This case study outlines how we helped a global client who is world’s leading suppliers of forwarding and logistics services, specializing in end-to-end supply chain management solutions and intercontinental air freight and ocean freight shipments, headquartered in US. Their team in the Andean region had a challenge managing their accounts receivables. Although they had dedicated team for AR collections, they did not have proper process to effectively utilize their resources and realize payments. They had increasing aging of invoices, number of disputes unresolved, etc.
A BPR activity was initiated onsite with CFO, credit collectors and their managers, IT team and SAP system owners for couple of weeks to understand their current process.
Client had SAP as their ERP through which the invoices and payments were managed but it was not integrated with their collection process. Due to this collectors had difficulty in identifying unpaid invoices or invoices that are due for follow up. Following up on pending invoices and sending reminders was done manually by the Collectors. Credit collection managers had no real time visibility on the status of the collection process as the collection process was arbitrary and not based on aging, multiple invoices pending for client.
As mentioned above the other challenge they had was managing the disputed Invoices. Disputes were recorded in emails and exchanged internally. It was very difficult to know the current status of the disputed invoices and once the dispute is resolved it was difficult to find out how it got resolved.
Subsequent to the completion of as-is analysis following areas were identified which required new processes to be defined
Each of the above process areas were discussed in detail with the BPR team members and new processes were defined for each specific area. For example to process and reconcile invoices from SAP we understood the data formats, integrated with SAP to receive data every day and setup a daily processing schedule.
After the new processes were defined the required software components required were and developed. A comprehensive credit collection system was developed with following salient features
Once the new process and the related software was in place
Number of customers followed up in a day increased by more than
Invoice collections increased
A/R aging >90 days – decreased
A/R aging >Time spent on dispute resolution – decreased
A/R aging >Time spent on identifying invoices for follow-up and reconciliation – decreased
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