Australia's oldest bank 'banks' on compliance and recovery with Profectus

Australia’s first bank was established in 1817 and is also one of the largest banks in New Zealand.

It provides a broad range of consumer, business and institutional banking and wealth management services through a portfolio of financial services brands and businesses.

Like any large-scale organisation, particularly one with as many complex arrangements as those in the banking sector, there are always challenges in liaising with and tracking contracts and invoices, which can lead to slow payments and financial erosion.

The business of banking is more than banking

Affectionately termed ‘The Big Red Bank’, this bank has more than 14 million customers, employs nearly 40,000 people and has over 1,200 branches and more than 3,200 ATMs across the country. But when the average Aussie thinks of banks, they think only of deposits, withdrawals and mortgages or other financial services.

What many people don’t see is that The Bank has a huge reliance on logistics to deliver between branches and to customers.

It employs cleaning services for every branch, requires maintenance for ATMs, and does most of everything else the typical business requires, just at a massive scale.

“Take logistics: we do a lot of branch-to-branch deliveries of cheques and marketing collateral, or delivering credit card statements to customers,” according to their Head of Procurement Services. “Then there’s printing jobs which can include everything from the printing of those statements to the design and print of marketing collateral. When you consider we also have functions around the nation that require catering, signage… you can begin to see how widespread our supplier portfolio really is.”

Often the payment of these invoices would rest with category managers, who would be charged with signing off on each and every invoice. Sometimes, small errors in supplier invoices would not be picked up given the sheer number of invoices that needed to be checked on a daily basis, which is incredibly common among large-scale organisations and understandable given the time it takes to cross-reference invoiced charges versus agreed-to payment terms.

Now, a single invoice with an error of a few dollars does not make a material difference to a bank. But add up minor overcharges across thousands of invoices a month among hundreds of suppliers, and small oversights can snowball into something that can have a larger impact.

It was clear that an additional level of checking could prove valuable to not only reduce the burden of manually checking all invoices, but to also act as an additional compliance backstop.

“The most important job of the category managers actually working with the suppliers and having better contracts in place and operationally making sure that jobs are being completed,” he said. “We needed to let them get back to that core responsibility first and foremost without having to build additional compliance and recovery capabilities in-house.”

It’s why The Bank turned to Profectus Group.

Cashing in with Profectus

Profectus is the leading technology-driven services provider of compliance and recovery solutions. In 2016, The Bank engaged the company on a three-year compliance control project, testing the waters by allowing Profectus to undertake an Accounts Payable Audit of a select number of suppliers. The stated aim was to recover $5 million over 36 months.

In analysing the first five suppliers it targeted, it identified and recovered $500,000. By the end of 30 months, when its remit had expanded to 74 suppliers, the company had hit the $5m recoveries target.

Within a year of working with Profectus, The Bank achieved more than 100 per cent return on investment.

The Bank now relies on Profectus to oversee the transactions and deals of 200 suppliers across their value chain, with an ROI of about 300 per cent achieved every year.

“With Profectus working in the background as our compliance insider, we’re able to use the recoveries we’ve identified for internal initiatives, such as spending it on hiring processes for instance,” said the Head of Procurement Services. “It’s also reduced the time for us to pay invoices to suppliers from about 28 days to as little as a week.”

He quickly realised that the value of Profectus’ accuracy in checking and identifying irregularities could be used elsewhere.

Whizzing up new service leads to fewer worries

For a company which employs around 40,000 Australians, there is a reliance on recruitment agencies to do the heavy lifting. A standard agreement with agencies is that they receive a fee per employee they can place with The Bank. However, if that employee leaves The Bank within the first six months, The Bank is entitled to recoup that fee back from the recruitment agency.

“As the departments aren’t responsible for the recruitment process nor dealing with the agencies, if one of their recent recruits leaves within the first six months, the department simply asks for another recruit.”

“There isn’t anyone charged with asking for the fee back from the agency and often this simple aspect can be easily and understandably overlooked.”

Highlighting this issue, in 2019 Profectus created HR Warranty, a control added to the system to ensure warranty claims are recovered and tracked. It tracks all aspects of the employment cycle, from hirings to retirement and everything between, including the recruitment phase. To date, The Bank has achieved above 1,000% ROI on the service.

“It’s a very quick and easy service to implement, and the return on investment is massive.”

In addition, Profectus implemented a portal for suppliers to engage directly with Profectus on behalf of The Bank, into which suppliers can ask questions directly about such matters as payment queries and escalations if required. Dubbed Supplier Advocacy, the portal has freed up additional resources for The Bank and the category managers who would normally be responsible for undertaking each and every engagement or query.

All told, while the Bank relies on enterprise resource planning and procurement platforms to receive and send invoices, acquire services and recruit new staff, Profectus has proven to be indispensable to the procurement team at The Bank, as none of these systems are capable of undertaking the cross-checking, analysis and recovery required to prevent minor errors or oversights in each process – nor does it automatically highlight irregularities or streamline contract compliance.

“I have extreme confidence that whatever we’re doing, Profectus is able to check everything. They’ve got our back, and they’re an essential extension of our team.”

- Head of Procurement Services

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Big Red Bank Case Study

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