8/21/2018

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THE MORPHING OF THE ORDER –TO – CASH PRACTITIONERHOW THE DISCIPLINE IS CHANGING AND WHAT SKILLS WILL BE REQUIRED TO MEET THE NEW DEMANDS

AUGUST 14, 2018CREDIT RESEARCH FOUNDATION FORUM

PRESENTED BY: YESINNE ALVAREZ

WHAT I PREDICTED 8 YEARS AGO

• Systems knowledge as

important as Credit

knowledge

• Consumer credit aspects will

creep into B2B

• Data Mining and Portfolio

segmentation will be

expected

• Understanding of supply

chain, logistics and

procurement will become

more important.

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SAMPLE JOB DESCRIPTION DIRECTOR OF ACCOUNTS RECEIVABLE 2018SAP KNOWLEDGE EQUALLY IMPORTANT AS A/R

• Provide leadership and guidance to the Accounts Receivable landscape with

the emphasis being on special projects related to the multi-year SAP

implementation.

• Will be a key business partner with AR department leaders and their support

staff to strategically maximize opportunities, create efficiencies and minimize

risk with regards to the SAP system implementation.

CONSUMER CREDIT PRACTICES

Are now commonplace in B2B Order To Cash departments

• Segmenting your customers by Credit Risk, customer type, product line, etc.

• Accepting Credit Card payments commonplace ( e-commerce)

• Credit Risk scorecards

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KNOWLEDGE OF SUPPLY CHAIN IS EXPECTED TODAY

• Logistics terminology is now commonplace as part of an A/R conversation

• Understanding of distribution practices for your product.

• In some industries, logistics and supply chain issues are the focus of the

Accounts Receivable function.

WHAT IS DRIVING CHANGE TODAY

• Automation, Automation, Automation

• Credit Scoring, Collection Workflows w/ automated dunning, Auto Cash

Posting, EIPP, Auto- debit, E-commerce, Credit Card processing, Credit

Applications, etc.

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WHAT IS DRIVING CHANGE ….

• Artificial Intelligence/ Machine Learning

( Machine Learning is a part of Artificial Intelligence) It is responsible for

things like Auto- Cash posting, matching of remittance advice information,

Default or slow pay predictive models, Risk Models learning from data

elements to set a Credit Score or establish a credit line and Credit

application automation with no human touch point.

HOW BIG DATA IS ADVANCING MORE AI

• Big Data : Big data' is the science of understanding and predicting human ( customer ) behavior by studying large volumes of unstructured data. Big data is also known as 'predictive analytics'. Source : Livewire, Feb. 12, 2018 “ What exactly is Big Data

• As we continue into 2018, we’ll see the lines between business intelligence and artificial intelligence blurring even more. Thanks to the current capabilities of machine-learning systems that are capable of identifying patterns, habits and trends, human decision-makers might soon be a thing of the past.Source: Big Data Made Simple, 5 Big Data Trends Expected to Influence AI in 2018

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WHAT’S DRIVING CRAAAZY CHANGE

• Robotics or (RPA) Robotics Process Automation is the basis for “ Workforce

Virtualization” , High volume tasks performed not by robots per se, but by

software applications.Source: Forbes/ Robotics: The Next Frontier For Automation In Finance And Risk Management

RPA IN SHARED SERVICE CENTERS

• Robotics in the finance and accounting areas, for example, can be used for

fixed-asset accounting, to record journal entries, conduct general ledger

account reconciliation, perform intercompany transactions and maintain

accounting master data. Firms can also use robotics to audit expense reports,

manage incoming vendor invoices and process vendor payments while

handling vendor inquiries and/or disputes.Source: Forbes: Robotics: The Next Frontier For Automation In Finance And Risk Management

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SHARED SERVICE CENTERS CONT.

• By 2020, automation (RPA ) and artificial intelligence will reduce employee

requirements in business shared-service centers by 65%Source: Gartner article, October 2016 Robotic Process Automation: Eight Guidelines for Effective Results

RPA’S IMPACT ON WHERE THE JOBS ARE

• “The last decade was about replacing labor with cheaper labor. The coming

decade will be about replacing cheaper labor with autonomics.”

-- Chetan Dube, Founder, IPsoft Inc.

• Tasks and Functions that were a no brainer to off shore or outsource will no

longer hold the same ROI benefit.

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RPA CONTINUED

• The Mckinsey interview with a professor from the London School of Economics stated that RPA offers the potential for an ROI of 30- 200% in the first year.

• Leslie Willcocks, professor of technology, work, and globalization at the London School of Economics’ department of management,

“In the longer term, RPA means people will have more interesting work. For 130 years we’ve been making jobs uninteresting and deskilled. The evidence is that it’s not whole jobs that will be lost but parts of jobs, and you can reassemble work into different types of job”Source: The Next Acronym you Need to Know About: RPA by Xavier Lhuer

WHAT WILL THE SENIOR CREDIT & A/RROLES BE CALLED

Revenue/ Asset Manager

Order to Cash Leader

Director of Quote to Cash

Manager of Gross to Net

Director of Invoice to Cash

Director of A/P & A/R Process

Revenue Cycle Manager

P2P Cycle Leader

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YOUR TEAM MEMBERS MIGHT BE

• Credit Risk Business Intelligence

Analyst

• Risk Analyst

• Credit Data Modeler

• Dispute Resolution Manager/Analyst

( no staff/ manage the process)

• A/R Process Lead

• Business Intelligence Analyst

THE ORDER TO CASH DISCIPLINE IS MORPHING INTO 2 DISTINCT TRACKS

BUSINESS INTELLIGENCE TRACK

• Emphasis on Analytics

• Setting the parameters for data

• Integral part of Automation/ Technology partner selection

• Setting data elements for reporting requirements

• Interpreting Data into business decisions.

• Communicating data up, down and across departments and functions.

• Educating the organization as a result of Root Cause Analysis.

BUSINESS PARTNER TRACK

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RESPONSIBILITIES: BUSINESS INTELLIGENCE/ SYSTEMS ADMINISTRATOR TRACK

• Manage the systems, almost no staff

• Set the parameters for reporting, coordinate the data elements from other

departments or external sources

• Design reports for detailed portfolio analysis, trend analysis, customer

segmentation

RESPONSIBILITIES: BUSINESS PARTNER TRACK

Root Cause Analysis and communicating findings to the organization.

Communicate internal and external data gathered to improve internal

processes: order management, returns, credits, tolerance policies.

• Responsible for interpreting & communicating customer A/R behavior, trends,

unique market conditions, etc.

• Identify and communicate Business Opportunities to support sales, marketing,

Procurement and customer service

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OVERALL SKILLS IN DEMAND

• Both tracks will require systems knowledgeAbove average in Microsoft Office Suite, beyond Excel, knowledge of

Access and Sharepoint, SQL,

• ERP Knowledge: Oracle, SAP, JDE, Peoplesoft, Microsoft Dynamics, Netsuite

• Understanding of the logic/ algorithms/ data elements of software partners, ERP components and their interactions.

• Relationship Management

RELATIONSHIP MANAGEMENT

• More important than ever as the relationships are with service and software

providers since staff will be minimal.

• More interaction with cross functional teams and potential outsource partners

• Relationships with peers and colleagues for best practices discussions, best

practices credit groups, virtual credit groups, networking in educational

settings.

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RELATIONSHIP MANAGEMENT FOR THE O2C LEADER

• Relationship management with strategic customers more important than ever

because all other points of contact may be automated.

• The New customer may have no human interaction, until there is a problem

particularly if adopting e-commerce methods.

• Maintaining Key relationships with your customer and your sales team more

necessary than ever.

RELATIONSHIP MANAGEMENT AT THE STAFF LEVEL

• Peer to peer relationships at the staff level will become very important as the

human interaction will limited to problem solving and escalation purposes: AR

to AP, AR to Logistics, AR to Distribution Centers, etc.

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O2C LEADER CAN ALSO BE A CHANGE MANAGEMENT LEADER ( CHANGE MANAGEMENT IS A SKILL)

• As new technologies are implemented and the customer facing as well as

internal processes evolve……

• The Order to Cash Leader is uniquely positioned to lead the way in creating

the new processes and communicating it across the organization as well as to

the customer base.

BACK TO RPA & FUTURE HIRES

• From finance to billing to IT, employees across all departments are plagued

with a slew of manual, repetitive tasks. On average, managers spend two full

days per week on administrative activities and, in the U.S., approximately

$575 billion per year is spent performing administrative work. Millennial

employees would rather make $40,000 per year doing a job they love as

opposed to making $100,000 per year doing something boring

Source: Entrepeneur magazine, OpED called “Don’t Worry So Much. Robots are Mostly

doing the Work People Hate Anyway.”

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THE MILLENNIALS – SOME CONTEXT

Millennials became the largest U. S. workforce since 2016

As of 2017 – the most recent year for which data are available – 56 million Millennials (those

ages 21 to 36 in 2017) were working or looking for workSource: Facttank - Millennials are the largest generation in the U.S. labor force

Average tenure for Millennials is 2 years (compared to 5 years for Gen X and 7 years for Baby

Boomers.) Source: [Pay Scale / Millennial Branding]

It costs an average of $24,000 to replace each Millennial employee. [Microsoft / Experience Inc]

MORE MILLENNIAL STATS

• 89% of Millennials would prefer to choose when and where they work rather than being

placed in a 9-to-5 position. [Odesk] 45% of Millennials will choose workplace flexibility over

pay. [Millennial Branding]

• 63.3% of U.S. executives will be eligible to retire in the next 5 years. [PWC]

• (If that stat is half right, that still leaves a large leadership gap that will have to be filled by

Millennials. Will they be ready?)

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MILLENNIALS AND AUTOMATION

• Closer analysis of the data shows that millennials who are heavy users of

social media are less threatened by automation than their peers. They

recognize the potential for workplace automation to support more creative

and expanded roles. Source: Wall Street Journal: Millennials Conflicted About Automation- Deloitte study

MILLENNIALS AND RPA IN PARTICULAR

• A lot has been written and talked about with regard to Millennials being job hoppers and not loyal. The case is being made that they are just BORED.

• The millennial workforce is not willing to compromise on their expectations. They want challenging tasks and opportunities that allow them to use their analytical skills, creativity and technical prowess. The mindless, lengthy and repetitive processes like filling out complaint forms and rote data entry that so many millennials are instructed to execute leave them feeling underutilized and undervalued.

• This is where automation can come in handy to boost morale and the business as a whole. Source: Information Age- Can robots boost job satisfaction for millennials?

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THE ORDER TO CASH LEADERSHIP CHALLENGE

Re-engineering the tasks/ duties and job responsibilities as automation takes

over some of the steps in making decisions and day to day operational

functions.

Engaging in more internal and external customer facing activities and

encouraging the staff level to perform more data analysis, trend analysis and

interpretation of all the data available.

SUMMARY

• There may be fewer positions in the Shared Service Department or Order to

Cash team but the functions and jobs will not disappear. They will be different

and more exciting !!!

• Automation will create more opportunity for the O2C leader to expand the

role into other areas of the organization, free up time to focus more on

supporting and leading working capital initiatives, cash management

strategies and mentoring the new generation.