Cash Insight: a Tale of Augmented Collections

Published  9 MIN READ

Insight Enterprises is a Fortune 500 global IT solutions integrator. With its finance function managing around 10,000 invoices per day on the back of nearly $10bn in revenues, Lynn Willden, Senior Vice President Finance, Treasury and Tax, Insight Enterprises, knew the business needed help to secure and accelerate its cash flows, and support for its financial decision-making. Enter Sidetrade’s Augmented Collections platform. Willden, along with Bill North, Area Vice President Sales, Sidetrade, reveal the story so far.

Despite having a number of legacy reporting tools from its days as a technology product reseller, the growth of Insight Enterprises into a Fortune 500 global IT solutions integrator outstripped the usability of these tools. With its customer base having expanded in line with that growth – it includes some of the Fortune 500’s top 10 and 20 players – and its strategic push into the services space, collections issues were mounting too.

“Our migration from reseller to solutions integrator brought with it a host of new components in every sales transaction,” comments Willden. Today, these include hardware, software, cloud and consumption billing, and a host of overlaid project or monthly services, some of which are third-party delivered. “By overlaying services and entering new markets, we’ve shifted our fairly static collections scenario into one that is very dynamic and complex.”

Indeed, Insight works on everything from extensive global deployments to contracts in the SME space, and all points in between. And as Willden notes: “From a collections perspective, we were struggling not only to find the best collectors for each client but also to manage how each approached their tasks, and whether or not they could fully cover their client list.”

With a lack of visibility over Insight’s collections processes, it was becoming more of a challenge to steer the actions of the department on a day-to-day basis. In discussion with the firm’s Collections Director, Willden created a vision of the ideal day-in-a-life of a collector.

“They would arrive at work and power up an AI-based system that could guide them through their day’s work,” he explains. “It would show them what needed to be done that day to successfully cover all of their accounts that required action, helping them collect as much cash possible.” Unaware that such a tool existed, a surprising conversation with an external contact led him straight to Sidetrade. “And it had the exact same features that we had been discussing,” he declares.

Moment of change

From his first meeting with Insight, Sidetrade’s North says Willden’s technology vision was well-informed and clear. But from experience, North and his team knew the implementation process would require a well-managed change management programme. “When you’re taking a group of people with well-established daily routines, shifting that can sometimes be difficult,” he acknowledges . “Making sure that key stakeholders are fully on board with the future state is really important. But because we have other customers in the same core industry as Insight, we are able to leverage what we know about how best to achieve their goals.”

To aid change management, North explains that the first step is to build confidence in the incoming technology. “We need to prove every day of the project that our technology adds value to the individual’s experience of their own work,” explains North. “When you can repeatedly prove it to them, their level of confidence and trust rises quickly.

“When we considered the change process and what we wanted to achieve, we knew that Sidetrade was the way that we would collect going forward,” he states. “A tool that sits off to the side that our collectors have to break off what they’re doing to use would never achieve the level of effectiveness that we need. We felt that the more activities that they could do while they’re in this tool, the more likely they would be to embrace change.”

Assisted by Aimee

As part of the knowledge transfer from Sidetrade, the vendor’s global customer base has enabled it to create rich AR benchmarking data. Segmented by sector and geography, this helps Insight’s collections department align its AR performance with the best. But it will also help each collector identify the best cash collection opportunities each day, based on analysis of historical payments behaviour and the needs of the business. It uses proprietary technology to achieve this.

The Sidetrade Augmented Cash platform contains an AI engine, dubbed Aimee. This is able to explore the vendor’s own vast data lake. From this it is able to create a bespoke daily workflow for each collector. In doing so, a personal map of the most effective actions they can take each day is provided. These are termed ‘cash collection opportunities’.

The data lake is formed of around two decades of invoice payment data drawn from Sidetrade’s own customers from across multiple geographies and sectors enriched with external sources of data. With more than 52 million invoice entities in the lake, representing in the region of $5tr. of payment value, the platform harvests a number of key characteristics including payment timing and payment mechanism. These characteristics are augmented by information such as the most successful actions that led to each payment. An outcome for a particular customer might be that a payment is received only following an email or phone call intervention from the collections team, or that it is always paid but habitually two days late.

Armed with this information, the platform uses Aimee’s algorithms to create each collector’s tailored list of the day’s likely most productive activities, and how best to achieve them. “It’s like a financial CRM [customer relationship management tool], optimising each collector’s day, recording their actions and comments, tracking disputes and part payments, and providing a central source of truth for all collections effort across the entire organisation,” says North.

Deeper knowledge

The fundamental goal of most systems in the collections space is to predict payment patterns. From a treasury perspective, this is an important part of the drive for working capital and forecasting improvements highlighting predictive payment windows. An additional aim of Sidetrade, says North, is to use that data to enable a customer such as Insight to improve the payments patterns and behaviours of its own customers. Indeed, he believes no other vendors are collecting and applying AI to payment-level data to this effect.

“With our data lake, there is a very high percentage chance that we will know when a buyer actually pays its other suppliers,” explains North. “And if we know how each customer pays its other suppliers, we can begin to understand their payments windows. It may be that one buyer has one window for Insight but an earlier one for another supplier. If that is the case, we can advise Insight that it could press this customer for payment of a late invoice in that earlier window, rather than waiting for its usual later window.”

Hard times

With many businesses anxious about global economic volatility, it’s to be expected that some AP departments will try to extend payment terms when they can, comments Willden. “But customers are increasingly pushing their AP responsibilities onto their suppliers too. Instead of just sending an invoice for payment, now we are being told, to receive payment, that the invoice has to be reformatted in a certain way or must contain new data fields.”

With some clients “going to another level of complexity and trying to make us pay to use the system they want us to upload our invoices into”, Willden says Insight’s sales team is empowered either to push back or just charge more. But with Sidetrade, he feels the firm is better able to expedite its collections because the system exposes the payments practices of customers, enabling a more nuanced approach to AR and late payments collections.

In more stable economic times, credit reports from agencies and published financial results have typically been used to measure a customer’s financial health. This data has usually been acquired at the onboarding stage with only occasional updates during the relationship. With cheap funding and deep market liquidity, this was less of an issue for many suppliers.

Now, with changes to AP behaviour being driven in part by economic instability, and cash flow a great concern for many suppliers, North says Sidetrade users such as Insight are able to access a proprietary score for their own customers. This complementary data is based on how each buyer pays its invoices and can provide suppliers with early warning of potential issues, where a buyer is perhaps unilaterally extending its AP terms. “Having this level of information set as an alert enables Sidetrade users to select accounts for review or to advise its collections team to take a different approach where necessary.”

Rolling out

Insight is in the midst of rolling out the platform, the aim being to go live in Q1 2023. “It’s a big commitment for us,” says Willden, “not just financially but also around that change management piece”. With a team of at least 130 collectors, and around $3bn in AR last quarter, he describes disrupting that work as “material”, adding that engaging Sidetrade “is a decision we have not taken lightly, so we are taking our time rolling it out”.

Willden is also realistic about progress. “If anyone tells you their technology project was painless, they’re probably not telling the truth.” That being said, he acknowledges that with both Insight and its first connected client being an SAP shop, the deployment has been as smooth as it could be.

The project to date has been aided in no small way by Sidetrade’s own SAP experience. “Any vendor without deep experience in this realm might not have been the right way to go for us,” continues Willden. “We knew that with Sidetrade’s SAP experience, when we ran into some issues here and there, they had already been through it and found the solution. There was nothing then, or now, that has made us think twice about our choice, even for a second.”

Great expectations

The main objective of most clients following a Sidetrade go-live is for a reduction in DSO, says North. “Every day that you can reduce that metric by will bring more working capital back into the business.” However, with collection processes often having become labour intensive, he notes that companies may also see a downwards adjustment of FTEs, noting that “once the efficiencies are released, employees can do more with their day”. Perhaps as a function of this, he adds that the platform can enable bad debt provision to be reduced, with suppliers “often able to collect on invoices that previously would have been written off”.

Sidetrade also sets in motion an internal shift towards a “positive cash culture”, suggests North. With all internal stakeholders – from sales and purchasing to finance and treasury – able to access the platform’s data, he argues that it removes obstructive silos. It enables all to share the same customer information in real-time from one unique system and understand the impact of cash on other functions such as sales or customer service, yet still view and respond to it from their own departmental perspective.

In practical terms, this can have a constructive outcome for all. “Working with Sidetrade means we don’t wait for six or seven months as an AR issue goes round in circles with the client’s AP department: it brings it straight to the forefront,” says Willden. “By talking to client AP and procurement teams every one or two months, rather than twice a year, it makes our relationship with them a lot smoother. If AR is chasing a $100k issue with a client when our sales team is negotiating with it on the next $10m deal, smoothness matters.”

Of course, the main goal is “collecting as much cash as possible”, says Willden. He believes that with Insight’s vast AR balances, the ROI figures likely to be achieved by sharper collecting will be considerable. “And with the system ensuring our collectors stay on top of their daily task-lists and do not neglect the smaller collections, just that benefit alone will provide multiples for us from an ROI perspective.”