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Maxing Out Your Credit... and Accounts Receivable Department Potential Windy City Session 11 10:10 am – 11:00 am Friday, June 8 th 2012.

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Presentation on theme: "Maxing Out Your Credit... and Accounts Receivable Department Potential Windy City Session 11 10:10 am – 11:00 am Friday, June 8 th 2012."— Presentation transcript:

1 Maxing Out Your Credit... and Accounts Receivable Department Potential Windy City Session 11 10:10 am – 11:00 am Friday, June 8 th 2012

2 2 Speaker Information Andrew Shaffer □ Manager, Global Treasury & Credit □ Responsible for global cash management including investments and banking relationships, overseeing the credit and accounts receivable department, leads the customer to cash process globally as part of a working capital management initiative and manages the company’s debt obligations. Holly Crandell □ Supervisor, Treasury □ Responsible for supervising a team of four, overseeing daily operations of customer deductions, cash application, and credit management.

3 Hollister Incorporated - Overview Privately held, global company that develops, manufactures and markets healthcare products, servicing over 90 countries. □ Headquarters in Libertyville, Illinois □ Manufactures in United States, Ireland, Denmark and India □ Treasury staff of 8 to oversee global cash management, foreign exchange, insurance risk management, credit, real estate and company stock program □ Additional 4 accounts receivable and credit staff to oversee cash application, deduction resolution and collections for the US business unit 3

4 Hollister Overview A global manufacturer of… Wound Care Ostomy Continence 4

5 Evolution of Accounts Receivable and Credit 10 FTEs down to 6 FTEs in 3 years CASH APPLICATION AUTOMATION LEVERAGE REPORTING TOOLS CREATE OBJECTIVE CALLING PLAN RE-EVALUATE PROCESSES EVALUATE HEADCOUNT 5

6 Evolution of Accounts Receivable and Credit Accounts Receivable staff changes □ 2008 – FTE 10 (3 A/R staff, 4 Credit staff, 2 Supervisors, 1 Manager) A/R Supervisor Credit & A/R Manager Credit Supervisor Deduction Coordinator Cash Application Deduction Coordinator Credit Representative Credit Representative Credit Representative Credit Representative 6

7 Evolution of Accounts Receivable and Credit Accounts Receivable staff changes □ 2012 – FTE 6 (2 A/R staff, 2 Credit staff, 1 Supervisor, 1 Manager) Credit & A/R Manager A/R & Credit Supervisor Deduction Coordinator Cash Application Credit Representative Credit Representative 7

8 Accounts Receivable and Credit Process Improvements & Automation Automatic cash application (cash hit rate) Reporting tools leveraged Objective calling plan created 8

9 Automatic Cash Application Incentives for improving the automatic cash application process □ One person’s full job responsibilities □ Historical levels around 64% □ Not fully utilizing system capabilities □ No additional time for value added activities 9

10 Automatic Cash Application Current Cash Application Process □ JP Morgan Chase receives all checks and keys in all relevant information – Customer name, bank account number, routing number, invoice number and invoice dollar amount 10

11 Automatic Cash Application □ JP Morgan Chase scans a copy of the check and remittance detail and uploads it onto the online portal □ Electronic File sent to our company to be loaded into SAP 11

12 Historical automatic posting rate of 63% Steps to Improve □ From the scanned copies of the checks, input the bank account number and routing number into the customer master □ For customers with multiple ship-to accounts, maintain the correct payer relationship Automatic posting rate increased to an average of 79% Automatic Cash Application 12

13 Automatic Cash Application 13

14 Automatic Cash Application Average of 2,400 checks received per month Realized 16% improvement in automatic application Annual savings of 192 hours (5 weeks) □ Assume 2.5 minutes of processing time per check 14

15 Accounts Receivable and Credit Process Improvements & Automation Automatic cash application (cash hit rate) Reporting tools leveraged Objective calling plan created 15

16 Leveraging Reporting Tools Goals of automated reporting □ Quicker time to generate reports □ Eliminate hand written notes □ Generate higher quality of tracking customer activities □ Ease in monitoring personnel 16

17 Leveraging Reporting Tools Integrated reporting tool using SAP and Excel called EDW, including: □ Sales rebate report summary – savings of 288 hours annually □ Customized customer statements □ Standard customer deduction report □ Customer A/R Aging report 17

18 Leveraging Reporting Tools Outstanding Deductions run out of SAP □ Transaction FBL5 – Customer line item display □ Time consuming to run report □ Limited capability for customization 18

19 Leveraging Reporting Tools Deduction Report through EDW □ Quick report to run □ Can customize easily 19

20 Accounts Receivable and Credit Process Improvements & Automation Automatic cash application (cash hit rate) Reporting tools leveraged Objective calling plan created 20

21 Creating an Objective Calling Plan Goals for Objective Calling Plan □ Eliminate subjectivity for calling and repercussions for past due invoices □ Eliminate hand written notes □ Enhance capability for monitoring 21

22 Creating an Objective Calling Plan Set specific targets and actions based on days past invoice due date □ 10 days – call Accounts Payable □ 20 days – call Accounts Payable □ 30 days – call Accounts Payable and Purchasing □ 45 days – call Supervisor/Manager and hold any newly submitted orders □ 60 days – Send a letter to management indicating their account status and possibility of changing to CIA □ 75 days – Send a second letter to management and change the customer terms to CIA 22

23 Creating an Objective Calling Plan EDW Credit Calling Plan 23

24 Creating an Objective Calling Plan Each day call customers who fall on the specific past due day. □ Streamlines calling to just customers who need to be contacted □ No judgment calls needed on the action to take 24

25 Summary Key Changes in the past 3 years □ Cash Application Automation □ Leveraging Reporting Tools □ Implementing Credit Calling Plan 25

26 Contact Information Andrew B. Shaffer Manager, Global Treasury & Credit Hollister Incorporated 2000 Hollister Drive Libertyville, IL Telephone: Holly L. Crandell Supervisor, Treasury Hollister Incorporated 2000 Hollister Drive Libertyville, IL Telephone:


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