Timothy Murray: [0:05]
Okay, so at Wesco, we started our automation journey by implementing the HighRadius Cash App tool. And we did it on our businesses that were on the Oracle ERP platform. For the Oracle ERP and EBS platforms, we’ve now implemented the Cash App Tool on 11 ERP instances, so we haven’t hit the hole 30. Well, it’s actually 22 ERPs that we have across 30 business units. So we’re trying to get there. But right now we have about 85% of our receivables that are in the cash coming in, are going through HighRadius Cash App. Our first collections implementation is scheduled to go in June of this year. And then we’ll follow that by additional instances for collections and credit. So in this session, some of the things we’re going to talk about, just give you an overview of what West goes businesses and our vision, our path to automation. And then the success that we’ve had with our Cash Application automation needs, we think we’ve had success with it, and then expanding the scope out to other you know, the collections in the credit tools. And then we thought we’d throw in some things about you know, what to watch out for in the A/R transformation.
Renee Armstrong: [1:17]
Okay, so just a little bit about Wesco. We are a business-to-business distribution company. And we’ve had quite a transformation over the last couple of years. We’re in 53 countries, we started off as a distribution arm of Westinghouse, which some of you may be familiar with. Recently, we acquired Anixter, which was actually one of our competitors. And we’ve went from being about an $8 billion company to an $18 billion company after we came together and had a growth on both sides of the fence as well. Right now we have about 150,000 customers and those that’s growing pretty regularly. We also have a significant number of suppliers that we’re working with. And we’re trying to really manage the challenges that come with assimilating all of these businesses together, as well as growing at the same time. So our mission is to be the best tech-enabled supply chain solution provider in the world. And that is a huge drive right now from our corporate structure, we would like to not only digitize our business but really develop the best in class processes and policies and procedures that we can leverage throughout all of our individual business units.
Timothy Murray: [2:29]
Okay, so we started thinking about some automation for A/R back in 2015. It was before I was with a company, but the company recognized that there were we had various ERP systems, and a lot of different business processes that really didn’t lead to any standardization or optimization, or any type of scaling. And we had limited automation in our accounts receivable area. At that time, we had a little bit of automation with cheques, but nothing with ACH. So we really we’re not in a position where we could scale. I came to the company in 2017. And around that time, we talked with HighRadius, and we had a full A/R assessment performed with HighRadius. And from that, you know, we came out that hey, the easiest thing, the lowest hanging fruit, his Cash App, and we wanted to consider the Cash App, credit and collections. At that point, we didn’t want to do like a big bang theory, we just wanted to do, let’s get our feet on the floor with cash, make sure we get that right, and then move on to other areas. So right now at Wesco, we process about 8 million payments annually. And with as I mentioned, we had a little bit of automation. So we were fairly good with cheque processing. And that was just me, I consider that table stakes for having any type of automation tools with a different supplier, or different solution. But we’ve really had nothing for ACH payments. And then if you think of the other payment types, we had credit cards, we really had no automation with credit cards or very little. And then also with like online banking, there was no automation there. So other than cheques were pretty manually intensive. The company was also pushing to convert customers from cheques to ACH payments, so it just made it that much worse. And at this point, I think we probably have about 60% of our payments coming in ACH, and as most of you know the remittance comes in with emails or you have to go out to a portal and it’s just a pain in the neck to have people having to manually match that stuff up. So I think we did have a little bit of EDI automation there and we probably had about a 10% hit rate on EDI before we started all of this so all these just led us to the conclusion Okay, let’s automate Cash App so that we don’t have to just keep adding people to our world. So it was 2000 maintain before we went live with anything that was our Wesco us, Oracle EBS, and ERP in 2020. We put another implementation in for our Wesco, US Oracle SCM. So another version of Oracle, but also in as 400 for one of our businesses. And the timing here is wrong in the acquisition timing, we should have had that done in 2020. So I think it was in June of 2020. We finalized the acquisition of Anixter. So as Rene said, We doubled and we’re like an $18 billion company now. And Anixter, at that point had, I think their hit rate was about 35%, across all payment types. So they’re very, very little automation there. So we added on Oracle EBS for our Canada piece. And then we added on the big nuts with Anixter, North America, they have a mainframe, and still as whenever they looked at some of the codings that they were using for the little bit of auto cash they had the last update to it was 1983. So they got some information from the bank and pulled that in. And it basically said, Hey, we don’t want to Alrighty guys, so we don’t want to deal with going in there and even touching the code. So if you can get a file that mimics what the bank is sending us now, then we’re good with that. But otherwise, we’re just afraid of touching all that. So we had radius was able to do that they were able to mimic the files that we were getting from the banks. And then two more businesses in extra power solutions are on systems called Eclipse and SFC. So those two answers were in October of this past year, and then November. So we did those a month apart, did all the testing and everything leading up to that time. And then this year, we’re going live with another business called EECOL, which is on a CAPP D3 system, which I never heard of before I came to Wesco. I’m not sure if anybody’s ever heard of that. I shouldn’t say that maybe there’s some cat people here. But we’re gonna live with them in May. And that’s an interesting one because there was zero automation up there right now. So it’s kind of a challenge with the change management with the users. And the IT team has been very good about figuring out how to put Auto Cash programs together. But it’s going to be much better than what we had previously.
Timothy Murray: [07:22]
So our current Cash App automation, what we’re measuring for metrics is a pre exception hit rate, which way I defined our way I understand that is basically those payments are coming in. And we don’t have to touch those payments, because we have a customer identified and we have invoices that are being pulled up for those. So we’re at 78% there. And we’re at 94% After our team touches and does the exception handling. So we’re pretty happy with that. The pre-exception hit rate. And you see on the right where we have, we’ve scaled up we have over 85% of our payments coming through there dollar wisely. And our first implementation with our Oracle EBS that we had on for, I guess about a year and a half to two years so far, maybe a little over that. We were at a high point of 86% for our pretty exception hit rate. And then we had two changes, basically, one was one of our businesses moved over from Oracle to the mainframe, so customers are paying, we’re still paying into the old lockbox, and none of those were matching up. So until we get them fully converted we took a hit with our hit rate there. And then every time you add in a new business, we had with our original Wesco, we had a good two years of experience to get it up to 86, almost 86%. And as we added new ones on, it was kind of like what Sashi was saying today, it’s like you can, you can wait and try to put it in perfect. And you don’t know how much benefit you’re getting from that. And there are only so many scenarios you can test in the UAT environment. And we have I think it’s 80,000 payments a month coming through. So to try to find things that are going to really move the needle, it’s hard whenever you’re just doing it through UAT. But whenever we get to the point where we’re in production, you know, those, I think with anixter, which they had 30 -35,000 payments a month, when we brought that through, we were around 70% Just for that business unit, which pulls our whole number down. We’re getting up I think we’re back up after you know, since October, I think we’re at 78% or so 77-78% with anixter. So every month we’re seeing we’re monitoring the metrics and we’re seeing them go up. So it does take some time. It’s not a magic bullet that right off the bat, you’re gonna hit 80% You’ve got to do some things to get there.
Renee Armstrong: [9:46]
So we decided in our journey that we wanted to start with Cash Application because we felt that getting the cash right was the key to getting collections right and getting collections right is the key to getting credit right. When the cash isn’t applied timely. You’re collecting money that cheques sitting in there waiting to be applied, there’s a disconnect there. And there was really not a good way for us to make great measurements, like, what’s our DSO, what is our weighted average days paid for certain customers to develop those collection strategies whenever we weren’t getting the cash, right. So after we’ve stabilized cash, we’re now running on to our collections. As Tim said, that’s going to be going live on June 9, which we’re really excited about. We are starting off with just one of our ERP systems on collections. And we’re going to take the same phased approach that we had with Cash Applications because that was very successful. So we’re actually going to put our first ERP instance on to HighRadius that was for our Oracle, ERP. And we knew that we got that right with cash. And now we’re moving that on to collections, we have our 22 Different ERP instances across the organization over the 30 business units, we know this is going to take some time and it’s a journey, we’re starting with our largest ERP systems, to begin with, it’ll be about 80% of our revenue that runs through them, we really wanted to get the most value first. And then we know it’s going to still take a significant effort to get the other federated systems on to HighRadius, we know the value will be a little bit lower. But overall, we’re going to get value on one view of the customer. Being able to integrate our collections into perhaps a single person can handle a single customer, rather than having five or six people working in different systems managing that same customer. Now in the next slides, we’re going to go over some of the insights and some advice that we have for this implementation process and some things you can do to prepare for it before you even get started with HighRadius. Alright, so if you haven’t already if you want to just take a quick minute and answer the poll question. So what we’re asking is, what are the pitfalls you encountered early in the process of an OTC transformation project. So it was that defining tangible success metrics, which I know we struggled with a little bit because sometimes some things can’t get measured, that’s tough. lack of adequate executive buy-in cross-functional alignment, or inadequate resources to manage the product, I could say probably all of the above has been a bit of a challenge for us in one way or another. But there’s oftentimes one of these it’s a very big issue. So we’ve got about a third on metrics, a couple of folks on executive buy-in, and then cross-functional alignment. And then the project resources. So it looks cross-functional. And the metrics are the biggest issues. I know a lot of times you people operate in silos, that was a big issue for us is having the silos on our different departments and getting all of the right folks involved to make those decisions. So now, here are three things to consider before you start your A/R transformation. These are things I really wish somebody would have told us before we started moving here. And now I find it’s very valuable as we move into our additional federated systems to start on this same process. So the first one is your data management. If you have garbage in, you’re going to get garbage out, right if your data isn’t clean, and if you don’t have good accurate data, whenever you’re starting on your journey, things may not work exactly how you think that they’re going to work. You’re trying to align fields, and you’re trying to work through this testing environment. And you find that, really, you didn’t make those preparations that you needed in order to get the most out of the system. Another thing that you can always start on right now is internal process improvement, especially in the world of acquisitions and growing through acquisition, you may have a lot of right ways to do things, but they’re not always going to line up. So the right thing for one business may not be the right thing for another business. But you have to find a way to pull those together to offer more like a higher level of standardization, we found that when we started aligning our processes, our thought processes, and policies and procedures across the organization, it’s making standardization much more smooth as we move forward. And then lastly, but I think most important is change management. We’ve got a lot of folks, especially in the credit and collection area that know a lot of things about all of the things and they don’t always agree. There may be a lot of again, right ways to do things, but building the trust in the HighRadius products and building trust. And some automation can sometimes be really challenging when that’s not what you’ve been doing for years and years and years. What we’ve had to do, and I feel like this has been very helpful to build that trust in your Cash Applications. A lot of our credit and collections folks were very hesitant about automation, they were really nervous about moving into this world. But once they see their Cash App numbers get better. And they have far fewer gripes about how long it takes to get their Cash Applied. They’re much more confident with the products and with these solutions.
Renee Armstrong: [14:32]
Okay, so data management, I talked about that a little bit already was one of our biggest issues that we had to handle. We do have a very large group of our business that we have on a single we have a customer data hub, but there are still all of our federated systems that aren’t quite the same across the board. Now one of the biggest things we wanted to accomplish was having one view of our customers across the organization. A lot of times you would have credit analysts in different areas saying, Oh, my exposure isn’t that bad. You know, we can go had it increased their credit line. And suddenly we have a customer that’s a little bit risky, that has an exceptional amount of exposure. And nobody knew that that was happening because of all of our disparate systems. But what we found is actually aligning those customers across the organization is really challenging unless you have a way to connect them. Your bill twos aren’t right, your ship twos are different, it’s really hard to see really who’s connected across the organization. So getting that in line ahead of time, is really helpful whenever you’re trying to get one view of a customer or arrange a single collector for a single account. That’s not really possible to do unless you have a way to connect them along the way. Another thing is learning how to assign the second industry code or some sort of a qualifier to your customers so that you can look at your segmentation across different areas. So for example, we have say solar customers, or we have utility customers, things that we need to look at kind of in a group, you need to find a way within your data to specify what goes where. And then again, our customer contacts, I just did a really big exercise to get all of our collectors to put the customer contacts in the system. And an easy way to do it, most of them have it in Outlook, or we have notes somewhere on our collection notes. And that is not very helpful when you’re trying to get it loaded up into the higher radius system. So I would highly recommend trying to standardize your customer contacts. Um, categorize them if possible, and find a good way that you can extract those and load those into the system,
Timothy Murray: [16:22]
Some internal process improvements that we’re focusing on to try to get our hit rates higher for Cash App. And I’ll go through these quick because I think we were just hit with a two-minute warning. So the MICR, ALIAS, and Remittance cleaning. So we have specifically looked at I think we have seven different groupings of our businesses that we’re looking at right now for hit rates, and plus the overall rating. So we see that HighRadius has told us that 80% is considered world-class. So we’re shooting for that 80%. And then growing from there, for pre-exception handling hit rate, we have three of them, three of the businesses that are above 80%. Now, one that is 79.8%, or something like that. And then we have three that are lower that are in the low 70s. So a couple of those ones that we got up into the 80s, were able to make a concerted effort to look at the MICR and ALIAS cross-references. So the MICR is the bank, routing number, and account number. And we have a cross-reference from that MICR over to who the customer is that is paying from that account. So our internal customer number, and then also the ALIAS is for EFT or ACH payments, the payer name cross-reference to that customer number, if you have that set up cleanly, then I radius is good about going out there and looking at all the open art for opening or for those customers. And we’ve seen that we’ve got like five or 6% increase in our hit rate, just by having that out there with what they call system intelligence. So they figured out the remit from the system intelligence if they can’t find the remit there. So that comes in handy mostly for the ACH payments, because we’re still struggling to try to match up or make sure that we get all the remit from the customers and that we have it there ready whenever the payment comes. And that gets to the second point there, the centralized email remittances. We have email addresses where we tell customers, here’s where you should send the remit to. And we have those automatically forwarded to HighRadius. The struggle we’ve had with that is that a lot of those customers would send that remit to our credit collections person, that person would then when they get around to it, they’d forward it over to our Cash App group. And they were used to doing that. And it could be a few days after that payment that came in. And in the old days, whenever they were doing things manually. That was really wasn’t okay, but it worked. Now, it doesn’t work with automation. So we’re pushing everybody to get to their customers and get that remit sent directly to these email addresses. And we’re trying to make sure that that whole team knows the importance of that. And we won that I don’t have on here that I should mention now that popped into my head is our credit collections users. They’re not there. Obviously, we didn’t go live with collections yet. But we started to get them as view-only users within the Cash App system. So we show them how they can get in there, how the system works, how they can see payments, and if they’re looking for a payment from their customer, so that they can be self-serving, instead of going back to the Cash App and saying, Hey, did you see my cheque come in? Did you see this payment anywhere, they cannot go out and look at it. And then the added benefit of that is that when we go live with collections, they’ve seen HighRadius already they know how to navigate around and they know how to use the filters and things like that. The advanced searches
Renee Armstrong: [19:43]
So, just a little bit more on change management as we discussed before. Executive buy intends to be the easiest I know everyone said that wasn’t high on their list in the poll. I believe executives want to digitize the business they want to move forward with additional technology. A big thing to do is include tech-savvy. semis on this project. We want people who are forward-thinking and want to change and they want to improve their processes, it’s really difficult to move forward into the design to move forward in the process with individuals who are resistant. So you want to look for that excitement from the beginning. And then initiating the early adoption is very important, as Tim just mentioned, with getting all of our credit and collection users into the Cash Application system that gave them time to navigate a little bit and become much more comfortable. And then that way, when they transition into a new way of working, in addition to a new system, they feel much more comfortable in the long run. So I know we’re quick on time. So just a couple of final takeaways. It’s really important to understand your current process gaps, and then start with optimizing your cash and then moving to collections. And then credit we feel was a great way a great approach to take for us. The Cash Application and timeliness is the foundation to getting everything else right. As you move forward, the importance of the data quality is paramount, you cannot have good data coming out and good results coming out unless you have good clean data going in. And it’s really helped us to build on our successes. With our phased implementation. They feel much better about everything else we’re doing now that cash is going really great. And then identify those digital transformation change agents, you really want people who are excited about this. It’s a fun product. It’s a fun process. But you really want to have people there that want to do it and they really see the value of the automation. I think we’re about at time so that actually works out nicely.
Timothy Murray: [21:29]
Thanks, everybody.
