How to Achieve Zero Bad Debt? – Yaskawa America Case Study

Introduction

Meet John, he’s an accounts receivable manager at a growing manufacturing company. In a recent meeting with his team, he realized they need to onboard an integrated software to automate their mundane tasks of creating, recording, updating, and files on disparate tools. The current systems lack data security and they still have to pay hefty credit card processing fees annually.

John decided to take this up with his boss –

John – Hi boss! I wanted to talk to you about automating our AR processes with integrated software.

Boss – I see. But what about the cost of implementation and the time required to train the team for the same? I don’t believe it’s worth it. In most cases companies onboard such costly software and after a while it all comes down to this same situation. Look at us, we already have tools to manage our AR processes and yet are facing difficulties.

John – I agree, but today there are software with a future vision in mind. If we invest in it today, maybe tomorrow we won’t need to onboard any other tool as the same tool would have upgrades for us as required to solve the roadblocks on the way.

Boss – Interesting! Let’s do an exercise, evaluate and bring me a software that can solve our current problem and yet be our partner in the long run as well.

Want to see what John came across?

An Interesting Finding: Yaskawa’s Digital Transformation Story

In the B2B world, zero bad debts are surely a head-turner. The cash flow in a company’s AR directly depends on collection management. The faster the collections, the more positive impact on the bottom line. Optimizing deductions could further help in plugging leaks from the company’s working capital. Yaskawa, a manufacturing giant generating more than $3 Billion in annual revenue and 1000 associates achieved a 5.5 day DSO reduction and hit a count of zero bad debts using order to cash automation.

The O2C Friction: Yaskawa’s Roadblocks

Before automation stepped in to save the day, the O2C processes at Yaskawa faced the following difficulties that increased manual workload and negatively affected the bottom line:

1. Disconnected tools:

Using decentralized systems for collections and deductions added to the hassles of uploading data multiple times using excel and spreadsheets. This led to redundancy and the absence of a single source of truth. Result? The team focused squarely on large accounts while a multitude of smaller accounts fell through the cracks.

2. Lower visibility:

The diagnosis of a problem is the first step to its solution. Due to inefficient reporting, root cause analysis of disputes was a difficult task.

3. Difficulties in credit card payment:

Highly manual and insecure credit card payment processing made the influx of cash slower as it was not integrated with the ERP system.

4. Insecure data:

The storage of credit card information while collecting payments required expensive PCI-DSS compliance. The costs incurred made it difficult to adhere to the PCI-DSS requirements, as a result, it made data insecure.

The Power Of Automation: Yaskawa’s Road Roller

Just like road rollers are used to level roads, Yaskawa said ‘yes’ to automation with HighRadius to smoothen all their challenges. By the onset of automation for collections and deductions, they achieved:

• • Integrated Platform: The cloud solution enabled an integrated platform where the different modules could interact with each other, ensuring centralized access to critical data.

• • Better visibility: Easy access to a single source of truth for all kinds of information made reporting extremely easy. Improved accuracy in reporting led to better visibility into different functions for the managers.
  • Secure payment processing: The presence of a seamless, secure interface between the ERP and the card processor made the acceptance of credit card payments safer.

Correspondence Solutions: The Added Bonus

There are no shoes ever made where one size fits all. So why would a single type of correspondence suit all customers? Automation enabled Yaskawa to have customizable correspondence templates & packages according to customer requirements and provided out of the box collections and dispute modules.

Yaskawa Automated correspondence that can be created at the click of a button, made it easier to execute proactive collections strategies, and reduce bad debt.

The Results Obtained with AR Automation

The transformation brought about significant improvements, including reduction in manual workload and time and cost optimization. Let’s look at them briefly:

1. Reduction in manual workload: 

Automation brought about the transformation of Yaskawa’s collections as well as the deductions landscape. Some of the results obtained included:

2. Time and cost optimization: 

The use of cloud solutions for collections and deductions management not only helped in minimizing errors but also strategizing collections according to the risk category of customers. It resulted in:

“The game isn’t over till the clock says zero.”

A swift transformation from zero automation to zero bad debt was a key milestone for Yaskawa. Leveraging automation for the O2C cycle helped Yaskawa pedal faster to the ultimate goal of business growth.

Autonomous Receivables for the Office of the CFO

As far as automating the accounts receivable processes are concerned, an automated solution operates on pre-defined rules and requires minimal human intervention.

On the other hand, an autonomous accounting solution is a more advanced technology that uses artificial intelligence (AI) and machine learning (ML) algorithms to learn and adapt to different accounting processes. It can analyze data, make decisions, and even take action without human intervention.

HighRadius is a leading provider of autonomous receivable for order to cash. It offers automation for all AR processes, including credit, collections, cash application, dispute management, billing and invoicing. Our solutions use artificial intelligence and machine learning to analyze financial data and provide real-time insights into a business’s financial health.

Moreover, these solutions are the world’s only end-to-end automation platform that integrates with all the processes to communicate with each other and give you real-time visibility across the office of the CFO globally.

To see how HighRadius can help you transform your finance and accounting processes, schedule a demo with our experts.

The Path Ahead for Manufacturing Companies

Wondering what happened with John?

Well, when John presented this story to his boss, he was quite impressed and signed up to take the conversation ahead with HighRadius. Today, manufacturing companies are growing at an accelerated pace. With the requirement to automate mundane tasks, or centralize the receivables processes, make sure you evaluate your vendor based on future predictions and requirements to yield higher ROI.