Cash Application in LatAm

Highradius

Speakers

Mariana Costa

O2C Coordinator, Syngenta

Transcript

Mariana Costa:

Hello everyone. So I’m here to talk a little bit about the cash application in Latin America. I am working in Montevideo in Syngenta and we have a financial center operation there. I am responsible for Brazil but I’m still working on some projects in Latin America and we are trying to automatize and optimize some processes in our financial center. So here I would talk a little bit about payment methods that we have in Brazil that are so good and trying to work on automatizing the cash application process. I’ll talk about some processes and pain points that we have with our customers, our business and key technology requirements in the future of FinTech in Brazil. And feel free if you want to add any comments or make questions.

So mainly in Brazil, we have some types of payments that we receive. It still receives check payments, though it’s not so common in Brazil anymore. We are not using it a lot. We’re just like an exception for some customers. We’re used to receiving cash through credit transfers or Boletos. Boleto is something that’s just having a resume, it’s like an invoice with bar code. And I’ll try to explain later a little bit more. But it’s good because we can link the payment through the invoice, that we have from our customers and apply automatically. And credit transfer, when we receive a credit transfer from the customer, if he puts the code to identify the payment will be easier for us. But we can’t identify which invoice you need to apply, just to identify the customer.

Mariana Costa:

So, some of them are our types of receivables in Brazil. The best one is Boleto, and we can then find the customer, the invoice and apply it automatically. But we are still working on our customers in our business to use a little bit more. And the other ones we have, it’s easier to identify but not the invoice that we need to apply. So this is a Boleto, for those who don’t know what it is. It is like an invoice with a bar-code but is not an invoice like a text document. It’s just a type of payment that we have in Brazil and I know that’s just an existing resume. That’s why I am trying to explain a little bit more but this bar-code helps us identify the invoice the customers are paying. So that’s why this is so efficient for us. But it requires that type of customization in the system so that we can receive the file from the bank and then process SAP and then we identify automatically.

So this is insight inside the system that we need to configure to receive payments through Boletos. So normally Syngenta sends a file to the bank if the whole invoice that you have billed for our customer, the bank processes and decides to register all these invoices and then generates this Boleto. All these Boletos have been registered in every bank. I can send it to two or three banks differently, but they always have registered, so it’s something they’ve linked. So even when we can track, they stop those so we don’t lose this process. And then the customer sends me this file back. Once the customer has paid, I receive the bank file every day with all the payments that I received the day before. And then I process this file in SAP and then I can identify. In the case of Boleto when you identify the payment to be applied automatically, we don’t have any problem looking for which invoice is related to this credit. And for the credit transfer deposit, we need to check with the customer where we need to apply. So it seems a little bit complicated but in Brazil, it’s very common. And considering the benefits that we have received through Boleto, it’s something that’s really worth us having.

Mariana Costa:

So it’s really good to receive through Boleto, but we have an issue. In the past we used to ask the bank to send the Boleto to the customer’s place, we needed to explain our latter about money. By money, we meant, how we are trying to do everything digitally. So, in the beginning, I have a team that needs to send this Boleto to the customer, and I need a big team to do that because in Syngenta Brazil we have almost 4000 customers. So I need a lot of people. So it wasn’t easy for me. Now we have our customer portal, which we are trying to offer for our self-service to the customer, and once the customer reaches this portal, checks his invoicing and downloads this Boleto and makes the payment the next day, he can check and see if the invoices are already applied and if he had made the payments.

So for us, this process is much better. But in our business, we have a problem. A lot of customers don’t like to use Boleto. And, they don’t like it because they have their systems. It’s better and it’s easier for them to program this credit transfer in their bank. Then they go to the portal to print the Boleto. And then reach their assistants, putting this Boleto in their system and process the payment through Boleto. But for us, the process is much better in Boleto. So this is our challenge to make them understand the whole benefit, to have this payment through Boleto and to use more of this portal, so I can release operational work from my team. And another point is that not just the biggest core companies and their biggest customers, have to put this Boleto inside the system, but they also have small farmers. These small farmers don’t trust the Internet. They don’t trust technology and they don’t like it and some of them don’t know how to send an email. So what we are doing, is putting a lot of effort inside Syngenta and I know that other companies are doing the same to trying to optimize technology, digitalize things or automatize the process and etc.

But it’s very difficult to reach customer meetings and business because they’re very simple, they live in small cities, they don’t have access to all this technology and they don’t like it. So it’s our challenge to tell them the benefits of having this, to teach them how to use it and, then we can improve our process towards the customers. Therefore offering a self-service portal to the customer is not easy, if the customers are not engaged to use it. So we have the tool, we have the process, we have the technology but sometimes they don’t want to use it. Now what they do, they do credit transfer, and if they don’t put their code in this credit transfer, it is very difficult to identify which payment is this and from whom. And also, even if they put the code they used to pay huge amounts related to a lot of invoices or cash-in-advance for other cash-in-advance. And we need to check with them all this information before we split the credit to them to do the application, so it doesn’t seem like I use this process when I talk about cash application but depending on the business, depending on the country, is not as easy to use as you think.

Mariana Costa:

Some of these customers go to the bank and use Internet mail to do this payment. Some customers, believe it or not, take out the cash and go to the bank in person to make this payment. And once I visit the customer and they say “No I like to go to the bank with my cash in my hands and face on agenda.” And I say, “Oh God, don’t do that. It’s very dangerous. You’re gonna be robbed. Please don’t do that.” So some of them like to do that. We used to say in Brazil that some customers like to have their money behind their beds or above their beds or below their beds, sorry, it’s an expression that they use because they don’t like banks and because banks charge it. We have a lot of turn in fees of the bank and they say the bank is stealing their money. So it’s a different culture. If you are talking about big companies who are sharing the capital in the big cities, it’s easier to talk to them about technology and how to do it. But it’s farmers who are very difficult, it’s another culture and they don’t trust the bank. They don’t trust technology.

Mariana Costa:

So that’s it. Maybe the customer goes to the bank with the cash in their hands and makes the payments. And, it seems like a nightmare for us because we need to check small customers, maybe they don’t have a lot of invoices, but we also need to check with them, and then they don’t like to use mail, so we have to call the customer or have to visit the customer. And now consider that I have the cash application team, and we are not available to visit the customer. So, we have to call. But imagine if I have to call 4000 customers. So, now how many people would I need in my team? it’s impossible. Therefore, what we are trying to do is to customize a little bit, and check which customers would use the portal, which customers would go to the bank and faithfully, in which customers want to do anything. So we tried to customize and tried to improve a little bit. I used to say that if you have a 100 percent manual process, reaching 30 percent of automation is something, reaching 50 is much better and 70 is excellent. But it is very difficult to automatize a hundred percent of the customers. Since they have different cultures, there is a different perspective and it depends on their country. Their process is totally different. For example in Paraguay, 95 percent of the customers pay through checks, which in Brazil is less than 5 percent and once. But it is not that the customers pay to have the checks and go to the bank and make the deposit. But they give this check to the salesperson who stays the whole week visiting all their customers. This person goes to their offices to see them as often and give the check to someone in the treasury who makes the deposit.

Imagine how long it’s going take to receive this money and send it to an account. And then we have to reconstitute it in our account and apply the cash. So it seems simple but it’s not. In 2015 we tried to make a campaign with a customer and product line. Offered them a discount to trust banking transfer, so it’d be easier for us to identify the payment and do faster cash applications if they don’t accept that. And last week my boss was saying, “Let’s try this portal in Paraguay”, and I said they don’t like to go to the bank. So we are trying to make it more creative. We need to be more creative with Paraguay. But we are trying to reach other solutions for all the countries also, even Brazil, we think that Boleto is the best option. In Argentina, we are trying to reach a little bit more for credit cards but credit cards are very expensive in Argentina. So most of the customers don’t like to use it. So we have around 15 percent of the customer using credit cards.

Mariana Costa:

But we are trying to have this solution, trying to reach our customers. You won’t be a hundred percent in any country but if you will be 30 percent in Argentina, 15 percent in Paraguay, and 70 percent in Brazil it’s fine. We are improving. So it’s what we’re looking for. It’s about more technology to connect. In Syngenta, we try to identify the profile of our customers, try to separate them and offer some solutions that will be good for them. And we can improve our process a little bit more. I know that there are a lot of differences from one country to another, but if you look at the big picture, basically the processes are the same. We have the same invoices we need the customers to make the payment, and maybe you need to apply it all to make as much as we can. In some cases, we can do it and improve a little bit. I attended a project in Mexico, Chile, and Poland. In Poland, we reached 70 percent of automation, in Mexico 30 percent and Chile was zero. And because of this difference between processing and naming in each country, we are trying to offer and find the solution for all countries. But in some countries like Paraguay, for example, I don’t believe that they use this portal. So we need something that I think is a good solution for our cash application because we cannot apply the cash until the customers give their okay.

But we’re still not just looking for new technologies. We’re still reviewing our processes inside the company to make sure that maybe there’s something internal that we can work on and change policy, change processes and try to adapt a little bit, according to our customer’s profile or our country profile. So basically we are looking to offer more of our self-service for the customer. And trying to personalize it a little bit.

As I tell you, in the cash application process in Syngenta, considering that we have a lot of types of payments and mainly in Brazil, we have a high risk of credit so we have a normal invoice, we have cash-in-advance, we have barter operations and we also have financial solutions. We have around five types of financial solutions to deal with the customer to reduce the credit to risking resume.

Mariana Costa:

So how can we connect all this information, because I have part of the credit and collections team in Brazil, and also the sales team are there and they also have a part of the financial team? You know the why, and we have to contact the customer, and the sales team, credit and collections team, financial solutions team, barter team to do the whole cash application and then we can apply with it when everyone is aligned with the information. So it seems there’s base cooperation but it’s not basically negative business. It’s a little bit complex. So what is the point of the portal for us? The point of the portal is, in this portal I can concentrate all the information that the customer has sent to me. The other teams could check this information and put this information there, connecting the payments with credit notes. We’ve seen invoice in aligned information and the cash application and then the customer likes to take this payment history from the store. So now my team needs to send you, this information but if they check on the portal it’s better to release the operational work from my team and we need to guarantee that their whole information is ok for the customer and for our internal team also.

So we are looking, for prospecting with higher ranges just in that we are looking for this spot that connects the whole information and we can reduce a lot of e-mails, a lot of telephones and phone calls all to connect the information and make sure that everything’s fine in our accounts receivables.

Mariana Costa:

So this is part of the idea of the portal that we want to have. Let this information be available for the customer and basically they like to consult his account status, they like to check the payment history, they like to download the invoice, the Boleto is there and also the invoices. And we want to release for them the credit and the invoice they are paying and put all the information here. If here he is paying less of the total amount of invoice, he needs to inform why he is doing that. Because I need to know if they will return some progress or we will receive some rebate program. So we need to collect all the information and make sure that everything is fine. And we can also work in order to know why attending the whole Americas guarantees that the business is going well. And the teams are doing the work properly.

In the future of Fintech in Brazil, I researched that basically everyone is on mobile phones or cell phones all the time. So we have a lot of patience in our cell phones which do a lot of things. Either bank applications, or other suppliers companies customers. So we truly believe that in the future we won’t have all this sort of thing or maybe you’re going to have, but we still have an application in our cell phones that can connect all the information and all the technology.

So, If we look, you’re going to see that people check their cell phones before sleeping, and even when they get up, when they are in traffic and, when they are at home, in public transportation, when they are at work, when they are driving, still, while driving it’s not safe. But considering the traffic of some parts, for example, you can check your phone many times because I’ve gotten stuck in the traffic for a long time, and while watching TV. And I’m an example of that. I am always watching Netflix when I notice I am on the phone and still watching Netflix. So I think it’s very normal. We are addicted to our phones now and I have more information I have and I need it on my phone. If I lost it, I would be dead. I think that’s it. So anyone has any questions, any comments and you want to share any funny story related to that.

Moderator:

I have the mic if you need it. I too am addicted to my phone by the way. Ok.

Audience 1:

You mentioned Argentina paying 15 percent with cards. What are the other payment that you have in Argentina that are frequent?

Mariana Costa:

Now the ball is in banking transfer also. What we have in Argentina is a complication because of the currency. We have contracts and all are in business and channel so we always have a difference to check with the customer before applying the cash. So we think that it takes much more time in cash applications than in Brazil. Sorry.

Audience 1:

So you’re saying that Poland has automated 7 percent and Mexico with 30. Yeah. How did you get there?

Mariana Costa:

We had the project of cash application, a pilot project and worked last year with that and then we were trying in countries like Mexico, Chile, and Poland. But basically, our business in Latin America is more complex then than in other regions. It is the same process, what do you call that, automatize just 7 percent in Poland and 30 percent in Mexico and zero in Chile. And I can say that it is not just the fault of the two. In the case of Chile, we need to receive much more information in our bank file. So we are trying to contact the bank and trying to see if they can customize this file for us so we can use this to improve the process. In the case of Mexico and it happens in Brazil also, because our business is called common, with customer pain delay of five days, seven days and sometimes 15 days in dealing.

And our policy doesn’t and allows us to apply this cash without charging tourists for them. But it is normally in Agri-business. So we used to be more flexible with the customer. So most of the time, we apply and we file charging tourists for them but it’s something that we need to study in our policy and see if we have a lot of exceptions, this is not an exception anymore. Maybe we need to change our policy and our process and try to make it easier but we cannot put this rule in the system until we change the policy. So it’s something that we are still analyzing. And in Poland the customer used to pay invoice by invoice, they don’t pay with delay, if they’re paying the delay he will pay the charge so interested. So it’s something that we are still studying, country by country and tried to understand the process, the difference in our customer profile to adapt a little bit.

Moderator:

Look to the next slide. To some food for thought here you have some questions. You know how do you encourage the banked population to pay electronically. Anybody in the crowd has a thought on that one.

Mariana Costa:

False for the bank.

Daniel:

That’s a good one. What we have seen is that we’re hoping mobile wallets feel double. So that’s for all that we see flows from bank populations. We’re seeing that it is too expensive to move cash. We get clients to pay electronically, so some mobile wallets like Michael Powell in left town, we have others in Central America like legal money. So we’re trying to close the loop to make sure populations that are localized can have a mobile wallet so that small motions would accept that. And by them accepting small motion, they would buy consumer goods using those funds as well.

Mariana Costa:

So my kind of guy was like a PayPal Mercado Pago.

Daniel:

It’s like PayPal, you know they do more stuff. Say they are the finance so I am of Mercado Pago which is a marketplace, the largest in Lat-Am. So especially in Argentina, they have a lot of penetration so that maybe is a way of looking at the Argentina collections. Yeah, if the American public might be away in there, they’re expanding into other markets as well. And I’m Daniel from Citibank. So I’m not from the Bible by the way.

Mariana Costa:

Okay now in Argentina I have a huge amount of market also. So we don’t receive their act from the customer, we see from our trading. So anyway it was different at training you have to topline the customer and its technical contracts and then trial, but it’s fine we can find another solution. As I said they don’t need to be a hundred percent.

Moderator:

You know one of the notions is there is the single biggest challenge that our teams across Brazil face in dealing with credit transfer payments.

Mariana Costa:

Okay. It’s something that I’ve already said here. When do the credit transfer from the bank they use their code to identify season and they will use it? We cannot then find, we just receive payment without knowing which customer base it is from and then in the business group we have a huge amount. So sometimes I receive one million dollars. I’ve done five million dollars so I need to know who is paying that. And normally in Brazil, we also used to receive 50 percent of our payments in the last two days of the month. This is very critical for us because we need to apply before the month-end and do the report.

Moderator:

So it’s getting close.

Mariana Costa:

Yes. We don’t have enough time to do everything.

Mariana Costa: Hello everyone. So I'm here to talk a little bit about the cash application in Latin America. I am working in Montevideo in Syngenta and we have a financial center operation there. I am responsible for Brazil but I'm still working on some projects in Latin America and we are trying to automatize and optimize some processes in our financial center. So here I would talk a little bit about payment methods that we have in Brazil that are so good and trying to work on automatizing the cash application process. I'll talk about some processes and pain points that we have with our customers, our business and key technology requirements in the future of FinTech in Brazil. And feel free if you want to add any comments or make questions. So mainly in Brazil, we have some types of payments that we receive. It still receives check payments, though it's not so common in Brazil anymore. We are not using it a lot. We’re just like an exception for some customers. We’re used to receiving cash through credit transfers or Boletos. Boleto is something that's just having a resume, it's like an invoice with bar code. And…

What you'll learn

Thinking about expanding to Latin America? Great, you are in for a treat. But wait, do you know about boletos or strange customer behaviors? Join this session as Mariana explains the ABCs of boletos and shares her hands-on experience with customers and how technology could address their concerns.

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HighRadius Cash Application Software enables the end-to-end automation of the cash application process that covers major benefits such as AI-enabled data capture for remittances, auto-linking of payments with open invoices, cost-cutting on lockbox fees and easy compatibility with any system due to its ERP-agnostic Saas infrastructure. Apart from the major benefits that it has, there are some key features which can not be missed out, some of them are Email Remittance capture, Discounts and Deductions Handling, Check Remittance Capture, Web Remittance Capture, Invoice Matching, and RDC & Mobile Payments.