cash management and receivables in 2020: transforming

Cash Management and Receivables in 2020:

Transforming Treasury Forecasts with AI and

Machine Learning

Marinko Marijolovic

Director, Corp. Credit Services

ShurTech Brands, LLC

Shankar Bellam

Solution Engineering

HighRadius Corporation

Agenda

1

2

3

4

Collections: Today v/s Future

Artificial Intelligence to Improve Collectors’ Effectiveness

How Robots Could Improve Efficiency

Bottom-line for Collections

5 Summary

Collections:

Today v/s Future

Generations of Technology

1

2

3

4

ERPs like SAP, Oracle, IBM

and others to handle A/R

Centralization

Spreadsheets and excel

sheets are used for A/R

Digitization

Robotic Process

Automation(RPA) used to

automate processes

Automation

Machine Learning based

algorithms for proactive A/R

Artificial Intelligence

5

All A/R processes are

completely paper-dependent

Paper-based A/R

1

2

3

4

ERPs like SAP, Oracle, IBM

and others to handle A/R

Centralization

Spreadsheets and excel

sheets are used for A/R

Digitization

Robotic Process

Automation(RPA) used to

automate processes

Automation

Machine Learning based

algorithms for proactive A/R

Artificial Intelligence

5

All A/R processes are

completely paper-dependent

Paper-based A/R

Expectations from AI

Effectiveness + Efficiency

Artificial Intelligence for CollectionsExpectations

1

2

Improve Scalability

Reduce Credit Risk Exposure

Artificial Intelligence

to Improve Collectors’

Effectiveness:How well your collectors are able to collect?

1

2

How AI Could Impact Collectors’ Effectiveness

Dynamic Prioritization of Collectors’ Worklist

Skip Invoice Tracing for Customer Portals

1

2

How AI Could Impact Collectors’ Effectiveness

Dynamic Prioritization of Collectors’ Worklist

Skip Invoice Tracing for Customer Portals

Worklist prioritization

Aging

Past Due Amount

Disputed Amount

Credit Limit, % Utilization

Risk Category

Broken Promise to Pay

Dunning Level

Based on static

parameters

Reactive Collections Based on Static Factors

Worklist prioritization

Aging

Past Due Amount

Disputed Amount

Credit Limit, % Utilization

Risk Category

Broken Promise to Pay

Dunning Level

Based on static

parameters

Proactive Collections Driven by AI

Dynamic, driven by AI

Predicted

Invoice

Payment

Date

Past

payment

behaviour

Current

open

invoices

Machine

learning

algorithms

Predicted Payment Date

Collections Management With AI

Open

invoices

Payment

date

predicted

Strategize dunning for each open

invoice

Start dunning process

On-time payment by customers

Close

invoices

For invoices with high delay predictions

1 2 3 4 5 6 7

Request upfront payment for accounts or particular

invoices

Updating credit terms to proactively minimize delay

in payment

Require payment commitments at the time

of order creation

Impact Of Proactive Collections On Bottom-line

Benefits Of Proactive Collections Management

Invoices

Average Delay-

Reactive

(days)

Average Delay-

Proactive

(days)

%

All Delayed Invoices 10.7 5.8 45.8%

Invoices delayed by > 15 days 34 20 41.1%

Operational Approach:

Do not wait for invoices to be past-due

Take proactive actions based on predicted delay

1

2

How AI Could Impact Collectors’ Effectiveness

Dynamic Prioritization of Collectors’ Worklist

Skip Invoice Tracing for Customer Portals

Manually Download Invoices from Portals

ERP

Customer PO No. Sales Invoice Date Amount

MyRetail 1122334 aa9990 1011

BuyShop 1122335 bb9991 202

BuyShop 1122336 bb9992 987

BuyShop 1122337 bb9993 3001

BuyShop 1122338 bb9994 908

BuyShop 1122339 bb9995 …

BuyShop 1122340 bb9996 …

MyRetail 1122341 aa9997 …

MyRetail 1122342 aa9998 …

MyRetail 1122343 aa9999 …

MyRetail 1122344 aa10000 …

MyRetail 1122345 aa10001 …

MyRetail 1122346 aa10002 …

MyRetail 1122347 aa10003 …

MyRetail 1122348 aa10004 …

MyRetail 1122349 aa10005 …

MyRetail 1122350 aa10006 …

External Invoice System

Sales Invoice Date Paid Amount Status Expected Date Payment ID

aa9990 1011

bb9991 202 Processing … 983748

bb9992 987Check

released… 983749

bb9993 3001Verified

Invoice… 983750

bb9994 908 … … 983751

bb9995 … … … 983752

bb9996 …

aa9997 … … … 983754

aa9998 … … … 983755

aa9999 … … … 983756

aa10000 …

aa10001 … … … 983758

aa10002 … … … 983759

aa10003 … … … 983760

aa10004 … … … 983761

aa10005 … … … …

aa10006 … … … …

Collector

Challenges

ERP

Customer PO No. Sales Invoice Date Amount

MyRetail 1122334 aa9990 1011

BuyShop 1122335 bb9991 202

BuyShop 1122336 bb9992 987

BuyShop 1122337 bb9993 3001

BuyShop 1122338 bb9994 908

BuyShop 1122339 bb9995 …

BuyShop 1122340 bb9996 …

MyRetail 1122341 aa9997 …

MyRetail 1122342 aa9998 …

MyRetail 1122343 aa9999 …

MyRetail 1122344 aa10000 …

MyRetail 1122345 aa10001 …

MyRetail 1122346 aa10002 …

MyRetail 1122347 aa10003 …

MyRetail 1122348 aa10004 …

MyRetail 1122349 aa10005 …

MyRetail 1122350 aa10006 …

External Invoice System

Sales Invoice Date Paid Amount Status Expected Date Payment ID

aa9990 1011

bb9991 202 Processing … 983748

bb9992 987Check

released… 983749

bb9993 3001Verified

Invoice… 983750

bb9994 908 … … 983751

bb9995 … … … 983752

bb9996 …

aa9997 … … … 983754

aa9998 … … … 983755

aa9999 … … … 983756

aa10000 …

aa10001 … … … 983758

aa10002 … … … 983759

aa10003 … … … 983760

aa10004 … … … 983761

aa10005 … … … …

aa10006 … … … …

Collector

• More time spent on retrieving payments statuses

• Significant time lag between invoice updates and follow-ups

• For invoices with discrepancy, customers would block payments and collections

team would not realize until last minute

Skip Invoice Tracing- Auto Download

ERP

Customer PO No. Sales Invoice Date Amount

MyRetail 1122334 aa9990 1011

BuyShop 1122335 bb9991 202

BuyShop 1122336 bb9992 987

BuyShop 1122337 bb9993 3001

BuyShop 1122338 bb9994 908

BuyShop 1122339 bb9995 …

BuyShop 1122340 bb9996 …

MyRetail 1122341 aa9997 …

MyRetail 1122342 aa9998 …

MyRetail 1122343 aa9999 …

MyRetail 1122344 aa10000 …

MyRetail 1122345 aa10001 …

MyRetail 1122346 aa10002 …

MyRetail 1122347 aa10003 …

MyRetail 1122348 aa10004 …

MyRetail 1122349 aa10005 …

MyRetail 1122350 aa10006 …

External Invoice System

Sales Invoice Date Paid Amount Status Expected Date Payment ID

aa9990 1011

bb9991 202 Processing … 983748

bb9992 987Check

released… 983749

bb9993 3001Verified

Invoice… 983750

bb9994 908 … … 983751

bb9995 … … … 983752

bb9996 …

aa9997 … … … 983754

aa9998 … … … 983755

aa9999 … … … 983756

aa10000 …

aa10001 … … … 983758

aa10002 … … … 983759

aa10003 … … … 983760

aa10004 … … … 983761

aa10005 … … … …

aa10006 … … … …

Collector

Skip Invoice Tracing- Tracking Status

ERP + External System Data

Customer PO No.Sales

InvoiceDate Amount

Sales

Invoice

Paid

AmountStatus

Expected

DatePayment ID

MyRetail 1122334 aa9990 1011 aa9990 1011 Follow Up

BuyShop 1122335 bb9991 202 bb9991 202 Processing … 983748

BuyShop 1122336 bb9992 987 bb9992 987 Released … 983749

BuyShop 1122337 bb9993 3001 bb9993 3001 Verified Invoice … 983750

BuyShop 1122340 bb9996 … bb9996 … Follow Up

MyRetail 1122343 aa9999 … aa9999 … … … 983756

MyRetail 1122344 aa10000 … aa10000 … Follow Up

MyRetail 1122345 aa10001 … aa10001 … … … 983758

✓ Efficient capture of unprocessed/skipped invoices and status on other invoices

✓ Scheduling immediate follow-ups for the invoices not updated for payments

✓ Productive utilization of collectors effort by automation of low-value tasks

✓ Quick identification of invoices with discrepancy that customer may block for necessary follow-up

Benefits of Skip Invoice Tracing

Improve

Effectiveness

Future of Collections:

Skip Invoice Tracing +

Dynamic Prioritization

Future of Collections

Skip Invoice

Tracing

Dynamic

Prioritization

Case Study: AI predicting payment date

Account 1 Account 2

Predicted Payment Date

20 days past-due

Predicted Payment Date

10 days past-due

Low Priority Follow-up High Priority Follow-up

Case Study: What if account 2 is Walmart?

Account 1

Predicted Payment Date

10 days past-due

Predicted Payment Date

20 days past-due

Low Priority Follow-up Medium Priority Follow-up

Case Study: Skip Invoice + Dynamic Prioritization

Account 1

Predicted Payment Date

10 days past-due

Lower Priority Follow-up High Priority Follow-up on these 5 invoices

Predicted Payment Date

20 days past-due

Traced 5 Invoices

that are not set up

1

2

3

Summary:How AI Could Impact Collectors’ Effectiveness

Dynamic Prioritization of Collectors’ Worklist

Skip Invoice Tracing for Customer Portals

Future of Collections: Skip Invoice Tracing + Dynamic Prioritization

How Robots Could

Improve Efficiency:How fast your collectors are able to collect?

Past v/s Present: Automation in Collections

Past Present

Scanning and printing paper documents

Drafting and sending emails, mails, fax

Aggregating information from all documents

in electronic format

Single source of truth

Static prioritization of worklist

Automatic correspondence based on

pre-defined templates

Impact on Collections Efficiency

Past Present

Scanning and printing paper documents

Drafting and sending emails, mails, fax

Aggregating information from all documents

in electronic format

Single source of truth

Static prioritization of worklist

Automatic correspondence based on

pre-defined templates

Collectors handle 30-40 accounts

Collectors handle 50-60 accounts 50% increase in the number of

accounts handled by collectors.

✓ Eliminate the need for scanning and printing - paper independent solution

✓ Automated collection worklist prioritization based on best practices

✓ Increased bandwidth for collectors to make necessary calls while sending

automated correspondence to low risk accounts

✓ Handle more accounts with lesser number of resources

Benefits of Automation

Improve

Efficiency

Future of Collections:

Robots Making Calls

Robots Making Calls

Hey, you have got a past due balance of X

for A, B, C invoices

if you would like to make a payment,

press and enter your credit card

information

1

Or if you would like to talk to someone,

press 2.2

Sure

1

Robot

Customer

A $8.4 Billion hospital with 10 regional hospitals

and 19 family health centres in north-east Ohio,

and hospitals in Florida and Nevada.

Is this Possible in A/R?

Hey, you have got a past due balance of X

for A, B, C invoices

if you would like to make a payment,

press and enter your credit card

information

1

Or if you would like to talk to someone,

press 2.2

Sure

1

Robot

Customer

For low risk accounts

Not for Large Accounts and Delinquent Customers

Hey, you have got a past due balance of X

for A, B, C invoices

if you would like to make a payment,

press and enter your credit card

information

1

Or if you would like to talk to someone,

press 2.2

Sure

1

Robot

Customer

Need human interaction for high and

medium risk delinquent customers

Future of Collections

Accounts

Receivables

Robot

Accounts

Payables

Robot

Bottom-line for

Collections

Focus on Customer Engagement

Automatic gentle reminders for low/medium risk customers and calls only to high risk customers

No Dial for Dollars

Streamlined internal workflows to ensure single point of collaboration

No Multiple Touchpoints

Predict Payment Behavior • Predict delinquent accounts and provide factual data to sales

• Sales can negotiate for early payment or promise to pay

Scientific Analysis to Surgically Guide Sales

A/R powered by AI How it guides sales to make better decisions

Drill Down Reporting• Forecast bad debt write offs

• Target profitable customers for upsell or cross sell

Predict Blocked Orders • Revise sales order for customers with blocked orders

• Block release of large orders unless payment/commitment is done

Better Cash Forecasting

Cash Forecasting FuturePredictive Analysis + Single Source of Truth

Use of Siloed BI Tool Integrated cash forecasting tool

Based on Static Assumptions AI to self-learn and improve dynamically

Disparate Data Sources Single Source of Truth

Cash Forecasting TodayManual, Time Consuming

Summary

Summary

Robots Automatically handle

Low Risk Accounts

Collectors improve collaboration

with internal teams to deal with

High Risk Accounts

Scalability Improved Credit Risk Exposure Reduced

The Credit Manager is now more comfortable onboarding riskier customers

About

HighRadius

Copyright © 2018 HighRadius Corporation

43

HighRadius at a Glance

375+ Clients

#1 in Fortune1000 market

$500 Billion of receivables

processed annually

750+ employees globally

Integrated Receivables Platform for

the entire credit-to-cash cycle

• FinTech cloud-based software company

• Founded in 2006

• HQ in Houston, Texas

Select Customers

Integrated Receivables Cloud Platform

$50 Million secured in growth funding

from Susquehanna Growth Equity$

Copyright © 2018 HighRadius Corporation

44

Integrated Receivables Cloud Platform

Questions ?