Published: May 01, 2010
Atlas Copco uses shared service centres globally, including Australia which provides centralised cash receipt services whilst each business operation includes receivables collection services. We use three ERP systems across the group: BPCS, Scala and SAP. In Australia, we use BPCS which we previously used for receivables management. When I joined the company in early 2007, our collections management process involved a series of manual processes including printing or exporting data, manipulating information in spreadsheets, making calls and then recording notes in BPCS. As this was cumbersome and time-consuming, we had to prioritise which invoices to chase, so inevitably we focused on receivables with the highest value. This meant that many smaller amounts were not chased routinely, affecting our working capital and days sales outstanding (DSO) considerably.
Another challenge related to invoice disputes, which can arise as a result of issues with machinery, service or pricing issues. When a dispute was raised, we used to alert the sales team by email, but there was no traceability of follow-up actions. Consequently, collections were often not received for a long time after the invoice date, and we were concerned that we were very dependent on manual processes, subsystems and key individuals.
Although we were starting to think about a new strategy for our collections business, SunGard contacted our credit officer in early 2007 and introduced us to AvantGard Receivables, which Atlas Copco was already using in the UK. We took a reference from the UK business and received excellent feedback, which encouraged us to evaluate the solution more fully. It took some time to ratify our decision and secure the budget for the project, but in February 2009, after an implementation process of only two to three weeks, fully supported by our SunGard consultant, we started to use AvantGard Receivables for live business operations.
Inevitably, changing working practices can be unpopular and we experienced initial resistance from our sales team. However, senior management locally and globally was supportive of the project and recognised the need for implementing more rigorous and disciplined collections controls, which made it easier to encourage support. Having become accustomed to a new system and business processes, the sales team is now positive about the contribution it makes to our business. In particular, people recognise its value in accelerating payments and improving customer satisfaction, whilst clarifying the tasks for each individual. As we now have a central point of information, we have comprehensive visibility over the status of each account, what action should be taken and by whom.
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Since implementing the solution, we have achieved considerable benefits. Our DSO quickly fell by six days, although this varies during the year due to the cyclical nature of our business. In particular, we had a major reduction in outstanding receivables relating to our service business, which fell by between ten and fifteen days. We had a high proportion of disputed invoices in this area, but by understanding why this was the case, we were able to put in place better processes, reduce the number of disputes and the time taken to rectify them.
We now have standard processes across the business, and visibility over invoice status across the different business units, encouraging a common commitment to resolving issues. As the system is easy to use, new and temporary staff members are able to be productive immediately. We will shortly be using the dashboards in AvantGard Receivables, so we will be able to see what actions individual staff members are taking and understand each employee’s workload. This will be important in helping to balance workloads and assess staffing needs more accurately.
One of the most significant advantages that implementing a new system has brought is the ability to understand why problems are occurring, so we have been able to adapt processes to reduce disputes and avoid issues falling between individuals’ responsibilities. Furthermore, with both the collections and sales teams taking responsibility for different elements of the process, we now have more clarity over which issues should be dealt with by collections, and which should be handled by sales. This accelerates issue resolution and encourages greater ownership of issues.
We are now in a position to generate high quality management reporting, which continues to improve as we build up more experience of the system. These reports are used extensively by the business lines, and by senior management, with a single, real-time view of data, as opposed to using fragmented and inconsistent information held in different spreadsheets. These spreadsheets are disappearing and we have a strong commitment to becoming a fully automated, paperless office by emailing statements and duplicate invoices to customers. Automating the production of statements with the right logos and information is a complex task for a company like Atlas Copco which has so many brands, but we are working closely with SunGard to achieve this and we will soon have the ability to put multi-branding on all our external documentation produced within AvantGard Receivables.
Having been through the process of selecting and implementing a new system, we have gained some valuable experiences along the way. Firstly, we would emphasise the importance of initial and follow-up training. Although the system is easy to use and intuitive, no one in the team had experience of using a similar product before, and it is impossible to take in everything at once. Follow-up training also means that users can become familiar with day-to-day use of the system initially and then learn more advanced skills.
A collections management tool provides an opportunity to revolutionise processes, reporting and staff behaviour so it is important to leverage its full potential. The value is not restricted internally, however, and customers’ experience is also enhanced. For example, we now send payment reminders automatically a week before due date, which customers appreciate, as opposed to making contact only after a payment is overdue. In this way, we are able to give a more professional impression and place our relationships with customers on a more positive footing.
After using AvantGard Receivables for over a year, it is now pivotal to our operations and it seems inconceivable that we could manage without it! If I were ever responsible for another collections factory, I would not hesitate to implement the solution again. In the future, our aim is to bring down our DSO even further and continue to serve the needs of a growing business without adding to our collections staff.
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