cforia inc. usa +1.866.859.1054 / +1.818.871.9687 ~ emea ......each fte (full time employee) has a...

Greg Coulter, Managing Director

Cforia Inc. USA +1.866.859.1054 / +1.818.871.9687 ~ EMEA +44 (0) 203.286.0039 www.cforia.com

2018 CRF August Forum

~

Shared Services

Technology

Working Capital

& Financial

Best Practices



Guest Speaker: Chris Caparon

Chris Caparon has led the implementations of over 250 Order‐to‐Cash (OTC) Improvement Projects globally, integrating real‐time data across multiple ERPs Systems, Countries, Currencies and Languages significantly impacting DSO/DBT and available Working Capital.

Chris has degrees in both Electrical and Computer Engineering from the University of Michigan

Chris CaparonCEO

Cforia Software



Financial Shared Services

Intro

The Journey to FSSC

FSSC Best Practices Technology

Q & A



CRF Platinum Partner

For 16 years Cforia Software has served over 250 customers managing $300B of Working Capital in 117+ countries

Cforia’s sole focus is delivering technology transformation to streamline Order‐to‐Cash (OTC) processes and results in Local, Regional and Global Financial Shared Service Center (FSSC) Environments

Best practices examples are based on direct experience with a global enterprise customer base

Cforia Software is also a continuing contributor to CRF News & Management Review publications



CFORIA’S GLOBAL FOOTPRINT$300 BILLION IN A/R TURNOVER MANAGED

117 COUNTRIES WORLDWIDE 150+ MILLION TRANSACTIONS PROCESSED250 ENTERPRISES USING CFORIA GLOBALLY

CFORIA GLOBAL HEADQUARTERS:

Los Angeles

London

250 Clients in 117 Countries



Evolving Thoughts on FSSC

• 1980’s ~ “Reduce traditional centralized finance and accounting departments and move to regional services ‐ closer to the customer.”

• 1990’s ~ “Reduce counterproductive, redundant and labor intensive manual processes of a distributed regional finance and accounting services.”

• 2000’s ~ “Find a happy medium between traditional centralized finance and accounting services and disjointed financial services by utilizing financial shared service centers.”



CRF: Financial Shared Services

“The tricky part from a credit and A/R management perspective is how to structure and manage the relationships required to maximize and control policy effectiveness at the top of the pyramid, while at the same time maximizing efficiency and minimizing cost per transaction at the base of the pyramid. This illustrates the importance of the middle of the pyramid the process of policy implementation and supervision.”

"Financial Shared Services: Focus on Credit and Accounts Receivable Management, Insights from Leading

Practitioners"



Performing C2C processes within a shared services organization is a characteristic of World Class organizations

Source: The Hackett Group’s Global Business Services (GBS) performance study, 2017



“In‐Source” vs “Outsource” FSSC

Cost driven decisions

Generally the shared service ”decision” is inclusive of all

F&A processes

OTC, P2P, R2R, T&E, Payroll, etc..

All processes have very different requirements and

stakeholders

Customer‐facing impacts ?



Gartner CRF PPT - Cliff Stuhar



Gartner CRF PPT - Cliff Stuhar

‐ ‐ ‐ ‐ ‐ 91%

‐ ‐ ‐ ‐ ‐ 83%

52% = No Surprise Order‐to‐Cash is Complicated



What Should OTC Tech Deliver

1. Cost Efficient OTC Processes Methodology2. Accelerated Cash Conversion of A/R3. 100% Portfolio Coverage every 30 Day Cycle4. Improved DSO/DBT Performance5. Improved Customer Satisfaction &

Responsiveness at Lower Costs6. Minimize Manual & Redundant Activity7. Capture Parent/Child Exposure Globally8. Accurate Aging Across Multiple Systems of

Record9. Compressed Dispute Resolution Cycle Times10. 7/24/365 Customer A/R Support



Costs and Working Capital

AR departments and FSSC’s as units of capacity

Why do you have the headcount that you do?

Target SLAs for financial performance

DSO

DDO

Overhead (bank fees, materials, facilities, other)

Labor



Each FTE (Full Time Employee) has a finite number of tasks they can accomplish in a workday = FTE Events (FTEEs):• 100% Portfolio Coverage of Customers/Transactions is needed

Goal #1: Increase the number of FTEEs for smaller customers/ transactions (Segment: High Volume ‐ Lower Value): • Replace and automate low‐value tasks with RPA and other

technologies

Goal #2: Maximize the of each and every FTEE (V/E)to yield the desired Financial Outcomes – Measure with clean data:• Strategic Collections Management (SCM)• Prioritized Deduction Adjudication & Prevention • Proactive Large Invoice Management (PLIM)

Capacity Driven OTC Mgmt



Optimize Global Cash‐Flow Performance Reduce DSO (DBT), Reserves & Write‐Offs to release working capital

trapped in inefficient OTC processes & systems Decrease DDO & Increase Deduction Dispute Percentages and Recovery

Rates > Move towards Prevention Optimize FTE Requirements > Deliver Optimal Financial Outcomes

10-25% reduction in Days Past Term (or DSO)

40-50% improvement in Portfolio coverage

20-80% reduction in inbound call volumes about invoice related issues

15-40% improvement in OTC resource productivity

Can absorb significant sales volume growth without adding headcount

10-50 % reduction in dispute resolution cycle times

100% Dispute and Deduction tracking

30-90% improvement in Root-Cause Tracking to help eliminate chronic recurring upstream issues

FSSC Collections Outcomes FSSC Deductions Outcomes

Best in Class OTC Objectives



Order‐to‐Cash is Complicated

Manual & Paper > Process &Technology• FTE Event Optimization

– FTE OTC Event Coefficient > WC Release• Orders & Hold/Release Management • Multiple‐EIPP Billing Options• Robotic Process Automation for Reminders • Strategic Receivables Mgmt (SRM)

– Proactive Collections & Dispute Prevention – Customer Harmonization and Aggregation

• Lockbox TIF/PDF OCR Automation• Cash App: Automate BAI, BAI2, MT940, EDI

820, Excel and CSV Data• Deductions Resolution Compression and

Prevention via Root Cause Review



FSSC Technology Challenges

Geographic challenges in moving to FSSC (Local, Regional, National)o Moving offshore increases this significantly

Multiple ERP systems across your business’ operating unitso Multiple versions of the same system o Impacts on organization footprint of FSSCo IT roadmap vs. M&A roadmap

Localized information at business unit levels o Brands, currency, culture, languages

Customer and transaction segmentation and treatment methods

Centralized vs. local disputes & deductions management

Delivering outstanding customer experience (internal and external)



1.How many ERP systems/environments are involved?2.How are best practices, credit exposure/risk, agings, managed?3.How will we manage variable terms, multiple bill‐to’s and multiple languages, with different treatments and segmentations, from each of these back‐end systems?

4.Do we have access to the shared Customer’s transaction history, credit exposure or payment behavior across these systems? What about critical notes from secondary systems like Service or Sales?

5.Will we be sending out payment reminders and dunning notices with multiple logos, in multiple formats, languages and currencies?

6.When and where is the Finance data generated and stored today in these systems? Do we have instant access to them from a single productivity platform?

FSSC Challenges



FSSC Challenges7. How many “systems” are required to manage your customers? 8. Who is going to make the Tier 1 Collections first calls to common

Customers? Can they cover the workload? Do we know what their workload across parent/child is or might be?

9. How many contacts can I keep and where do I keep them; How do I share those Contacts with others in finance locally, regionally and globally; Where are the Notes and how do we share them?

10. How will we delegate/assign/prioritize Collections workflows across FSSC teams?

11. When the Customer disputes or deducts, who is responsible for adjudication for those Tier 2 Dispute Resolutions? How do we get resolution help from Sales or Customer Support?

12. How will the finance team know what is “Clean” and past due A/R, versus what is “Dirty”? (e.g. Credit Memos, Returns, Promise to Pay’s, Disputes, Deductions, Payments in process, Payment Workouts,…etc.)

13. Global credit management?



ERP systems

Will your ERP system maximize your FSSC performance?

AR Automation platforms (credit, collections and disputes)

EIPP customer self-service portals

Cash application

Billing automation

Workflow

Robotic Process Automation (RPA) & Artificial Intelligence (AI)

Technology Tools in OTC



0.0%

50.0%

Invoices per Collector

Past Due %

SAP FSCMReplacesOTC Tool

OTC Tool Re‐Purchased

Post OTC Tool48% Increase Collector Capacity

On JDE > Purchased OTC Tool

Invoice Volumes

Percentage of Invoices Over 90 Days Past

Due

12 Year Period

Post OTC Tool78%+ Decrease in 90 Day Past

SAP FSCM Case Study

Headcount



ERP & System consolidation > Build the optimal OTC database

Parent/Child consolidation to simplify account management

Customer Self Service > High-Volume / Low-$ Value Clients

Automating low-value tasks where they exist through RPA and AI

Collaborative Dispute and Deduction Resolution Cycles

Billing Automation & Electronic Invoice Presentment (EIP)

Cash Application Automation (Payments = EIPP)

Strategic & Proactive Collections/Deductions (Pre-Chasing)

Global Management of Credit & Risk

Executive Dashboards, CEI’s and Root Cause Analytics

2018 Best Practice List



ERP Master DataSystem(s) of Record – ERP, Order‐Entry, Legacy Database, CRM, Billing Systems

Transactional Master DataContracts, Invoicing, Imaging, Shipping, POD, Warranty

Credit Bureaus Telephony & IVR Imaging

Robotic Process Automation

Business & ComplianceBest Practices

Customer Sharing Knowledgebase

Software as a Service (SaaS)

CustomerSelf‐Service Portals

Merchant Banking Interfaces

User Interfaces Analytics & Dashboards Capacity Management

Multiple Layers of Technology



A Single View of Global Cash



Collectables = Clean Receivables

Disputes/Deduction = Dirty Receivables

WorkflowSuppression

Typical A/R Database

Transactions that are not disputed &

whose receipt can be forecast

Transactional discrepancies that must be resolved at the Item Level

Promise‐to‐PayCredit Memo

Return AuthorizationPayment WorkoutAccount StrategyAccount Treatment

Calculating Clean vs. Dirty A/R



BUsBUs

Global HQ

ROW

BU1

Invoice InvoiceInvoice InvoiceInvoice InvoiceInvoice Invoice

Oracle SAP IBM DB2 Other ERPs

BU2 BU3 BUs

US

Parent / Child Support



ERP Changes Causes Disparity



Harmonized OTC Master Data



Case Study #1

A medical device manufacturer has grown through M&A and has five global divisions

They sell to common customers across each division / ERP system

Setup centralized FSSC across those 5 ERP systems

Implemented OTC Automation platform to link common customers across customer OTC Financial Supply‐Chain

DSO decreased by 23% and headcount by 15%



Dunning and ”Free” Touches

Traditional dunning IT creates templates for dunning Snail mail is often used in lieu of invoicing Limited templates Languages/logos are a real challenge Sent on schedule Inflexible

The dunning rebound effect Low value per touch The true cost of invoice reprints



EIPP and Customer Self‐Service

Small customers manage their own accounts Invoice reprints Payment (ACH, Credit Card, other) Parent support Scheduled payments Auto settlement of payments into ERP system

“Zero‐Touch Collections” Infinite scalability Maximum value per touch



Case Study #2

Aerospace company implemented zero‐touch collections with EIPP

DSO decreased by 40% Headcount decreased by 20%

Purchased competitor running same ERP system Competitor was ½ the size in sales volume DSO was 18 days higher with twice the FTE’s



Prioritization & Pre-Chasing



Cash Application Automation

Standard ERP automation

EDI automation

Bank lockbox automation with OCR/AI

Self‐learning matching logic to improve hit rates and reduce

manual intervention

Decoupled remittances

AP portal automation



Robotics Process Automation

Replace FTEEs with robotics technology Increase departmental capacity Areas that can be automated Customer AP portals

Payments, deductions, backup, invoice status Proof of delivery portals

Backup of shipment information Cash application Other repetitive tasks



Billing Automation

EDI Mailroom outsourcing Print/mail Transition to email Invoicing and billing automation

Ariba (SAP), OB10 (Tungsten), others



Disputes Management

Major challenge in shared service

Dispute identification vs. resolution

Workflow suppression

Excel, ERP or workflow tools

Disputes visibility and workflow with the business

stakeholders for resolution

Root cause identification and prevention



Credit and Risk

Standard policies across entire business

On‐line applications

Scoring and approval workflow

Credit risk portfolio analysis and predictive processes



Chris [email protected]‐292‐9017

CRF Q&A

cforia inc. usa +1.866.859.1054 / +1.818.871.9687 ~ emea ......each fte (full time employee) has a...

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