Skies Clear for Receivables Automation - Managing Electronic Payments in the Cloud
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Transcript of Skies Clear for Receivables Automation - Managing Electronic Payments in the Cloud
© 2014 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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Skies Clear for Receivables Automation - Managing Electronic
Payments in the Cloud
May 6th, 2014
Dynamic Enterprise Cash Flow Processing
© 2014 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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Timothy F. Ray joined Open Scan in 2007 as a major account executive. Following a string of successes, he was promoted to Chief Operating Officer. In this role, Tim is responsible for all operations, including sales and implementations.
During his tenure at Open Scan, Tim has led the organization in sales by closing opportunities with many Fortune 500 companies. He has built a top notch sales organization resulting in better forecasting, increased sales, and growth for the company.
Prior to Open Scan, Tim founded a commercial lending organization that focused on serving small to medium-sized businesses. As well, Tim was the Director of Western U.S. and Latin America Sales at Moldflow Corporation, the leading provider of CAD/CAE software products and services. While at Moldflow, he was responsible for building the sales organization from the ground up and developing a reseller network in Latin America.
Tim has a Bachelor of Arts Degree in Business Administration, including the Completion of Entrepreneurial Studies Program from the Department of Economics and Business at Washington & Jefferson College in Washington, PA. Tim and his wife live in Denver, CO, with their two children.
Welcome Timothy F. Ray Chief Operating Officer
Open Scan Technologies, Inc.
© 2014 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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Founded in 1998Denver, CO
Software-as-a-Solution Development Company• Enterprise solutions• Wholesale environment• Accounts receivable• Accounts payable
Delivering industry-defining automation technology toFortune 1000 companies since 1998”
The leader in financial workflow
automation including A/R & A/P with
proven success in the market for 15
years.
“
About OPEN SCAN®
© 2014 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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• The Pain of Electronics• The False Promise• World Class Companies• The Cash Application Opportunity• Traditional Model to process most EFT’s• Technology Options
Agenda
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The Pain of Electronic Payments• Coupled payments and remits don’t follow a standard and are
not human-readable
• Heavy IT overhead to map EDI820’s
• Processed manually
• Most remits are decoupled from the payment
Apply Technology to:
• Automate the ingestion of EDI820’s and decoupled remits
• Intelligently match and correct data before it flows into the ERP
• Eliminate the majority of the manual tasks done today
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Invoice Volume
Average Payment Volume vs. Value
10%
80%
10%
ElectronicsLockboxRemote
Electronic Volumes are Low but Increasing.
Invoice Value ($)
30%
65%
5% ElectronicsLockboxRemote
Many of Your Most Valuable Customers are Moving
Toward Electronics
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Hackett 2012 Metric: Automatic remittance posting match rate
Peer Group World Class
40%
66%
A Hackett-Certified Practice that all productivity-focused A/R managers should take steps to incorporate automatically matching at least 80% of all customer remittances to the appropriate invoices. This percentage represents payments that are completely applied, resulting in zero manual effort required. Depending upon the nature and complexity of the business, measuring the percentage of closed invoices (80%) can be an equally effective measure. Achieving this level of remittance-matching greatly reduces the manual workload for accounts receivable.
This was Published in 2005
80% - Easier Said than Done
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The result is that approximately 61 percent of all B2B
payments are forecast to be
conducted electronically by the year 2010.
http//www.emarketer.com. (June 2003) “Electronic Payments: From Online Bill Payments to Credit Cards – Statistics, Strategies, and Trends.”
This was Predicted in 2003
B2B Payment Predictions
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© 2014 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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Why Didn’t Electronics Fulfill its Promise in the Last
Decade?
What Happened?
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100% straight-through processing (Touchless) in B2B environments has not materialized
quite yet.
Electronic Payment Chaos
No agreement on standardization
Difficulty of forcing payers to change
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WORLD-CLASS PERFORMANCE METRICS AND BEST PRACTICES
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Peer World-class
0.018% 0.015%
0.036%
0.008%
0.021%
0.006%
0.037%
0.016%
0.020%
0.004%
Process Cost as a Percent of Revenue
Credit Billing Cash application Collections Dispute Management
63%
0.048%
0.132%
The performance gap is significant…
Taking an end-to-end view we see that Top Performers use significantly less resources than Peers
Process Cost as aPercent of Revenue
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Technology Leverage
Integrate credit, order entry, customer billing, receivables, and collections applications, tax applications, intercompany billing
Auto interface with Collections and Dispute Management systems
Automatic triggering of billing
Standardization & simplification
Company-wide credit policy, Standardized terms & conditions Centralized master data management
Peer World-class
10.7
2.0
Secondary applications per $B of revenue
Peer World-class
8.5
6.5
Billing Terms(How many different terms used in
past 12 months?)
FTE Gap
Peer World-class1.9 1.8
6.1
1.3
5.3
2.4
4.0
1.1
2.8
0.7
FTEs per $B of revenue
Credit Process
Customer Billing
Collections Process
Cash Application
Dispute Management
20.0
7.2
Simplification, Standardization, & Automation
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*Process Cost = Labor costs + Outsourcing Costs
The Cash Application process challenge is not just payment automation but also electronic receipt of remittance advice (coupled is ideal)
Electronic payments alone do not reduce process costs
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Improvements in Automatic Cash Application Rates Have a Direct Affect on Reducing Average Days Delinquent
Percentile 25
Median Percentile 75
4
8
10
Percentile 25
Median Percentile 75
2
6
12
Percentile 25
Median Percentile 75
2
5
14
Less than 35% 35% - 65% 65% - 100%
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Reducing the Average Time to Apply Cash Has a Significant Affect on Average Days Delinquent
Percentile 25
Median Percentile 75
2
4
7
Percentile 25
Median Percentile 75
4
9
12
Up to one Day1 - 2 Day(s)
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Average Time to Apply Cash (Business Days From Receipt of Customer Remittance
Through Successfully Completing the Cash Application to Individual Accounts)
Peer Group World Class
1.7
1.0
Automatic remittance posting match rate
Peer Group World Class
40%
66%
Automatic Matching of Remittance Influences Cash Flow
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Remittance Processing Costs
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Inefficient ways to process receivables:• Lockbox Processing• In-House Processing• Manual Electronic Payment Processing
Technology helps World-Class Corporations achieve:• Savings
• 100% Elimination of Data Entry Costs• 50-75% Process Efficiency Improvement• 40-50% Reduction in Exceptions• 1-3 Days Sales Outstanding Reduction
• Process Improvements• Cash Application• Deduction Management• Collections
• More timely and accurate data into ERPs
Cash Application Opportunity
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Coupled Payments
Decoupled Payments
Traditional Electronics
Data Entry and Matching Payments to Remittances is Manual, Time Consuming, and
Resource Heavy
EDIEDI
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Coupled Payments
Decoupled Payments
Open Scan Electronics
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Electronics Automation– How it Works
Here’s the Breakdown
Auto CorrelationSolutions ModeStandard ModeCTX / CCD+Payment Only
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After training the system, Auto Correlation will Find Matches and Process Them Without Human Interaction
Newest Enhancements– Automation Mode
Evaluating a Remit
Payment Remittance Determining a Score• Complete or partial originator email
address• Accurate or similar amount
• Manually entered• In the Subject• Located next to the word TOTAL• In the Body
• Other Attributes• Reference number• PO number
Score= 89
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Newest Enhancements– Automation Mode
Determine Routing
Remittance
Is it the highest rated
match?
Is itfar enough
from the second
candidate
Auto Correlate
Yes Yes
No No
SolutionsMode
SolutionsMode
Does it meet the minimum
confidence threshold
Not a Candidate
No
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• Highly Automated Matching and Scoring• The System Learns Which Remittances and Payments are Likely to Match• Simple One-Click Matching• This Trains the System and Creates History Which is Essential
Newest Enhancements– Solutions Mode
Choose the Correct Remit Manually and Train the System While Matching
Scoring is Based on How Relevant the Remit is to the Payment
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1
Examine a payment
2
Search and examine remit(s)
Standard Mode
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Correlate
3
4
Submit
Standard Mode
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• Coupled electronic payments such as CTX & CCD+ are processed like a check and remit. Even with electronic payments, there are typos, short pays, and other anomalies that need to be identified.
• “Payment Only” is simply processed like a “Check Only”
CTX / CCD+ / Payment Only
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Other Feedback & Questions
?
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If you would like to learn more or have additional questions, visit www.openscan.com, e-mail [email protected], or call 303.867.7431
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