Optimising reconciliation and cash applications in complex shared services environments

Optimising Reconciliation and Cash Applications in Complex Shared Services Environments

Jim Muir – Director at AutoRekTim Klepp - Order-to-Cash Process Leader at IBM

Introduction

•Welcome•About your host•sharedserviceslink.com

How this session works?

How this session works

•Technical support•Questions!

Today’s Agenda

Introduction Products and Services for Shared Services Centres Delivering the Business Case Case Study 1: Re-Engineering of a Major Insurance Shared Service Centre

Tim Klepp - Order-to-Cash Process Leader at IBM

About IBM IBM’s Order-to-Cash Solution - Tim Klepp Case Study 2: AutoRek Cash Apps Process – One Client Experience

Summary and Q&A

Poll Question 1

I have signed up for today’s webinar because...

My reconciliations are manual and taking too long

My reconciliations cost too much to prepare/require write offs

I am reviewing our fast close procedures

We are considering outsourcing/ insourcing and want to understand what controls AutoRek provides in that process/journey?

Our credit control is adversely impacted by the time it takes to identify and post receipts

Introduction

AutoRek financial management software has an outstanding pedigree in blue chip organisations.

Working with Shared Service Operations we developed capabilities and solutions to address the challenges around data management ranging from high volume reconciliations and data migration to automated cash allocation of receivables and vendor statement reconciliations.

The next few slides outline what we do, how we do it, and the irresistible business case for deploying AutoRek in “complex shared services environments”.

Lowering Costs

Improving Processes

AutoRek

Reducing Risk

Control Stabilise Improve

Blue chip international client base

AutoRek first launched 1998

Reconciliations, Cash Applications and Attestation on the same platform

Preferred tool of leading F&A BPO provider

Partner of leading consultancies

Microsoft Gold Partner

Main offices: Glasgow, London

Dat

a M

anag

emen

t C

on

sult

ing

Ser

vice

s

AutoRekReconciliations

VanguARdOrder to Cash

Cash Applications

ReKlaimDuplicate Payments

and Invoice Processing

Performance Management and Reporting

Products and Services

ReKognizeAccount

Attestation

Delivering the Business CaseSource

Explode

Enrich

Match

Escalate

Identify

Classify

Escalate

Remediate

Measure

RelativeFTE

Audit

Reporting & Escalation

Exception management Shared Services

Intercompany

Balance Sheet

Cash Allocation

Supplier Statements

Cost Reduction

Increasing Capacity

Reduce Risk

Improved Visibility

Fast Close

Consolidation

Mergers/Acquisitions

De-mergers/Disposals

Outsourcing

Data Migration

Attestation

Suspense Accounts

Poll Question 2

What level of automation (no manual matching of payments to open invoices) exists in cash allocations today?

None

1 to 25%

26 to 50%

51 to 75%

Over 76%

AutoRek Case Study27th October 2011

Re-Engineering of a Major Insurance Shared Service Centre

The client had implemented a new Finance system in a short timescale in a Shared Services Centre on a tight budget but reconciliations with the legacy administration systems had not been performed properly due to:

Inconsistent data mapping

No definitions of accounts

Rigid charts of accounts

Loss of audit trail

No sub-ledgers supporting a thin general ledger

Legacy system data issues and robustness

• The Finance function was under-staffed, under-trained and knowledge rested with a few longer serving staff

• Financial reporting was slow (35 days after month end) and prone to error without any “drill down capability” to determine reasons for variances month on month, year on year, division on division or from budget/plan.

• Operational management information was out of synch and inconsistent with financial information

• System fixes and requests were not properly analysed, specified, evaluated and prioritised

• Legacy systems did not interface and there was over reliance on end user computing for reporting and analysis

The Challenge

Reconciliations were defined and built for every nominal ledger account in the balance sheet and every bank account in every division

The higher transaction volume reconciliations were put onto AutoRek which was directly interfaced to client systems

An intranet site was established for KPIs, Training, Procedures, MI, systems requests, staff whereabouts and other key communications and templates

A data warehouse solution was bought to allow drill-down from general ledgers into sub-ledgers and operational systems to allow detective and predictive MI on Finance and Operational matters.

New separate entities became fully accountable for P&L and Balance Sheets. No accounts were shared.

New systems prioritisation procedures put in place

The Solution

Fully auditable and explicable numbers

Faster MI and Financial results

Elimination of root cause accounting error

New automated interfaces from legacy systems

Clearer roles and responsibilities for staff

Increased accountability for performance across the whole business

The Benefits

October 27, 2011

Autorek Discussion Document: IBM Cash Apps Experience

© 2011 IBM Corporation

19

IBM’s delivery model allows us to provide off-shore, near-shore and on-shore solutions, and to create the mix that suits our clients.

ST. JOHN

TORONTO

TULSA

DURHAM BEAVERTON

BOULDER

TUCSON

SAN JOSE DALEVILLE

GREENVILLE BRATISLAVA

BRAGA

DUBLIN

CAIRO

BUENOS AIRES

MUMBAI

CHANDIGARH

SHANGHAI

PUNE

KOLKATA

VIZAG

BRISBANE

OKINAWA

TOKYO

SAPPORO

JEONJU

BALLARAT MONTEVIDEO

FREETOWN

ANTANANARIVO

KAMPALA

F&AHRSCMCRMIndustry-specific

HORTOLANDIA BANGALORE

TAUNTON

SWANSEA

GREENOCK

KRAKOW

COVENTRY

BUDAPEST

SOFIA

DELHI

CHENNAI

MANILA

DALIAN

F&A and SCM Global Delivery Centers 20+ delivery centers globally 40+ languages supported 60+ countries supported


20

Key Highlights:

Serving the largest & most innovative global companies

Full suite offering across - 20 delivery centres, 18 languages, 60 countries worldwide; approximately 85% of services delivered from off-shore locations

Managing ~$75 billion in client revenues, ~40% US-based & 60% European-based

Wide spectrum of specialist Tools & Technologies to enable the collection process

Management team with deep industry and process expertise

Committed cost savings and efficiencies - up to 60%

ReportingCash Application

Dispute Management

CashCollection Billing

Credit Management

Order Entry

Global Delivery Capability

Specialist Tools

High Level Process

IBM delivers a comprehensive O2C solution that is global in scope and enabled by technology and analytics


2121

We support end-to-end O2C processes with over 2,600 O2C specialists serving more than 20 clients


22

Typical issues in manual cash application processing

- High level of staffing required to handle intensive manual processing

- Working capital and customer service issues due to time lag / backlog of unapplied cash

- Customer service and audit issues due to misapplied payments

- Profit and loss impact of poor management of deductions

- Poor matching rates

- Poor traceability and audit


23

Common tool and process for all clients

– Able to create factory across deals to maximise resource

– Reduced transition costs

Match single remittance across several ERPs

Payments can be applied across more than one entity

Enhanced matching capability in tool – more items auto matched

Auto matching can take place outside working hours

Seeking ability to drive productivity upwards of 40%

Autorek has been a strong fit for our goals

Key Objectives

Strong reputation for creating and supporting automated solutions with rapid ROI

Wide base of customers across multiple industries

Commitment to continuous improvement:

Dedicated R & D Team

Strong results in initial pilot testing

– Productivity gains

– Working relationship

Autorek Factors


24

High Level Process

The Data

1. Payment Data is Imported from banks in digital format

2. Customer information is imported either from the client ERP or AR Collect.

3. Transactional information is imported either from the client ERP or AR Collect.

4. Remittance information is digitized and then processed via a OCR reader to extract transactional information.

The Process

1. Payment information is matched to customer name using a wide variety of rules. Where it is not possible to match the customer to a payment it is sent for exception processing via workflow.

2. Remittance information is extracted from the advice and matched to transactions. Exceptions are routed for manual inspection via workflow.

3. The payment / Customer file in 1 above is matched to the transaction / remittance file and reconciled.

4. Export file created to be imported into the client ERP system.


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Deployment timeline

Category Activity

Week

1 2 3 4 5 6

Project Kickoff

Preparation Design Workshops

Requirements definition

Configuration Extract development

Application configuration

Testing and training Testing – system and process

Training

Go-Live


26

Pre-Autorek Background• Matching Process – Trade Payments received are cleared against open invoices. • 25% - 50% of payments researched and cleared manually.• Matching criteria - pre-defined in ERP; difficult to amend

Solution – Autorek Tool Autorek Tool works as an intermediary to the Bank and ERP to enhance the auto-match. Takes details from Bank, validates against ledger feeds & identifies potential matches Provides flexibility to design new matching rules which can be added to the tool and would aid in

improving / suggesting matching possibilities.

Current Status Quick deployment; tool stable after four weeks of operation 85%-90% invoices with partial matches being achieved Intercompany matching of cross-company receipts previously handled manually, now automatic

Autorek Cash Apps Process – One Client Experience

SAP – BU #1 50%

SAP – BU #2 50%

Oracle – BU #3 75%

SAP – BU #1 84%

SAP – BU #2 90%

Oracle – BU #3 84%

Pre AutoRek Post AutoRek

In SummaryAutoRek will help optimise staff productivity, resource planning and management in your Shared Service Centre…

RelativeEffort

RelativeFTE

Improving compliance with regulation

Reducing financial and operational burden of regulation

Reducing production costs of management information and the reliance on IT to cut data and produce reports

Faster error detection, default detection and recovery speeds

Creating capacity for increasing business volumes

Improving speed and quality of management information

Demonstrating and monitoring stronger financial controls

Improved visibility of adherence to service level agreements

… and we are prepared to prove it…..

Rapid Deployment Approach

Poll Question 3

Would you be interested in a free, one-to-one discussion with one of our data management experts to discuss your Shared Service Centre’s business case?

Yes

Possibly, please send me further information

Unsure

Unlikely

No, I am definitely not interested

Next at sharedserviceslink.com

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Q&A

193 Bath StreetGlasgow, G2 4HU

+44(0) 141 229 5300www.AutoRek.com

http://www.autorek.com/

http://www.autorek.com/

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Optimising reconciliation and cash applications in complex shared services environments

Technology

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