Clean vs. Dirty Receivables Management

1. Clean vs. Dirty Receivables Management

2. Cforia Software Cforia is a market leader in AR automation software with 140 accounts world-wide Dozens of ERP applications supported including SAP, Oracle, JDE, PeopleSoft, etc… SAP Certified AR automation is designed to: Reduce bad debt Decrease DSO Improve deductions processing Headcount avoidance or reduction

3. Chris Caparon VP of Professional Services for Cforia Software Education: BSEE, BSCE from the University of Michigan 10 years of ERP implementation experience 7 years of managing Cforia’s software services team Personally lead over 100 AR automation projects

4. Customers

6. Review of current tools being used to manage accounts receivable

7. Current AR Management Tools • Outlook/Notes • Ticklers • Collaboration • Contacts • SAP Inquiries • Ticklers (?) • Notes • Contacts(?) • AR Inquiries • Invoice reprint • Order hold/release • Credit limit changes • Word • Letters • Internal collaboration • Paper • Aging reports • Statements • Notes (?) • Ticklers (?) • Deduction folders • Excel • Account analysis • Internal collaboration • Deductions(?) • Internet • POD’s • Banking information • Customer web sites • Fax Machines • Collaboration • Imaging Systems • Documentation • Network Drives • Store customer information • Credit • eRam, etc. • Others

8. The Question is Why? • SAP is designed to process transactions and post to the GL • AR workflow optimization is new and still in its infancy • Agings are traditional and is that a good thing? • AR and Inventory databases are not equivalent but are treated as such by all AR software vendors

9. When a customer asks you:“What do I owe,” can you answer them?

10. What they owe you is a far different question than what their account balance is

11. Collectables – Clean receivables Disputes – Dirty receivables Deductions- Dirty receivables AR Databases are Unique in ERP • Clean Receivables • Collectables : transactions that are not disputed & whose receipt can be forecast • Dirty Receivables • Disputes : transactions that disputed and not paid • Deductions : transactions that are customer debits

12. Dirty Receivables are Complex • There is no one policy that covers all the scenarios • Lots and lots of subtlety • Transactions and move from clean to dirty and vice versa • Some “clean” transactions may still be managed as dirty

13. Examples Examples

14. Deductions on a Check • Easily identified as dirty and input as a deduction • Can change status depending on the outcome of the resolution process • Re-invoice to customer for recovery

15. Short Payments/Residual Bills • Transactional discrepancy normally associated with a deduction • Handled like a deduction • May be re-invoiced for recovery

16. Credits? • Not all credits are created equal • Some are cleaner than others… • Return credits • Different customers can have different transactional flows and relationships • Credits awaiting matching to deductions • Authorized by management

17. Others • Disputes • Finance Charges • Unapplied cash • Misc Charges • Any transactional anomaly that is part of your transactional interaction with customers

18. Impacts to Collections Activities • Inefficient collection processes • False positives • Recalculations • Accurate letter generation impossible • Inaccurate cash flow forecasting • Increased DSO • Reduced collections efficiency

19. How Cforia’s Application Manages this Process

20. How does your Company Look? • Run a test in your own databases • Review all invoice transactions over 90 days old • Sort by value (high to low and low to high) • What do you see? • What percentage of monies are actually dirty? • What processes do you have in place to remove them from your books? • What are the financial impacts

21. Next StepsIf you want to see a detailed presentation of Cforia’s product suite, call 818-871-9687 ext 104or email info@cforia.com