Transforming Financial Back-office - PowerPoint PPT Presentation

1 / 42
About This Presentation

Transforming Financial Back-office


Credit Information - Integrate with third party credit data bureaus like D&B, Experian, etc to leverage the latest credit information ... – PowerPoint PPT presentation

Number of Views:36
Avg rating:3.0/5.0
Slides: 43
Provided by: loub


Transcript and Presenter's Notes

Title: Transforming Financial Back-office

Transforming Financial Back-office Processes to
Optimize Working Capital Veena Gundavelli Presiden
t CEO Emagia Corporation
Emagia Introduction
Leading Provider of Working Capital Management
Software Solutions to Global 2000 companies
Leadership in Working Capital Management Solutions
Emagia Customers Include
  • In Business Over 8 years
  • Unlocked over 10.3 Billion in Working
  • Have Delivered Over 150 Million in Bottom
    Line Savings
  • Have Managed Over 30 Billion in Receivables
  • Are Used By Over 2000 Global Users
  • Process Over 100 Million Transactions Per
  • Have Been Deployed Across Over 53 Countries
  • Have Been Implemented in Over 35 Different
    Languages and in Over 30 Different Currencies

  • Top Priorities for Todays CFO
  • Working Capital A Key Competitive Advantage
  • Transformation of Financial Back Office 3
    Step Approach
  • Case Studies Highly Effective Finance

Transformation of Role of Finance
Top 3 Areas of Finance Focus
  1. Performance Managing enterprise-wide
    performance to maximize share holder value
  2. Growth Partnering with the enterprise to
    support new growth strategies
  3. Risk Strengthening process controls and
    streamlining processes to reduce risk and meet
    fiduciary/regulatory compliance standards

Top 2 Challenges in Finance Departments
  1. Structural Complexity Multiple Disconnected
    Operations, Lack of Standardized Processes, Lack
    of Collaboration within and outside of Finance
  2. Fragmented Information Disconnected Systems,
    Lack of Information Insight, Lack of Consolidated
    Information in Timely Order, Lack of Integrated
    or Global View of Processes, Lack of Single
    version of truth

Roadmap to an Agile Finance Organization
Components of the Working Capital Cycle
Unlock Working Capital From Your Financial
  • Cash is the life blood of any business
  • Cash-to-Cash Cycle is the largest consumer/source
    of cash
  • Cash Flow from Operations Free measurement of
    health of any business
  • Receivables One of the top 3 largest assets of
    any business
  • Free Cash Flow has stronger influence on share
    price compared to Earnings

Impact of Better Working Capital Management Case
  • Situation
  • Hi-tech Company with over 500M in revenues
  • Serious failures in receivables management
  • High DSO (gt 110 days), Bad debt write-offs
  • Depressed Stock Price
  • Speculations that either the new products are not
    working or sales reported were not true
  • Solution
  • Streamlined entire order-to-cash processes,
    staff, management focus and adopted specialized
  • Working Capital Management focus right from Board
    and C-level executives

Impact of Better Working Capital Management Case
  • Result
  • Reduced DSO to high 50s
  • Increased cash by equivalent of four month of
  • Reduced bad debt expense by millions of dollars
  • Increased stock price dramatically

Source Parson Consulting
Cash Tied in Financial Operations
Working capital remains top of mind for many
CFOs. Indeed, continued working capital
improvement or even a controlled, temporary
reduction can ultimately drive growth.
2005 Working Capital Survey
162 Bn Opportunity toDrive Cash Flow
Source McKinsey Co. Studyof Top 24 U.S.
Working Capital Improvements In Receivables,
Payables and Cash FlowForecasting Can Be A
Hidden Reservoir To Drive Financial Excellence
Close the Short-term Liquidity Gap
Short-term Liquidity Gap
  • Greater Need to Borrow
  • Higher Interest Expense
  • Higher Debt-to Equity Ratio
  • Lower Return on Invested Capital

Accelerate Cash InflowsImprove Cash Receipts
Cash Inflows
Cash Outflows
Cash Flow Visibility, Control and Predictability
Ensures Better WorkingCapital Management and
Cash Conversion Cycles
Barriers to Working Capital Excellence
Working Capital Process Typical Challenges Impact on Financial Performance
Accounts Receivable Disconnected A/R Systems and Processes Ineffective Credit Risk Extension Slow Customer-to-Cash Cycle Manual Processes Unattended Disputes Higher DSO Increased Bad Debt Expense Slower Quote-to-Cash Cycle Higher Operational Expenses Higher Revenue Risk
Accounts Payable Disconnected A/P Systems and Processes Inefficient Payment Decisions Inefficient Procure-to-Pay Cycle Manual Processes Sub-optimal DPO Increased Administrative Expenses Lost Discount Savings
Cash Flow Forecasting Limited Consolidated Visibility Lack of Structured Real-time Data Discrepancies in Forecast Models Lack of Structured Forecasting Process Inaccurate Short-term Forecasts Sub-optimal Investment Strategies Reduced Efficiencies Lowered Returns from Cash Management
Transforming the Enterprise to Drive Sustainable
Decision Support
WorkingCapital Optimization
Best PracticesBased Standardization
Cash FlowProcess Management
Cash Flow Transactions Management
From Working Capital Vision
Transforming the Enterprise to Drive Sustainable
Effectively Driving Profitable Growth
Balancing Risk And Performance
Managing Complexity
Level 1 Transformation Transactions Management
  • Simplification and Integration of Enterprise-Wide
    Information Management
  • Reduce structural and data complexity
  • Reduce number of disparate Finance Platforms
  • Reduce number of ERP instances
  • Reduce number of point transaction solutions
  • Rationalize common platforms for consolidation
    and reporting across receivables, payables,
  • Deploy solutions that address multi-currency,
    multi-language, multi-level organizational and
    customer hierarchies

Transactions Management Reality Out There
Level 1 Transformation Transactions Management
  • Advantages
  • Single version of truth
  • Reduces number of reconciliations
  • Reduces time and effort needed to gather
  • Faster access to information for decision making

Working Capital Platform
Level 2 Transformation Process Management
  • Standardize Process Management Management with
  • Streamline and document internal processes for
    local and globally operations order-to-cash,
    procure-to-pay, treasury
  • Implement enterprise-wide standard policies and
    rules on credit, collections, deductions,
    payables, billing, dispute handling
  • Formulate workflow and collaboration processes
    across finance, sales, order-entry, customer
    support, purchasing and other departments
  • Automate business processes with common
    technology, platforms
  • Adopt functional best practices in the industry

Level 2 Transformation Process Management
  • Advantages
  • Improves productivity and efficiency
  • Reduces operational costs and increases
  • Enhances compliance and reduces process control
  • Mitigates and manages corporate risk
  • Improves Free Cash Flow

Level 2 Transformation Quote-To-Cash Process
  • Standardize Credit Scoring Decision Management
    with Technology
  • Credit Policies - Formulate and establish credit
    extension policies across multiple customers and
    operating units
  • Credit Scoring - Implement a standardized and
    flexible credit scoring approach which takes into
    account historical payment patterns, external
    credit data and input from field sales and credit
  • Credit Information - Integrate with third party
    credit data bureaus like DB, Experian, etc to
    leverage the latest credit information
  • Credit Reviews - Establish a credit review
    process using workflow technology to focus credit
    analysts on high risk accounts
  • Portfolio Analysis - Measure and monitor credit
    exposures across global customer base

Level 2 Transformation Quote-To-Cash Process
  • Standardize Collections Management with
  • Strategy Driven - Enable global collections to
    be carried out in a proactive manner based on
    customer segments, regions, etc
  • Intelligent Collections - Direct the collections
    team to focus on high impact accounts
  • Automation - Focus the team on high value added
    activities such as customer management by
    automating repetitive and manual tasks
  • Collaboration - Align closely with sales and
    leverage relationships for faster collections.
    Connect to enterprise systems within the company
    and outside with trading partners
  • Portfolio Management - Embed best practices for
    collections management across multiple divisions
    and business units

Level 2 Transformation Quote-To-Cash Process
  • Standardize Billing and Accounts Receivable with
  • Accuracy - Enable accuracy and timeliness of
    invoice documentation sent to customers
  • Timeliness - Ensure that invoicing is properly
    carried out after order fulfillment processes
  • Consolidation - Consolidate invoice information
    sent to customers to reduce redundant business
  • Collaboration - Offer customers the ability to
    view all supporting documents and transactions
    for the invoice
  • Self-Service - Offer customer self service
    functions to strengthen customer relationships
    and facilitate speedier dispute resolution and

Level 2 Transformation Quote-To-Cash Process
  • Standardize Dispute Resolution and
    DeductionsManagement with Technology
  • Predict - Proactively manage customer disputes by
    identifying at-risk accounts and short payments
    from customers
  • Reason Codes - Tailor specific resolution
    approaches across the enterprise based on the
    type of dispute or deduction
  • Resolution Workflows - Leverage a collaborative
    approach to dispute resolution and deductions
    management using workflow technology
  • Escalations - Establish a sense of urgency with
    clear resolution processes and escalation
  • Root Cause Analysis - Drive business process
    improvements across the quote-to-cash cycle using
    root cause analysis and process monitoring

Level 2 Transformation Quote-To-Cash Process
  • Standardize Cash Application with Technology
  • Consistency - Establish a consistent approach to
    processing remittances and applying cash
  • Automation - Facilitate faster processing of high
    volume payments with reduced need for research
    and reconciliation
  • Reconciliation - Reconcile payments with
    erroneous reference information invoice
    numbers, purchase order numbers, etc..
  • Corrective - Enable cash application personnel
    to identify and process deductions earlier in the
    quote-to-cash process

Level 3 Transformation Optimization
  • Optimization using Insight and Analysis
  • Performance Dash Boards, KPIs, Scorecards that
    are deployed enterprise-wide
  • Executive attention from CFO, VP Finance,
    Controller, AR/AP managers, Director/VP of credit
    collections, credit managers, sales executive
    managements teams and field sales
  • Strategic goal setting and proactive management
    of performance across the board
  • Analysis of historical performance and changing
    business practices to eliminate bottlenecks
  • What-if analysis for predicting future states and
    setting strategies for growth

Level 3 Transformation Optimization
  • Advantages
  • Enable fact-based decision making with better
    integration of information
  • Better insight into overall operations
  • Strategic planning and risk management
  • Executive attention on timely basis
  • Improved cash forecasting and free cash flow
  • Drives optimal levels of performance across the
    entire enterprise

The ideal solution for optimizing global Finance
and treasury functions is one that combines
business intelligence with collaborative process
automation to increase world-wide efficiencies
- John Van Decker, Senior VP and Principal
Research Fellow
Technologies commonly used
  • ERP systems (Oracle, SAP, PeopleSoft, JDEdwards,
    Geac) do not cover working capital process
    management 67 percent of respondents of survey
    were not satisfied
  • Home grown systems are expensive and time
  • Adoption of specialized working capital
    management solutions increasing in trend -56
    percent of survey respondents indicated plans to
    implement specialized solutions
  • Performance management dash boards rank in top 3
    projects from IT

Example of Specialized Working Capital Solution
Cash FlowPerformanceManagement

Cash FlowProcessAutomation

Specialized Technology Platform
Working CapitalOptimization
Case In Point Solectron Corporation
  • 12 Billion Global Electronics Contract
  • A/R Shared Services spans across 3 continents
    and across multiple disparate systems
  • No single system for global A/R and cash flow
  • No automation of country-specific A/R
  • No decision support tools for cash flow
    management and cash forecasting

Solectron Mastering Global Cash Flow
Emagia Working Capital Management Solution
North America
Solectron Sustainable Value
ROI Component Benefits ROI Value
Interest Expense Savings from Improved Cash Flow Acceleration of collections Reduction of DSO by 15 days and compressed Cash-to-Cash cycle Improved cash forecasting accuracy 14 Million
Direct Cost Reductions Consolidation of direct costs Wider support with fewer resources Reduce SGA and overhead costs 1 Million
Common Business Processes Shared Services Enabler Streamline invoice-to-cash System used by collectors at over 45 sites on three continents Estimated 20 Million
Solectron Sustainable Value
We now have a powerful working capital platform
that allows us to make better cash flow
decisions, empower our Shared Services teams and
maintain focus on maximizing profitability. -
Perry Hayes, Solectron VP Treasurer
Case Study Mastering Global Cash Flow
  • Syngenta - 3 Billion leading global manufacturer
    of Agricultural Chemicals spun off from Astra
    Zeneca and Novartis
  • Over 15,000 U.S. customers including agents,
    distributors, retailers and end users
  • Agricultural cycle drives seasonality and
    unpredictability in Syngentas cash forecast
  • Manual customer-to-cash processes adversely
    impacted Syngentas cash conversion efficiency

Key Success Factor Cash Flow Visibility
  • Syngenta deals with multiple types of customer
    roles who can all sell directly to end consumers
  • Distributors can also beagents in some cases
  • Collections may be done by Syngenta or agent or
  • Customers have multiple levels
  • Global AR visibility requires aggregating
    portfolio and exposure across different customer
    roles at different levels

Point ofCollection
End Consumer
Point ofCollection
Goods FlowPayment Flow
Improved Cash Forecasting Accuracy
Mean AbsolutePercentage Error 5- 55 before
Emagia Go Live
Mean AbsolutePercentage Error 2- 20 after
Improved Cash Flow
ROI Component Benefits ROI Value
1 Interest Expense Savings from Improved Cash Flow Acceleration of collections Reduction of DSO by 4.5 days Average Deductions balance decreased from 2.9 mil to 1.1mil- Improved cash forecasting by up to 30 in some cases 3 Mil
2 Direct Cost reductions - Redeployment of excess resources- Reduce overhead costs 100K
Also attained Well Controlled rating for
internal SOX audit
Solectron Sustainable Value
Working Capital Platform has given us the
consistency and control needed in our cash flow
processes. As a result, we have seen a decrease
in DSO, and a dramatic improvement in cash
forecasting accuracy. - Bert Cuiston, Head of
Credit and Receivables Management, Syngenta
Selected Customer Success Stories
Customer Industry Business Challenges Results
12 Bn Electronics Contract Manufacturer Needed global A/R visibility across Shared Shared Services Centers High financing costs 14 Mil Annual Interest Savings 1 Mil Direct Expense Savings Infrastructure for Shared Services
3 Bn Agricultural Chemicals Manufacturer No A/R visibility into customer network and wide swings in cash forecasting accuracy 3 Mil Annual Savings Reduced DSO by 5 days Improved Cash Forecasting Accuracy by up to 35
2 Bn Staffing Services Company Six Sigma initiative focused on credit collections Little A/R automation 750K reduction in bad debt 150K reduction in direct expenses Six Sigma based automation
500 Mil Enterprise Software Company High DSO with no collections or dispute resolution tools 25 reduction in DSO within 6 months
800 Mil Consumer Packaged Goods Company Chargebacks deductions negatively impacting revenue by over 17M Reduced deductions backlog by 75 12 Mil in bottom line savings
For more information, please contact Veena
Gundavelli President CEO Emagia
Corporation 408.492.
Write a Comment
User Comments (0)