electronic receivables: using intelligent automation to
TRANSCRIPT
Electronic Receivables:
Using Intelligent Automation to Optimize
Payment Processing
Ellen FarishSr. Operations Manager-Shared
Financial Services
Southwire
Shankar BellamSolution Engineering,
Pre-Sales & Business Development
HighRadius Corporation
Carolyn EtressDirector of Accounts Receivable at
EBSCO Information Services
and GOBI Library Solutions from EBSCO
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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2
3
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 capture
Remittance Data CaptureRPA & AI in Cash Application
Payments with missing or
incomplete remittance data
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
Payments with missing or
incomplete remittance data
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
Remittance data capture
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
Remittance data capture
Payments with missing or
incomplete remittance data
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
Remittance data capture
Payments with missing or
incomplete remittance data
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
$50 Million secured in growth funding
from Susquehanna Growth Equity$
Copyright © 2018 HighRadius Corporation
Integrated Receivables Cloud Platform
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