“Our cash flow was so good in the last 7 months, one of the first things our new CFO noticed was the influx of cash and that the aging percentage was so low. His comment was “How are we doing this?”
Ivanti is a fast-growing US software company with about $500m in annual revenue.
Like many other companies, before automation, they had a very manual Accounts Receivable process. Tony Hiatt, Credit Manager at Ivanti said, “We were working off Excel spreadsheets. We had no way of getting call logs, no way of tracking who we had talked to. We were doing v-lookups, and we were dialling for dollars. Our reps were just barely keeping their heads above water.”
To address these issues, Ivanti implemented HighRadius, and not only have they improved their operational efficiency, but they have also improved the business’ cash flow significantly.
Here is how Ivanti improved cash flow and transformed Order to Cash with HighRadius.
Automating Collections, Dunning and Worklists
Using HighRadius, Ivanti would send out an automated reminder 5 days before the payment due date with the invoice attached. Hiatt said, “We were able to mask our [automated] email, so when the email went out to the customer, the customer thought they were receiving the email from an A/R specialist and it had the signature of the A/R specialist responsible for their account. When the customer would reply, it would go to the A/R specialist.”
“Automating the dunning brought the customers to us and solved the problem of customers who just needed to be reminded to pay on time,” Hiatt said. “This impacted our cash flow in a big way.”
The tool also produced an automated worklist which gave A/R specialists a view of which customers should be contacted as a priority and a list of the top delinquent customers. Creating the list used to take about two hours a day. Now that it’s automated, the A/R team can log straight in and contact customers that need speaking to. They will have the collection notes, call histories, contact details and call notes all in one place.
Now, 90% of analysts’ time is spent reaching and contacting the top customers.
Key Performance Indicators (KPIs) in Order to Cash for Employees and Executives
Their new-found visibility gave Ivanti the ability to create in-depth KPIs for employees to identify areas for improvement, and also to recognize and promote high performing employees.
Some of the KPIs they tracked in Order to Cash were: Days Sales Outstanding (DSO), Cost of AR operations, and bad debt trends.
“We were able to track anything down from a geo-level, global level, collector level, or team level. We could track everything and have these KPIs in a visual format. We no longer have to create these reports – these are created every day through the HighRadius system. This has saved us hours of work a day.” These KPIs were used to help identify areas for improvement, were used for employee promotions and were given to the executive level for insight into performance.
Using AI to Improve Cash Flow and Forecasting
When it comes to aging, Hiatt said, “We were at 32% over 60 days. We now have no invoices over 90 days, we have under 2% total past due. This is really good for us.”
“The first year, we saw a big increase in cash. With automation and proactive reminders, we are changing customer payment behaviors. We are also more proactive because our A/R team has the time to spend on accounts.”
In addition, they had gone from cash forecasting being guesswork to a science. Customers don’t always pay when they should. The HighRadius tool uses Artificial Intelligence to analyze invoice and supplier behavior to predict the actual payment date. “We have a 7-week cash forecast model that runs off logic. It has some rules and takes the invoice, uses the customer’s payment behavior and determines when they are going to pay. Right now, with our forecast model, we are about $100,000 dollars above what is forecasted, which puts us pretty close.”
These efficiencies mean the business has been able to achieve 20% year-on-year growth without any additional staff in A/R.
The Executive Board has Noticed
“This improvement in cash flow has been noticed all the way up to the executive board,” Hiatt said. “Our cash flow was so good in the last 7 months, one of the first things our new CFO noticed was the influx of cash and that the aging percentage was so low. His comment was “How are we doing this?”
This article was originally posted at sharespace by Sarah Fane.