Over 60

Accounts Receivable

Situation:

Over 60 days portion of the company Accounts receivable in Brazil has reached 15% (15.1M$) of the total. However, Corporate guidelines and Controllership accepted an Over60 maximum of 7% worldwide.

Business Impact:

Credit for Customers begun to be analyzed one by one by headquarter (USA) controllers. Credit concession then formed an strong bottleneck in the sales process reducing sales volume in approximately 10% (@ 12M$) in the quarter.

3.Root Cause:

There wasn't a systematic way of retrieving Accounts receivable numbers and their respective aging. The process was manual, slow and presented low accuracy because it was based in several spreadsheets that presented disparate versions of true.

Implemented solution:

An Accounts Receivable portal was developed, using SQL Server2000, Analysis Server and active server pages, where the information retrieved daily and automatically from the corporate AR system begun to be presented to managers and analysts with drill down by Segment, Customer, Aging, Sales Manager, etc. Business rules used by analysts to prepare AR data were identified and loaded into the transformation phase of the ETL (extraction, transformation and loading). Managers and analysts were trained in the new system and processes, converting previous data preparation time into planning and execution.

Results and benefits:

In 90 days the Over60 met a US$ 9 Million reduction, representing only 6% of the total AR and has been under control since there. Sales quota was achieved in the quarter. Accounts receivable area received an “With Honor" in corporate audit.

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