Resolving Unique Cash App Challenges and Handling Global Relocation

Deborah DiLuca:

I’m surprised that everybody’s here. I heard that there was a big party last night.
So I’m glad that people actually showed up. I just wanted to sort of talk about DB Schenker. This is our agenda and we’re going to just talk about Schenker and what that is and our cash application, basically before we went live our requirements how we selected a vendor, implementation phase and the lessons learned. DB Schenker is a global logistics provider already. I work for Schenker Canada Ltd. We’re sort of located in Mississauga which is just outside of Toronto. We have about 2000 locations worldwide.

Schenker Canada reports into Schenker AG which is owned by Deutsche Bahn. Deutsche Bahn is the railway system in Germany. So we’re owned by a German company and we’re sort of dictated downward on what we can and cannot do. There are about seven hundred and fifty warehouses across the world and more than 72000 employees. Basically, our cash application when I started at Schenker, I’ve been there for about 15 years. And the first thing I wanted to do when I came in changed what I saw, what they were doing and one of the things I wanted to bring in was the electronic bank statement as well as cash application. But at that time we were a branch structure and there was a lot of resistance to change. So that sort of got put on the backburner. Our cash application was very manual.

Deborah DiLuca:

There were six branches basically across Canada that were handling cash applications. It was a very old fashioned methodology. Checks that would come into the branches would be handled physically by the branches and we would have to walk to the bank for deposits. So it’s hard to believe now that that’s what we did. Cash application was done manually in SAP so people would deposit, they would sort of take copies of everything and they’d manually key it in. Banking, when I went in there, it was very decentralized, the bank rep was a nightmare. I think when I started the first week and the auditors walked in and said where’s your bank rep. It took me about a month to figure out that I needed to make massive changes so I did pull that in essentially but we downloaded the statements from RBC, from the CADC and I created the database to do the manual journal entry. And posted it to SAP daily. And that’s what we used for many years.

So the journal entry was done on a daily basis. And we had no lockboxes. Absolutely none. So that’s what I was dealing with for the last 15 years. We survived and we’re doing well but then basically what happened in 2016, we were told that Canada was the next in line & we would have to move to the Philippines, we had very little knowledge of what that would mean. We were given a sort of very high-level objectives on what would be moving but one of the prerequisites was that we had to be on cash application and be on an electronic bank statement. Oh well, that’s our opportunity to move forward. So at that point in time, we did our investment proposal and we started to do it and do our research when we were sitting and this is really at the very beginning stages of the global project for the Philippines. To move to the Philippines, we started our lockbox. What we initially did was we talked to the banks in Canada and I know most of you are probably Americans, who are not familiar with the Canadian banking system.

Deborah DiLuca:

But one of the first things we wanted to do was to see- I was always wanting to move from a very keypunch sort of system into an OCR technology. So one of my exercises was to visit RBC and go into SymCor and SymCor is sort of the lockbox processing center that’s owned by several of the Canadian banks. So we went on-site and visited there. In the SymCor environment, they’re very much relied on OCR for scanning the checks and capturing basic information such as customer name the micro information and the amount date, etc. But that’s where the automation ended and basically, the keypunch of invoice information is done by manually keying in. When I saw that and I started asking questions to SymCor. When are they actually going to move to more automated or OCR technology? They had no answer for me and I had to move the project along so I made a decision right off the bat. This was not going to work for me because in the long-range what I was aiming for is to have with the move from checks to ACH that shift in the number of checks was dramatically changing.

So I am on a cash application system that captures ACH, wires, and checks in one package. So banks wrote in the Canadian system so then when I was going in, I attended a SAP conference. I ran into HighRadius and a couple of other vendors and I gave them our requirements. So the bottom line is we were looking at key challenges in making changes to our cash application of which we had to set up a lockbox.
We had to have email remittances that were going to branches all over the country or collectors and we had to sort of consolidate that ran into one email thing that meant that from our transportation management systems. We had all of these systems, which had to be updated with the new lockbox remittance details and email remittance address. So all of that work had to be done very early on. And it did make the major change path there. It was on our TMF systems.

Deborah DiLuca:

It took at least four months to get that done. It took a lot of time to communicate with our teammates, our 80 people to get it changed and get it into implementation. So the key challenges in cash application because it was a very branch sort of methodology. The knowledge of specific customers and how that cash was applied was very much at a branch level. There was no central knowledge of how cash application was to work. So part of the process that we had to do is in this transition to the Philippines. There was also the transition for lockbox and that change in the process. So we had to manage our local teams to get them used to the lockbox and the different processes. And also manage the change to the Philippines. So I’m going to let Seth speak on the sort of what we were looking for from a cash application and electronic bank statement process.

Seth Pleta:

Hi. So what we did as part of our automation process and requirement was we acted on this. Definitely streamlined and automated processes. So what does this involve in Canada? So what we did was we tried to integrate our electronic bank statement and our lockbox. So we thought how great it is that we all wanted to implement the automation to our bank statement and at the same time establishing automation in our lockbox. It is an integrated process. The next thing is that the bank statement that we have is that it cuts to all the checks remittance as per customers. So what do we mean by this? Some of our customers remit by wires and in Canada, when every customer remits by ACH, it doesn’t have much information about customers and invoices so HighRadius enhance their reading of the remittance information from the bank statement and then they try to get more information of the customers’ remittances by all of the emails that were sent by the customer to HighRadius because we are strictly mandated by a German company and Germany normally has these strict governors, so we were not able to convince them to install like I think HighRadius has this exporter program that they can install in SAP so that they can get data.

Seth Pleta:

So that didn’t happen to us. So instead we found an alternative or we established connectivity between HighRadius and SAP. This involved establishing or creating a program to extract these files for customer master data. And we have their banking details and the details of an open AR. We extract from SAP and send it to HighRadius. I’m establishing all this automation process so we created interfaces. Several interfaces are coming back and forth, one is the interface from HighRadius to the bank, they’re getting information from RBC which is our local bank. So that’s connectivity. And then another connectivity between SAP and HighRadius and in between those interfaces, what we required from HighRadius is to give us an email notification. So our business wanted this email so that whenever these interfaces are triggered, an email is sent to the finance group and they are notified. So an e-mail is received by HighRadius and e-mail is sent by HighRadius to SAP.

Deborah DiLuca:

So because of this sort of dictation by Germany on what we really could and could not do, it really made it difficult to choose a vendor or basically that we could find a vendor that would meet our needs. So we wanted something to seamlessly integrate into SAP. And that’s very important without the need for custom code. We wanted to be able to read remittances for the customer from different formats and of sources informants. And we also wanted the electronic bank statement file basically, we wanted a simple way or a smooth way to integrate all of that information. And one of the things I did not want to do is have to set up a communication with the RBC basically, I wanted to eliminate as much as possible because when you’re dealing with a big bank like RBC in Canada if you want something special like email notification that a file was sent properly, they will not do it. So basically when we went to HighRadius, we sort of said, “These are what we need.” They were very open to listening to what we needed and they basically said that they could deliver it.

The electronic bank statement was something that they hadn’t done before basically, that was sort of a really important thing because what we do now is that HighRadius goes into the RBC portal, picks up the files for both cash application and ABS and they send us to email notifications when that happens. So that I know first thing in the morning that something’s filled or not filled. And that’s really important to me because they also send notifications when they bring it into their system. Then they’ll send an interface into our SAP system and I get a notification when those things have succeeded or not so, I know beforehand that something’s failed and that will give me enough time to alert HighRadius and a lot of the problems can happen just because from the RBC side when something’s changed there or their files are not available and it can prove frustrating both for HighRadius and us as well. But we have to then intercede to get the RBC’s help in fixing whatever the underlying problem is. So these email notifications can be very important and what it also allows me to do is, I’m dealing with the Philippines and it allows me to let them know something’s failed. In 2016, when we were told in Canada that we were the next country to move to the Philippines, what I was talking about is accounts receivable, accounts payable, geo fixed assets. And there are a hundred and fifty business processes that they wanted us to move and what it got down to is that my team and about 20 people, basically, there were about 27 people across the country that were all going to lose access to posting rights and SAP.

Deborah DiLuca:

So the Philippines was going to be designated to take over these postings of transactions. So in 2016, there was very limited oversight of what we had to do and we did begin, I knew right away that I had to implement cash application in EDF. But there was a lot of initial background work that we had to do to sort of get ready for our go-live. And this is the timeline and that we were given in this sort of the first team that came over in January was the pre-transition team and they sort of laid out this roadmap and said these were the dates that we had to sort of meet and to be honest, we did meet them. In that pre-transition phase, we were given a sort of oversight. And that’s when we had to get sort of leads for AR, RGO, AP and fixed assets. Of those three groups, I had, I took on AP, my other two staff took on fixed assets and GL and AR, where Seth and I were sort of taking responsibility for something that wasn’t in our wheelhouse we were not responsible for it. But it became our responsibility. So Seth and I were very busy and I was really busy because I had all of these things I had to sort of take ownership of it. I think in the pre-transition phase, what happened at that point is some leads came over from the Philippines and for each of those towers there was a key knowledge expert and they sat with my leads as well as myself and went over every processed document and these processed documents could have been 20 – 40 pages long. Let’s say 20 pages long.

Deborah DiLuca:

Some would be not applicable but some were. Let’s say we were doing something very different in Canada compared to what they were. We had to go through and discuss all those key things. And I said well we’re not doing that. I don’t want to do that. We were forced in many ways to go with the global process owner who was Deutsche Bahn. Even though we thought we had some ability to change it was very restrictive. In other words, we were forced to change our process to the global process. The pre-transition was very important because it gave us where we were going and what the future would hold for us. And that allowed me to envision where our project was going to go for the lockbox. The knowledge transfer happened in August or September when about twenty-seven people from the Philippines came over and sat with our employees and had knowledge transfer. But in cash application, it was the old methodology and we’d have very little value in the sense of the new situation. But there were a lot of collectors and those Filipinos sat with the collectors and would learn about the customers.

That knowledge transfer took about two months and then we shared our process with the Philippine person, they would take notes and come back with a formal document on the new process. We then had to read them over and approve them. I think the goal was in October. We got very worried all of a sudden. It’s okay to do a process document but- Can they do the transaction? Can they do the work? So I think in September I wanted our teams to stop doing the work and have the Philippine team do the work and step by step while they were here. I think that enabled our go-live to be successful. At the same time, we are implementing HighRadius through all of this from January to the October date so you can imagine how busy we were. And we went live pretty much at the same time. Stabilization was really when you sort of go-live and sort of measure and notice it right before year-end. Our year-end is in December. It went pretty smooth and we went through the year-end fine. This just gives you an idea of what we were looking at. So each of the tiers has process documents and for each of the things that were broken and each one has multiple pages associated and each one had to be gone through. When I had to look at my AP, there were forty-five documents I had and I was just looking at AP. I was responsible as I had 45 documents to read over, one document had 40 pages to it. So you can imagine the amount of work that had to be done here.

Deborah DiLuca:

Now, what’s a concern and when I say take a step back and I say this is still a concern of mine, what is the GASSC’s responsibility? In the bottom line, when I’m looking at my financial statements and I want to make sure that my month-end closes properly and that my financial statements are correctly stated. Where does it fall? It falls on me. Even though the GASSC is doing this transactional processing. The thinking is still done in Canada and that’s one of the risks that I see going forward for any transition to a global country is where is that knowledge. And how much ownership is that group taking? So when I saw this sort of split and you’ll see that there’s a business analyst which is the local portion and then you have the Philippine portion. So there is sort of a division and own responsibility. But in the end, it still comes back to the local country. I wanted to be sure in that transition that my team has a lot of control over still what happens and they are key decision-makers in what they’re doing. So I’m always alerted if there’s any kind of problem but what’s also really important is that you have key contacts in the Philippines that you can rely on. But there are challenges there as well because often when people are working in the off-hours, they’re working through the night to support us and Canada. You find that there could be a lot of turnover in people. I’ve been fortunate that the one I depend on is still there. So let Seth take over on this one.

Seth Pleta:

So our experience with higher revenues overall was very satisfactory. So just to sum it up. They provided paid the best whatever the best practice is especially in the process of setting up the lockbox and the integration and automation of our bank statement and the lockbox processes and they provided us with the best practice at that time during implementation. They suggested that we use reason code but at that time, we were not ready to implement the reason code. So when we realized that we implemented the reason code like weeks or months after, it had to go live. Right just to monitor the open items in S.A.P and why is it open. It has to help the business to identify these open items and because like Deborah said we had a GASSC implementation and then we have the lockbox implementations with HighRadius. So what they did was- they provided and made sure that the implementation in the go-live which is actually in the third week of September. We met that deadline by hook or by crook.

Deborah DiLuca:

Yeah.

Seth Pleta:

So HighRadius showed their commitment that we needed to implement by the third week of September because the knowledge transfer to the GASSC is very important to us.

Deborah DiLuca:

My focus was on the move to the Philippines. It sort of took second priority because when the Filipinos came, we had so many meetings and constant demands made. So often, HighRadius would need me to do something and I just didn’t have the time or resources, so I had to push off deadlines and stuff. I found them very cooperative that way and they didn’t you know to hand me a lot and we have to achieve this. They worked with us to get that done. But it was very difficult. I must say I would not necessarily recommend that you ever do that effort because it’s so stressful and I don’t have a big team. I have like four people. So not only were they involved in the GASSC project, I had to pull people to work on the HighRadius project too so I can remember basically on the EBS, it changed your bank reconciliation process and also the cash outflow is all new. So that actually fell to me in the last weeks before we were transitioning the knowledge that to figure out the new bank reckoned it was more complex because now you have multiple clearing accounts you have your cash application clearing accounts and I think I was working on that at the last minute and I had the GASSC there for the last week. I brought it out to them, saying that you guys can get over this now. And they sort of took it on themselves and they went back home with it.

For the cash application, it was the same thing. It was sort of last minute. I had no actual firm processed documents written so it was a scramble to get that in place before they’d been home. When they did go home, what they ended up doing was writing the process documents after the fact. And I would review them and make changes and we modified them as I said one of the things that happened is we did not have reason codes in but when we went live we had open items and I thought we need to do something here. So we had the GASSC, see if they update the reason codes, why things were open, so we still have lots of things that we need to improve. But one of the difficulties we face is dealing with a cash application team that’s in the GASSC while we’re here. So that’s one of our next tasks, to look at that and how we can make more improvements going forward because, to be honest with you we pushed it in real easy. It’s working. We were successful but it’s not where it should be.

Seth Pleta:

Yeah. So another thing that we faced was during the testing, our SAP system wasn’t refreshed. So sometime in August and September and the last AR that we had in our test environment was in April. So what did we do? We had to minorly upload in recess. So that means uploading from our team system like free systems like billing invoices, billing system, we had to manually enter that into SAP. So what we did- all the interface files and production, we took that individual files and production and manually, we had to upload it in the test so that we can mirror the AR so that the AR during the test period which is sometime between April to August we have to move it forward so that the testing could make sense for us.

Deborah DiLuca:

Yeah. And that was a real challenge because basically, Germany refreshes our test system once a year. So the information there when we are pulling files from the RBC live files they were already the items probably closed or they weren’t even there. So that became a real issue of how we were going to manage that. A lot of times, we would have an error just because there was no invoice there and maybe we made a mistake, we missed a date or whatever. So it becomes very frustrating. As I said, we left a lot of the stuff to the last minute. So training for our Philippine team from the Cash App side and the electronic banking side happened after, when it went live and went to the Philippines. Any questions?

Audience:

[Inaudible]

Deborah DiLuca:

No, it’s strictly a Canadian thing. They’re running multiple different platforms and that’s one of the challenges in a global company is that we’re not necessarily all doing the same things. We’re not even dealing with the same banks so that does pose a challenge. But why Canada was able to use HighRadius is because we were just sending files that are no different from an RBC sending a file and they’re fine with sort of receiving that.

Audience:

[Inaudible]

Deborah DiLuca:

Yeah. But what’s surprising is that when we went live, my team was very involved in monitoring everything and we still are like from a bank credit point of view and I guess my biggest risk is that your team loses the knowledge of what is transpiring. And so my team is very much involved daily and looking at the HighRadius platform knowing when the files come in, they get notified that the bank and I have somebody here on my team that is responsible for that bank track from the cash application point of view.

Deborah DiLuca:

We’re also monitoring that. And so yes but I think from a GASSC point of view where I think the biggest risk is with my staff, we’re very familiar with all the SAP transactions and the reporting requirements. Now all of that knowledge is transferred over to the Philippines. But the trouble is that knowledge is very important to keep in your own country because as soon as you lose that knowledge you lose a person. They will not understand what an FX Reval is or just all the different technical things that are going on and how to validate it. That is one of the risks. As soon as you outsource the transaction that innate knowledge of what SAP is doing and how to justify it, it is lost. You have to rely on the Philippines to do that. But my experience is that their doers and their processors, they’re not necessarily knowledgeable about the risks and the controls around these things that they’re working on.

Audience:

[Inaudible]

Deborah DiLuca:

I would say there’s no difference. Cash application from the EBS point of view probably takes longer because it’s more involved. After all, you have more clearing accounts and we include all the cash up accounts the clearing accounts in that bank as well. But it’s done daily. So it’s their effort not my team’s effort that’s doing it. So I would say there’s no difference in the bank track and the Cash App is done, I would say, just as quickly with a lot. They do have to FTE working in the Philippines on cash App versus the SEC that we’re doing in Canada. But they’re still making the effort to sort of look at open items and clearing them.

Audience:

[Inaudible]

Deborah DiLuca:

I think when I first looked at this, I would say 100 to 150 payments a day. Yeah. If I can remember that’s when I did the study.

Audience:

[Inaudible]

Deborah DiLuca:

Because we’re a German company, you bet you’ll find with the German company and Seth and I often get frustrated because we’ve seen new things come out all the time. They’re very much hesitant to adopt any new sort of platform unless it comes from them. So yeah we’ve tried to sort of change and move upward but it’s very difficult. Often you’ll find that the change comes downward. So yes. Well, that’s all I can say about that. There is a real resistance. So one of the next spaces in our process is to standardize things from GL Account and cost center anything globally. That should have already been done. But, we’re all in different instances of this AP, etc.. So yes, there’s a lot of work to be done still.

Seth Pleta:

And in addition to that, when it was implemented globally, they have already identified that the Cash APP should be under SAP environment. But there are functionalities in SAP that are limited. So as we have said earlier like some of our remittances or most of our remittances are ACH and wires. This doesn’t have the micro information and SAP cannot read that. So you will have to customize and design another program to read that file and the bank statement. But Highradius was supporting that idea. So you don’t need any programming within SAP and HighRadius was able to capture those remittances and bank statements and then grab the remittances in various sources like emails. So we are not changing the SAP landscape because Germany didn’t want that. So HighRadius provided this solution.

Audience:

[Inaudible].

Deborah DiLuca:

Well, our solution is complex. Like it wasn’t as complex as you might think. But yeah I think, to be honest with you, HighRadius worked with us in how we needed things to be done. But often we didn’t devote enough time to get those rules perfect and even now and that’s one of the things I probably need to look at more carefully. And we did put it together and it’s working. But again there’s still an effort that we need to do and I wouldn’t say it’s HighRadius. That was our problem in finding the resources to devote to that because it does take time and effort and to understand it especially since Seth and I weren’t responsible for Cash App. We sort of came in from a business owner, a project and saying we need to make a change. So it was challenging for sure.

Seth Pleta:

And also like when HighRadius defines the algorithm, they’re very flexible. That’s when they find a remittance or an invoice number, they can also use characters like they save one to create and character and they can make sense out of it and then they will, therefore, suggest that like aliases. There are some functionalities in HighRadius that SAP wouldn’t even support. The SAP couldn’t handle them. So when we define their business requirements. Highradius was able to provide that for multiple remittances, so they have this algorithm in their system that can provide that.