How to Achieve Digital World Class Performance with AR Automation
- 1. How to Achieve Digital World Class Performance with AR Automation
- 2. • Introduction • World Class Performance in AR • Foundational Capabilities Required • Automation Capability Required • Case Study • Benefits • Conclusion • Questions Agenda
- 3. 3 Introduction • The Hackett Group released a study in Q4 2021 stating that Digital World Class companies: • Are 34% more efficient • Commit 40% fewer errors • Allot 75% of staff time to analytics vs processing • Can achieve an incremental 17% cost reduction over current upper quartile performers • While an optimal mix of Process, People, and Metrics is also required, Digital Technology is the primary attribute associated with World Class Performance
- 4. 4 Hackett Benchmarks for AR: • Credit Vetting Decision (elapsed time): 2 days • Average Days Delinquent (collections): 4 days beyond payment terms due date. Not affected by granting extended terms • Cash Application Auto-Cash Hit Rate: 75% We have clients with hit rates > 90% • Deduction Resolution Cycle Time: 7 days • Credit-to-Cash Process Cost as % of Revenue: 0.04% World Class AR Performance Benchmarks
- 5. Foundational Capabilities Required Policy • Documented policies with clear exception protocols • Work reduction policies (e.g.: contractual allowance for shortages & damages, automatic small balance write-off) • Process: Best Practice process adapted to businesses served • Metrics: the “right” ones; fewer vs more • Analytics: insight • Governance These elements provide the foundation for success
- 6. 6 Hyper-Automation is the confluence of Intelligent Document Processing (IDP), Robotic Process Automation (RPA), and AI (Artificial Intelligence) Powered Digital Assistants working with the ERP. It can deliver automated processing of 70-90% of transactions in an operation If an Operation: • has a high volume of transactions, and • is performed manually • labor savings of 70 – 90% is feasible vs 10-25% of other productivity enhancing methods Accuracy and Speed is improved: • Rework reduced Automation Capabilities Required
- 7. • Vendor Portals • EIPP Portals • Excel files • PDF/tiff/gif files • E-mail • Fax • Paper/hard copy • Lockbox data & files • MT940, EDI 820, BAI2 Trans. • Bank Statements • Credit Applications • Orders, Remits, Deductions CUSTOMERS, BANKS, CREDIT BUREAUS, ETC. Extracts & Converts unstructured data into structured data in a CSV File IDP • Accepts data. • Basic processing with ERP • Emulates human interaction with ERP. • Best with simple, repetitive, high volume operations RPA • Retrieve Credit info • Compute credit score and limit • Collections emails with dialogue • Auto-cash & small balance W/O • Routes deductions, etc., etc. AI DIGITAL ASSISTANTS (As needed) FURTHER PROCESSING As needed) FURTHER PROCESSING 90 + % Automation 90 + % Automation 70 - 90 % Automation Hyperautomation: IDP Feeds RPA & AI & ERP Unstructured Data Storm
- 8. • Customizable, online credit application with digital signature • Automated customizable credit scoring – with real time import of credit bureau data, verification of legal and tax status, etc. • Automated AI-powered credit decisions based on pre-defined rules to assign credit limits • Full featured Approval Workflow guided by Delegation of Authority policy Automation in Credit Risk Management Gathering the information for a Credit investigation and setting a credit limit can be almost completely automated, leaving only the quantification of the credit limit or the review/approval of a machine-recommended one for human judgement.
- 9. • Configurable Collections Strategy – multiple parameters • Prioritized Task List • Collector Workbench with all required information • Automated Interactive Dunning - 100% customer touch performed by AI Digital Assistant AI Digital “Low Touch” Collections AI Dunning communication enables 100% portfolio coverage with a persistent request for payment and logging of Promise to Pay when successful
- 10. • IDP extracts remittance data from multiple customer sources/documents in multiple formats (read & keypunch) • Remittance data automatically applied to open invoices by Auto-Cash engine at 85% - 90% hit rate • Automatic creation of deductions to be routed for resolution • Automatic execution of small balance write-offs and matching debits to corresponding credits AI Digital Cash Application Reading data and inputting it into a file consumes the most time in manual Cash Application. It can be 95% automated.
- 11. • AI-assisted dispute reason code assignment (reason code read from remit advice and translated) • Full featured Workflow to route deductions to assigned Resolver, with audit trail, internal dunning, & robust reporting of status & results • Automatic credit to debit matching & clearing • Root cause Analytics to fuel process improvement efforts AI Digitally Assisted Deduction Resolution Deductions are routed thru resolution process and cleared from AR Ledger automatically
- 12. 12 Problem Overview AHA launched eCommerce site ShopCPR to sell CPR equipment and classes online. Credit Processing cycle time was over 2 weeks. They needed B2B digital credit solution to accept more customers and do more business. Customer Value • Deployed Emagia Digital Credit Solution - Mobile and ADA compliant • Digital signatures, digital trade and business reference checks • Integrated with Experian, AHA custom score-card, automatic credit limit decisions enabled. • AHA reduced B2B credit approval process from 2 weeks to 1 to 2 days • Now processing over 200 -300 credit applications per month • Scalable foundation for digital ecommerce growth Case Study
- 13. 13 Challenge: AR management needed overall improvement. SAP deployed in 30 countries, multiple languages Solution: Emagia AI-powered Hyper-Automation Digital Assistants for Deductions, Cash Application, Collections and Analytics modules Customer Value Achieved: • Deduction resolution cycle time reduced to 5 days • Auto-cash hit rate increased from 50 to 80% • DSO reduced 7% in 6 months Customer Success Story – Global Medical Products Supplier
- 14. Enhanced Effectiveness: World Class AR Performance Cost Savings: staff cost, bad debt expense, funding of AR Improved Customer Experience Increased Cash Flow from AR Higher Cash Flow & Lower Cost over the Long Term Improved Customer Experience/Satisfaction Low Cost Operations Greater Cash Flow Increased Cash & Profit Benefits of AI Digital Automation in AR
- 15. Conclusion • World Class Performance in AR Management is an important competitive advantage • Policy, Process, Governance, etc., are foundational capabilities that enable World Class Performance • However, it is AI Driven Hyper-Automation that enables World Class performance
- 16. If you have any questions or comments about this session, please let us know in the chat box or write to us at info@emagia.com Orders Credit Cash Application Collections Deductions Payments Invoicing