electronic receivables: using intelligent automation to

Electronic Receivables:

Using Intelligent Automation to Optimize

Payment Processing

Ellen FarishSr. Operations Manager-Shared

Financial Services

Southwire

[email protected]

Shankar BellamSolution Engineering,

Pre-Sales & Business Development

HighRadius Corporation

[email protected]

Carolyn EtressDirector of Accounts Receivable at

EBSCO Information Services

and GOBI Library Solutions from EBSCO

[email protected]

AGENDA

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Cash Application Today

Cash Application @ Southwire

Cash Application @ EBSCO

About HighRadius

5 Questions

Cash Application

Today

• Challenges

• Evolution of Technology

• RPA & AI in Cash Application

Payment Processing Challenges

Multiple Remittance

Formats

Incomplete/ Missing

Remittance Data

Decoupled payments-

remittances for e-payments

High lockbox dependency

for check payments

Labor-intensive & error-

prone processTime-consuming

Evolution of TechnologyWhat Next?

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ERPs like SAP, Oracle, IBM

and others to handle A/R

Centralization

Spreadsheets and excel

sheets are used for A/R

Digitization

Robotic Process

Automation(RPA) used to

automate processes

Automation

5

All A/R processes are

completely paper-dependent

Paper-based A/R

How technology has played a role in A/R over the years

RPA vs AI

Simply mimics the users actions as trained Simulates human thought process based on patterns

Can only process data fed in a structured forms Processes data fed in a structured, semi-structured or even

unstructured form

Strictly A Rules Based Automation Behaviour Evolves With Experience and Exposure to Data

Cannot work through multiple variables

Needs regular human intervention Can function without regular human intervention

Delivers results in the most complex scenarios

RPA AI

Robotic Process

Automation Artificial Intelligence

Technology in Cash ApplicationKey sub-processes

Payments with missing or

incomplete remittance data

Remittance data capture

Invoice matching

Exception handling


Remittance Data CaptureRPA & AI in Cash Application



Invoice matching

Exception handling

RPA AI

• Capture data from a

pre-determined specific format

• Uses ‘rope-and-zone’ or

‘keyword search’ methods

• Results in an error for new

remittance format, requires

reprogramming

Consistent human efforts

required to train and

re-train system

• Segregates pages with no

remittance information

• Scans through the document for

specific data such as invoice

numbers, gross or net values

• Identifies patterns, hones its

ability and improves

performance/accuracy

Delivers straight-through

cash application

automation



Missing/ Incomplete Remittance15% of all payments are received without any remittance

Invoice matching

Exception handling

RPA AI

• Needs distinct rules to deal with

each scenario for each

customer

• Depends on heuristics based

approach for defining rules

• Requires creating and

maintaining thousands of rule-

scenarios for each and every

customer

Typically, A/R teams deploy

rules for 5-10 customers,

while manually handling all

other exceptions

• Suggests the group of invoices,

most likely to be associated

with the payment based on past

payment behavior

• Uses Random Forest algorithms

Saves time and reduces the

no. of exceptions – without

customer specific rules


Invoice Matching

Invoice MatchingComplexities due to unformatted or non-invoice reference no. and truncated reference numbers

Exception handling

RPA AI

• Uses rules to match payment

data with invoice information

such as invoice numbers

• Results in increase in

complexity and costs in case of

non-invoice/ unformatted

reference numbers

Huge database of rules

required to automate

invoice matching for every

scenario

• Creates multiple correlations to

identify the invoices best-suited

to reconcile with the payment

• If unsure, flags prediction for

review by an analyst

• Feeds analyst decision back into

the system for future predictions

Scalable automated

invoice matching




Exception Handling

Exception Handling

RPA AI

• Based of level of advancement,

pulls together all information

from different sources in a

single screen

• Analyst needs to review each

exception

Analysts still manually

resolve all exceptions

• Forecasts the appropriate action

for repetitive exceptions with a

high degree of probability

System identifies analysts’

exception handling pattern

and automates resolution




Invoice matching

Success StoriesExecutive Summary

• Auto-capture data

captured from lockbox

files and auto-process

electronic payments

• Auto-capture remittance

data from different sources

in various formats and

auto-populated in the

system

• Scalable to keep cash

application current by the

week and close weekly

cash reconciliation

• Auto-Correspondence

option for missing

remittances, Automated

deduction coding

Dollar Payments Posted Per Day$21M

Man Hours Saved Per Month40

• Better visibility into customer payment behavior

• Improved reporting with customer level insights

90% Hit Rate

100,000+ Payments Annually

Cash Application

@ Southwire

Cash Application @ Southwire

60,000 invoice

generated per month

5,000 payments

processed per month

Bank of Montreal

(4 Lockboxes)

Northern Trust Bank

(2 Lockboxes)6 lockboxes

E-Remittance

SourcesEmail

• AAFES• Home Depot• Walmart• Lowes• Anixter

EDI 820 File Web Portals

Key Challenges

Multiple bank lockboxes –high bank key-in fees

Complicated Buyer Group

business scenario

Multiple currencies – USD & CAD

100% manual electronic

payment reconciliation

Manual aggregation of e-remittance

from multiple sources

No support for identification and

coding of short payments

High lockbox dependency – fees, manual remittance aggregation, 100% manual e-payment processing

Highlight

Multiple bank lockboxes –high bank key-in fees

Multiple currencies – USD & CAD

100% manual electronic

payment reconciliation

Manual aggregation of e-remittance

from multiple sources

No support for identification and

coding of short payments

Buyer Group business scenario

Complicated Buyer Group

business scenario

Buyer Group Payments Processing

EFT Payment

NT Checkless Lockbox

Separate Remittance

Email from Individual

Members

Buyer Group HQMultiple Buyer

Group Members

Remittance

BAI2 Bank File

Southwire

A/R Team

Standard Lockbox

Program in SAP

Manual

Exception HandlingCash Posted

Payment

Summary

Payments from buyer

groups constitute 20% of

payments by dollar value

Process Overview

Process Challenges

EFT Payment

NT Checkless Lockbox

Separate Remittance

Email from Individual

Members

Buyer Group HQMultiple Buyer

Group Members

Remittance

BAI2 Bank File

Southwire

A/R Team

Standard Lockbox

Program in SAP

Manual

Exception HandlingCash Posted

Payment

Summary

High volume of manual,

clerical tasks – wastage of

time and resources

Avoidable bank

lockbox fee

Highly error-prone due to

involvement of multiple

entities

Buyer Group Payments Processing

Key Expectations From an automated solution

Reduce bank lockbox costs

while improving remittance

data capture quality

Cash posting across

checks & e-payments with

minimal manual

intervention

Almost real-time cash

application for electronic

payments across ACH and wire

Enable receivables team to be

driven by customer engagement

rather than transaction

management

Lessons Learned

Documents Why and WhatUnderstand the usage and necessity of documents

TransparencyEnsure transparent evaluation of the project

Early and Rigorous TrainingEnsure everyone is on-board. Get product demos and training throughout the project implementation phase

Thorough Ground Work Complete thorough groundwork before project starts so that no challenges or discoveries occur along the way

Cash Application

@ EBSCO

Cash Application @ EBSCO

2 Banks; 4 Lockboxes240,000 invoices annually

52% check payments; 46% EFT Electronic remittance from EDI, email

& 45 different customer portals

35,000 customers6 people on payment

posting team

20-50% hit-rate for checks through

custom lockbox program100% manual EFT reconciliation

Key Challenges

Error-prone

lockbox

processing

Fully manual

ACH

processing

Manual short-payment

identification and

deduction coding

Cash application without

customer remittance

information

Complex

parent-child

relationships

Highlight Process

Error-prone

lockbox

processing

Fully manual

ACH

processing

Manual short-payment

identification and

deduction coding

Complex

parent-child

relationships

Cash application without

customer remittance

information

Cash application without customer remittance information

No Remittance ScenariosProcess Overview

Post the payment

Wait for regular cash application

process to complete

Identify payments without

remittance

Apply common heuristics to identify

the invoice customer is paying for

Look for open invoices of the

customer

Reach out to customer for information

Process ChallengesNo Remittance Scenarios

Post the payment

Wait for regular cash application

process to complete

Identify payments without

remittance

Apply common heuristics to identify

the invoice customer is paying for

Look for open invoices of the

customer

Reach out to customer for information

Manual, time-consuming process

High possibility of errors

Key ConsiderationsWhile choosing a vendor

Eliminate manual re-work created

due to bank lockbox file

Realize the value of low-cost electronic

payments through automation

Manage cash application for a

large customer base• Handle complex parent-child relations• Manage customers with missing remittance

information

Enable cash reconciliation to remain

current on a week-by-week basis

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Change Management Process

Stakeholder

Roles and

Responsibilities

Redefinition

Broadcasting

Organization’s

Plans

Process

Modifications and

KPI Identification

with Stakeholders

Product OrientationStakeholder

Identification

Stakeholder identification and discussion, early orientation and roles redefinition – Making the right choices

Lessons Learned

Always think outside the box.We believed we had the optimal processes. Being open to new technology helped us see

new possibilities.

Focus on what we can control.We had many opportunities around missing remittance and complex payment scenarios.

For EBSCO, those have to be solved internally, without depending on external change.

Look for automation opportunities.Identify efficiency improvement opportunities before the process becomes a revenue leak

and reaches a point of serious concern.

Manage change.Understand that business processes around unapplied or short payments need to change

in order to realize the value of the solution and prepare the team for the changes ahead.

Choose the right technology partner.Select someone with demonstrated expertise. EBSCO needs someone who is willing to dig

deep into our processes and help us drive change and share ownership in outcomes.

About

HighRadius

Copyright © 2018 HighRadius Corporation

HighRadius at a Glance

375+ Clients

#1 in Fortune1000 market

$500 Billion of receivables

processed annually

750+ employees globally

Integrated Receivables Platform for

the entire credit-to-cash cycle

• FinTech cloud-based software company

• Founded in 2006

• HQ in Houston, Texas

Select Customers

Integrated Receivables Cloud Platform

$50 Million secured in growth funding

from Susquehanna Growth Equity$

Questions ?