Client Background

Client: A multinational corporation based in US

Industry: Manufacturing

Products or Services: Manufacturing, refining, and distribution of petroleum and chemicals

Areas of Operations: Worldwide

Number of employees: Over 80,000

Challenge

The customer’s operating model was based on long-term relationships with their business partners, and processes were managed using traditional methods including fragmented legacy systems. This led to inefficiencies in the Accounts Receivable process that were hard to manage with existing flows.

Several resources were utilized, resulting in the need to run specialty programs to improve efficiency and effectiveness in the existing process. Besides, costs were overrun too.

The teams still functioned in silos, and the S4 HANA implementation was underway when this project was undertaken.

COVID-19 had struck, and collections were at an all-time low, resulting in high days sales outstanding (DSO), impacting cash flow directly.

Solution

With COVID-19, Wipro had to refocus on several financial variables, including credit models, and collection approaches. Wipro’s approach to collections was as follows:

Wipro identified the top reasons for unapplied cash and provided solutions:

• Initiated contact with top defaulting customers and updated them with the latest contact details to facilitate efficient sharing of remittance information.
• Wipro improved operational efficiency and individual productivity through process excellence and automation levers that reduced the time taken by agents to prioritize accounts and gather information.
• The Wipro team performed rigorous follow up with customers via phone or email. Artificial intelligence (AI) was implemented into a dialer solution to give automated task lists to agents.
• Several solutions, including screen mirroring with ex-service providers, were implemented to bridge knowledge gaps.

Wipro team identified the following factors contributing to past dues over 60 days, and provided solutions:

• When customers requested payments, the team would contact proof of delivery (POD). Now they use a proactive 15-day approach to receive PODs (early PODs).
• The collections team did not contact customers for details about tracking cash (lockbox/payment mode/date of payment). As a solution, the team began contacting customers and collaborating with cash application teams.
• Friendly reminders for past dues.
• Analyzed the reasons for past dues in every business segment and implemented the solutions accordingly.

Business Impact

Wipro's solutions helped the company achieve many benefits, including reduced borrowing costs and releasing cash, as well as shortening their cash collection cycle dramatically.

• The DSO was reduced by five days, from 38.4 to 33.4.
• The cash application process was significantly shortened, from 3.9 days to 1.5 days.
• In 10 months, Wipro was able to reduce the unapplied cash from $18.7 million to $0.5 million. The customer received an estimated financial benefit of $152,810.
• Wipro solution reduced past dues over 60 days from $6.5 million to $3.2 million in a period of four months, which resulted in an estimated benefit of $954,000 for the customer.
• Unapplied cash percentage were improved to 94.6% from 90.3%.

If you are interested in learning more about how Wipro is helping clients enable greater efficiencies with Collections-as-a-Service, connect with us.