Paper S(ll Blocks the Path to Streamlined Processes in AR Session #280 Pam Miller Educa(on Director & Editor IOFM

Transcription

1 Paper S(ll Blocks the Path to Streamlined Processes in AR Session #280 Pam Miller Educa(on Director & Editor IOFM

2 Does This Sound Familiar? Go to conference and learn about cool new things other AR departments are doing Things that would be perfect for your department! Go back to work and get bogged down in the day to day stuff Figure AR never gets money to do anything anyway Every department is for shrinking budget dollars Give up the next conference Who to plan, let alone implement, something new even if it will and money once it is in place?

3 NO MORE!!! Let be Determine to champion the project you want for your department your sponsor Prove the value Do it!

4 Accounts Receivable Cost containment & cash management are at the top of the agenda Increasing cash flow & profitability are strategic goals for many Increasing desire for visibility into customer financial health Increasing desire to improve cash flow Pressure to respond to increased customer requests for longer terms AR has the power to improve (or destroy) with customers

5 Accounts Receivable Pressures for compliance management & improvement SOX which is considered to be the gold standard for financial in many both public & private Processing receivables faster Facilitates cash flow Reduces risk Framed properly, who wouldn t want to help AR do a beyer job? Yet AR is s@ll a paper driven & manual process in many organiza@ons

6 AR is Ready to Automate AR has been slower to automate than AP Typical AR has been to outsource all or parts of the process to a bank lockbox Keystroke charges for data entry Possible delays in ge\ng cash into our account Now AR managers & execs see the success AP has had adding automa@on

7 Automa(on That Could Help Minimize paperwork Eliminate non value added Control & monitor the flow Reduce DSO Accelerate cash flow Improve customer Reduce write offs and doub_ul accounts Reduce late payments Enable benchmarking to increase efficiency & leverage staffing

8 Benefits of Automa(on enables Growth without increasing headcount & effort spent in sending invoices & effort spent in finding invoices for research More accurate and invoicing Reduced costs of processing and mailing by 40-80% One study says cost of mailing invoice is $15.00 Reduced document by as much as 96% Prevent loss of invoices & related documents Increased accuracy the right invoice to the right customer Reduced billing errors & returns up to 90%

9 Benefits of Automa(on, con(nued Faster conversion of receivables to cash decreased DSO Improved cash flow accuracy Increased ease of cash management Visibility into process Root cause visibility leads to increased efficiency & improved processes Reduced due to increased accuracy Easier to resolve customer disputes Support compliance w/tax in over 39 countries Free up AR

10 IOFM 2012 AR, Credit & Collec(ons Automa(on Survey a fundamental change driver order to cash cycle key driver in greater profitability through decreased DSO and reduced discrepancies Those who do it bring advantages to their dept and contribute to their s boyom line A push for AR to become part more involved with cross func@onal ac@vi@es including cash management and forecas@ng

11 PreQy Good News spending is growing again 49.4% spent more on AR automaton in 2011 than average annual spend % plan to spend more in 2012 than in 2011 In general larger are more likely to invest in At large 44.3% with no plans for 2012 are already automated (WOW!) Only 28.5% cited frozen or delayed budgets due to economy But at small 64.3% cite economy as the reason for not spending

12 Most Desired Technologies E- invoicing send invoices & receive payments electronically 21.1% 2011 and 20.3% 2012 Immediate ROI Improved cash mgmt & Lower DSO Improved & expense mgmt End to costly & labour intensive paper invoice & delivery

13 Most Desired Technologies, con(nued such as 18% 16.4% Cash 14.1% management 8.6% Credit Risk analysis & approval 8.6%

14 Barriers to Automa(on in General 29.7% surveyed indicate difficulty of to ERP or other systems (# one obstacle) Investment of & expense Extended ROI Other challenges include Complexity of the process Concerns about Lack of management support ERP already does AR..

15 Barriers Increase as Size Decreases Challenges loom especially large for small to midsized Growth of cloud as a solu@on Advances in ERP systems is also a posi@ve indicator More AR friendly Less expensive

16 Barriers to e- Invoicing 25.4% surveyed list customer resistance to e- invoicing And too many formats/tools Total of 44.7% surveyed have implemented e- invoicing to some extent and 55.3% have not

17 Automa(ng One Piece at a Time Aberdeen: Organiza@ons that have automated key steps in the O2C process Have 27% fewer disputed invoices Process 14% more invoices per month with 9% fewer people Which func@ons ripe for automa@on? What are the concrete gains?

18 One Piece at a Time, con(nued Accep@ng payment via ACH and encouraging customers to pay via ACH enhances cash flow and lowers risk of fraud 37% surveyed say that ACH provides the greatest efficiency gains to AR performance! Accep@ng credit apps on line Credit Research Founda@on survey says only implemented by 15% of organiza@ons But 72% of them are sa@sfied with the results And 18% of them found the results to be beyer than an@cipated

19 Roadmap Get management support & the right sponsor Assess where you are today Map your current process Develop a needs assessment Benchmarking can help Iden@fy where you want to be Set priori@es Set realis@c expecta@ons Define the project Involve the right players

20 Roadmap, con(nued Choose a project leader or champion Iden@fy which technology fits your needs best Choose the right vendor Jus@fy the investment Sell the solu@on Implement (effec@vely) Share the success Rinse & repeat

21 Importance of the Process Map Map out processes O2C includes many discrete but related steps Do not automate a bad process Understand which technology op@on makes sense for your organiza@on Can/should you change your process to fit the technology? BeYer fit to your process means fewer customiza@ons And select right vendor fit BeYer fit to your process means fewer customiza@ons And configure new system Measure costs now so you can measure improvement

22 Choosing your Target Choose the right tool for you & your customers Look at your customers, disputes, and metrics Do you have a high volume of customers, many disputes, and high average days delinquent? What are your customers like big, small, etc Start with least efficient and/or most painful areas Imaging is a good place to start Then OCR Then workflow Eliminate some data entry Add review and approvals Self service portals

23 e- Invoicing Faster, cheaper, more reliable than manual invoicing & removes inefficiency inherent in paper with its many manual steps that automate PO receipt, invoicing and payments have 37% lower AR past due levels than those who perform these tasks manually What do IOFM survey say about e- invoicing? 29.6% say fewer misplaced invoices 22.6% say it s required to meet customer demand & improve customer service 18.3% say it increases speed of ge\ng paid/reducing DSO (listed as top benefit of e- invoicing) 16.5% say it provides enhanced cash management capabili@es

24 How many invoices go out each month? To what size companies small, mid- sized, large, or a mix? Some customers understand advantages of receiving invoices electronically Others do not Not ready to change Set up to receive paper invoices only Challenges Difficulty in conver@ng customers - - Low customer adop@on rates are common How many are enough? What is Your Customer Popula(on Like? It s too expensive & complex to ayempt custom designing processes to sa@sfy each customer

25 Force customer to opt out of e- invoicing Cut off date for paper Charge fees for paper invoices May anger customer base but can achieve rates up to 70% first year Works beyer for large companies Passive Solving the Customer Adop(on Conundrum Allow customer to choose method of receiving invoice Keeps them happy as it matches their processes S L O W adop@on rate only 10-25% first year Offer incen@ves and sell, sell, sell it to them

26 Imaging (Give Paper the Boot!) Capture documents as soon as they arrive and extract data Docs such as PO or order form Use OCR to extract data from documents Electronic docs go directly to order entry Order entry process is thus sped up and accuracy increased Extracted data is used to create invoice Enter workflow to manage & monitor steps in process Documents are available online & easily searchable Digitally archive checks Doesn t require a change on customer s part like e- invoicing does

27 Workflow Rules, rules, rules Orders routed for approval Reminders plus Approved order pushed to financial system to add info such as customer account number Invoice & delivery including docs such as POD Scanning payments Expedite cash

28 Self Service Customer Portals 24/7 accessibility Place order & track status Review order histories Electronic invoices available through portal Customers can manage how invoices are received Customers can post problems Resolve disputes themselves Make payments Self service is customer service Enables customers to search & retrieve invoices Oxen provided with e- invoicing soxware

29 Automa(ng Cash Applica(on Even highly automated AR departments rely on manual or only automated processes for this step Aberdeen says only 50% of BinC automate cash Match payments and credits to open debits Should integrate with ERP Reduce errors Decrease manual processing Avoid misapplied payments link to management

30 Success Factors in Automa(ng Cash Applica(on Interface electronically with bank Accept remiyance from sources Take advantage of any and all remiyance available remiyance processing Check remiyances are imaged OCR extracts data for entry Matching rules Necessarily complex Must be flexible handling workflows

31 Automated Collec(ons Efficient equals cash Doesn t replace calling helps calling be more successful Triggers & warnings based on rules Manage & priori@ze contacts Ability to track notes Ability to schedule follow up calls Deduc@on management solu@ons improve root cause visibility to enhance solu@on capability

32 Automa(ng Credit Analysis/ Approval Scoring & Decision Making Credit analysis has 2 main components Risk of delayed payment Risk of non payment Eliminates arbitrary decisions Increases consistency Facts equate to easier to defend credit decisions But can be hard to automate Creditworthiness of customers constantly in flux Orgs appe@te for credit risk and their strategy are different So oxen require a lot of customiza@on

33 Selec(ng the Right Vendor This is like a marriage Do your due diligence This includes reference checks And site visits if possible Meet support and implementa@on teams the salesman will be gone soon enough Ensure vendor and internal resources are available and compa@ble Ensure clear goals & responsibili@es are defined (in detail)

34 ROI Calcula(on Time and labour expended on Data entry copying, mailing invoices and Filing, storing, and searching for documents handling & errors Cost of paper, supplies, equipment, & postage outcomes of lost documents to track down or re- create them and loss of customer

35 SaaS Solu(ons Unisys survey says cloud is the top priority for almost 50% of US Low up front costs in $ Quick implementa@on Pay as you usage matches cost Scalability Low maintenance Lack of IT involvement For small organiza@ons = complete solu@on For large organiza@ons = components of automa@on solu@on

36 SaaS Not a Silver Bullet ERP integra@on oxen required Service Level Agreement (SLA) Understand what it says Penal@es Security Data privacy Business con@nuity & disaster recovery

37 Top 10 Reasons Projects Fail (Learn from Others ) Poor leadership from the top Customizing an off the shelf product line Unrealis@c expecta@ons scope too broad Poor project management Lack of IT resources Inadequate tes@ng Inadequate training Inadequate change management Project sa@sfies IT needs, not end users needs

38 ? Ques(ons