Magazine article Business Credit

Unlock Your Receivable Data and Optimize Cash Flow

Magazine article Business Credit

Unlock Your Receivable Data and Optimize Cash Flow

Article excerpt

Every day, we as credit professionals face the ongoing challenge of exceeding corporate expectations in terms of managing and controlling critical accounts receivable business information. Improving working capital, reducing DSO, optimizing internal efficiency while maintaining superior customer satisfaction levels is a goal we all aspire to in today's challenging business environment. We all know the impact that these initiatives have on the financial success of our individual organizations.

As a credit professional, achievement will be measured by innovation, creativity and the ability to find and implement alternative policies, procedures and systems. This strategic business solution may focus on internal as well as external strategies.

In most organizations, the accounts receivable base is the largest tangible asset, yet the tools provided are typically the weakest link. Analyzing trends, collecting money, and resolving disputes without the proper mechanisms can lead to a significant deterioration in profit margins and an unnecessarily inflated DSO. Here at Johnson and Johnson, we strive to achieve success using technology as an aid, in order to maximize efficiencies and maintain our corporate goals and objectives. One of the ways that we do this is to attempt to equip ourselves with the best possible business analysis credit and accounts receivable software tool that is available. It is imperative that we leave no stone unturned in providing our staff with flexible resources that will enhance our daily processing efficiencies in terms of workflow task orientation and management analysis capability.

In the short term, our main objective in working with a software partner was to maintain our current A/R system, but provide an interface to a business tool, which would allow us to meet our priorities and provide a roadmap to success: "a one-stop solution". The core priorities we established were:

* Executive Dashboard with graphical drilldown

* Provide functionality for all A/R related functions:




--Receivables management

* Data Analysis query tool

* Identify DSO at a business level and a customer level

* Flexibility to customize Johnson and Johnson key business measures

* Identify trends and react to them

* Windows-based solution

* Detailed drill-downs to support high-level and customer data analysis

* Ability to export data to Excel

* Customer & item comments as well as "future review date" functionality for collections, deductions, financial statement analysis

* High-level customer consolidation

* Deduction analysis tools

* History and G/L analysis tools

In addition to the core receivable requirements, we wanted to analyze our portfolio with such Johnson and Johnson specific critical measures such as:

* Weighted DSO

* J and J custom calculated DSO

* Best possible DSO

* Days over best

* Days of claims outstanding

Initially, we thought that a software solution would be easy to develop internally. After all, our current mainframe legacy CustomAR system has an incredible amount of information available to us: massive customer data, comprehensive aging information, and deduction statistics, not to mention a huge history file. The problem, as we came to realize, is that the information was difficult to get to in an easy, user-friendly manner. We found ourselves writing huge reports and going through hoops to get an answer to a simple business question. …

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