white paper Integrating Automated Cash Collection with SAP Solutions www.esker.com
white paper Table of Contents Executive Summary...3 Esker DeliveryWare and Your SAP Application...4 Automating Cash Collection...1 Cash Collection with Esker Mail Services...7 Conclusion...8 About Esker...9
white paper Executive Summary Business processes run on input to and output from SAP solutions. Each step in a process involving a manual touch point causes friction that costs time and money. Esker DeliveryWare reduces this friction, helping companies maximize profitability by automating and streamlining document-intensive business processes from beginning to end. Research by a leading IT analyst has found that companies with the fastest-growing profits in their industry sectors are addressing document processes and achieving real benefits. Businesses with effective document processes are more likely to be leaders in profit growth, and more responsive to changing market conditions. As a result, the recommendation is for organizations to examine key business processes for opportunities to achieve ROI. For many SAP customers, cash collection still involves manual deliery of documents. These inefficient processes limit the ability to achieve objectives such as reducing Days Sales Outstanding (a measure of the average time to collect receivables), shortening transaction cycles, cutting overall business communication costs and increasing profitability. Automated cash collection has the potential to deliver significant benefits as a result of eliminating document process inefficiencies within cash collection. By increasing the speed and accuracy of business information exchange, organizations can improve financial management and key performance indicators. Intelligent document delivery technology enables SAP customers to optimize cash collection by automating document delivery based on business rules through logic residing outside the SAP system. 3
Esker DeliveryWare and Your SAP Application SAP customers looking to achieve greater efficiency and gain additional ROI can choose from several solutions to automate document processes. Only one offers patented DeliveryWare Rules Engine technology and a full range of document capture and delivery format capabilities to maximize the value of SAP applications. Esker DeliveryWare Esker DeliveryWare offers a comprehensive solution that streamlines document processes by eliminating inefficient steps, making communication more personalized and cost-effective, regardless of the information source or delivery type. Esker DeliveryWare eliminates manual touch points and brings visibility to document processes while causing no disruption of current business operations. Designed to optimize internal and external information flow into and out of SAP applications, Esker DeliveryWare is an end-to-end document process automation platform with patented technology. Managing all inbound and outbound document processes through this central platform simplifies the IT infrastructure, reduces the time and costs associated with document communication and streamlines critical business processes such as cash collection. 1 Document Capture 2 DeliveryWare Rules Engine 3 Document Transport Esker DeliveryWare automatically captures invoices and other documents in any format independent of layout and application or source, without the need for custom programming. At the heart of Esker DeliveryWare is patented technology that automatically recognizes and extracts data from electronic documents to determine formatting, conversion, and routing conditions and actions that need to take place, as defined by processing rules. Esker DeliveryWare distributes documents automatically, based on organizations specific requirements. They can be delivered to multiple recipients in the most complete range of formats (text, XML, PDF, IDoc, PCL, PS, TIFF, etc.) and media (postal mail, fax, print, email, web, file transfer, archive, wireless message, etc.) 4
Automating Cash Collection Each of the three processes outlined above lead to cash collection. Companies purchase goods and services to fulfill orders, and they want their money. Customers do not pay until they receive acknowledgements of and invoices for their orders. Inefficient cash collection directly impacts profitability by creating debt and restricting cash flow, resulting in high DSO. When cash collection is driven by paper statements, reminders, notices and other documents, recovery of unpaid invoices is often a costly manual process that takes too much time. Automating the process with Esker DeliveryWare reduces DSO, yielding significant savings in terms of additional cash available and cost-of-cash savings. For example, a company with $1,000,000,000 in annual revenues can generate $4,000,000 in additional cash for each day it reduces DSO. That same company can reduce its cost of cash by $200,000 per day of DSO reduction, based on a 5% interest rate. Average DSO can be reduced by seven days, which means $28,000,000 extra cash in the bank with a $1,400,000 cost savings. Integrated with the SAP ERP system, Esker DeliveryWare automatically composes and sends cash collection documents in the best format at the correct stage. Businesses can give customers the same amount of time to pay, but reduce average time to collect cash by shortening the overall information exchange cycle. In a typical enterprise, the cash process is usually a complex, multi-step process involving communication between the accounts receivable department, the sales department and customers through a variety of transaction documents such as invoices, statements, dunning letters, reminders and notices. Each document must be printed, retrieved from the printer, faxed or mailed, photocopied (perhaps several times) and filed. After a customer places a sales order, which is verified and manually entered into the SAP ERP system, a copy of the sales order is manually filed and the cash collection process is initiated to ensure payment. An invoice is manually printed and mailed to the customer, typically with 30 days net payment terms. An invoice copy is manually printed and chronologically archived. A number of days after the due date (typically 15 days, plus or minus seven days), a first reminder is manually printed and mailed to the customer. A copy of the first reminder is manually printed and chronologically archived. If delinquency continues, a second reminder is manually printed and mailed to the customer a number of days after the first reminder (typically 15 days, plus or minus seven days). A copy of the second reminder is also manually printed and chronologically archived. At this point, a phone call will typically be made to the customer, who might request a copy of the invoice, which means manually printing and faxing the document yet again. Ultimately, a final notice is manually printed, mailed and filed. One final copy of the invoice is then printed to inform the appropriate sales representative of non-payment. Intelligently automated cash collection with Esker DeliveryWare has a much shorter time span than the typical manual process. By eliminating manual printing, sending and filing of documents, the process is shortened and all correspondence is delivered at the appropriate time. An invoice is automatically emailed to the customer, typically with 30 days net payment terms. The invoice can be automatically sent to the appropriate sales representative or other recipient via any method, including populating a database or printing a hard copy. A number of days (typically 15) after the due date, Esker DeliveryWare extracts the relevant information needed to generate a reminder notification. The first reminder is automatically emailed to the customer. For the second reminder, Esker DeliveryWare extracts the appropriate information from the invoice, such as customer name, fax number and product details. The second reminder is generated, formatted, and automatically faxed to the customer a fixed number of days (again, typically 15) after the first reminder. Then a copy of the second reminder is automatically stored in the Esker DeliveryWare archiving database and can be emailed to the appropriate sales representative. When a customer requests a copy of the invoice, it can be automatically faxed. If payment is not received, a final notice is automatically sent by postal mail through the hosted Esker on Demand delivery service. 5
Automated cash collection benefits Faster and less expensive cash collection cycle MANUAL PROCESS AUTOMATED PROCESS Reduced Days Sales Outstanding (DSO) Time 43 minutes Time 1 minute More cash available Lower cost of cash Cost $17.00 Cost $8.30 Increased productivity with fewer manual tasks in accounts receivable Rapid return on investment with immediate impact on the bottom line Improved customer relations through timely, personalized communication Automated cash collection example Cash study Days Sales Outstanding had become an issue for a leading manufacturer of veterinary medical devices. Their accounts receivable collection department needed the ability to fax past due invoices and dunning letters on demand rather than batch printing and mailing on a monthly basis. To address the situation, the company implemented Esker DeliveryWare as part of their collection solution for 6,000 active customers and 3 4,000 dunning letters per month. The accounting department also automated the resending of 50 100 invoices a day by fax. Prior to Esker DeliveryWare they were spending hours printing and manually faxing the invoices. They are also routing incoming faxes to employee desktops via Microsoft Exchange. The implementation also includes inbound fax integration with their document management system, a roll-out of fax capability to additional departments within the company, including sales order confirmations, shipping notifications, delivery confirmations, quotes and purchase orders. 6
Cash Collection with Esker Mail Services Esker Mail Services enable businesses to realize significant efficiency gains by sending physical mail automatically from SAP applications without adding hardware or software. Documents are securely submitted from SAP Business Workplace, or automatically from SAP modules, to Esker mail production facilities. Mail is prepared and put into the postal network by the Esker facility. Mail status is fed directly into the SAP system, is easily visible to users and is updated in real time. Documents are transmitted using a secure SAProuter-to-SAProuter communication protocol. Through SAP certified integration, documents are received using SAP RFC technology. Days Sales Outstanding (DSO) advantages DSO results with conventional mail process DSO 75 days (average) Month Average Payment delay 60 days Produced invoices waiting to be sent Invoices processed and sent to customers at the end of the period Customers receive Invoices Customers pay Invoices DSO results with Esker Mail Services Customers pay Invoices Payment delay Payment delay Payment delay Reduced DSO Payment delay Invoices are sent to customers in real time Payment delay Improved cash collection cycle Cash collection cycle with conventional invoice mail process Cash collection cycle with Esker Mail Services Cash Cash Cash collection depending on invoice batches posted by end of month Continuing cash collection thanks to real-time invoicing Jan Feb Mar Time Jan Feb Mar Time 7
Conclusion Business depends heavily on cash collection. The ability to optimize the process is hindered by manual delivery of documents by conventional means. Despite the revolutionary impact of SAP solutions, cash collection is among the essential business processes that often remain bound to manual document delivery. Significant operational efficiencies and improved financial metrics can be directly attributed to intelligently automated delivery of cash collection documents. Esker DeliveryWare and Esker mail services enable businesses running ERP solutions to automate cash collection document processes from end to end, shortening order-to-cash cycles and reducing DSO. As a result, businesses can receive payment sooner and help improve overall profitability while lowering administrative costs. 8
About Esker Esker is a recognized leader in helping organizations eliminate paper and improve business processes with on-premise and on-demand document automation solutions. Integrating seamlessly with enterprise systems and other applications, Esker solutions delivery end-to-end automation of any inbound and outbound document processes sales orders, accounts payable, invoicing, purchasing and more. As an established SAP Software Partner with certified integration, and an SAP customer itself. Esker has made serving the needs of SAP customers a top priority. The results of the SAP and Esker partnership are demonstrated around the world by SAP customers who have automated document processes with Esker solutions. Esker has a dedicated R&D team focusing on SAP applications, and a primary objective to offer SAP customers the best solution for document process automation. Esker was founded in 1985 and operates globally with more than 80,000 customers and millions of licensed users worldwide. Esker has global headquarters in Lyon, France and U.S. headquarters in Madison, Wisconsin. For more information, visit www.esker.com. 2007 Esker S.A. All rights reserved. Esker and the Esker logo are registered trademarks of Esker S.A. in the U.S. and other countries. SAP is a registered trademark of SAP AG in Germany and in several other countries. 9
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