Heather King
Welcome to our next session at our virtual radiance on the road program. Thank you so much for joining us. If this is your first session with us today, thank you very much for taking some time out of your day and your busy schedule to join us. And if you’ve been with us this entire morning, and now into the afternoon, at least Eastern time. Thank you so very much. We love having you here. We love giving these sessions to you. And we hope that you’ve been getting a lot out of them. Before we head into our next session of the day. Some housekeeping notes, If you’ve been doing this with us all day, you know them already, but if you haven’t, they’ll be new to you. First things first, our questions and answers. Our speakers are awesome. And they’re so awesome that they want to answer all of your questions. But they can’t do that unless you ask those questions. There are two opportunities to do so. On the upper right-hand corner, there is a box that is a question mark, which is our official Q&A box. That is the box to use if you want to keep yourself anonymous, so only myself and the other moderators are able to see them. The other option is the room chat. That’s where you can talk to each other, you can let us know about yourselves, you can comment, you can give a, “Woohoo, great job”, and a little bit of affirmation, anything that you want, feel free to put it in that room chat. But we can’t know what you want unless you tell us. Also to note, I know everybody’s been super excited about these is that we have prizes. I know you’re not just interested in autonomous accounting, I know you’re interested in prizes. Also, we’ve got some of those for you. So, I’ve already given away a couple of them in our last session, at the last two sessions. At the end of every single session, we will have trivia. You have to wait until the end to be able to enter that. The first person who answers the trivia question correctly will get that $20 gift card. Also, if this is your third session with us, you are going to have three entry raffle tickets for our echo show. This is your first, you get your one ticket, every session you go to gets you one more entry into our big echo show giveaway, and also meeting. We would love to meet with you. If you want to meet with us to learn a little bit more about us, please let us know in the question box. We’ll keep it confidential. And we’ll reach out to you to schedule that meeting. Everyone who schedules and completes a 30-minute meeting with us is entered to win an iPad. So, enough reasons to keep going, enough prizes to keep going. At this point now, I think it’s time to jump into our next session, which is Scaling Up Treasury with AI-powered Cash Forecasting, the Peter Cremer Story, and that is with the fabulous Jennifer Sheffel, the Treasury Manager for Peter Cremer. She leads global relationships with the global treasury team, local banking relationships, cash forecasting, and tax responsibilities. I don’t want to give you her bio, I’m sure she’s gonna tell you better than I could about herself. So, at this point, I’m going to make myself scarce and hand it over to Jennifer. Jennifer, please take the stage.
Jennifer Sheffel
Excellent. Thank you so much, Heather. And thank you, of course, for introducing me and for the time today. So, what I’m going to be going through is our treasury footprint, where we kind of are, and where we’re trying to go. So, today we are doing cash forecasting. But we of course want to take it to the next level and two inches higher. And to do so, we’ve been exploring some AI-powered options with HighRadius. A couple of things that I will be going through today is of course, why do we do this cash forecasting. What exactly is the purpose? We spend a lot of time doing it, there’s got to be a purpose, and there’s got to be a reason. Of course, I’m going to tell you about Peter Cremer in North America. We are located in Cincinnati, Ohio, so, more to come in regards to my employer. And the objectives of cash forecasting kind of goes hand in hand with the purpose. What are our objectives as treasury people? And what are we trying to achieve? And then, of course, the challenges that we have currently with our current state, and then where do we kind of want to go. What is our anticipated footprint as well as our projected glide path in order to kind of get there? So, if you guys have any questions whatsoever, definitely pop them into the Q&A boxes. And we will go ahead and address those as we go. So, without further ado, more in regards to the purpose. A lot of you are probably already creating your own cash forecasting. And if you’re anything like me, today, we do it primarily in Excel. So, we will pull all of our sales orders and any kind of purchase orders that we have out in our system and try to look at when do we anticipate not only to pay some of these things but when do we think we will get some of the funds in from our customers. The whole purpose though, is how much do I need to have on hand and how much am I going to use up within a certain period of time. Of course, interest rates right now are very conservative, are extremely low. We want to be able to take advantage of those as much as possible, but leverage how much borrowing I have. Because if I don’t use my borrowing base, for example, I will have to pay fees associated with that unused portion of the line. So really, it’s a balancing act between what’s my surplus and what’s my deficit, how quickly am I going to be using up that surplus, because maybe of seasonality, I need to purchase ahead, if I have a capital expenditure that I’m going to be investing in. So, making sure that there’s a high accuracy and frequency associated with this is extremely powerful. And we need to make sure that we have all the pieces to talk about it because management’s always wanting to know where we are and how it looks. Of course, one of the big pieces that we are looking into is growth opportunities, especially whether it’s for organic expansion, or mergers and acquisitions. But in order to do that, you have to be positioned appropriately. And yes, I’m sure we’ve all heard, cash is king. So, ensuring that you have the right amount of cash exactly when you need it is extremely powerful.
Jennifer Sheffel
There are a couple of ways of doing your cash forecast, you can do an indirect or direct method. And today I had already mentioned we pull a lot of things from our ERP to try to look at what our inflows and outflows are. And when do I anticipate having collected those receipts, and when do I have to give the disbursements on certain POs or even invoices that I’ve received from my suppliers. So, looking at my average days to pay is extremely powerful in order to ensure that I’m not just looking at, say, payment terms, just because a customer may have payment terms, are they going to pay you accordingly. One of the other things is after we’re complete, kind of standing back and looking at it from a reasonability perspective and looking at net income, and even my operating cash flows. For example, my AR is climbing and going upward, because my sales are also going upward. It’s going to take a little bit of time to, of course, collect on all of your accounts receivable. So, having that reasonability standpoint, and looking at it from an indirect methodology does help because it helps with validating what you have out there. One of the big things, though, is everything I talked about is a lot of work. And it’s very manual currently. Looking into Artificial Intelligence or AI perspective, based on the historical actuals, will increase our accuracy. Taking that perspective and going to that next level, will make our cash forecasting process super powerful. About Peter Cremer in North America. Peter Cremer was founded back in World War II. We are a global company. And we have a huge footprint over in Germany where our world headquarters is located in Hamburg. And what we do is we not only do contract manufacturing, but we also do a lot of trading. So, buy and resell oleochemicals. Oleochemicals are any kind of chemical that’s derived from plants. So, if you think of your organic kind of space, that’s where we’re like it’s our niche. So, that’s fatty alcohols, fatty acids, even methyl esters, glycerin, and a wide array of other materials. Of course, we do logistics as well as just sourcing. And to deliver that I can only imagine what you guys are thinking because we have 67 branch offices and holdings around the world and over 2000 employees. Well, that’s great, Jennifer, what does that mean for North America? In North America, we have about 350 employees currently. We have two plants here as well as warehouses in Cincinnati, Ohio. We do have a campus, we have a couple of buildings here, but everything is honestly in Cincinnati, Ohio for North America. But our footprint is complete across North America. So, just because our headquarters are here in Cincinnati, Ohio, we do have a very wide array of services and fees and our name is out there from the east to the west coast. To kind of give you guys an idea as to our team, when you think of contract manufacturing or manufacturing industry in general, you can probably think immediately- Oh, I bet they’re very lean. Yes, we are. I only have three people reporting to me. And then there’s a finance manager who concentrates on FP&A, but also the controller aspect. So, you can see that he has the controller that reports to him as well as the financial analyst. And then the corresponding stuff for the controller. You have your AP, and also a staff accountant, who does a wide array of things primarily within the inventory. In order to deliver what I had said, in cash forecasting, you have to be extremely efficient, because we are very lean, and there’s only a couple of us that are doing this on a monthly basis.
Jennifer Sheffel
So, objectives of cash forecasting. Why, again, do we do this, after we spent so much time in this space? What we’re trying to do is, of course, where we’re wanting to head is increase our forecasting accuracy to at least 90%. Today, we are looking out about 45 days, but where we’re wanting to go is to do kind of the 15-month rolling forecast out into the future. And today, I don’t know about any of you guys. But in manufacturing, we don’t tend to have many sales orders or purchase orders that are out there 15 months in advance. So, having that Artificial Intelligence to tell us where we are and what we think is going to happen in 15 months, will give us more light at the end of the tunnel. And we can get ahead of some things if needed. We definitely want to be able to move away from some of the spreadsheet-based data gathering. Of course, with spreadsheets, primarily Excel, they’re very accident-prone, a formula can become broken, and it’s not linked anymore. And now you’re going to get inaccurate data, which is never a situation that you want to be in. My bread and butter, as far as a background is Forecasting Planning and Analysis, so more from an FP&A perspective. What I’m wanting to do is switch from more of my FP&A forecasting background to more of that direct centralized forecasting by leveraging HighRadius honestly, and having that Artificial Intelligence. But I don’t want to lose any of that invoice level visibility that I can get today through power queries within Excel. But we want to be able to scale up and continue with our sustainability. So, by doing that, we have to have that visibility across regions, currencies, and maybe additional entities as we are looking at mergers and acquisitions in order to grow outside of our organic growth.
Jennifer Sheffel
As far as the roadmap, Heather kind of alluded to, as far as my bio, I started with Peter Cremer in North America about four years ago. And I did start more on the FP&A space. And about a year and a half ago, we had a gentleman who retired in treasury. And it’s a piece that I’ve not done in the past. So, they had asked me, “Hey, why don’t you go ahead and give it a go?” Because I strongly believe in growth and development on a personal level. So, I went ahead and transitioned into treasury, as I said, about a year and a half ago, and wow, have I learned a lot. Not only have I learned my people that I need to leverage at the bank, but also cash, how does it behave, what kind of things can I maybe look at differently in order to gain a better perspective. And I’ve also taken on tax responsibilities. I am the liaison for our third party who does our income taxes, but I do process all of the state and local taxes. But of course, they’re always there for me. Thank goodness as I may have questions, and as I went into the North American Treasury, it quickly developed into more working globally with our treasury team even over in Hamburg. With that being said, though, quickly, I started to realize there’s a lot of data here and we need to be able to quickly go through this data. We can continue to peel back layers of the onion and understand what we can do in order to continue increasing our accuracy. So, I’ve taken up courses in order to learn more about treasury. I was in a course just recently at Northwestern University to learn about the CTP, the Certified Treasury Professional exam. And of course, watching webinars, which is how I learned about HighRadius, and how we can continue to grow and develop in the treasury sector. Automation, of course, came up. And that’s where HighRadius’ niche was already in play. So, quickly, we did a demo and started to ask more questions- Is this really a fit for us? And how can we scale up or down with this and make sure that we are having our sustainability? So, the next steps, of course, increase our forecast accuracy to at least 90%. I can honestly tell you, we’re definitely not there. If I look at just my inbound versus outbound cash, it looks pretty good. But then there are always these things, heaven forbid that pop up within the month, and you have to address those. So, those one-offs can make or break your cash forecast. I do want to have more of 15-month visibility, as mergers and acquisitions don’t happen overnight, I want to make sure that we’re positioned appropriately. And if there’s anything that I need to do in order to secure more cash, or to think differently, I would much rather have that pop in 15 months, versus “Oh, now we’re behind the eight ball and we have a lot of work to do.” And then, of course, make sure that I have that right balance as far as my cash flow. And then I have the appropriate reserves and lens for what I’m needing.
Jennifer Sheffel
So, challenges, I’ve already alluded to a couple of these, today, our ERP we are on Microsoft Dynamics 365. And that’s where my AR and AP reside. I do have a power query that’s written over the ERP and is Excel. With that piece, though, I’m also looking at queries from the bank. So, those are in a PDF, but I’ve been able to get them in a CSV file. But again, now I’m merging things into Excel and having this god-awful, huge workbook that I’m having to go through. And I’m only trying to do 45 days out for the next month. I can honestly say today, it’s a lot of work and a lot of data. So, analyzing that, and being able to dictate where do I need to maybe spend efforts in order to get better accuracy. And looking at variance analysis. This takes about 70 hours a month in order to review the data and figure out what we want to do and the next steps. So of course, that strategic decision comes into play as we start to talk more and more through our cash forecasting. And this is highlighted, even some processes and procedures that we have gaps in, in our everyday functionalities. So then, some of the things I had already mentioned, it is error-prone, because things can break as far as formulas. And of course, having that inability to scale up quickly, and to have that variance analysis, and a very quick and efficient manner is not something that I have today. So that limits my visibility as well to being able to forecast and to put in different measures that are needed because of gaps within our process.
Jennifer Sheffel
So, TO-BE State. Here, you can see it’s the same kind of slide as before, but it’s definitely more condensed. We still pull data, of course from the ERP as well as from the banks, and then I will get a cash forecast. And that Artificial Intelligence or the AI will be leveraging what has happened historically on my actuals. Now, I’m going to be able to have more visibility out into the future, I can forecast at any kind of group or product level even, and have additional visibility into what may be soaking up my cash that we need to correct. Of course, I will continue to review with my CFO and think of what else and what are our next steps as we continue into the future. Having a centralized repository for easy data access will be extremely key. It’ll free up time and we’ll be able to work more on our strategic initiatives and to talk about maybe some of those processes and procedures that we need to fix, because now we have the visibility, and we have the time, heaven forbid to work on them. And of course, making sure that we have accurate decisions with strategic initiatives. If we buy a new company, of course, I want to make sure that we’re all in, and eyes wide open. Or if there’s a business expansion, because one of our customers comes to us, and wants us to expand with them, we want to be at the table and say, “Yes, absolutely, let’s do this”, especially if it makes sense. And of course, having that increased cadence of forecasting, why should I only do it 45 days out in advance, maybe I need to be doing it weekly, or quarterly, I don’t know. But that’ll be something that we can work toward, and in.
Jennifer Sheffel
The 4E frameworks for success. Embrace- Accept the course of the future it is upon us, and we’re probably behind the eight ball and just now looking at Artificial Intelligence in order to help us with this. Evaluate if you have the necessary hard skills, soft skills, you’ll even be more successful and empowered. This will help my team not only empower me to even work on some more value-added activities but also be able to leverage Artificial Intelligence and to see what’s out there. And then last, but not least, educate, internal and external training, continuing with those and webinars, and kind of staying up to date with opportunities that are out there.
Heather King
That is a question of the day. All right, we have another one here. What was your process to select your technology vendor or any technology vendor?
Jennifer Sheffel
Our process has been and I know the team has been wonderful in this particular space because I ask many questions, and I do have a lot of due diligence that I go through in trying to evaluate what is the right fit for us. So, not only have we walked through my process but then also looked at how I can quickly scale up if I were to have an M&A or even down if I may sell a company in the future? What does that look like? And how can I quickly adjust? And how flexible is it for those needs? So, that’s been a big piece as well. I would say, just walking hand in hand with the team and asking lots of questions, whether it’s through the demo. That’s been instrumental. I would always recommend that if you’re ever going to look for another software, definitely always do a demo and make sure that it’s the right fit for you and your organization.
Heather King
Okay, what about what are some of the best practices to get your team on board with using technology?
Jennifer Sheffel
Let them do the current process. No, that’s partially true. Because of course, by them getting to see what you go through today. They’re happier to embrace what the future can hold and have that available.
Heather King
Fine, but there’s a lot of pushback? You know, do you have to work through a lot of, you know, human pushback when implementing anything new?
Jennifer Sheffel
Of course, that comes with anything that’s new. Because some people embrace change, and then some people don’t. But as you can show data, and how you’re getting better. Then, of course, that change of apprehension is not as much as normal.
Heather King
We have one more question. Somebody asked, “How long do you anticipate the transformation to take?”
Jennifer Sheffel
So interestingly, I have the documentation here, but I would say the implementation itself is like three months. However, as far as making sure that it’s a success, and it’s achieving everything that we want, I would say, minimum of six months. So yes, you need to scale up. And it does require some of our IT resources in order to get there. But definitely reaching out to the team that you have at HighRadius and asking them what are the requirements and restrictions on your resources is extremely instrumental too. Because of course, if you have any kind of bottleneck with your resources, that can play into how long the implementation can take.
Heather King
Alright, so we have one more question. One more question is sent. But if anyone has any more, please utilize all those lovely areas to ask those questions. What is the biggest advantage you expect from Artificial Intelligence?
Jennifer Sheffel
Definitely forecasting accuracy. Something that’s super aggravating today is going in and saying, “Oh, I think we’re going to have X amount of dollars of surplus this month.” And here, you actually like broke even. And then you start to try to figure out what went wrong and what happened every time you have to try to figure out what happened and what went wrong. People just don’t believe in the product. And then are you doing something that you should be? Or are you just kind of wasting your time? Having that where I can leverage and show my forecast accuracy, as improved, will get people to be on board and to believe in the product. And as well as the process that we’re doing and spending a lot of time on.
Heather King
I don’t see any other questions in any of our question boxes. So, I will take the opportunity to thank Jennifer so much. A virtual round of applause for Jennifer, please feel free to give her your kudos and your applause in the chatbox and let us know how you liked the session. And thank you so much. That was such a great session. And we appreciate all of your time in presenting this today. Alright, so before we go, though, I know everyone was waiting with bated breath for our trivia question for this session. So, our trivia question, the first person to answer this correctly, will receive a $20 gift card. And here is the question. On average, how much time a day did an Instagram user spend on the platform in 2020? So, do you think it was a ton of time? Or do you think it was not as much time? All right, I’m giving everybody a chance to answer. All right, we finally saw the right answer, the right answer is A. 28 minutes is the average time for an Instagram user in 2020. I don’t know what that’ll look like in 2021. But people are on their phones in 2020. And I have a feeling if you ask about TikTok or Facebook, you’re probably looking into triple digits of numbers. But congratulations to our winner. You were the first one to say A and you will be receiving a $20 gift card. Well done. Thank you to everyone for participating in that question. You still have two more opportunities for trivia questions at the end of the sessions. And also, watching more sessions will get you more entries into our raffle for an echo show. So, there are lots of good things happening that is for sure. In our next session again, you’re going to get a little bit of a break about 10 minutes before our next session, which is our Analytics Training, Double Your Order to Cash Productivity through Deep-Dive Analytics. So, make sure you head back into our agenda for our next session starting in 10 minutes, 1:15 Eastern Time, and I will see you all there. Thank you so much.
