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Global-ready Cash Application

Highradius

Speakers

Martin Doran

Process Manager Accounts Receivable, Bayer Business Services

Transcript

Martin Doran:

So just full disclosure, I come from an I.T. background and we’re not usually famous for our presentations. So bear with me here. And, if you have any questions go ahead, please interrupt, make it as interactive as possible because this is really where the value is and where the fun is. So as you can hear, I’m Irish. I worked with Bayer for 11 years. I started in Barcelona in Spain. And for many of those years, I worked on rolling out FSCM – Financial Supply Chain Management and moved to this position one year ago.

Martin Doran:

So I’m quite new and young with the HighRadius projects, and this was my first big project within this role as a GPO Process Manager. And today’s presentation is the Global Cash Apps – roll-out for 12 countries, actually in scope. So in scope, it is 64 countries, but we have twelve countries that are live so far. And what today’s presentation is – to give a bit of background, a bit of feeling. How was the experience so far? What were the challenges? What did we learn and what did we take away? What are we going to do next? So a bit of a background Bayer, I guess you all know aspirin. It’s a life science company, for a better life and innovative products in health care and also nutrition. And one of the big things is, it’s a large company. It’s got 150 years of experience and even though it sounds like a great thing, it is a double-edged sword. Because when you’re large, when you have the experience, when you have good people in I.T. and in-house consulting, you get the tendency to say, “Okay, we can solve challenges by ourselves.” You rely on your I.T and you get the tendency to say, “We can do it.” This is what happened. I worked in FSCM. For many years, we customized, we implemented ourselves, our solutions in-house, and we changed EBS. For example, we have a Bayer EBS. Good results with great results. We have FSCM totally changed from what the standard is. So you kind of blinkered yourself to what are the possibilities out there. So even though you have success, you have the growth the size, it’s a double-edged sword.

Martin Doran:

So 64 countries are in scope at the start of our story, we had a new O2C head who came in and he said, “Okay, don’t blinker yourselves, look at the markets, look at the technology out there and find what can work for us.” So look at those technologies on the markets and look at how they can be used within the O2C end to end. So not just looking at A/R, not just looking at building cash or order to build or credit management. See how you can improve the process end to end. So this was our start of the journey. This is the mandate, the message of where we should go. So we have the destination. And now we need to find a traveling companion. And this is where we are looking at the markets and like any journey, if you’re going in a car, you want to find somebody who is going to the same destination, who wants the same things, hopefully, likes the same music, talks a bit but not too much to make sure that the journey together is a great one. So collaboration.

Martin Doran:

We went to the market, and we said okay, we have four key criteria to choose the best partner. I am starting with Digital Data and Aggregation. So like I said we have our own solutions already – EBS, we’ve tailored it, we’ve made many, many changes. We got good automation already before we began. But we’re not fully using the information that we have. If you have automation and you’re not using the information that the customer is giving you that makes work down the line – end to end, it doesn’t make sense.

Martin Doran:

Cash application within A/R was good, but you have more leg work for Dispute Management for collections management to the bill. You want to have an end to end use of technology to use the information that you have. So part of that was looking for a partner that could use OCR, that could read that payment advice, that could translate that into information that we can use, not just in A/R for Cash App but then further down the line for Collections, disputes. Another part was it’s not a perfect world. We know that we don’t get payment advice in all cases. So we wanted to have an automatic way to apply those caring rules. So in the worst-case scenario, we would still have good automation, we’re reducing the workload for our accountants for our associates and I keep on saying cash allocation but I guess over here it’s cash application. Correct? But it’s the same way with the buyer and Bayer.

Martin Doran:

So, automatic rules, clearing steps. We wanted a way to apply those in the case if we have anything, and still reduce our workload. So here, we wanted somebody who had a good product, had experience and not just in one part of the world, but across the globe, because we wanted a solution that would make sense for us. 64 countries in scope and we didn’t want to invent the wheel from the beginning. So even though it sounds like one of the smallest key criteria, it’s one of the largest and we have our Cash App. Our shared service center for the cash app is in Manila. And like you all to know it’s hard to retain talent. You spend the time and effort in getting your accountants up, you know up-skilling them, experience and everything else and then because in Manila you have so many shared service centers then they just jump to the next one. And in yesterday’s keynote, one image stuck with me with the workers. So you have two different scenarios. You have a worker in a warehouse who’s carrying 60 kg of cement on the back, and then you have the other worker where you’re giving them the tools, you’re using technology and you’re giving them a forklift to do the same work. So taking away the legwork and I think this is part of the usability. This is part of the value-added there.

Martin Doran:

If we have an accountant who’s coming into the work every day, going through 60-10 whatever pages of payment advice and just keying in that – that is mind-numbing. Yeah, there are better ways to do this work. And automation is not just about automation as a whole. You want to make their working life better to allow them to up-skill, to allow them to have, you know, more fulfilling roles. And to keep the talent. So that’s one usability. So we thought this is key. And from this, it’s like Tinder, then you have your perfect match which was HighRadius. So then we started the journey together. And part of that is- okay, what are we going to visit? So A/R in Bayer, it’s Cash Application. So incoming payments open receivables, we’ve split it. And that’s there’s a GPO – Global Process Owner for A/R but there’s also a GPO for credits, collections, disputes and the GPO for an Order to Build. And those three GPOs are key because it’s not just a Cash App, in this case, you want a solution that will add value across the board. So when I’m talking about like A/R processes that are touched here then it’s management advice. So how you’re dealing with the receipt of the payment. So the creation of the bank statements, the lockbox file, the deposit of the checks for example and then the second part of that is how to deal with the payment advice. So it’s not just the payment advice. Receipt of the remittance forwarding it to OCR. So reading the contents of it and turning it into usable data for ourselves and to have it ready for the cash app. And subsequent processes so when we’re talking about data here, we’re also adding data to follow-up processes, dispute management, and collections. Any questions so far?

Martin Doran:

And Cash Allocation. So this is cash application, and this is where we’re taking the incoming payment and we’re applying it to the open receivables. Now in a perfect world, it’s all automatic so you have payment advice coming in and you’re applying the payments based on that information or if you don’t have payment advice, you’re using a clearing rule. So a definition of logic that is saying “Okay, I’m applying this cash in a logical way and across the board.” So we had clear rules before Highradius but these were always applied manually. And when their money was manually applied, you have a lot of leeways. So people understand different rules in different ways. And what we wanted is an automatic way to use these clearing steps, these clearing rules. And then the second part of that is the exception handling. So when you don’t have enough information so either the payment advice is not clear or the clearing rules are not allowing you to apply for payments, then it’s falling into exception handling and this is where your accountant is going in adding the value and saying “Okay, I need to make a manual decision.”

Martin Doran:

That can either be the full match where everything is perfect, you’re clearing the receivable fully, or we’re getting a payment that is an underpayment of some sort. And here’s where the great value-added is that’s based on the payment advice based on the OCR, you’re able to understand in most cases what was the reason for the underpayment. And you have reason codes that you will apply and add value there because up until now, every underpayment was just an underpayment and dispute management has to start from scratch regardless of what information we received. You’ve seen the slides a dozen times, I’m sure it’s the same for nearly every implementation, but information from our side. So we already had payment information being used within our EBS for good automation. What we really wanted to open up and make full use is the bottom part of this. Remittance Advice. Because that’s where you have a lot of gold, a lot of information that you can use further down the line. And on our sides, because we’re a buyer, it’s a change of culture. Because until now we’ve worked with our internal I.T., with internal consultants. And this meant we’re spoilt. So at the start of a project, we’re able to go in and say, “Okay, I want X Y Z” and change our minds two weeks later. And this happens a lot, and if you learn these bad habits, it takes a while to get out of them.

Martin Doran:

So by working with HighRadius, I’m sure they had a lot of patience with us because of our demands, our scope was constantly changing. So it’s one of the big lessons learned for us. But for that reason, we said okay, we would keep flexible in the information that we’re taking from our ERP systems and sending it to HighRadius and we would keep flexible with the information from HighRadius to our ERP system. So that meant that we’re using the hex file to send information from the ERP to Highradius and the BAI lockbox file in order to send it from Highradius to the back-end system.
So now we’ve started the journey, we know where we want to go and this is what we want to have at the end of it. This is value-added. So like I said automatic handling of payment advice, the OCR is the gold that we want to mine from the information that we’re getting. And also it’s not mentioned in any of the presentations, but I don’t know about you, but on our side, we were added to the payment advice manually and in many cases more so.

Martin Doran:

In the US and Canada, it was one of the requirements and this is again minded-numbing. If you’re an accountant and you have to attach this every single time, it’s not job satisfaction. So this is added automatically to either the SAP or to the dispute case and it’s a huge bonus of efforts that got saved. In the best-case scenario, we’re using our payment advice. And this reduces, it increases customer satisfaction because the customer is giving you information, they’ve given you instructions. Use it. Otherwise, you would have this disconnect of what we’re applying and what they expect on their accounts. And in the case that you don’t have anything automatic here in the rules. And the other big added bonus here that I think is not mentioned enough is when you’re reducing the legwork for down the line processes. So in our Dispute Management, in our Collections Management reason codes we’re applying it to the residuals from the beginning. Whoever is working on those dispute cases, they have the payment advice added and they have the reason code that’s telling them the reason for those underpayments. That’s a huge step forward already. Even if you don’t have an increase in automation, you have a reduction in workload. Whoever is working on that dispute already has the basis and they don’t have to start investigating from scratch. And that’s basically what I’m saying here. Also the flexibility of new scenarios. That’s my way of disguising that we were not sure of what we needed at the very beginning of the project and we asked for it to go along.

Martin Doran:

So progress so far – we have 12 countries. Like any journey has potholes. And if you come from Ireland, you know that most of the road has potholes. So we had a pilot project. And we picked a small country. I wasn’t part of the project yet for this Australian pilot, but we picked a small country with like a mixture of challenges and a mixture of payment advice usage and everything else. To test our design, we went live with it and the results were good, but nothing spectacular, nothing that we were saying, “Okay, we’re delighted with this we can roll it out.” And this is like when you hit a bad pothole, at least in Ireland, you pull over and you check if the car is banjaxed. Yeah, that’s exactly what we did here. We organized a workshop in Manila, so close to our Cash App. And we said “Okay, we will look at what we have so far, what we’re missing and we will learn a lesson and we will involve our cash app people.” So the people using the tool- they’re the closest to the process. They’re the ones who know if they’re doing three clicks when the reality is they could do two or if something was missing. If there’s something that we needed and we didn’t discuss it so far. So that’s what happened to the second part of the review workshop and we came together with the global process owner for the design questions.

Martin Doran:

Our I.T. guys, Highradius and a lot of collaboration, a lot of patience on their side with us, but we got a lot to do. We had a lot of improvement points and I think this was the making of a successful project. That’s exactly where you say “Okay, we started with a bit of a hiccup, but we’ve learned from it and we’re going to turn around.” And from that, we had the to-dos implemented and ready for our wave 1 countries. So when I say wave 1 countries, we took a bunch of countries with similar customer behavior. And we said, “Okay, we will use these countries as our guinea pigs to see if we’re going to get great results.” Now with our new design, with our new implementation and with those countries, we did deep dives, and this is very important because when we’re talking about cash app or Highradius or any of these implementations, what you need is global standards.

Martin Doran:

In Bayer, we had a cleanup of our processes and I moved to the global standards in 2015. So it was a project. And this is necessary because unless you have a global standard, it’s very hard to get that automation and it’s very hard to give cash app a design that you can roll out across the world. So our shared service centers, they want to please the locals. So even though you have a design global standard you would be amazed how many things fall back in there. So this was part of the deep dive with the wave one and wave two countries, great results so far. Yeah, I have to say we have very good automation across some countries. We’ve never fallen in automation, but it’s a better quality of automation. You’re applying based on the payment advice and you have a reduction of the workload with the disputes and with everything else. The major finding and the major lesson from this whole project as we needed to have somebody responsible for continuous improvements and GPO were based on labor cues in our center of expertise. So they’re the ones responsible for our I.T. Solutions. They are based in Barcelona and our cash app is based in Manila. And I don’t know about you, but sometimes it’s hard to get feedback from Manila. You don’t know who they want to please and they don’t like to make a noise. So what we decided was that we needed somebody local there who will be the center of expertise for Highradius. We picked somebody from the projects. So they knew the I.T. They knew the whole design, and they were going to the operations and saying, “How are you using it? Is it good? Is it making your life easier? Is there something that we can improve? Or is there a gap?”

And from this, I think I’m surprised that Highradius, they even invited me because we are a demanding customer. We had so many requests coming from this. So we have a long list of incremental improvements. So you have good automation at go live, but you can always push it further and this is where it came from, this was the value-added. And so from that, you had improvements in the UI. You had improvements on the recommendation type was one addition of certain fields to two other tabs. And it added to the user experience and the performance overall. So these were the countries for the wave one. Wave two, as I said, if you want details of the specifics, I can give this afterward, but so far positive results with our automation part of the success were the composition of the team. So like I said the GPO, the bear project lead to collect all the points and Highradius project team, we split between our project team on Highradius side and our success manager because we said success manager for us was somebody who would work with our CEO, we would get those incremental improvements into the system into the tool and in between the go-lives.

Martin Doran:

So let’s not just wait for the next wave. If we can get this next week, let’s look for it. And so the center of expertise is adding quite a lot of value there. Challenges along the way, these are the little boom, the potholes – there’s quite a few of them. So lockbox limitation is one we see that it’s not. It’s not an ending we only have a certain amount of information we can fit in there. Stagger payments, pool payments. These are customer-specific topics for certain countries. Customer identification, I think we’ve already resolved this challenge with our recommendations tab with our additions to the UI, change management was a huge topic so we didn’t expect that it would be such a big topic. But if you have credit managers receiving payment advice for years, they hold the keys to the castle. They’re not giving that up easily. And also with our operations, they know how they’ve worked for the last few years.

Martin Doran:

Again yesterday, we made the point of automation or A.I. or technology can be a bit scary as well. So for them, they were working in SAP as well. So they were using Highradius and then going into SAP afterward to check everything. So it was like – it’s for them, it’s comforting to continue to work as they knew. But for us, it was invisible for a long time. We had good results, we were good automation. It only came up through our COE. Or somebody who will drive or check. That experience is unnecessary and deductions – so deductions could be put down as a challenge because you have a lot of information you’ve not been using for years. You need to turn that into something that you can use. So we started by looking at what information we’re receiving from our customers and doing a mapping to good reason codes. But if you have a customer continuously telling you that you have damaged goods or returned goods, dispute cases are created with the reason code for that. Now it’s information that orders to book can use to say, “Okay, look at this logistics company, maybe something is going wrong there.” So when I say that it’s not just a cash app. There’s value-added, along the O2C process. And yesterday also one of the great presentations was SILO thinking.

Until now, people knew about this information, but they weren’t able to use it. The Highradius is I.T. enabled to say, “Okay, you can break down those SILOS.” I think I’m going a bit over time so I’ll speed up a bit. Lockbox limitation. We demand a lot of things, we put a lot of information in there and at some point, we’re going to hit a limit. So we need to be selective about what information we’re sending. Also the lockbox status. This is one of the things that we analysts were going in, they were checking the lockbox status after they made the postings to HighRadius. So imagine they had HighRadius open, everything is going great and then going into SAP. So even if you have a great automation check what the users are doing to change management, it’s normal. Staggered payments – this was a customer behavior we’ve seen in certain countries where a customer is splitting their payments into different parts and for all, it’s not yet resolved, but we’re getting there and it’s kind of limit to our automation because the first chunk of payments will be correctly applied and then the rest will either be identified as duplicates or left on account. Pool payments – this is where we need to work with our credit managers to identify those hierarchies where you might have one customer paying for multiple other customers and really to get that automation you need to have a good mapping. And also in certain cases banks were allowing a feature that all customers that are making payments on their online banking. Then this information, the payments were sent to us as a chunk and the information of what was part of that payment was on a portal. So this was one of the other things that were hindering our automation. Customer identifications are recommendations to solve this. But it was really before we had the recommendations. It just took a lot of effort. And then deductions like I said, OCR, it’s a whole, it’s a goldmine. You start off with good automation.

Martin Doran:

It’s not the end of the story. You need to work on turning that information received into something that can be used within the various O2C areas. And then in continuous improvements. So if you take one thing from these presentations today it’s Highradius needs to have somebody in your Cash App in your operations that are looking at how to push those results further. And that’s the major learning from my side. And also GPOs, if you don’t already have a cleanup of the activities then make sure you do this before you start with the project. Otherwise, you’re going to be running into a wall every time. So the value-added I have to say that’s across the board, increase of automation, maybe in some cases, less but value added is a reduction of the workload, an increase of job satisfaction for our analysts and adding value not just to A/R but to our collections as dispute management and order to bill as well.

And I’ve jumped again. So this was what the lessons learned were basically about. So the 12 countries are live. We have 64 in total. So we have a big bang approach for next year. For me, that’s one of the points that I want to look into. And yeah any questions?

Derek Halliburton:

What were the biggest challenges for you? You talked a lot about, maybe the cleanup efforts. Can you talk a little more about what the cleanup efforts were and what you’d recommend ahead of going live with this?

Martin Doran:

So for example when I went to countries like France or Italy, you have the credit managers and they have this relationship with the customers. So they prized this relationship because, in the end, this is their value-added. So when you go to them and you say that suddenly you’re going to redirect your payment advice to a central location, you have a bit of resistance. And it’s understandable as well. So you need to go to the countries and explain the process in detail to show that you’re not. It’s not negative, it’s not aggressive. You’re adding value to the company as a whole. And their job is to increase their value and concentrate on more value-added. So not just looking at payment advice and sending instructions to accountants, how to apply for payments. You want the credit manager to do credit manager work. So that was one of the big challenges.

The second part is like I said processes, we had standardized processes way back in 2015. But you would be amazed at how many times deviations fall back, and then creep back in. I don’t tend to go with a project. Sometimes this is not always visible because you have a lot of activities in the shirts that have a center, that goes under the radar. So this is one of the lessons learned to do a deep dive at least in the first countries until you know exactly what to look for and then go from there. Any other questions?

Martin Doran: So just full disclosure, I come from an I.T. background and we're not usually famous for our presentations. So bear with me here. And, if you have any questions go ahead, please interrupt, make it as interactive as possible because this is really where the value is and where the fun is. So as you can hear, I'm Irish. I worked with Bayer for 11 years. I started in Barcelona in Spain. And for many of those years, I worked on rolling out FSCM - Financial Supply Chain Management and moved to this position one year ago. Martin Doran: So I'm quite new and young with the HighRadius projects, and this was my first big project within this role as a GPO Process Manager. And today's presentation is the Global Cash Apps - roll-out for 12 countries, actually in scope. So in scope, it is 64 countries, but we have twelve countries that are live so far. And what today's presentation is - to give a bit of background, a bit of feeling. How was the experience so far? What were the challenges? What did we learn and what did we take away? What are we going to…

What you'll learn

12 countries – 3 continents – one solution. Implementing global-ready cash application at such a mammoth scale was riddled with complexities such as addressing localized customer behavior, incorporating complex payment types and processing inconsistent payment advice. Learn from Martin how pharma-giant, Bayer championed global cash allocation roll-out by flexible remittance processing, extracting value out of vast amounts of customer data, and prioritizing value creation over process automation.

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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.