Collecting Cash Faster with Real-Time Document Delivery from Your SAP(R) Application

whiTe PAPeR Collecting Cash Faster with Real-Time Document Delivery from Your SAP® Application www.esker.com eSkeR DeliveRYwARe whiTe PAPeR Table of Contents Introduction ....................................................................................................................................................................................... 3 Complexities of Manual Cash Collection ................................................................................................................................ 4 Simplicity of Document Process Automation......................................................................................................................... 5 Best-Practice Cash Collection .................................................................................................................................................... 6 Time/Cost Saving and DSO Advantages .................................................................................................................................... 8 DSO Success Story ........................................................................................................................................................................... 9 About Esker ...................................................................................................................................................................................... 10 eSkeR DeliveRYwARe whiTe PAPeR Introduction when you’re dealing with cash collection, time actually is money. After a company fulfills an order, it wants payment as quickly as possible. But of course, customers do not pay until they receive the bills for their orders — and sometimes not until they’ve received several requests for payment. Cash collection processes encompass multiple communications with customers through various channels, including mail, email, fax and other media. with technology available to automate production and delivery of the invoices, statements, dunning letters and reminders that drive cash collection, manual steps in the process of sending and resending documents to recover unpaid invoices represent lost time and money. Low efficiency in cash collection has a direct impact on profitability because it creates debt, restricts vital cash flow and results in high average time to collect payment on invoices, measured as Days Sales Outstanding (DSO). Many companies (and solution vendors) think of automating the process as making both the sending and receiving of cash collection documents electronic. But in implementing a solution, customer preferences are a major consideration. A company that has been sending some or all of its cash collection documents by traditional postal mail can expect a large percentage of its customers to want to continue receiving them that way. So, businesses face the challenge of finding a solution that achieves their cash collection process improvement objectives and brings no pain — only enhanced service resulting from increased accuracy and timeliness — to their customers. Businesses running SAP applications also need to know that the solution will integrate seamlessly and be easy to maintain. The answer is to remove paper from the sending side of the process and keep it available along with other options on the receiving side. in other words, sending becomes completely electronic (and companies gain the corresponding automation benefits) but receiving doesn’t have to be. And no matter how you send cash collection documents, you can do it on demand, in real time. This paper presents a practical solution enabling businesses to automate cash collection document processes from end to end, shortening order-to-cash cycles and reducing DSO while improving accuracy and satisfying customer preferences. As a result, businesses can receive payment sooner, help improve overall profitability, lower administrative costs and realize additional return on their investments in SAP solutions. 3 eSkeR DeliveRYwARe whiTe PAPeR Complexities of Manual Cash Collection in a typical enterprise, cash collection is a complex, multi-step process involving communication between the accounts receivable department, the sales department and customers through a variety of transaction documents. Companies need to send and re-send individual documents including invoices, proof of delivery, statements, dunning letters and reminders. The various documents may come from several different sources — an SAP application, a desktop application with mail merge or a credit management application. And in many cases, companies need to deliver “packets” of documents to make the request for payment. each document must be printed, retrieved from the printer, faxed or mailed, photocopied and filed. Steps in the conventional process § After a customer places an order, which is verified and manually entered into the SAP system, a copy of the sales order is manually filed and the cash collection process is initiated to ensure payment. An invoice is manually printed, folded, inserted into an envelope, stamped and mailed to the customer, typically with 30 days net payment terms. An invoice copy is manually printed and chronologically archived. At a certain point after the due date, often in conjunction with other past-due orders, a first reminder is manually printed and mailed to the customer. § A copy of the first reminder is manually printed and chronologically archived. If delinquency continues, a second reminder is manually printed, folded, inserted, stamped and mailed to the customer a number of days after the first reminder. A copy of the second reminder is also manually printed and chronologically archived. At this point, phone calls typically will be made to customers, each of whom might request a copy of their invoice — which means manually printing and faxing documents yet again. Ultimately, final notices are manually printed, mailed and filed. One final copy of each invoice is then printed to inform the appropriate sales representatives of non-payment. § And rather than delivering these various documents individually in real time, companies often send them in batches at a set time such as the end of the week or the end of the month. In today’s highly competitive business world, the value of eliminating these inefficiencies is too great for companies to ignore. But many of the cash collection solutions marketed today are less than ideal because they essentially force customers to receive all documents electronically or make other changes to their accounts payable processes. Customer Accounts Receivable Invoices Proof of Delivery Dunning Letters Print, retrieve, fax, mail, photocopy, archive Statements Invoice Reminders Sales = Manual touch points 4 eSkeR DeliveRYwARe whiTe PAPeR Simplicity of Document Process Automation A practical and proven solution is available now as part of a comprehensive platform for inbound and outbound document process automation. By automating the processing of documents previously tied to manual methods, businesses reduce the cost, increase the speed and improve the quality of information exchange with customers and suppliers. These outcomes translate directly to higher efficiency, profitability and return on investment in SAP solutions. Esker DeliveryWare removes inefficient manual steps from business processes, automating every phase from inbound data capture to document formatting and outbound delivery — regardless of the information source or type of transport. in doing so, esker Deliveryware brings visibility and control to document processes while leveraging existing iT systems and requiring no custom ABAP programming or SAPscript development to implement. Designed to optimize the flow of information into and out of SAP applications, Esker DeliveryWare is an end-toend automation platform using patented business rules technology developed by esker. Companies managing all document processes through this central platform are able to: § Simplify the iT infrastructure § Reduce the time and costs associated with document communication § Streamline critical business processes such as billing The non-intrusive nature, intelligent automation and complete input/output capabilities of esker Deliveryware allow companies to fully automate cash collection without disrupting their existing processes or those of their customers. 1 Document Capture 2 1 3 2 DeliveryWare 5 4 1 3 Rules Engine 2 4 Patented esker technology automatically recognizes and extracts data from electronic documents to determine formatting, conversion, and routing conditions and actions that need to take place, as defined by processing rules. 5 3 5 Document 4 Transport 5 esker Deliveryware automatically captures invoices and other documents in any format — independent of layout and application or source, without the need for custom programming. esker Deliveryware delivers documents, based on specified preferences, to multiple recipients via a full range of transport mechanisms — including eDi, text, XMl, PDF, iDoc, PCl, PS, TiFF, postal mail, fax, file transfer, wireless, and more. eSkeR DeliveRYwARe whiTe PAPeR Best-Practice Cash Collection integrated with SAP applications, esker Deliveryware automatically composes and sends cash collection documents in the right formats at the right time to optimize cash collection. Businesses can give customers the same amount of time to pay, but reduce average time to collect cash by delivering documents more quickly and on demand. Cash collection automated with esker Deliveryware has a much shorter time span than the typical manual process. eliminating the lag in sending due to manual preparation of documents, as well as the delay of documents waiting to be sent along with others at a certain time, accelerates the process and brings more cash into the company faster. At the start of the order-to-cash cycle esker Deliveryware automates order capture and entry into your SAP application. every invoice and subsequent cash collection document can be sent electronically, as it is generated, directly from the SAP application, by whatever means each customer prefers — whether postal mail, email, fax or a combination. The documents are automatically archived for easy retrieval and can be routed to sales representatives or others via any method, including populating a database or printing a hard copy. After the due date, esker Deliveryware uses relevant information it has extracted from the invoice (such as customer name, fax number and product details) to generate, format, send and store reminder notifications automatically. As an example, a first reminder is emailed to a customer. The second reminder is faxed to the customer, archived and emailed to the sales representative. when the customer requests a copy of the invoice, it can be automatically faxed. If payment is not received, the final notice is transmitted to an Esker facility for mail production and postal delivery. And with esker Deliveryware, the documents can be sent as they are prepared — so they can trigger payment sooner than the batch process. This real-time invoicing can significantly reduce DSO. ESKER PRODUCTION FACILITY SAP or credit management application Case study § Situation: Days Sales Outstanding had become an issue for a manufacturer of veterinary medical devices. They were spending hours printing and manually sending invoices, and the accounts receivable department needed to fax past-due invoices and dunning letters on demand instead of batch mailing on a monthly basis. § Solution: The company implemented esker Deliveryware as part of its collection solution for 6,000 active customers and 3–4,000 dunning letters per month. The accounting department also automated the re-sending of 50–100 invoices per day by fax. The implementation also includes inbound fax integration with a document management system and roll-out of fax capability to additional departments within the company for delivery of sales order confirmations, shipping notifications, delivery confirmations, quotes and purchase orders. 6 eSkeR DeliveRYwARe whiTe PAPeR Time/Cost Savings and DSO Advantages Key outcomes of Esker DeliveryWare automation § Faster, less expensive and more consistent cash collection cycle § Reduced Days Sales Outstanding (DSO) § More cash available § Lower cost of cash MANUAL PROCESS AUTOMATED PROCESS Time Cost 1 minute $8.30 MANUAL PROCESS Time Cost 43 minutes $17.00 AUTOMATED Time Cost 1m § Increased productivity with fewer manual tasks in accounts receivable 43 minutes Time § Fewer cash collection document errors with less human intervention $17.00 Cost § Rapid return on investment with immediate impact on the bottom line § Improved customer relations as a result of more timely, accurate and personalized communication DSO comparison DSO results with conventional mail process DSO 75 days (average) Average payment delay 60 days Month Produced invoices waiting to be sent Invoices are processed and sent to customers at the end of the period Customers receive invoices Customers pay invoices DSO results with Esker DeliveryWare Payment delay Payment delay Customers pay invoices Payment delay Reduced DSO Payment delay Payment delay Invoices are sent to customers in real time 7 eSkeR DeliveRYwARe whiTe PAPeR Collecting more cash quicker DSO reduction resulting from esker Deliveryware automation yields significant savings in terms of additional cash available and cost-of-cash savings. For example, a company with $1,000,000,000 in annual revenue can generate $4,000,000 in additional cash for each day it reduces DSO. That same company can reduce its cost of cash by $200,000 per day of DSO reduction, based on a 5% interest rate. Average DSO can be reduced by seven days, which means $28,000,000 extra cash in the bank with a $1,400,000 cost savings. 10 days 8 days 7 days 6 days Company with annual revenue of $100m 4 days 2 days Early Payments As a consequence of the conventional process, businesses experience sharp drops in cash flow because most payments are collected at specific times. Esker DeliveryWare automation makes cash flow continuous. Cash collection cycle with conventional invoice mail process Cash Cash collection cycle with Mail on Demand Cash Cash collection depending on invoice batches posted by end of month Jan Feb Mar Time Jan Continuing cash collection thanks to real-time invoicing Time Feb Mar Gaining automated cash collection efficiency now As a complete solution for document process automation, esker Deliveryware automates every phase of the cash collection process and every type of cash collection document delivery — including traditional postal mail. with esker Deliveryware your company can send all of its cash collection documents electronically, regardless of the different ways in which customers prefer to receive them. You gain the efficiency of a fully automated cash collection process without any adverse effect on customer satisfaction. This capability also helps prevent missed milestones along the cash collection process timeline due to document errors, equipment failure in your company’s mailroom, fax or email system downtime, mailroom labor shortages and other document production factors. Best of all, the only difference your customers may notice is that they always receive accurate cash collection documents when they are supposed to, according to your established payment terms and notification schedule. And cash collection is only one area of the order-to-cash cycle that esker solutions automate. esker also helps companies gain efficiencies in sales order processing, invoicing and more. Esker can help you determine your specific requirements and identify the best solution for your business processes. For details, please visit www.esker.com. 8 eSkeR DeliveRYwARe whiTe PAPeR DSO Success Story Electronics manufacturer Challenge § Mailing 250,000 invoices per year out of SAP application § Invoices printed at the corporate headquarters § Printed invoices sent to an external service for folding, stamping, and handing off to the post office § Invoices not sent in real time, causing delays in collection § Cumbersome process caused errors that could not be caught before collection process started (no tracking of individual documents) § Customer satisfaction at risk Manual Touch Point Post office delivery Customers Accounting Printing Automated Folding Automated Stamping/Metering Internal Manual Process External Service Distribution Results § Real-time delivery of invoices § Real-time tracking of invoices directly within the SAP application § Multi-channel invoice delivery based on customer preferences (mail, fax, EDI) § Not sensitive to fluctuations in mail volume § No need to store letterhead paper § 10% reduction of DSO, representing hundreds of thousands of dollars per year https Customers Post office delivery Distribution 9 eSkeR DeliveRYwARe whiTe PAPeR About Esker esker is a recognized leader in helping organizations eliminate paper and improve business processes with on-premise and on-demand document automation solutions. integrating seamlessly with enterprise systems and other applications, esker solutions enable end-to-end automation of any inbound or outbound document processes — cash collection, sales order processing, accounts payable, billing, procurement and more. As an established SAP Software Partner with certified integration, and an SAP customer itself. Esker has made serving the needs of SAP customers a top priority. The results of the SAP and esker partnership are demonstrated around the world by SAP customers who have automated document processes with esker solutions. esker has a dedicated R&D team focusing on SAP applications, and a primary objective to offer SAP customers the best solution for document process automation. esker was founded in 1985 and operates globally with more than 80,000 customers and millions of licensed users worldwide. esker has global headquarters in lyon, France and U.S. headquarters in Madison, wisconsin. For more information, visit www.esker.com. © 2007 esker S.A. All rights reserved. esker and the esker logo are registered trademarks of esker S.A. in the U.S. and other countries. SAP is a registered trademark of SAP AG in Germany and in several other countries. All other trademarks are the property of their respective owners. 10 whiTe PAPeR MADISON, WISCONSIN § U.S. HEADqUARTERS esker, inc. 1212 Deming way Suite 350 Madison, wi 53717 Tel : 608.828.6000 Fax : 608.828.6001 email : info@esker.com www.esker.com WORLDWIDE ESkER LOCATIONS Asia § www.esker.com.sg Australia § www.esker.com.au France § www.esker.fr Germany § www.esker.de italy § www.esker.it Spain § www.esker.es United kingdom § www.esker.co.uk www.esker.com