Countering the pain of unallocated cash

If cash isn’t flowing, a business isn’t growing. This is what makes accounts receivable (AR) one of the most important parts of the order-to-process cycle.

 

 

A typical, manually run AR team will receive cash in the morning, and manually begin batching cheques and remittances as necessary. It is a familiar chore, manually matching cheques, remittances, bank and sales.

 

 

Because of the sheer variety of sources where remittances and funds can be received from, including: sales ledger extracts; lock box; BACS; Faster payments; credit card payments; cheques and remittance advice, manual AR becomes a slow, cumbersome and unnecessarily complex process. ledgers in the hope that payments will match remittances and invoices.

 

Throughout the day the team will undertake considerable amounts of manual keying to ensure information flows into the necessary systems, and any errors or amendments are reworked. Only then can calls to customers chasing payments take place, and these often result “we have already paid” conversations because the remittance is still sat in the post room waiting to be sorted.

 

Faced with a multitude of sources that need to be consolidated within the AR process, and the potential for errors it is no surprise to find debt outstanding accumulating.  In one client case we saw close to £600k of unallocated cash on account, yet within a year that had been reduced to effectively nothing.

How? By automating the AR process.

Working closely with Rimilia, it is now an easy task to simplify the AR process by scanning incoming documents and replacing manual batching, matching, keying and reworking.  Maintaining a live feed to both bank and finance system, Rimilia’s Alloc8 technology captures data from payments and remittances at the point of entry, enabling companies to automatically match up to 90% of incoming payment invoices in minutes. Even with remittance advices, the self leaning technology can find, match and allocate without manual intervention. Sales ledgers are automatically updated and cash flow is ready for reporting and forecasting.

 

Alloc8 is a best practice solution, which is simple to administer and easily adopted by staff. It eliminates inefficiencies in old O2C processes, increases process visibility and compliance, improves cycle times and delivers cost reduction, all while decreasing day sales outstanding and enabling the AR function to regain control over company cashflow.

To learn more about AR automation and Alloc8 watch the webinar here.

 

 

 

 

 

 

Automate and celebrate

Last night at a gala dinner at London’s Hilton Park Lane, the Institute of Credit Management recognised businesses with exemplary work and innovation in the credit profession. The 2013 British Credit Awards saw businesses which had chosen to automate Accounts Receivable processes with ReadSoft and partner Rimilia dominating the evening.

Britvic which employs Rimilia’s Alloc8 software to resolve in minutes the complexity of managing remittances from supermarkets was awarded Best Use of Credit Technology.

The biggest winner on the night was another Rimilia customer, Veolia Environmental Services (UK). It not only took home the award for Credit Employer of the Year but also an individual prize for Charlotte Ashford from the cash allocation team as the credit profession’s Best Newcomer. Brian Morgan, Head of Credit, Veolia was also in the spotlight for his acknowledged contribution to best practice, winning the ICM Achievement Award.

Brian was at first sceptical of the real capability automation could bring to Veolia, but very quickly became a driving force for its adoption. Brian told us early this year, “When we looked at Alloc8 we thought it looked too good to be true, but we completed a three month trial period and the results were outstanding. We see much faster allocation on our system. We get the bank statement in the morning, this is downloaded into Alloc8 within minutes, and straightaway 85-90% of BACS payments are posted, allocated and cleared off the customer accounts.”

“Many credit managers, and I include myself in the past, focus on collections, and rightly so,” he continued. “We deal with debtor days and look at risk to prevent bad debt. Often we forget about the importance of cash allocation. Getting cash allocation right makes a massive impact both on collections and risk. Having a clean and accurate ledger lets you do what is needed in a prompt and efficient way.” Brian’s forward looking attitude to credit control was without doubt a factor in this much deserved accolade.

 

Rimilia was also pleased to be able to support the ICM sponsoring the Fraud/Anti Money Laundering Initiative of the Year, which was rightly awarded to SmartSearch.

Speaking on the night, ICM Chief Executive Philip King said, “The judges reviewed some amazing submissions, and my one big regret is that there can only be one winner.” From our perspective the real winner this year was automation.

 

 

Credit where it is due

This week the Institute of Credit Management (ICM) which represents the profession across trade, consumer, and export credit, and all credit-related services celebrates industry excellence with the British Credit Awards.

This year’s awards are of particular note for ReadSoft partner Rimilia, which two years ago won Innovative Solution of the Year for its automated Accounts Receivable (AR) technology, Alloc8. According to the ICM, Alloc8 is a ‘unique solution to a common problem’, a powerful self-learning Accounts Receivable product which automatically matches up to 90% of incoming payments to invoices in just minutes, increasing visibility of cash processes, improving productivity and removing the pain of ‘month end’
Alloc8 has been employed by Britvic to resolve in minutes the complexity of managing remittances from supermarkets. These are unique in the market because the sent payments are characterised by numerous deductions for everything from in-store marketing campaigns to short orders and damaged goods. Without automation, the process is time consuming, and prone to error, leading to poor cash management.collections. For this reason it is a key tool for Britvic and Aggregate Industries, two of this year’s finalists in the ICM’s Best Use of Credit Technology Award.

Aggregate Industries, which is operating as a shared service centre (SSC) with 70 separate businesses across Europe, used Alloc8 to reduce high levels of unallocated cash on account, from as many as 10,000 invoices per day.

Phil Rice, Manager – Order to Cash, at Aggregate Industries says: “Getting the cash allocated onto the ledger at peak times, such as month end was a real issue for us. We wanted to achieve automatic allocation down to invoice level when cash was on the sales ledger. With Alloc8 we were achieving 87-90% almost immediately, and within six months we were seeing 95% automation for both cheques and BACS.” By quickly achieving this level of automation, Aggregate has been able to return control to the Order to Cash team and so increase business efficiency.

The results of the British Credit Awards will be announced on Wednesday evening and we wish Rimilia, and its customers Britvic and Aggregate Industries the best of luck.

To read more download the whitepaper here.

Making month end just another day

 

Getting accounts receivable (AR) right should be a point of focus of any business that wishes to retain a professional outlook and appreciative customers.  Annoyed customers being chased for payments they’ve already made, large levels of unallocated cash on account, increasing day sales outstanding DSO figures and the need for high debt value provision are all symptoms of mismanagement. However, the results of implementing an automated process for accounts receivable can be startling, and in many cases the cost of investment can be paid back within a matter of weeks.

One of the most effective means of automation is though intelligent document scanning and workflow processing. Such system automation can halve the cost of cash allocation per invoice and deliver greater levels of control than previously available. Performance indicators, such as the management cost per invoice, become instantly identifiable.

With every transaction recorded to identify the user and the action carried out, an electronic audit trail can trace a receipt to allocation or an allocation to receipt.  Every receipt generated can have a status assigned during the life cycle  enabling the user / management to identify where receipts are in the process and to log queries against them, effectively ending the need for ‘chase the payee’ notes.

Unlike the traditional manual process which is almost impossible to performance manage; an automated process constantly updates the number of receipts remaining unallocated and their status.  This provides a greater accuracy to allocation of funds. This can be further enhanced if an auto-matching process is also enabled within the document scanning and workflow process.

Automating unallocated cash through a system driven approach improves the ease of matching and the visibility of where receipts are currently allocated. In many cases, more than 98% of receipts are allocated to invoice first time.  This enables credit control personnel to focus on a very small number of queries, ensuring that these are dealt with quickly and efficiently, vastly improving the cash position of a company.

Deploying automation in to the accounts receivable processes is simple and intuitive. Training can take a matter of hours and improvements in processes and reporting can be seen as soon three weeks after implementation.

The latest generation of automated AR systems have shown in real world case studies that, even where two people undertake the existing process, up to 75% of their time can be reallocated to other, more valued added activities. Speedy Hire said, “We have achieved a resource saving equivalent to around 70% of the original team, and reduced unallocated cash by around 80%”.

Aggregate Industries which now puts 90% of the company’s order-to-cash finances through automation said, “As a business, automating has really helped the credit team concentrate on cash collection. We reduced unallocated cash by £12m in the first three months.”

To learn more about AR automation click here or download our latest whitepaper

How are you evolving your AP processes?

Richard Dawkins said, “The theory of evolution … is the only theory we know of that is in principle capable of explaining the existence of organised complexity.” And evolution is the topic of choice for this year’s Institute of Accounts Payable Professionals (IAPP) conference. Organised complexity is a great way to describe a finance department, and the conference will focus its two days of comprehensive learning sessions on how companies can evolve their accounts payable, accounts receivable, automation, document management and procure-to-pay activities.

ReadSoft will be demonstrating AP & document automation and workflow solutions, including an opportunity to calculate your AP ROI. You can try it for yourself here or visit us on stand #6 in the exhibition area.

This is also the first year that the IAPP is including accounts receivable on the agenda, and our partner Rimilia will be on hand to host a round table with ReadSoft on this important topic. Together we will explain how departments can improve cash flow, lower DSO and mitigate risk through automation.

The conference takes place on the 14 – 15 November, at Wokefield Park, Reading.  The two day delegate rate is £450 for non-members (incl. free annual membership) and £399 for members (incl. membership renewal). But you can use ReadSoft’s discount code for 20% off tickets by visiting the event website and quoting the code ‘APUK21-EVT’.

Regaining control of Accounts Receivable

Inefficiencies in the finance function can critically impact the bottom line and the viability of a business to grow and flourish. For Accounts Receivable (AR) functions, month end can be a time to dread, requiring additional staff be reallocated from other business critical functions.

A good barometer for the likelihood of bad debt provision is Day Sale Outstanding (DSO) giving the number of days it takes on average to turn a sale into cash in the bank. The problem is there are often no targets around the quality of the sales ledger, the number of queries resolved, or the reduction of costs. How robust a company’s position is will be defined by the impact of unallocated cash. Unfortunately these metrics often go unmeasured and uncontrolled.

Overall, a sales ledger should be as clean and as accurate as possible; after all it is the record of what is owed, by whom and when it is due for payment. Any unallocated cash more than seven days old is a sure sign of poor control. Unallocated cash on account occurs when goods or services have been provided and a customer has paid for them. The cash receipt has been matched to the customer’s account but not the payment. Unallocated cash on suspense/holding account is a case where goods or services have been provided and a customer has paid for them, however the cash receipt has not been matched to either the customer’s account or the invoice. In these cases the number and value of credit notes issued becomes a key indicator of poor operational delivery, a lack of quality of goods and service provided, and errors in pricing or invoicing.

So what changes can be made to the way credit with customers is managed and controlled to deliver a more effective business and better understand and control cash receipts?

First and foremost it is about understanding customer payment behaviour – particularly how and when customers pay. If a customer is paying beyond terms, what pattern emerges?  Like your own organisation, your customers will have their own behaviours. But this does not mean just letting customers pay when they want. Rather it is about making use of available metrics to better analyse and understand payment patterns and trends, and then align your systems and process with those of your customers.

Such behaviour led approach can save money through reduced credit management costs and can also improve cash received. It focuses time and effort into debtor analysis and makes credit management a scalable function rather than a fixed cost. By removing the ‘noise’ associated with unmatched credits it should be possible to bring an end to the administrative activity that detracts from the real job: to manage credit limits and collect overdue cash. So the first step is to put in place straightforward metrics that help to better understand the issues.

When the finance organisation is understood as a series of processes, it is possible to monitor the costs of each transaction. This helps to appreciate the value that each of these processes adds, and whether there is a more efficient approach.

The vast majority of these finance processes can now be simply and effectively automated, providing a stable and reliable set of metrics, regardless of the day of the month.  One of the most effective means of automation is though intelligent document scanning and workflow processing. System automation can halve the cost of cash allocation per invoice and deliver greater levels of control than previously available. Unlike the traditional manual process which is almost impossible to performance manage; an automated process constantly updates the number of receipts remaining unallocated and their status.

This helps to provide a greater accuracy to allocation of funds and in many cases, more than 98% of receipts are allocated to invoice first time. This then enables credit control personnel to focus on a very small number of queries, ensuring that these are dealt with quickly and efficiently, vastly improving the cash position of a company.

Download the whitepaper:
Accounts Recievable: Making Month End Just Another Day

Rimilia’s Alloc8 is named finalist for best innovation in the Midlands Excellence Awards 2012 Rimilia’s Alloc8 is named finalist for best innovation in the Midlands Excellence Awards 2012

Rimilia’s Alloc8 is named finalist for best innovation in the Midlands Excellence Awards 2012

• Shortlisting celebrates Rimilia’s product excellence and market success
• Automates accounts receivable, can improve quality of allocation to 100%

Payment automation specialist Rimilia is a shortlisted finalist in the 2011/2012 Midlands Excellence Awards in the specialist category of innovation for its Alloc8 product.

Competing against hundreds of organisations, Rimilia was required to demonstrate how it exceeded normal expectations to become an ‘exemplar of excellence’. In the past year Rimilia’s innovation has improved the accounts receivable operations of numerous organisations, including Veolia Environmental Services, which deployed Alloc8 to automatically match processing for all payments.

Brian Morgan, Head of UK Credit, Veolia Environmental Services, said: “The whole project was a success from start to finish, and the benefits of Alloc8 started from day one.” Alloc8 saved Veolia more than 75% on costs associated with matching, and the quality of allocation was improved to 100% ensuring all transactions were allocated to invoice level on the company’s Sales Ledger every day.

Alloc8, enables a company’s financial department to more easily cope with monthly peaks in cash receipts by accurately and automatically allocating money, removing the stress and cost of chasing payments by month end. With an in built learning capability, Alloc8 automates and streamlines the accounts receivable process, continually improving and delivering real ongoing benefits to the organisation; reducing costs, speeding up processes and increasing control.

Chris McGibbon, Managing Director, Rimilia, said: “We seek to continually improve Alloc8 through formal analysis and review, helping ensure the company innovates with a product which leads the market in accounts receivable automation. The recognition of this by Midland’s Excellence is tremendous, and is a reflection of the fantastic support our customers continue to give us.”

Rimilia’s submission for Alloc8 has undergone one of the toughest, most rigorous assessments of organisational performance there is, including independent verification and a site visit by Midland’s Excellence team of experts.

The winner of the innovation award will be announced at the Midlands Excellence Awards Ceremony 2011/12 on March 8^th.

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• Join my Webinar and see how you can reduce your cash allocation costs by two thirds! (readsoft.wordpress.com)
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