become one of the largest nationwide providers of these products.

They currently rank amongst the top 3 largest milk powder manufacturers¹ and top 2 largest baby formula manufacturers in Vietnam².

VitaDairy had opened accounts with multiple banks in a bid to support the growth of their business across Vietnam. As a result of this, multiple banking platforms were involved in daily payments and collections processes, which had created the following operational inefficiencies:

• Unstandardised payments and collections processes – While VitaDairy had highly tailored support from their banking partners on the execution of manual payments, inefficiencies arose from the need to use various processes and report formats across banks to raise payment instructions and reconcile transactions.
• Low levels of system integration – Payments and collections information was scattered across various banking platforms, which invoked significant manual effort from staff on reconciliation. Transactions had to be traced manually on each platform, and matched to open invoices before goods could be released. This resulted in delays, and a large amount of time spent daily gathering and matching payment information. While VitaDairy had an existing enterprise resource planning (ERP) system, integrating their various banks onto the ERP was potentially extremely costly and time-consuming.
• Low identification rate on collections from buyers – On top of this, it was not always easy to identify payments from suppliers, due to incomplete or a complete lack of reference information on payments. This would necessitate manual follow-up from staff with customers to verify when payments were made, further increasing workload and potential delays in the release of goods.

To address these, VitaDairy made the decision to undergo a significant transformation centered on achieving a greater level of automation, standardisation and centralisation of key treasury processes. Banking operations were consolidated to one core provider, HSBC in Vietnam, with whom they implemented the following solutions:

• Streamlined banking platforms – Accounts were migrated to a single HSBCnet profile, providing centralised, real-time visibility on VitaDairy’s accounts across Vietnam on a single interface.
• Improved interconnectivity between systems – Following account rationalisation, just a single host-to-host connection was required to integrate VitaDairy’s HSBCnet profile with their ERP system. This enables real-time flows of information between HSBC and their ERP, improving the capacity for process automation. Additionally, this has also allowed VitaDairy to execute payments directly from their ERP through a single, standard payment file format, with reports flowing back into the ERP for automatic end-of-day reconciliation.
• Automation of identification and reconciliation of collections against invoices – VitaDairy also adopted a collections solution that combined the capabilities of HSBC’s Virtual Accounts (VA - an information management service that enables identification of the originator of the payment) and Receivables Management System (RMS) solutions to automate invoice reconciliation. Through this, VitaDairy assigns a unique VA to each of their customers, which is linked to a physical account. When customers remit payments to their assigned VA, the VA number is automatically posted in the payment reference field, while payments are credited to the linked physical account. The payment information is then fed into the RMS system, which maintains a database of all of VitaDairy’s currently open invoices. Payments are then automatically matched against the corresponding invoice, achieving 100% automation on reconciliation.

• Streamlined accounts and platforms – VitaDairy now has real-time visibility on all accounts directly via their ERP, allowing funding needs to be met more definitively, and enhancing visibility on transactions.
• Scalable solutions to support growth - an unlimited amount of VAs can be generated and linked to their collections account, allowing for the streamlined structure to be maintained as VitaDairy’s business grows
• Higher degree of process standardisation – VitaDairy now uses the H2H connection to execute payments in a standardised fashion directly from their ERP, eliminating the need to grapple with disparate processes and reports
• Standard, customised reporting - Reports have also been standardised and customised to suit VitaDairy’s specific requirements, automating reconciliation while ensuring that can meet financial reporting obligations.
• Freeing up capacity for staff – automation of daily payments and collections processes allows staff to focus on other, more strategic or urgent tasks.