Account Receivables Management   Assisting companies to improve  the working capital cycle  January 2010 Ensuring that exc...
Context Setting – What is Accounts Receivables Management  Faster collections = lower WC = higher ROCE = higher profit = h...
Why is Accounts Receivables Management Important <ul><li>AR is among the top 3 tangible assets of a company – Growth Capit...
Reasons for Account Receivables Delays The “Real” Cost of Account Receivables Delays Customer not happy / complaints Custo...
Challenges in Account Receivables Management Processes No credit policies / Customer credit analysis Services / Product re...
Do it Yourself - Best Practices to Improve the Working Capital Cycle Robust “credit extension ” processes   Elimination of...
Accys - Account Receivables Management Services Coherent and carefully monitored follow-up on every account, business inte...
The Accys Delivery Model  AR Health check AR Snapshot Ongoing Monitoring High level proactive assessment of key customer a...
The Accys Delivery Model (contd.) Understand client requirements Accys AR team – to improve client AR process at reduced A...
Accys - Account Receivables Outsourcing Process - Overview Payment not received within 10 days Lock in invoice Payment dat...
Invoice Delivery & Acceptance Process - Detailed Check the invoice  value Check for O/S of  previous invoices Validate the...
Benefits of AR Management Best Practices Accys <ul><li>Increased Transactional Efficiency </li></ul><ul><li>Reduced transa...
Accys Advantage over Internal Departments Area Organization <ul><li>Cost of Accys AR Management offsets the benefits : </l...
The Accys Success Story
Partnering with Accys  Gaurav Gupta CEO + 91 98111 63422 [email_address] Preeti Sachan Manager +91 99710 10275 [email_addr...
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Accys Ar Pack

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Accys Ar Pack

  1. 1. Account Receivables Management Assisting companies to improve the working capital cycle January 2010 Ensuring that excellent AR Management leads to Superior Organizational Performance Accys CONSULTING - OUTSOURCING
  2. 2. Context Setting – What is Accounts Receivables Management Faster collections = lower WC = higher ROCE = higher profit = higher valuation <ul><li>The AR processes of a company would involve: </li></ul><ul><li>Customer risk assessment and credit extension processes </li></ul><ul><li>Sales documentation - accurate, complete & timely invoicing </li></ul><ul><li>Focused follow up with the customers OR branch OR sales (account) managers to realize sales proceeds within the due dates </li></ul><ul><li>Correct application of receipts, ledger a/c & TDS reconciliations </li></ul>Sales growth, Cash generation, Risk tolerance, Profitability, Market share Bad debts, charge-offs, and collection operating costs Managing Conflict Revenue Cash Debtors
  3. 3. Why is Accounts Receivables Management Important <ul><li>AR is among the top 3 tangible assets of a company – Growth Capital </li></ul><ul><li>Rarely does the management focus on AR – unless serious issue develops </li></ul><ul><li>Cost of AR is very high (administrative, bad debt, interest) – 19 % of revenue </li></ul>Value to a company due to focused Account Receivables Management Budgeting Faster dispute Resolution Reduced bad debts Enhanced customer service Increased cash flow Higher credit sales & margins Lower administrative costs Decreased short payments Reduced bad debts & provisions
  4. 4. Reasons for Account Receivables Delays The “Real” Cost of Account Receivables Delays Customer not happy / complaints Customer facing fund issues Customers purposely delaying 30 % Inefficiency in the customers business 70 % Inefficient processes in own business <ul><li>Risk Assessment </li></ul><ul><li>Order Management </li></ul><ul><li>Invoicing </li></ul><ul><li>Collection follow up </li></ul><ul><li>A/c Reconciliations </li></ul><ul><li>Fund Application </li></ul><ul><li>A/c Management </li></ul>% of customers Reasons for delay in AR
  5. 5. Challenges in Account Receivables Management Processes No credit policies / Customer credit analysis Services / Product rendered Invoice generation & dispatch Sales realizations process Follow up only after due date Delays in AR issue resolutions Customer Ageing grows <ul><li>Reduced cash flows </li></ul><ul><li>Increased bad debts </li></ul><ul><li>Low efficiency </li></ul><ul><li>Reduced cash forecasting </li></ul><ul><li>Customer risk </li></ul>Team focus on core KRA’s Lack of process & AR skills Conflicting relationships Lack of a sustained follow up process Lack of information sharing, business intelligence & process flow Application of funds, TDS details Delay in generation, inaccurate / incomplete Customer billing details Only ageing – no details No customer a/c reconciliations No quick closure of issues Reliance on stretched a/c team Undisciplined credit extension Confirmation of sale Sale documentation
  6. 6. Do it Yourself - Best Practices to Improve the Working Capital Cycle Robust “credit extension ” processes Elimination of payment barriers One point contact for reliable information Systematic collection procedures Timely and accurate cash application Support from the top management Regular communications with client Clearly stated staff responsibilities Valid risk assessment parameters
  7. 7. Accys - Account Receivables Management Services Coherent and carefully monitored follow-up on every account, business intelligence to understand root cause and resolution “” Do ARM better” ARM services enable a corporate to improve the quality of revenue, maintain and grow the competitive advantage and provide better decision making ability to the management The Accys ARM Value Proposition Reduce hidden costs of AR – while increasing cash turnover, reducing bad debts – at a lower AR transaction cost “ Do ARM at lower cost” System-driven processes, procedures & policies applied uniformly across your entire credit portfolio with a dedicated & trained team “ Do ARM faster” Pre invoicing activities Post invoicing activities Order Processing Quotation Pricing Administration Credit Control Policies & Standards Invoicing Customer Risk Assessment Customer Reconciliations Special Collection Process Short payments processing Dispute Management Collection Strategy Application of funds Collection Process
  8. 8. The Accys Delivery Model AR Health check AR Snapshot Ongoing Monitoring High level proactive assessment of key customer accounts Undertaken at a single point in time Allows process owners a better understanding of AR processes and controls Reactive approach when a specific problem has been encountered Detailed validation for identifying issues, their root cause and remediation's Improve specific areas of concern to process owners, better customer management Regular assessment of credit and collection management processes. Combines health checks with snapshots Ongoing assessment of established processes can help improve management confidence in account receivables management and cash flow cycles Assists management to understand changing landscape of customer risks, enable visibility into cash position and manage and reduce AR transaction cost Situation Approach Potential Benefits
  9. 9. The Accys Delivery Model (contd.) Understand client requirements Accys AR team – to improve client AR process at reduced AR cost to the client Go – Live stage Accys - Account Manager Client Project Management team Accys Project team List of clients Contact details of client / customers Run a pilot project / one time at client site Monitoring and Managing Proposal stage <ul><li>Independently assess the AR processes and requirements </li></ul><ul><li>Understand in depth the clients requirements, the delivery timelines, the staffing & infrastructure requirements, process costs, escalation processes, SLA etc </li></ul><ul><li>Participate in AR review meetings and rigorously monitor implementation of action points. </li></ul><ul><li>Escalate key concerns/ issues on a real time basis. </li></ul><ul><li>Continuously identify improvement avenues and develop road map for AR improvement </li></ul><ul><li>Ensure compliance with defined policies, processes, budgets and payment schedules. </li></ul>Benchmark Key client stakeholders Accys Project team 3-4 NCR based clients
  10. 10. Accys - Account Receivables Outsourcing Process - Overview Payment not received within 10 days Lock in invoice Payment date Within 48 hrs of dispatch Payment Received Payment not received Re-issue invoice Invoice approved by client Invoice data Re-checked Invoice correction mechanism Issues with invoice On call with client Immediate effect Yes NO Confirmation recd Regular follow ups Payment due As per communication Payment received Payment not received Within 2 working days Escalation with Account Manager Follow up Approval requested Dispute resolution Mechanism 13 th of the month Within 15 days Management Escalation Process Escalation Results Amount still unpaid till 21st No action till 30 th Payment received Payment received Confirmation of invoice Thank you/ confirmation call After 72 hrs of confirmation call
  11. 11. Invoice Delivery & Acceptance Process - Detailed Check the invoice value Check for O/S of previous invoices Validate the invoice being raised correctly Validate amount & Billing address Validate other client Specifications (if any) CALLING PROCESS Check POD details & status Invoice Confirmation Invoice Acceptance Expected invoice payment date EXISTING CLIENTS NEW CLIENTS D No No Check with team for reasons for delay/issues confirmed Confirm issues INVOICE REPOSITORY Follow up & confirmation process Invoice re - generation Invoice Status update INVOICE DISPATCH THANK YOU CALL DISPUTE RESOLUTION MECHANISM Update the payment receivable date Dispute resolved Unresolved Expected amount receivable date Not paid Amount paid within due date Yes Customer Database Complete Status 1 2 3 Within 48 hrs of dispatch After 72 hrs of confirmation #2 After 48 hrs of confirmation #1 4 5 Status update Through E - mails & calls Check the invoice value Check for O/S of previous invoices Validate the invoice being raised correctly Validate amount & Billing address Validate other client Specifications (if any) CALLING PROCESS Check POD details & status Invoice Confirmation Invoice Acceptance Expected invoice payment date EXISTING CLIENTS NEW CLIENTS D No No Check with team for reasons for delay/issues confirmed Confirm issues INVOICE REPOSITORY Follow up & confirmation process Invoice re - generation Invoice Status update INVOICE DISPATCH THANK YOU CALL DISPUTE RESOLUTION MECHANISM Update the payment receivable date Dispute resolved Unresolved Expected amount receivable date Not paid Amount paid within due date Yes Customer Database Complete Status 1 2 3 Within 48 hrs of dispatch After 72 hrs of confirmation #2 After 48 hrs of confirmation #1 4 5 Status update Through E - mails & calls
  12. 12. Benefits of AR Management Best Practices Accys <ul><li>Increased Transactional Efficiency </li></ul><ul><li>Reduced transaction costs </li></ul><ul><li>Reduced staff dependency </li></ul><ul><li>Improved customer relationships </li></ul><ul><li>Faster dispute resolutions </li></ul><ul><li>Improved Customer to Cash Cycle </li></ul><ul><li>Accelerated collections </li></ul><ul><li>Managed customer risk </li></ul><ul><li>Reduction in DSO </li></ul><ul><li>Reduction in bad debts / provisions </li></ul><ul><li>Improved Financial Management </li></ul><ul><li>Visibility on cash flow & treasury </li></ul><ul><li>Reconciled customer accounts - audit </li></ul><ul><li>Customer risk assessment & exposure </li></ul><ul><li>Enhanced working capital </li></ul><ul><li>Reduced interest costs </li></ul>CFO TREASURY CASH MANAGEMENT
  13. 13. Accys Advantage over Internal Departments Area Organization <ul><li>Cost of Accys AR Management offsets the benefits : </li></ul><ul><li>Reduced bad debt expense </li></ul><ul><li>Lower deductions </li></ul><ul><li>Reduced interest cost on working capital </li></ul><ul><li>Improved customer service </li></ul>Personal Continuous Relationship Management Ad- hoc basis For every client Account Reconciliations Variable Defined process Dispute Resolutions Undefined Result oriented AR Efficiency Random Defined AR Process & Reporting Need based Core focus Focus Reactive Proactive AR follow up Fixed and increasing Variable and lower Cost of AR Internal departments Accys
  14. 14. The Accys Success Story
  15. 15. Partnering with Accys Gaurav Gupta CEO + 91 98111 63422 [email_address] Preeti Sachan Manager +91 99710 10275 [email_address] Accys Management Services Private Limited 418, 4th Floor, The Galleria Towers DLF, Phase IV Gurgaon, Haryana India - 122009 Thank you

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