improving your net cash cycle
Post on 02-Dec-2014
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Improving your net cash cycleAutomation from purchase request to customer payment
Mark MacLeod, Computershare
Computershare
Business process outsourcingMulti‐channel communications
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Operational statisticsCountries 17
Group Revenue US$1.6 billion
Group IT R&D investment $US66 million
Outbound documents 520 million
Inbound documents 120 million
Documents archived 440 million
Australia Revenue (AU$)
33% Registry maintenance
$128m
17% Corporate actions
$65m
12% IT & other
$46m
38% Communication services
$144m
Our solution
Software‐as‐a‐service (cloud) – exceptions management, content management
Your organisation
Order‐to‐cash Procure‐to‐pay
Your customers
Your suppliers
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Invoice generation
and delivery
Supply chain messaging
Remittance processing
Invoice Processing
Our partners
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Banking Solution
Net cash cycle
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CaseWorking capital management•Reduce days in Net Cash Cycle without negatively affecting business activities•Days sales outstanding•Supply chain messaging•Payments and allocations
Computershare
Sales revenue $1,600m
Cost capital 12%
Opportunity cost per DSO $526,000
Mid‐tier client
Sales revenue $250m
Cost capital 15%
Opportunity cost per DSO $102,000
Cost efficiencies
CaseCosts•Labour costs•FTE payroll and on‐costs•Infrastructure costs•Hard costs
Efficiencies•Eliminate paper•Process automation•Cap‐ex to Op‐ex
Volume (invoices processed) 1,000,000
Number of FTEs 50
Labour costs
Cost per employee $35,000
On costs at 20% $7,000
Infrastructure costs $7,000
Total labour cost $2,450,000
Hard costs
Rental ‐ scanners $6,300
OCR Software and infrastructure $52,000
Floor space ‐ $425/m2 $15,300
Physical storage, secure shredding $17,200
Total hard costs $90,800
Total costs $2,540,800
Current cost per invoice $2.54
Outsource fee per invoice $1.00
Remaining FTEs (20%) $0.49
Saving $1.05
Total $1,050,800
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Accounts receivable Case: B2B client
2005 2009
21
821
71
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Accounts receivableSame day allocation and value through our banking partners
3 way matching and validation
Remittance invoice line item
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Cheque MICR line + valueEFT, CC, BPAY data
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Debtor Ledger Open Items
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Email/Fax Remittance
Phone/Counter
National locked box
EFT/CC/BPAY
Journal fileAllocated payments
Exception processing portal
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Accounts payableCase B2B clients
Most clients have some degree of automation...
Efficient
› Paper AP processing (25%) ‐ $0.79 (labour only)
› EDI AP processing (75%) ‐ $0.33 (labour, exceptions only)
In‐efficient
› Paper AP processing (100%) ‐ $10.40 (labour only)
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Accounts payable Integration of workflow, B2B messaging and paper processing
ComputershareYarra Falls452 Johnston StreetAbbotsford VIC 3067
Payment Details
Please send Payments to:
Computershare LimitedAccounts ReceivablesGPO Box 2975EEMelbourne VIC 3000
ABN 2234 3333 3333
452 Road Runner Way SEQUOIA ARIZONA 43067
Phone +61 (0)3 9415 5000Fax +61 (0)3 9473 2500
Invoice Date Invoice Numbers Amount Paid
29/04/20081/05/2008
00010383439498474300
$100.00$82.77
Sub Total $182.77
GST $18.28
Invoice Total $201.05
Message
Direct Deposit:
Account Name Computershare LimitedBSB 999 764Account Number 9999 99999
Bank XYZ Bank 2002 Collins St Melbourne Vic 3000
Remittance
Invoice
Email/Fax Invoice
National locked box
Approve payment
Exception workflow‐ Refer/approval flow‐ Raise PO
Matching/validation‐ PO master file‐ Vendor master file‐ HR master file‐ Proof of Delivery
B2B messages/EDI
Purchase order
Proof of delivery‐ GPS/RFID‐ Barcodes‐ EDI
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Invoice and bill deliveryMaximise customer communications
Trans‐promo (bill messaging)
› Pro‐actively target slow pay / no pay customers
› Cross/up sell
Variable colour output
› Variable colour at equivalent cost to base black laser
› No base stock management, same day SLAs
Multi‐channel delivery
› Electronic bill payment and presentment (eBills)
In‐house office‐mail aggregation
› Low volumes via mail house to maximise postal discounts
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Invoice and bill deliveryMaximise customer communications
Trigger X‐sell
Trigger Up‐sell
Purchase behaviour
CRM + Transactional data
Paper challenge
On‐premise solutions institutionalise paper within your organisation
Core strategy to reduce paper volumes and increase STP
Economies of scale institutionalise volume
On‐premise capability requires volume to amortise costs
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Computershare’s experience
2007
Volume: 14 million• 11 million paper• 3 million electronic
Transaction cost: $1.20 unit• 57% fixed / 43% variable costs
Investments• IT and infrastructure• Scanning equipment• OCR / ICR software• Workflow
Paper
Electronic
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Computershare’s experience
2010
Volume: 14 million• 4 million paper• 10 million electronic
Transaction cost doubled to $2.40• Fixed costs amortised over less volume• Under‐utilisation
Investments• EDI • Enterprise content management• Auto‐learning – capture, classification, indexing
Paper
Electronic
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Paper challenge
Outsource solutions provide the flexibility to purchase only what you need today and then add (remove) scale overtime as necessary
Core strategy to reduce paper volumes and increase STP
Outsource paper‐intensive processes actively reduces paper volumes
Changes low value cap‐ex equation to op‐ex aligned with business benefit
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Considerations
Improving your net cash cycle
› Talk to your bank regarding payment solutions
› OCR + real time look‐ups greatly reduces exceptions
› Leading solutions integrate paper and B2B gateways
› Maximise the communication potential of our bills
› Focus on eliminating paper but avoid on‐premise cap‐ex
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Thank you
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