A/R leaders have to grow the team size to deal with the large volume of receivables
Consumer goods A/R departments generate a high volume of invoices and receive deductions in almost the same proportion. To minimize lag, A/R executives rely on employing too many people to look after receivables management, resulting in many FTEs spending unproductive hours on a task as repetitive as
cash application and backup document aggregation. This way, most CPG A/R departments are not utilizing their resources judiciously, causing an increase in their operational expenditure.
One of our largest CPG customers in Canada was able to reallocate almost 75% of their resources to more strategic tasks by leveraging automation for just their cash application processes.
Despite electronic alternatives, most CPG processes are paper-based
Consumer goods companies with paper-based processes spend a ton of money on printing, packing, and mailing invoices. While these costs look trivial on the surface,
HighRadius had received confirmation from one of our leading CPG customers, an apparel and footwear brand, that they spent $250,000 a year on paper before they started leveraging our cloud solutions.
Top-notch customer experience brings additional costs
While traditionally, the A/R departments have not always been customer-centric, there has been a shift in recent years. A/R executives have accepted spending more time on training their customer-facing analysts to enable a better experience.
From enabling 24/7 support for the customers to employing more people on the team to resolve customer issues faster, the receivables department has been incurring additional costs to prioritize customer satisfaction.
Integration with external groups such as banks and credit agencies has its costs
The A/R department seldom operates independently. In addition to many internal stakeholders, they work with outside groups to access data and perform an action. The most common external stakeholders are banks that charge a
lockbox fee and a keying-in fee to capture and process remittances on behalf of the CPG company. Additionally, credit agencies charge a significant amount to provide access to data required for making credit decisions. These two sums amount to a considerable percentage of the A/R department’s operational costs, which they can eliminate with ease.
HighRadius has worked with multiple suppliers to eliminate their integration costs by 100%.
HighRadius works with 9 out of 10 of the World’s largest CPG companies. Our customers have reported significant improvement in their A/R efficiency and process effectiveness with cloud solutions deployment. Danone (a leading global food & beverage company) achieved a 75% reduction in operating costs with our cash application solution. If you are looking to make a similar impact within your organization, adopt an A/R automation solution. To know more, get on a call with our expert today.
Learn more about Danone's cost optimization story with HighRadius.