Using Automation to Streamline the Collections Process
While the vast majority of large companies are utilizing some sort of ERP system that includes basic functionality to support the Collections process, this functionality often falls short of meeting the overall needs of the organization. In many cases, companies attempt to modify their process design to mitigate the impact of this lack of system functionality, often with limited success. However, through the use of both third-party software packages and internally developed tools, many companies are able to augment their Collections system capabilities to a level that provides the functionality they require.
On a recent Peeriosity PeercastTM, the Global Director of Order-to-Cash for a member company shared their experiences in automating the Collections process. With over 100 operating units across the globe, along with doing business in 19 currencies, utilizing over 100 bank accounts, and with multiple ERP systems, the Collections process at this company can be quite complex.
For our feature company, the billing, cash application, and other financial transactions are tied to the operating units, while the collections and customer management activities are at the company level. This results in the frequent scenario of having individual customers with many bill-to-customer records across multiple operating units, which makes it very challenging for the Collections organization. Even defining what a customer actually is can be difficult due to the following factors:
- Multiple operating unit/bill-to numbers
- Different customer names
- Multiple currencies
- Multiple languages
- Multiple countries
- Multiple bank accounts
The challenge was that the Oracle master data did not keep up or align with the way the customer needed to be managed, and they had no way to create a parent account to link everything together. The company needed a system that aligned with the master data since Oracle was only one of the systems of record and did not properly support the needs of the OTC team. To address this, they implemented a Pentaho Relational Model (a business intelligence software) that integrated and managed data from Oracle, local folders (containing the parent structure created and updated using robotics), and additional sources to blend weekly and monthly reports.
This solution is now being enhanced by the following additional approaches:
- Combining robotic process automation and data extraction techniques in Python and R (the two most popular programming languages used by data analysts and data scientists) to consult credit agency data, D&B reports, EDGAR databases and search engine queries to automate the customer mapping and credit risk assessment processes.
- Mapping: By using BS Library in Python and R, they can extract relevant information about the parental structure of the customers and compare it with the data collected by bots from official credit agency sources.
- Credit Risk Assessment: The same information is later used to update statistical and machine learning models to assign the most appropriate credit limit to each of the customers.
As a result of this focused effort to apply technology in the Collections process, they have significantly improved its capabilities in this area and simplified what was clearly an overly-complex process design.
iPollingTM Results Review
A recent poll created using Peeriosity’s iPollingTM technology provides some excellent insight regarding what companies are doing in the area of Accounts Receivable Collections. The first poll question looked at what primary ERP system companies utilize for Accounts Receivable activities. The results are not surprising, with SAP being the dominant system (63%), followed by Oracle (21%), and JD Edwards (8%).
The second question in the poll focused on the technology utilized in managing A/R workflow specific to the Collections process, such as priority task lists, aging reports, dunning letters, etc. It is interesting to see that 55% of the surveyed companies use just the standard functionality found in their ERP system. Of the remaining 45% of the companies, 25% have enhanced their ERP system with additional functionality related to collector activities, while 8% have purchased a specialized 3rd-party solution, developed a solution internally (4%), or have used some other approach (8%).
Some of the comments related to this poll made by Peeriosity members include the following:
Non-Profit Member: We are starting to review advanced Oracle collection functionality.
Consumer Products & Services Member: We have a different solution based on the portfolio: CARMS, SAP, and Oracle. For workflow, we also have a combo: Specialized 3rd party solution, SAP, and Oracle.
Computers & Electronics Member: We use the SAP bolt-on application FSCM (Financial Supply Chain Module) for Collections.
Real Estate & Construction Member: We have both SAP & JDE, depending on the product line. Our 3rd-party solution is GetPaid.
Other Industry Member: Oracle R12 with minimal customization.
Healthcare, Pharmaceuticals, Biotech Member: Using SAP for the last two years.
Depending on the level of complexity of a variety of factors, the standard functionality of a company’s ERP system may or may not meet the needs of the Collections organization. The good news is that there are a variety of available options that can address the specific needs companies have in this area, including very powerful third-party solutions that address the needs of not just Collections, but the entire Order-to-Cash organization.
What is the status at your company with respect to the implementation and utilization of enhanced Collections technology? Is your current solution meeting your needs or is it time to consider another solution in this critical area?
Who are your peers and how are you collaborating with them?
“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
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