Guide From Staples: Four Ways to Encash Aging Receivables Faster & Achieve the Lowest Possible DSO

Digitally transforming your collections process doesn’t stop with implementing a Collections automation solution. Learn four ways to encash aging receivables faster and achieve the lowest possible DSO.
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George Uko

George Uko

Manager Credit and Collections, Staples
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Session Summary:

Takeaway 1
Recommended capabilities to enhance Collections operations

Key Points

  • Consolidated collections profile for a customer present across different geographies
  • Two way customer segmentation: Risk-based segmentation and Customer-based segmentation
  • Single point of coordination for all the Sales representives and A/P departments
[04:38]
Takeaway 2
Hassle-free integration with third-party collection agency to collect bad debt

Key Points

  • Allows the customer information transfer to happen with a single click
  • Eliminates the need for manual aggregation of customer data like, interaction history and payment behavior information.
  • Allows the collectors to focus on strategizing collection outreach and leave the data exchange to the system
[12:13]
Takeaway 3
Collections analytics dashboard gives a 360° view of the Collections operations

Key Points

  • Account Level Reporting helps you track how all your customers are doing through dashboards like the aging analysis, etc.
  • Employee Level Reporting helps you track the performance of all the collectors in your team through Activity Analysis Dashboard
  • Value Metric Reporting helps you to measure collection department’s contribution to the overall business
[20:30]
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Moderator [0:04]
Hello, everyone. If you haven’t been here, welcome, if you’ve already been here, welcome back. Thanks for coming to radiance. Just a quick note, we’ve got IV bars, if you guys had a late night last night like I did, we have hangover kids, we’ve got coffee all back there. But I would recommend we have buses from 1230 to 230, that are going to the airport, and they can also take you back to your hotel. But I would definitely stick around for the next 30 to 45 minutes because we have a great speaker, his name’s George. And I’ve gotten to know him a little bit. It’s been a pleasure. He has three degrees. He’s an expert in making things more efficient, which is what he’s going to talk to us about today. But when he’s not coming, and teaching is actually a teacher as well. He taught four classes last semester, which is insane, so we’re about to learn a lot from him. But when he’s not teaching, you can find him at the lake on a 22 foot seaway every weekend. So you can find him at the lake on the weekends. But we’re really happy to have him in Nashville. And without further ado, here’s George.

George Uko [1:11]
Thank you. Thanks, everybody. Hopefully this isn’t too loud here. What we’re going to do, we’re going to talk about, excuse my microphone here, we’re going to talk about four different ways to look at as far as your receivables for different things you could do to increase as far as your receivables and drive down your DSO.

George Uko [1:37]
So one thing I want to start with is Staples promotional products. For most people, you probably don’t know this, but if you have a shirt with your company logo, or pin paper, anything of that nature, that Staples, promotional products, we are in the top 10 about number six of all the promotional products. So we sell to everybody. It’s a pretty cool company. So here’s four things we’re going to focus on with my presentation, we’re going to talk about as far as risk based customer segmentation, we’re going to talk about as far as third party. So third party, how you could send your accounts to the collection agency. We’ll talk about artificial intelligence AI with as far as your receivables. And we’ll talk about as far as analytics, I’m gonna go fairly fast, so I could get you to lunch. I know a lot of you are hungry. So let’s get going here.

George Uko [2:33]
So I’m gonna keep going here, just for location purposes. Staples promotional products is based in Overland Park Kansas. Great fact, just in case you want to know.

George Uko [2:46]
So here’s our polling question. So if you go on as far as the app, you could find as far as the poll question at the very bottom. So our question is, what is the biggest factor or biggest challenge for your receivables? So if you could take the time to please go on your phone, go ahead and answer this we’d like to get as far as your input. So is it limited resources manual as far as done in collections as far as reporting, or as far as large number of priority as far as customers. So let’s kind of talk about why we went into as far as working with HighRadius. So with Staples, promotional products, a couple of big things that we wanted, our management, upper management, one is to reduce as far as our DSL. So that was one big factor that we focused on to reduce it by as far as 20%, which you could see right there to the right. And then the other thing we wanted to do is come up with a better workflow. So that was a huge issue. For us prior to HighRadius, everything was paper bound paper process. And it was pretty hard to manage to be honest with you.

George Uko [4:02]
So here’s a couple of things to think about. We’ve been with HighRadius for the last four years, we are actually re looking at the way we’re doing things we are now updating as far as some of our setup, we’re going in setting up as far as new strategies. HighRadius, as you get everything implemented, it’s an ongoing process. So you need to keep in mind once you set it up, you’re going to have to go back and revisit what’s working, what’s not working, and go in and make the changes. So let’s go in here and let’s talk a little further.

George Uko [4:38]
So here’s some things to think about. And this is what the basis of the presentation is about. So as we look at this, one of the biggest things to think about is what we call customer segmentation. So with your customers, you need to segment them so you know where to put as far as your focus with Staples promotional price

George Uko [5:00]
Next, we have pharmaceuticals. We have a ton of different customers like John Deere, Coca Cola. While what we found is one of these customers can have 200 separate accounts. So what we did is we started segmenting the customers. So when we call one customer, we ask about all 200 accounts. So it really kind of sped up as far as the collection process. And we also found, maybe there were payments sitting on the wrong account that we moved over.

George Uko [5:30]
Other thing, as we look at this, if you’d look at the second bullet there, third party integration, we use all tests, and they are a great collection agency. Nice thing with all tests, it’s hooked into HighRadius. So as we review our accounts, we just literally click on the different buttons, and we send the counts to the collection agency. As we send accounts to the collection agency, that next day, they start calling. So it’s a great feature, you could get some of these low hanging fruit, some of these customers that you’re just spinning your wheels on, let them call let them use their resources to help.

George Uko [6:13]
AI in collections. Once again, looking through as far as the information, what’s in the system, what can we automate. One big thing with AI, we used it for all our letters, all our correspondence, we set up as far as different strategies that really sped up as far as our collection process. And probably one of the bigger things that a lot of times people forget is if you look at the far right collections, as far as analytics, when you’re running HighRadius, the data is in the system. So you need to kind of dig through the data to know what’s going on. And it’s amazing, as you take a step back, relook at some of the data, you’re gonna find some answers, and you could go in and reset some of your different strategies.

George Uko [7:02]
So here’s the big things, once again, I know I’ve kind of re honing on this, but customer segmentation, huge. And then the thing with third party, what we found with the third party collections, we now have a day threshold set in our system. So once it hits, let’s say day 150, all those accounts get reviewed to go to the collection agency, we don’t mess around, we don’t hold accounts, it gets to a point if we’re not making traction with the customers that go to the collection agency.

George Uko [7:37]
So with customer segmentation, you could do it basically two different ways. You could have HighRadius score, as far as your customers high, low medium, however, you want to set the different scoring. So the good thing with a scoring is you could drive different rules around that scoring. And that scoring helps because once again, you know where to put your emphasis. So as the collectors are working their accounts based on the scoring, that’s where the emphasis should be. So once again, you could go in, you could change that and decide what you want to do. And then the customer base segmentation, another little trick with the segmentation, we assign our different collectors to the different segmentation. So we have one rep that handles just Coca Cola, we have another rep that may handle as far as John Deere. By doing that segmentation, we put more focus on the particular customer.

George Uko [8:35]
So here’s some things like I was just saying, once again, divide your customers up, there has to be some common things that you could break down as far as your customers, who are the customers? How can we divide this up? And better yet, what about the different strategies, you know, as you go into the different booths, as they’re showing with HighRadius, they’re telling you there are different strategies they can set up, the system will score for you, you just have to dictate what that score is going to be. So definitely do that. And then one of the other things as noted on here, with a different segmentation, have different letters have different strategies set up for those different segmentations. So for example, like Coca Cola, maybe we don’t have to call today 60. So we don’t call until day 60. We may not correspond with the particular customer and to the day 62. So as we set up HighRadius, we set it around our customers, and you can always go back in and change this. But one thing I will definitely tell you, at least with our customers, we have numerous strategies. We don’t just have one strategy across the board. It’s multiple strategies across our different customers. So here’s an example. If you look on the screen here, you can see, the as far as the customer segment. So when you’re on here, this is under the collections. And you can see on here, the high risk, the low risk, medium, etc, you could go through sort your work list by the segment. So the low risk, you’re probably not going to spend as much time on the high risk, that’s where you want to spend your time. And what you’re gonna find without high risk by putting more emphasis that should drive down your DSL. And the other thing you may find by segmenting, you’re going to find there might be a commonality that you weren’t seeing before. So once again, dig into it, the information is definitely there. And you can always change the different threshold. So that’s where you got to work with HighRadius and determine what is that threshold.

Unknown Speaker [10:50]
Other thing that we wanted to do, and this is what I was alluding to earlier, you know, if you have multiple customers, so for example, with Staples, Coca Cola, for example, we have over probably 300 or 400, Coca Cola accounts. Well, as soon as we started combining them, guess what we found, they all have like one multiple as far as PIO, one multiple as far as AP department. So we gave them access, so they could go and make their payments, they could see the invoices, they could see the statements, as we did that in EIP, that gave them more tools to help us. And it really, really helped as far as what we’re doing with that.

George Uko [11:35]
And then the other thing that we did that really worked with the different sales reps, different sales reps are set up to work with different customers. So before I was telling you about the different segments, we also segment by sales rep. So every other week, I send out a weekly report or bi weekly report to our sales group, they could see all their particular accounts and see how they’re paying, and guess what they’re helping us collect, they don’t want their customers stopped. So they’re gonna help us collect, they’re measured on how they pay. So that’s a big one.

George Uko [12:13]
Something else to think about with CADE. This is a big one here, you know, we’ll see this in the next screen. But you literally just click right next to as far as the account number, you click it, you hit send, you’re done with it, there’s no paperwork, it’s all done through the system. When altruists receive our collection accounts, they have the history, they have the notes, everything’s right there in front of them. So this is one of the best things I think we’ve ever done. Because we could send a bulk of accounts, they’ll start working on them, I have no paperwork to do.

George Uko [12:49]
So here’s basically how CADE works. Once again, we have to determine we have to set our threshold, which accounts do we want to send, you have to manually review which accounts you want to send. So you always want to do that. Because there might be some underlying reasons, you don’t want to send everything to the collection agency. But as you review them go in there and figure out what needs to go. And as we do that, guess what HighRadius is going to pull the information through the collection module, it’s going to provide the backup documents, the invoices, the statements to as far as the collection agency, once they receive that they start collecting. So it’s no emails back and forth, it’s through the system, it will take roughly about 45 days through HighRadius to implement. But once you get this done, you’re going to find a huge lift with your collections. So here’s an example. Notice up here we are on the collection screen. And what they do with HighRadius, they put this button on here that says as far as changed customer status, they give you the ability to go ahead and transfer. So literally all you do is on the left here, you click on the account you want to send, and you just click on transfer, and the account automatically goes to the collection agency. It’s as easy as that. You could send multiple accounts at the same time. So a lot of times, I’ll go in, I’ll take a list. Literally go down, click everything, send it five minutes later, they’re calling on the account. That’s how quick it happens. So it’s a very slick process, I would definitely recommend it.

George Uko [14:36]
So here’s something else to think about with your different customers that have different risks. Strategies, not all customers should have the same strategy. Look at the different contracts to know how your customers pay. Not all customers pay the same way. Some of the different contracts are set up differently. The lady that presented before me he’s some of our customers net 16 and 30. Know as far as what’s going on there, and set up the different strategies, and once again, work your accounts segment your accounts to get the most out of your collections.

George Uko [15:15]
Here’s some things that we’re currently looking at. We’re definitely digging into the analytics. Like I said before with Staples, promotional products. We’ve been into HighRadius now for four years, we’ve got three different modules, we have EIPP, we have the collections and we have the cash app. Now we’re finding we could update as far as our different strategies make as far as changes and make it as far as more updated and more efficient. And probably one of the bigger things that we’ve had to learn in the four years focus on AI, what information is out there, the system collects the information. So we really need to study what is the system telling us, HighRadius will work with you when you work with as far as your rep, let them analyze. And I know this sounds kind of bad, but let them analyze what you’re doing. So you may think you’re doing everything right. And it’s not saying you aren’t, but let them go behind you just to see how effective you are.

George Uko [16:20]
So here’s something else to think about with artificial intelligence, you know, think of everything is constantly changing. There’s so much information out there. And the big thing, once again, we can now predict when customers are going to pay, the system tells us that we know as far as the pay history, the system tells us that we know as far as the DSO. So once again, we could sort through this. But once again, use that artificial intelligence to your advantage, because it’s definitely there.

George Uko [16:53]
So here’s some things to think about. And this is about data prediction. So when I’m saying artificial intelligence, it’s telling you. So for example, here’s some of the main factors the system’s pulling, you know, what is the open balance? What about the gap between as far as payments, the system knows how long it usually takes between payments, they know when the customer normally pays, average delay, average number of invoice and payments. So if we want to grow the customer sales, if we want to work with our sales department, it’s right there in the system.

George Uko [17:33]
Some other things to consider. What about the invoice factors? So how many past invoice counts do we have? One thing as I analyzed by different collectors, I looked at their open invoices, you would be surprised sometimes just by going behind the scenes, what you can find on the invoices, because it’s all sitting there, look at your previous payment times, maybe the due month invoice value, what is the total value on the particular account. And as far as when the payments are due. So these are some things that you definitely want to keep in mind when you look at your invoices.

George Uko [18:15]
So here’s an example, if you note on here, once again, this is analytics at its best, it’s going to tell you what the predicted payment date is. So you don’t want your collectors calling on some of these accounts. If the system is telling you they’re going to pay based on past history, they’re going to pay it day, let’s just say 45. It’s telling you when the payment is going to be made. So what you want to do is refocus what you’re doing, and focus on the ones that are further out or that we don’t have as far as that data. So it’s a good way to work with your different collectors and figure out once again, where to put the emphasis. So here’s some things to kind of think about as we look at this. And I think one of the first ones, you know, we keep talking about some of the different metrics, some of the different things to look at with segmentation.

George Uko [19:07]
Don’t focus on the low accounts, don’t focus on the low risk, you want to focus on the high risk, the high risk is where you’re going to take the biggest hit. So you want to focus on the high risk. Other thing, I’ve done this before, there are reports and HighRadius where you can actually predict your cash flow. So I have our CFO knock on my door periodically and say, Hey, how much cash are we gonna get here in the next week? The reports out there, you could run the report, it’s out there.

George Uko [19:39]
And then the other thing you want to look for with some of your different strategies, like I said before, we’ve been in the program now for four years. You have to go back in look at the strategies and update them. Your customers are going to change some of the strategies so we need to change with them.

George Uko [19:57]
And then the other thing to think about.

George Uko [20:00]
Look at the bottom one there. As far as the bottom bullet, we don’t want to ruin the relationship with the customer. So if we know they pay a day 60, let’s put it in our system, follow them up on day 70, find what works for you to work with them idea behind it it as a partnership, we want to work with them so we can get the money collected. So let me kind of switch gears here. And what I want to do now is show you some of the reporting, if you haven’t used analytics, we were one of the first to test it for HighRadius. So this is pretty slick. As far as what they shared with us what setup, we could go in behind the scenes, we could track our different collectors, we could track overall how we’re doing across the board with our different segments. But one of the things that we want to really focus on is how are our customers doing some of the sales reps, Hey, how are the customers doing? You can actually click on the customer, it’ll tell you the DSO, it’ll give you all that information. Other thing from an employee standpoint, I want to know how effective my employees are, you know, are they collecting are they doing everything they should do? So we have that report. And then to the right, we have the value metrics, those are the metrics we have set up for our particular department. So once again, we want to look at all three of these. But you know, at the end of the day, look at the customer, you would be surprised how much information there. And the other thing with the customer, when it comes time to renew the contract, this is great information for sales. So they could relook at the contract and change accordingly.

George Uko [21:44]
So here’s where you’re gonna go. If you have analytics, if you don’t, I would highly recommend looking into it, or at least get the demo from HighRadius, they’re going to put it at the very top in your menu. And basically what it will do is based on the different modules you have, you’ll have a separate Analytics tab for each module. So for example, with Staples, we have three different modules, one for Cash App, one for collections, and one for AIP P. But you could see it’s kind of hard to see from the back there. But we could look by as far as the individual analyst, and you can actually click on the name, it will give you all those accounts for that particular analyst. So you can see how effective they are. And you can also compare overall how they’re doing with the group. So it’s a great report, I would definitely recommend it. Once again, it’s all based on the different modules you have.

George Uko [22:40]
So let me show you as far as the analyst dashboard and give you some more information on this.

George Uko [22:47]
So as I was saying before, this is where you could see all your different collectors. So as you look here on the left, that would be the collectors names, you can see as far as the balances, they have outstanding. When you click on their name, it will bring up the accounts right down here to the right. So you could see all the accounts and you know, which accounts are causing some of their aging. So it’s a real quick way to see as far as what’s going on. For example, with Staples, we have about 818 different collectors, they have different portfolios, so I could go in right away, and I know which key accounts they’re having issues with. And we could also see the activity that they’re doing on the individual accounts. So it’s a pretty slick screen, I would definitely look into that. And then the other thing, see where it says customers reached, you can click on the individual person, and it will tell you how many they’ve actually reached. So you could actually do a quick comparison of your different reps. All the data is right there. It’s great information. And the hard part, if people are saying, well, it didn’t record this, it didn’t record that. They didn’t put their notes in the system. So this is all system generated. So very important that they understand what they do in the system gets recorded, and on one on ones and reviews rate information.

George Uko [24:17]
So once again, look on this. It’s breaking down what I just said. So once again, what’s the individual collector doing? How are they doing? What are they doing? Other thing with the dashboard gives them access to the dashboards so they can see how they’re doing. If your team is more advanced, and they can see each other’s show it, let them see how they’re doing compared to the others. And it’s really a good driver to keep them focused to drive up that productivity and also focus on the efficiency and what they can do and learn from each other.

George Uko [24:53]
If you look at the very top, you could see day over day you could do day over day you could do month over month

George Uko [25:00]
You could do year over year, quarter over quarter. So what’s interesting is you can see there are certain days where people are more productive. So usually on Mondays, it’s pretty interesting. I don’t know if this is what’s going to show that. But like with my team on Mondays, they’re more productive, Friday comes around, they’re not as productive. But you can see it in there. And the other thing, when you share this information, it’s a 90 day window. So that’s what you want to share with them. And the other thing, you have to keep in consideration if people are on vacation, or if there’s other anomalies, you just have to understand that’s why their stats may be less. So once again, that’s a big one.

George Uko [25:41]
Something else to look at, once again, you got the bar chart. So we could take this down, and the information is definitely there. If you want to kind of dig further down, you could dig further into it.

George Uko [25:53]
And then this is what I was saying before, if you click on the person’s name, it will give you all their accounts. So if you want to see how they’re working their different accounts, or where their problem accounts are, it tells you right here, and not only does it tell you, it will tell you how many letters have been sent, if there’s any promise to pays, it will give you as far as that information. So you could really go back to the collector and say, Hey, these accounts are showing here, what have you done, because that’s not showing in our particular system. So we definitely want to look at that.

George Uko [26:31]
So here’s some different benefits, as far as collections. So once again, ability to dig through the different data to drive down. That’s probably one of the things that took us a little while to really understand. You can keep driving down to get as far as the data. And then the other thing as we drove down to the data, how can we use that data to make it better for the team to hold them as far as accountable. And that was probably one of the change management, we had to work with the team. We’re just trying to make them more efficient so they could get more collected?

George Uko [27:08]
All right, we are ready for question and answer. Anybody have any questions?

George Uko [27:19]
The automated email we send letters through the system? Yes, all our correspondents we do use the automated email, and we haven’t set up with the different strategies works very well, very well. And then what we also did is every Friday, we look at anything that gets rejected. So you just have to stay on it. Because if the emails change, someone leaves a particular position, you’ll have emails that you think are going out that don’t. So yeah, we’d love it. I think we’ve got another question back here.

Listener [27:56]
Hey, when it comes to grouping customers, maybe the challenge is not necessarily in the accounts receivable side. But on the other side, so for example, we can group and I’m telling like a true story, let’s say 100 accounts, but then on the vendor side, they have different accounts payable contacts, in different locations in different requests on how they would like to receive a statement of accounts and this type of things. Not sure you have had these type of scenarios in how you have managed them.

George Uko [28:35]
Good question we actually have. And what we did is we actually segmented the customer twice. So once in what we call a super major, so for example, if it’s a coke account, all through coke. And then we also segment it by if maybe they paid through arriba because not all customers paid through arriba. So one thing that you’ll learn with HighRadius is you could segment more than one way. So that’s allowed us once again to dig further into it and separate and it’s helped tremendously.

Listener [29:11]
On the EIPP process, can you just make some comments on how you communicate that to your customers how receptive they are? And does it typically take collection calls for them to respond? Or do they go out to the portal and do that or how many customers are actually using that process for you guys?

George Uko [29:30]
Good question. Okay, with EIPP we initially sent all our customers a sign on, but what we found is not everybody wants to sign on. So what I would recommend what we did with Staples is we put a link on the letters and on the invoices anytime any correspondence comes out to our customers. They could click on the link and it’s a one time link to go ahead and make the payment. So we tried to make it as easy as we can for them. One of the problems we had is some of our bigger customers, they want change to our process. So that’s where we ran into issues. But before when I was talking about segmenting, some of those AP departments may handle like 200 customers, we linked all those customers together for him. So they were able to separate go in look at all the invoices without calling us. And they actually know the system sometimes better than we do.

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