Automatic payment reconciliation and deduction coding with Highradius Cash Application Cloud
Capturing accurate remittance data with a multi OCR engine enabled a hit rate of about 96% for check payments.
The solution dealt with complex parent-child scenarios that added up to a manual and slow cash reconciliation process with the help of automated invoice matching.
The cloud solution seamlessly integrated with other A/R processes to capture claim data to code deductions automatically.
The solution acted as an “umbrella tool” that sits on top of multiple ERP systems, such as, ORACLE, AS400, etc.
Real-time visibility for the credit and collections team into payment processing statuses every day allowed for a better customer experience.
Increasing the scope of implementation to 30 business units and 18 ERPs with cash application acting as the ‘building block’ for further automation with the collections and credit cloud solution of HighRadius
Global presence pressed importance on having standardized processes and achieving best-in-class status with the right technology vendor.
Expanding with HighRadius was a step towards enabling proactive management by predictive analysis and advanced reporting.
Good morning, everybody. Today Jenny and I like to talk to you about WESCO’s journey and how WESCO is partnering with HighRadius in Genpact to achieve best in class accounts receivable. With this year assorted shorter sessions with the time format we intend to move pretty quickly through this material, but if after the session if you have any questions, you know, catch us during the break or at any time whenever you see us we’ll be more than happy to walk through more detail with you.So, who is WESCO what is WESCO? We’re a publicly-traded fortune 500 company. We strive to be the best tech-enabled supply chain distribution company in the world. Our business units are centered around electrical and electronic solutions, communications security solutions and utility and broadband solutions. This past, I guess it was a year ago on June 20 WESCO completed an acquisition of Anixter, they were roughly the same size as us, and through the pandemic, we closed this acquisition and combined we now have about 800 branches in 50 different countries. Our sales are roughly 17 to $18 billion. And we generate an excess of 10 million invoices per year.
So, when I joined WESCO about four years ago we had some limited automation with cash application, there were already some exploratory discussions going on regarding increased automation or digitization within AR and to gain some traction with these discussions we enlisted high radius, and this was around 2017 18 timeframes to do an assessment of our AR area.So the results from the assessment were pretty good. We shared those with our senior leadership and their results supported our goal of using automation to improve working capital, with high radius as our solution. Our CEO and CFO were huge proponents of automation digitization becoming tech enabled all the buzzwords that they were using, but they also, they did actually support it and understood it. And the solution aligned really nicely with these objectives that they had. And we obtained approval to move forward with a cash application as our first. First day to tackle our CFO he also wanted us to be ready to scale up any of the back office functions as needed. And little did we know at that point that, you know, years or so later, we were going to have Anixter added to our portfolio and doubled our size.So with millions of invoices being paid.So we have noise of invoices being paid, multiple payment methods. So we did have some challenges applying cash efficiently before we had high radius, we had some fairly good automation with our check processing. But as a company we’re converting a lot of these customers away from checks to each payment. And we had a little bit of automation so with our acgh payments, you know, some customers send DDI data with their payments, but the majority of those EFT payments, we get. We got remittance by emails, or by going out to a portal and seeing what the customers were paying for.
So, that type of remittance we call decoupled remittance. And we had a very hard time handling that manually. The analyst basically had to go find the emails we have these folders all over the place of, hey, here’s the emails from customer, A, B or C. So we were getting our money quicker because we were getting to ACTH, but we were slow in applying that money, and we’re definitely less efficient in applying it. And then we have another group of customers that pay based on receipt of the goods. We don’t transmit them the invoices or these are called ers payments or ers settlements, evaluate a receipt settlement. So, we had some Excel macros that we would use to try to match up a PEO with what they were paying and things like that but the end result was we had a lot of manual keying, and we had the minimal ability to scale up. So you can see here that our automation for EFT was about 11%. Before we had high radius, credit cards, about 33%, and then checks we were already at 93% which was pretty decent, but that also required some work to get there, we had OCR technology. And we had information coming from the banks, and we were able to get a decent amount of automation there but it just wasn’t sustainable with where we wanted to go.
So some of the key solution features that brought us the high radius. First, the automatic processing of multiple remaining formats, so check processing the OCR technology we, like I said we didn’t want to lose any traction there. And this is kind of like table stakes, you know, H Hunter radius has this capability and they do it well. But what differentiates them a little bit more in the Cash App area, is that they’re able to digitally manage those electronic payments. Match up the email remittance, or the portal remains even go out to the portals and get that remains for us so that we don’t have to spend as much time searching for remittance and trying to match that stuff up. They also had the capability on the ers payments to match on multiple fields like the PO, or the delivery tick number order number or any combination of those. And that helped us a great deal. Second one, the second feature, was the automatic deduction coding. And if a customer is sending in a certain deduction code. We’re able to pull that or the system is able to pull that and attach it to the output that’s going into our E RP system. And then third, just the configurations within our radius, they were able to help us with, say, hey, if one customer is paying for example, and they pay for, you know if we have 30 customers in our system. It can evaluate all the invoices, all the open invoices for all of those customers, so we can make sure that it’s looking at it as a group, but it’s still applying it down to that customer level. So our results after our automation with high radius and this is our first round with our first round of putting a radius in DFT went from 11% up to 84% hit rate, you automatically pushing those through into rdrp Credit cards from 33 up to 86%. And then with checks, we actually gained up to 96% on the check process and so whenever we look at this. There’s like five things that we definitely like out of this.
There’s an umbrella system over the earpiece, so we have multiple GRP systems at westco, this can be one system that sits on top and it is one system that sits on top of multiple e RPS IDE handles that decoupled remittance that I mentioned, it’s a building block. The cash application we feel is a building block for further automation with credit collections which we’re moving to next with high radius. It increases the speed and the accuracy of that application. And then also, it provides visibility to our credit collections team, so that they can go in and they can actually see the payments they can see the remit what the customer said they’re paying for, whereas before they were going to a cash application person to pull down stuff from the bank or to pull out an email to see what was actually paid for.
So going forward. 21, what we’re doing in 2021, and then in the future, we’ll talk a little bit about that. So I mentioned earlier we have acquired Anixter. I guess a little over a year ago. As part of the integration, we selected Genpact as our partner as we developed our Global Business Services area. And at the time we were using a high radius through one of our mutual banking partners. And we use the hydrating solution through their solution due to the integration with the Anixter, we wanted to be able to expand to other banking partners because Anixter had different banks and we also had Canadian banks, and it wouldn’t have been easy to transmit that or transfer that into our banking partners. So, we also had additional high radius solutions that we wanted to do, we wanted to do credit and collections that weren’t offered through our banking partner. So we ended up converting to a high radius direct connection through our relationship with Genpact, we did that this past April and went live with that. And then we’ve had additional scope within the cash application that we’re working on. So currently, the West Coast Canada, we’re, we actually went live with that last Tuesday.
So we’re in the process of going through hypercare and that’s going well. Whenever we put Canada on we went from about 800 million in open AR in high radius to now 900 million. And then, that’s out of our combined we’re somewhere around 2.72 point 8 billion in open AR at any point in time for our company. So it’s some pretty big numbers out there. We’re working to add more into that. So our next one is our first try at Anixter doing some of their businesses so we’re doing Anixter us in Canada, as well as AccuTech they’re on a mainframe solution that we have. And we’re doing that, or go live as planned, we’re saying q4 But it’s October, the second week of October we’re planning to go live with that. And then the other trixter Power Solutions is on two separate e RP systems and we’re doing that in November, when we get through that we’ll have about 2.2 billion in open AR on high radius cash application. From there we have a number of we call off systems or federated systems, and there are at least 11 of those, or not I think it’s like 18 or 19 businesses on 11 Different VRP instances, It will be doing that over the course of 2022, so we’re continuing to grow our cash application piece, and then currently we’re finalizing our design work for credit and collections, and we’re looking to do that in phases as well implementation in phases for these different businesses trying to say is that this was a huge implementation, and bringing all of the businesses and all of the things together was, it was quite an undertaking for sure, we want to we want to truly merge the two businesses that we have and organizationally we’ve merged in the AR area, so we’re reporting up to the same Senior Vice President, we have our credit collections reporting up centrally as well as our cash and a number of other areas within our Global Business Services.
So now we want to try to get that visibility and get everything on to your we’re not gonna have one of your pieces while we wait for that we’re going to be waiting five or 10 years. Realistically, to get all that in place, but with this system, it can kind of be over. See, or as I mentioned, a citizen umbrella on top of everything, and it’ll give us that visibility across the organization. So some of the key reasons for the expansion project. Oops. I’ll get this. So, when I improve our financial KPIs. We were paying or still are paying some banking fees for some of our banking partners that haven’t converted to high radius yet. So we want to eliminate those, we want to reduce the sales outstanding. We want to create that automation which will enable us to pivot over and do other value added tasks with our people, instead of just looking for remaps or, You know, trying to figure out who to collect from the system can tell us that type of thing. We want to standardize the processes and achieve best in class, across our organization. We do have many different disparate processes and procedures now. And part of the design with the credit collections as Jenny will talk about a little bit was really about trying to get common. And then at the end of the day we want to enable proactive management by doing some predictive analytics and using advanced reporting and it’s within that radius. So we have a poll question here, and I moved to that. So what do you see as the top most challenged AR digital transformation in your organization? So I think you can do this on the low back.There is Hoover.
Jennifer Baca Johns
Everybody vote. This is exciting.
All right. So you want to do that like we still have a few votes coming in. So, inhibition of the current workforce to switch to a new solution as leading legacy systems in the Europeans which are difficult to integrate with a new system, absolutely. Lack of buy in from senior leadership and inability to find the solution will support all your customer requirements, seem to be tired.
Jennifer Baca Johns:
All right, so when you agree that all of these can be enablers and hinder the ability to progress as a company, this is really where Genpact comes in and adds value to any of the high release implementations. So we basically we partnered with high radius because we believe that we best support the technology and our clients by utilizing our process frameworks, best in class, our compliance, we have operations across or across all geographies in service about 135 customers and we’ve led hundreds and hundreds of transformational projects, therefore we have a broad knowledge and expertise across industries that helps optimize the technology. So one of the things that, for this engagement that we did with westco is we added support by having, having support by having multiple roles that we played so we had a project role change management solution engagement leads, and then also the where I served which was the design lead so I worked hand in hand with the solution architects with the client to really kind of bring everything together and make sure that we brought a great solution for all of the different modules.So we’ve led. We’ve led many of the HR high radius implementation projects, and where our customers have really seen the most value or the best value is really the pack. The fact that we bring domain expertise, what worked well, what didn’t work well and then also from our own personal experience, most of us, if not all of us have actually ran operations for many many years in the business.
So we take all of that into consideration and we really present a holistic approach to our clients versus just having a lift and shift, which, you know, taking their old processes and putting it into your system, you know, none of that really gives any kind of value for the spend or the investment. So our goal of the project is to really save time, drive the results, and make the technology work for you. And like I always say, work smarter, not harder. And as an example, on the collection design, we bring the best practices into the strategy design. We use the customer segmentations the critical, which is also a critical component to drive efficiencies and also reduce the number of touches. So now, the team can work on their accounts in an organized fashion. Stopped wasting time on the non value activities, pulling letters, or writing letters, pulling copies of invoices and such.
So, another huge piece that we believe adds success to the overall project is really driving that transformation. If you think about it you can’t build a house on a shaky foundation, there’s many opportunities where there’s many opportunities where you have to change your processes, or do a deep dive, how are you, what are you doing me what’s the operating model, and even maybe even changes in some of your policies. These are all things to take into consideration as we build that technology. And really that strong foundation to fully optimize the vast majority of the transformational opportunities are captured within the tool but there’s also some that are low hanging fruits like brick as an example like aligning the zip codes for your customers to pay to the close lockbox, or getting the customers like Tim mentioned to start paying electronically. And then there’s others that require many projects or get other people involved. These are all things that we worked with on the West Coast project and also there’s many many more that were identified throughout the initiative.
So, like I talked about earlier, we’re talking about some of our cash application challenges, and here are some of the future expectations for some of those challenges. So, with high radius, we want to be able to eliminate those banking fees and it’s actually a pretty significant expense that we were paying out there but the OCR engine. You know that Auto Capture checker means that does eliminate all of those data capture fees that are out there. You know there’s still a little bit that they may capture for us with certain attributes on there but it’s nothing compared to the invoice detail that some of them were capturing before. Also, solving the decoupled remains the technology that they have was dependency stupendous really for, for helping us out with that. And to take it one step further, they. There’s an example there’s a group pair that we have that one customer one group payer pays for about 30 different customers they send individual payments for that customer when they send the remit, they send an email and they have 30 pages in there of remit, I radius was able to take that and parse it out for us, and have everything flow through cleanly whereas in the past, somebody would be manually, finding that, and figuring out which one matched and then keying all that in.
So just, that’s just one example of where their configurations in the technology can help us out. The automated production code and we mentioned, one of the things that we also do is, the system has the open AR from our system, it knows what the tax amount is the freight amount, the discount amount, and I can automatically code if the customer is short paying by any one of those and then we can send out into our DRP system just so that we’re not trying to figure that out on the back end.
Jennifer Baca Johns:
I’d also add that’s really where the upstream process and getting that coding correct upfront, also helps with the down downstream process and that’s where on the collection side we spent a lot of time making sure that those deduction codes and everything were set up so I know that a lot of companies have, at least in my experience I’ve had a lot of challenges with making sure that the deduction codes are set up correctly and now we’re allowing the system to kind of work for us, so that the collectors can have time. Back in their hands to really get to that root root cause and kind of eliminate the root cause from happening. So as you can imagine, you know a lot of times, you know, especially on the collections in the credit area, there’s a lot of manual processes, everybody uses Excel, you’re having a hard time prioritizing your accounts everybody doesn’t have a standard way of doing it.
So really we really focused on trying to add the value, and in, you know, create the stripe because collection strategies to make sure that they’re set up so that the team can come in and really work, their accounts without having to think about it and we’ve built that into this system to where they come in, they know what they have to do, they can get it done, things like that. The other thing that was pretty cool on the credits on the credit side is that during that design phase is really looking at bringing in, in linking videos is linking to a lot of the credit agencies. So then it’s taking those credit agencies, and how do we want to utilize that data so that we can become more data driven versus utilizing that subjectivity and bringing that in and then building out what that’s going to look like so what strategies we’re going to use, how are you going to score it, how are we going to, to really rate our customers, what’s the right credit limits and things like that so really tried to focus in streamline that process as much as possible, and another, the last challenge that I think I’m going to mention here is, is on the order holes, and the releases, there’s a lot of limitations on the, on the west coast side where the systems you know put basically, I want to say like, 80% of orders blocked because of the system limitations that they had. So we really looked at a process which was causing a lot of time and tried to kind of streamline that piece of it as well, putting rules in place to where people felt comfortable that we can release the orders in a logical way. So really, all of these things, we worked hand in hand. As a team, you know, thinking outside of the box harmonizing in order to build that strong foundation to really transform their business and optimize the technology, when you agree, Tim.
Absolutely. And if you think about what we’ve been doing in the last year everybody is working virtually. We’re working with people all across the globe, and how to radius and jetpack team and the West Coast team. It just seemed to mesh very well. And we’re continuing these, How many meetings I have a week with everybody. And I was telling Jenny last night that we really, many times we have no idea who’s from Genpact who’s from high radios we know our WESCO folks but everybody’s just kind of coming together, it’s kind of seamless interaction. One thing I would say to keep in mind whenever you’re embarking on this type of journey is to select your internal participants wisely.
Find people who are open to new processes, you’re demonstrating thinking outside the box and not just somebody that says they need to think outside the box. Somebody that’s strong in the process, somebody who’s respected within their group, you know, it could be a leader but it could be an entry-level analyst, that really knows what’s going on because as much as we as leaders think we know what’s going on. The people that are in the trenches are the ones that know the day in and day out where their difficulties are and they just may not be speaking up all the time. So get them to speak up, and then find somebody that has technical abilities that you know they don’t know how to have to know how to do all the programming and things like that, but they have to at least know how the technology works and I picked up a moniker, at some point over the last few years and they called it a digital transformation change agent change agent, digital transformation change agent, somebody that can actually want to do and understands the technology and can find them the places to apply it.
So thank you if you have any questions, I know we’re running. We won’t admit it. So, sorry, Aaron, wherever you’re at. If you have any questions if we have time we can maybe take a couple if not catch us afterward.