Nathan Booth 0:02
Hello, everyone. Thank you for joining us for our session today we have a guide to rethink your order to cash digital transformation roadmap, presenting today. We have Sean Das from Highradius. Sean has more than eight years of experience in design and implementation of solutions in the information technology space. He has versatility and extensive experience and knowledge on the varied functional areas of the order to cash cycle ranging from credit and collections to invoicing and cash application. Shawn has worked with us worked extensively with Fortune 1000 companies to understand their pain points related to accounts receivable, and has designed solutions to help them achieve best in class automation and operational efficiency. Shawn works with customers and the Highradius product management teams to identify areas for innovation and build disruptive technologies to improve the AR ecosystem. So without any further ado, I’ll pass it off to Sean
Sean Das 1:01
thanks a lot, Nathan for the introduction. Hello everyone, this Shawn das here. So as part of agenda, what we have planned for today’s meeting is we will be assessing some of the impact that COVID-19 has had on global shared service operations. What does the future look like? What’s next, as global leaders try to come out of this crisis that we are going through? What are the things that they should plan for in order to come out of it? unimpacted? What are the digital transformation initiatives that they can consider for the accounts receivable department? How do they ensure that they’re making the right choices and getting the relevant ROI out of it? While they’re making this investment? How do they track the performance? So we’ll be talking about Highradius vision for HR shared services, where you can track key KPIs and performance while you’re trying to digitise and improve the current ecosystem that you have. Lastly, we’ll talk a bit about Highradius, the company that we work for, and who we are and what we do on a day to day basis. So let’s get started by assessing some of the impacts that COVID-19 has had on global shared service operations. So there was a survey that was conducted by SSI in the month of March where COVID had just started. At that point of time, 52% of the recipients mentioned that they were highly concerned about the impact that COVID-19 would have on the global delivery of operations. I’m sure if we conduct this survey today, the numbers would be lot more, because in the last one month or one, two months, we have seen the impact that it has had on the accounts receivable and shared services departments globally. So there were also questions asked in terms of what are the reasons why they feel that COVID-19 will have a huge impact. And the number one criteria that was identified was the gap and back service service delivery or processing capability. So companies were struggling to maintain the SLA s that were promised before the COVID-19 environment. Second was the cost of operation. So certain companies were not ready as far as moving to a work from home or an Agile Model that resulted in them having to spend extra infrastructure cost in order to enable their teams to work in that kind of environment. Supply chains got disrupted, which led to further complicating the scenarios. And also, the customers started delaying payments, which resulted in an increase in DSO as well as a reduction in working capital. So these were the four main areas that leaders felt would get impacted because of the COVID 19 scenario. Now, while leaders are battling all these challenges, they also need to think of the way forward right? How do they come out of this current ecosystem and ensure that the impact of COVID-19 is mitigated as much as possible? While they’re coming out of this? They also need to plan in order what the future state of normalcy is going to look like, right? Are they planning to bring back all the employees to an office environment? Or are they going to do it in a phased way where a certain fraction of the employees would come to an office and man by other will work in a mobile work from home kind of environment? And while they’re trying to Get back to normalcy. Are there any digital initiatives that they can explore, to bring in additional automation and reduce the dependency and ensure that the able to be in a better position to handle such crisis, just in case there is a second wave that comes through. So in a recent survey conducted by Gartner, the shared service leaders responded by saying that 32% believe that cloud based projects would play a more critical role in the post COVID era compared to what they have done in the past.
Sean Das 5:38
So while we are talking about the future of shared services, there are some important questions and decisions that the leaders have to take. So questions such as will all the shared service centres remain? Or do the leaders look at reconciliation or eliminating some of the shared service centres? And if they do eliminate some of the shared service centres? What happens next? Are they planning to bring that work in house? Or are they planning to outsource it to a third party in order to reduce cost further? Also, for the work that is retained? Do they look at any digital transformation initiatives to get improve productivity with the help of higher automation software? So again, there are short term optimization objectives, there’s also the impact that a long term ROI would have. So there are no wrong answers are wrong decisions. It all depends on the priorities that a company has, every company would have a different criteria based on which they would go ahead and make their decisions. So Gartner tries to help business leaders in making the decision by providing a framework, which assesses each and every project. With the help of these key parameters. These parameters are potential financial benefits, overall business impact time requirement to deploy a solution, the technical risks involved in implementing a solution, the operational risk aspect, as far as ensuring that everyone is up to speed and starts using the solution, and the investment required in the form of capital. So companies if they evaluate each and every decision that they need to take using these key metrics, Gartner recommends that that will result in increasing the probability of a project becoming more successful. So basically, the projects which have higher green boxes ticked are the ones which are likely to deliver long term value to businesses. So, based on the survey, it was clearly evident that 52% of the shared service leaders believe that digitization is a way forward after the COVID crisis. So companies would look at software companies would look at bringing in automation in order to ensure that the dependency on performing those operations in a high risk environment goes down. However, the reality is, three out of 20 projects were successful. When companies tried to use a technology like artificial intelligence to implement digital transformation projects. 85% of those projects ended up being unsuccessful, and major reasons for the projects being unsuccessful are number one is budget constraints and resource availability. So companies started with a project as far as bringing in artificial intelligence technology is concerned, but midway, they ran out of budget. And that led to complicating the current scenario. There were also limitations as far as vendor capability is concerned, there was a second point where vendors did not understand the requirements in detail. And during the implementation of a project, huge gaps were identified in terms of what the vendor can provide, versus what the client really needs. During deployment and integration, a lot of challenges were discovered. So on theory, a project looks simpler. Or rather, in theory, the project looked a lot simpler. Why, but while implementing it on a global scale, a lot of challenges were identified, which led to a failure of these projects. And the last reason is artificial intelligence was viewed as a black box. So there’s a degree of distrust as far as using it technology which uses probability and parameters and algorithms to predict an outcome. So a lot of business users were not confident to use a technology like that, which led to a disconnect between external and internal parties which resulted in failure of these projects.
Sean Das 10:22
So, based on the learnings that Gartner provides, how do we ensure that we identify areas which would result in quick win deployment options. So let’s run the framework that has been provided by Gartner in an audit to cash scenario and see how the framework can help business leaders make those decisions. We are talking about audit to cash which consists of credit cloud, where you can bring in something like an online credit application to onboard your customers faster collections, which will help you in prioritisation of the task for your collectors to improve DSO, a billing and payment software which can help your team to provide a self service customer portal where customers can log in and make payments are a deduction solution that can help you research and analyse deductions and resolve those faster or a cash application solution that can help reduce your banking and fee. So, we will put the Gartner framework through each of these projects and look at what are the results that the Gartner framework provides. So starting with online credit application, so the potential financial benefits are in the medium category, because it helps reduce the cost of using paper based credit application and also improves customer convenience as far as them being on loaded in a digital way. From an overall business impact standpoint, faster processing of credit applications. And that also means your credit analysts save time and they can focus on more value added activities such as risk mitigation or identifying high risk accounts. Time requirement to deploy something like that is minimal. technical risk is also low, because an online credit application can integrate with multiple systems operation Liske is also low because it is you easy to use for internal teams, so there is less of change management. And investment requirement is also low because the subscription fee is not high for a functionality like this. Similarly, when we look at collections, we can look at a functionality like automated learning and follow ups. So current process might involve companies with collections or teams, where people would be sending manual correspondence, those are emails which are sent to customers reminding them a bit past due notices. By bringing in a technology like automated correspondence, the potential financial benefits would be medium, because it ensures that collections is done in a better way which would result in improved cash flow. Overall business impact is positive because it saves time. In terms of collections follow up is concerned, the time required to implement such a solution is also immediate. Because a lot of these tools come with pre built templates, which can be implemented in no time. Technology risk as far as integration with ERP is minimal. And then operational risk is also low. Similarly, when we look at something like a self service customer portal, where your customers can log in view invoices and make payments, the potential financial impacts are medium. Because with the help of real time payments, you’ll be able to get money faster, it’s more convenient for your customers to make digital payments considering the current scenario rather than writing a check and posting it. Similarly, the operational risks is in moderate category because the success or failure of a project depends on the customer adoption, do you have a customer base which is willing to use digital technologies in order to make those payments compared to the traditional mode of making payments such as writing paper checks, the time requirement is also less because implementation of required functionalities does not take that much amount of time. Similarly, investment is minimal to get something like this up and running.
Sean Das 14:50
For deductions, let’s look at something claims and proof of delivery aggregation. So what we have seen is if your customers are short paying invoices and taking a deduction. One of the important tasks in that particular activity is aggregating the backup documents which are required to resolve a particular deduction. So if you were to bring in automation, the potential benefits are going to be in the medium category, because deductions would be resolved a lot faster, that a lot of time would be saved by your current disputes team. As far as the resolution is concerned, the technical risk is also low because of easy integration. And the operational is also low because it’s easy to use. If we look at a project, which becomes a no brainer, for example, like cash application, where the traditional process will involve manual keying of remittance information, where lockbox facility would have a person looking at a check stub, or cheque backup, entered the remittance information so that those invoices get automatically cleared in your ERP. Now, you can eliminate that cost completely by using automation, where the tool can automatically capture data from those images. So you don’t need the bank or the lockbox to provide the key in service. So that’s a benefit from the day that you implement the software. The automation is pure automation, because it’s straight through processing without any manual intervention whatsoever. The and the time required to implement the project is minimal. So it kind of ticks all the boxes as far as providing you a high ROI is concerned. So this way, you can look at different aspects of audit to cash and do an evaluation in terms of which project makes sense. Looking at the big picture, the objective is to ensure that you become a dot one. So dot one means one in 1000. So this is the concept that Heidi started with a few years ago, where we wanted to be a dot one company, we wanted to be one in 1000 company. In order for us to be a dot one company, it was also important that our clients became a dot one company as well. So we came up with key performance criterias, which would be measured during the implementation of a project, which will ensure that the risks are as minimal as possible. So with that in mind, we implemented the framework for dot one performance, where while a project is going through a digital transformation process, you can track key KPIs, do benchmarking and goal setting to ensure that you’re achieving the desired success?
Sean Das 17:57
So business value metrics play a key role. How do you track important KPIs such as DSO, your bad debt, write offs, your automation rates, or productivity goals versus KPIs. As far as your accounts receivable team is concerned, tracking those KPIs became important parameters in order to enable a company to become a dot one. So we do that by first of all, identifying those key KPIs for each of those areas. For example, for credit, looking at bad debt write off would be an important parameter to cause the the maturity of the accounts receivable department. Similar to that when it comes to collections, you might look at something like collector productivity, average days delinquent and percentage of current as far as ageing is concerned to identify how you’re doing from an overall performance standpoint. So in order for you to achieve these value metrics, a company has to focus on these KPIs. As you focus on improving each of these KPIs, it will result in significant impact on these value metrics. This is how we track value, no key value metric and ensure that companies are continuously improving. So we also have customer value managers who are whose KPIs are tagged to the KPIs of their clients that they are supporting. So that way, we try to create an environment where they are motivated in order to ensure that every project becomes a successful one. So what are some of the key value metrics? So we are looking at capturing person current, obviously, you would want to see improvement in that and you want to see average days delinquent go down over a period of time and the these are results, which are basically an outcome of these leading indicators, such as how many calls were made on a particular day. From a collection standpoint, how many emails correspondence were sent to your customers? How many of those were automated email correspondence leading to freeing up a large chunk of your team’s time. product usage metrics is also an important parameter. So while you roll out different tools in your shared services environment, you also want to ensure that those are being used in an optimised way. So things such as how many unique customers were reached using automation, how many members logged in on a particular day? What were the suggested actions and how many of those actions were completed. Tracking these key activities also plays a very important role so that you know that whatever tools have been rolled out, there is enough adoption as far as the software is concerned. Also, while people are getting used to the new tools that you start implementing, you also want to track who’s adapting better. So by measuring the performance of the entire department, you will be able to find out who are the ones who need more help, and who are the ones who are doing better. This way, you can be a lot more proactive in ensuring that change management is done in a more streamlined way.
Sean Das 21:36
So from a customer performance standpoint, we are looking at a search engine like this where someone an exec can come and search for a particular customer. And they will be able to see high level metrics, as far as how that customer is performing things such as how much is open for that particular customer. From a collection standpoint, what’s the overall reduction value looking like? What is the current credit exposure? How much payments have been made by the customer on the cell service, customer portal, how many invoices have been cleared, and how’s the cash being applied for the customer. So if a person or an executive wants to drill down and look at any of the areas, they can do that by clicking on one of the areas where let’s assume they want to look at the collections activity, they can see how the company is doing overall from a DSO standpoint, what does the ageing bracket look like? How much is spending in the zero to 30 days piece versus 31 to 60? Day space? etc? If there are any payment commitments or promise to pays that have been captured? What are those? And what are the recent activities that have been done with respect to the customer. So this way, executives can have a bird’s eye view of what is happening on key accounts as far as day to day collections processes concerned. Now, for global shared service environments, if execs wants to track the key KPIs for each of those reasons, they can do that with the help of a dot one dashboard, where at a high level, they can see how much is past you. What’s the overall target, and what’s the credit exposure and things like that. They can drill down on each of the regions, for example, they can drill down on a particular continent, and identify the key KPIs for these regions, such as how much is past you? How much is a total open amount? What is the open deduction value? Open deduction volume, how much cash got applied for these regions? What is the credit utilisation percentage? What is the current bad debt write off? So here are some examples where execs would be able to look at, we’ll be able to look at data for each of those reasons. And see what are the top who are the top customers who are contributing to a past due amount, right? Similarly, they can look at these details at the country level as well if they want to deep dive on a particular region, and look at the metrics and data at a country level.
Sean Das 24:21
So that’s all that I had to cover as far as identifying some of the challenges that are there in the current COVID environment is concerned. What are the things that global shared services those should take into consideration how those projects can be evaluated, and how the key KPIs can be defined in order to ensure that you’re mitigating the risk of a project failure. And finally, while you’re implementing these projects, how key KPIs and metrics can be captured and have executive visibility so that the accounts receivable leaders around Top of the game. Lastly, I’ll end by giving a brief overview about who we are as a company. So high radius provides accounts receivable credit to cash software, which automates various activities that are being performed by the accounts receivable team today. So we have solutions which cater to each of the functional areas such as credit invoicing, billing and payment, automated application of cash deductions research and dispute analysis collections tool to help prioritise accounts and enable your collectors to reach out to all your customers on time. We also have a treasury management software, which focuses on Cash Forecasting, cash management and bank reconciliation. As a company we started in the year 2006, where we rolled out on prem solutions. But in 2010, we did the pivot to cloud because we thought that that’s where the industry is moving towards. We also started implementing the best in technology that was available. So we started implementing artificial intelligence into our tools. We are one of the early adopters as far as AI is concerned. In 2017, we got into multiple partnerships with different global banks consulting firms. This is also the phase in which high radius got its first round of investment after being profitable for a long period of time. In 2019, we also launched our autonomous version, which we feel is the next generation software in the b2b space as far as accounts receivable is concerned, whether where people, instead of clicking on multiple buttons or tabs, they can provide voice commands, and have the software perform various tasks. Today, we work with 200 of the Fortune 1000 companies and process a trillion dollars worth of receivables. This is a slide which highlights some of the customers that we are working with today. And as you can see, we are working with customers across the broad spectrum. There are a lot of smaller companies and the Lord of fortune 1000 companies that we are working with today, just to provide you an idea of the spread that we have as far as customer base is concerned. Overall, we have done more than 950 Plus finance transformation projects in six continents and 92 countries. And this is a footprint of where we have implemented software. We have offices in London, Houston, Amsterdam, and in India. So that is all that I had to cover from a demonstration standpoint. happy to address any questions that you might have, please feel free to drop an email to my mail id and I’ll be more than happy to address any queries or concerns that you might have. Were more also happy to set up a 15 minute one on one meeting, if required, if you want to understand each of those areas in more detail. Thanks a lot for your time. Have a good rest of the day.
