How to improve the Big Picture – and the detail too

Caroline Schneider
Credit-to-Cash Global Process Owner,
Capgemini’s Business Services

When you’re in business, there’s something that’s even more important than making a sale, and that’s actually getting paid for it. Receiving the funds, applying them to the correct invoices within 24 hours of receiving funds at the bank, and ensuring the values tally – the effectiveness of this process can make a huge difference to the financial strength and stability of an organization.

I work in a team that oversees these credit-to-cash (C2C) transactions on behalf of clients, and one of the main metrics we use to gauge process efficiency is the auto match rate (AMR).

Automatic transactions

For one of our clients – a large and well-known retailer – AMR was sub-optimal, and as its name suggests, in order to improve it, we looked at ways of increasing the number of transactions that went through automatically, without the need for any human intervention.

Our client had recently changed lockboxes, and the auto match rates were in decline. We knew that we needed to augment the process to increase the hit rates.

ESOAR in action

To kick off this process, we brought together a multidisciplinary team that included a developer, RPA expert, network support, project management, and process experts to pinpoint improvements by looking at the process through an ESOAR lens.

We needed to narrow our focus to target improvements that would impact results quickly, focusing on a series of “sprints” – smaller transformational elements, in which each of the improvements collectively could make a substantial difference to the overall process.

We soon found ESOAR lent itself very well to the task in hand.

Eliminate

  • Redundant processes (without compromising on controls)
  • Revised reconciliation frequency based on risk-based categorization (high, medium, and low risk)
  • Bank rationalization: reduced number of bank accounts being managed.
ESOAR-Standardize

  • Standardized templates/formats
  • Established Global Process Model/framework across locations
  • Structural initiatives in Inter-company scope: set up IC hub and centralized the activities, process simplification and standardization.
ESOAR-Optimize

  • Optimized SAP HANA T Codes
  • Optimization of workflow – intercompany
  • Auto-certification for sub-ledger recon
  • Auto upload of bank statement
  • Cost optimization through location mix.
ESOAR-Automate

  • Web-based application BMC as work flow across the countries for fixed assets reconciliation
  • Web based tool Trintech for account reconciliation
  • Auto-delivery of bank statement (Swift Cloud interface with ERP)
  • Automated auto-mailer communication
  • Pro-active costing process.
ESOAR-Robotize

  • Perform processing of requests – fixed assets and sundry invoicing
  • Validate (logical validation) the templates – journal
  • Perform reconciliation (preparation & upload)
  • Perform processing of all RM, PM, FG, SFG materials – download MDM from SAP, calculate cost and upload into SAP
  • Compare the similar materials costing (supply chain finance)
  • Reporting.

Macro and micro applications

Our holistic approach to our client’s C2C issue was to employ ESOAR principles to identify and then co-create a solution. In addition, our sprint-based approach leveraged an agile methodology in fast, easily manageable initiatives to deliver immediate results. Our solution:

  • Improved AMR for electronic payments
  • Laid the groundwork for additional initiatives deployed in secondary sprints.

Importantly, we found that ESOAR methodology can be applied not only to the entire C2C process, but also to specific individual elements. It works at all levels – and since the exercise’s conclusion, we’ve extended the application of ESOAR to:

  • Address other operational challenges
  • Zone in on a specific sub-process that needed attention – for example, collections, credit, master data, cash applications, disputes
  • Drive an automation-first approach to C2C through a review of existing technology and optimizing first
  • Identify opportunities to make other manual processes touch-less.

Even a marginal decline in a company’s AMR can impact customer experience, days sales outstanding (DSO), aging, and the number of resources required to support the work. You don’t need to have the journey figured out before you make changes. You can make improvements one small step at a time.

The outcomes

Our ESOAR methodology has delivered a range of tangible business outcomes for our client, including:

  • Significantly improved AMR:
    • 9% for the client’s payment method specific to this project
    • 3% overall impact on the client’s match rate
  • Increased speed, efficiency, and effectiveness of the client’s cash application
  • Improved DSO.

Caroline Schneider has been delivering and designing O2C solutions for clients for over 20 years. She is passionate about delivering solutions to clients to maximize their working capital through technology, automation, and industrialized process design. compliance.