Best Practices for Credit Management International vs ... · Receivables management Collections...

June 2011HeidelbergCement - Credit Management

Best Practices for Credit Management –International vs. GermanyHow has the SSC concept changed our Credit Manageme nt approach?


Agenda

� Overview of HeidelbergCement� SSC Landscape at HeidelbergCement� SSC Journey� Credit Management in a nutshell: global sizing, org anization and

IT tools� Development of the SSC Germany (HCS)� HCS customers� Credit Management at HCS


HeidelbergCement in the world

Cement & grinding plants

Aggregates

� No 1 in aggregates� No 3 in cement� No 3 in ready-mixed concrete


HeidelbergCement in figures

� 53,000 employees� Core business

– Aggregates– Cement– Downstream activities

� 2,530 locations in more than 40 countries – 566 production sites for sand, gravel and hard rock– 100 cement and grinding plants – 1,329 ready-mixed concrete plants– 96 asphalt plants

� Cement capacity 116 million tons� Aggregates reserves 19 billion tons� 11,762 Mio. € revenue in 2010


Overview of existing SSC’s in Europe


Overview of existing SSC’s in Asia


Overview of existing SSC’s in NAM (US + Canada)

Texas

One SSC per country with 1.356 SSC employees worldwide (status March 2011)


1. SSC Concept – background

Shared Services not generally endorsed by HC Group

- 2005 2006-2007

WIN projectEurope

Shared Services endorsed by HC Board

2008

Resulting Model

• Regional centers developed• Regional centers largely independentlymanaged

Resulting Model

• Group SSC team implemented• Role of BU & shared functions defined• Global leadership team


SSC PlanningSSC Planning

130 FTEs

� Process Improvement� SAS 70 Audit� Employee and Customer Satis-

faction Survey

� Staff Retention program

� Incentive system based on performance targets

40 FTEs

� Build infrastructure� Communicating SSC

approach� Staffing (Hire, deploy)� Training� Change Management &

Communication

0 FTE

� Baseline� Business Case� Process

definition� IT Landscape� SSC Set up� SSC Org.� Governance � KPIs� SLAs� Re-Charging� Migration Plan� Communication

2005 2006 (go live) 2007

HC SSC journey towards standardization I (Country A)

Building SSC team and transformationBuilding SSC team and transformation TransformationTransformation


StabilizationStabilization

140 FTEs

� Migration to Group SAP system� Implementation of new

Consolidation software� Activity Based Mgmt.� Expand to end-to-end

process ownership

2008

HC SSC journey towards standardization II (Country A )

2009

Process improvements

Process improvements

130 FTEs

� Six Sigma� Continuous Improvement

Program� Merger� E-Invoicing

– Workflow (Basware)

115 FTEs

� Efficient working Capital management (DSO, DPO)� Systematic process

improvements for front office functions (sales – queries, purchasing – purchasing orders)� Fairly smooth transition to

new audit requirements (e.g. BilMoG)� Flexible headcount

adjustments according to market development� E-Invoicing

– Consolidator (Crossgate)

� Travel Management

Value creationValue creation

2010


1. SSC Concept

Standardization potential HighLow

Low

High

Shared ServicesCentral Line Functions

Importance of physical proximity

• Standard activities

• Optimization “like a factory”

• Focus: efficiency and service mentality

• Governing and know-how-driven activities

• Focus: Value creation through business excellence

HR pay roll

Accounting

Controlling

Purchasing

Marketing

Mgmt.

other Admin.

techn. Support

Comm.

Law &Tax

Reporting

HR linefunction

SSC scope

Not in SSC scope

Basic principle of HC concept: separation of standard activities from know-how driven activities in ONE location


2. Making changes to retail customer

4. Making changes to business customer

1. Central accounting (year-to-date postings, perio d end closing)

1. Creating new retail customer

3. Creating new business

customer

1. Asset additions 2. Asset disposals 3. Reposting 4. Inventory taking 5. Period end closing

1. Credit rating2. Credit control 3. Credit collect

4. Litigation and disputes 5. Credit report

6. Related activities

1. Cost accounting2. issue ALEA

reporting3. Frangoreporting

4. External reporting 5. Other activities

Customer database

maintenance

Credit Control

General ledger

Asset accounting

3. Prepare

invoice (2)

1. Create delivery note

2. Complete delivery note

5. Filing delivery note and invoice4. Send invoice

1. Dunning letter 2. Issue order to pay/ collections

1. Importing billing data into financial accounting system 3. Managing incoming payments2. Handling of complaints (1)Receivables

management

Collections

Invoicing

Ord

er to

cas

h

1. Record order

2. Record incoming

goods

3. Record and filing invoices

4. Invoice verification

5. Accounting entries

6. Settle accounts

Accounts payable

Reporting

Performed in SSC Performed locallyPerformed in SSCPerformed in SSC Performed locallyPerformed locally(1) Process responsibility lies with SSC, handling in terms of content by local resources (2) Local for RMX, cement in SSC

Processes performed in SSC


Credit Management Organization

�221 FTE in Credit Management�Centralized in country SSCs�North America with decentralized local offices, but with centralised credit management back office�In many Asian and African Countries sales on a pre-payment basis � no credit management function necessary

Benefits of Credit Management:�Mitigate bad debt expense �Lower DSO / Improve cash flow �Reduce past due A/R �Improve productivity �One credit limit per customer/country


IT Landscape

Credit Information via SAP

� Standardized choice of reports� Data packages in SAP� Text files can be visualized in

SAP

Credit Agency

Interface SAP

Europe

Credit Agency

Interface JDE/Oracle

North America

Credit rating Credit control Credit collect Litigation and disputes Credit report Related

activitiesCredit Mgmt.

processes

Centralized IT tools such as CMS-Link, Inkasso-Link and Get Paid as add-on to ERP system in place to automate and control a big part of the Credit Management process

Credit Information via JDE/Oracle

� Standardized choice of reports

� Data packages in JDE/Oracle� Text files can be visualized in

JDE/Oracle


Upload possibility for credit information into SAP

123

456

1. Duns number2. Date of last check3. Monitoring4. Payment index5. Rating6. Recommended

credit

Risk information is linked to customer

master data

Best Practices for Credit Management International vs ... · Receivables management Collections...

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