Case Study

Streamlining operations and invoice-to-cash management across 25 countries results in savings for major business conglomerate

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Client:
Financial services unit of a major business conglomerate

Industry:
Financial services

Business need:
Consolidate operations and streamline invoice-to-cash function across 25 countries to improve effectiveness and efficiency

Genpact solution:

  • Improved cash flows for P&L impact of $650,000
  • Unapplied cash decreased from $80 million to just $1.7 million, creating a total P&L impact of $250,000
  • Past-due accounts declined from $55 million to $35 million, with a resulting benefit of $300,000
  • Total operational cost savings were $1.3 million per year

Business impact:

  • Growth and scalability
  • Adaptation and flexibility
  • Cash flow and liquidity

Business challenge

Aiming to improve cash flow and liquidity, the financial services unit of a major business conglomerate turned to Genpact to consolidate the company’s operations. The focus was managing the invoice-to-cash cycle, including collections and cash applications. An accounts receivable team in the Netherlands managed this process, covering a multi-country operational and client base across the European Union, the United Kingdom, and the United States.

By streamlining processes, the organization sought to reduce operational costs and improve efficiency and effectiveness. A related goal was to consolidate the operational structure with a scalable operational model for greater agility in a dynamic business environment.

Genpact approach

Working with the accounts receivable team, Genpact developed and initiated a transformation project for invoice-to-cash operations. The project applied a hybrid model to draw upon synergies within the Genpact skills base and the client organization.

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The Genpact-led team created an enterprise process for collections and cash applications across geographic units. With improved operating margins, the initial target was $2 million in savings from improvements in:

  • Quality: 1.5x improvement in “First Time Right” process accuracy
  • Speed: 1.8x improvement in the cycle time for collections and cash reconciliations
  • Cost: a 40% decrease in operational costs

The scope of the business included serviced assets of $30 billion across 25 countries. Genpact’s implementation of policies, standards, and technology was a transformative program that covered the entire asset base and operational scope. The program accounted for the unique regulatory environment in each geographic area.

Genpact solution

Genpact applied its rigorous Six Sigma framework and governance structure to deliver a total business impact of $2.5 million, using a four-tier approach.

1. Creating the ecosystem
The Genpact team began the transformation began by creating the ecosystem—a Genpact framework for process excellence—and impact levers (see Figure 1).

The team created a diagnostic process health framework to reduce bottlenecks. It included detailed value-stream mapping of each process, along with links to upstream and downstream activities. Genpact used its Six Sigma and Lean methodology to improve various auxiliary processes and create administrative changes.

An end-to-end study of the business value chain, process gaps, and links identified opportunities for reengineering. These major Six Sigma black-belt efforts required upstream process redesign, including risk-scoring models and improvements in billing and invoicing processes.

Genpact created enterprise-level processes using global benchmarks, insights, and practices refined over 14 years of experience in the order-to-cash discipline. The team helped reorganize, redefine, and recalibrate the client’s operating mechanisms and produce a best-in-class solution.

2. Project governance structure
To ensure a seamless flow of delivery objectives and communications, the team established a project governance structure. It encompassed all levels of employees as they engaged with stakeholders. The aim was to establish controllership without impacting the process metrics (see Figure 2).

  • Operations – This element of the structure ties together operations managers from Genpact and the client to execute deliverables and measure improvement.
  • Management – Operations leaders communicate the organizational goals and design of the project plans; the leaders also manage cultural changes.
  • Decisions – Strategic business decisions are made at the CxO level for overall business strategy and change management.

3. Mapping process goals to desired project outcomes
Genpact helped create an accounts receivable model to standardize the overall process and measure each discrete step (see Figure 3). The model incorporated Six Sigma methodologies to map transformation projects to the process level. Key project outcome measures included:

  • Cost to serve
  • Reserve ratios
  • Cash flow
  • Days sales outstanding (DSO)
  • Client satisfaction index

Process improvements were identified by establishing links among outcomes in the following areas:

  • Underwriting cycle times
  • Automation levels for underwriting and cash application
  • Accuracy of transactions
  • Administrative delinquency
  • Invoicing dispute levels

4. Creating the business impact
The Genpact-led project realized a total annualized value of $2.5 million for the client in several key areas (see Figure 4):

  • Quality – Unapplied cash decreased from $80 million to just $1.7 million, creating a total P&L impact of $250,000. Past-due accounts declined from $55 million to $35 million, with a resulting benefit of $300,000.
  • Faster cash flow – Same-day cash recognition improved from 83% to 91%, which yielded a $250,000 business impact. Collection cycles decreased by five days, creating a total gain of $400,000.
  • Cost of operations – With overall efficiency gains, cash operations headcount decreased by 42 FTEs through process-automation tools, workforce management, and level loading. Total operational cost savings amounted to $1.3 million per year.
  • Best practices – Genpact helped create a sustainable accounts receivable model that can be replicated in any global accounting operation. Implementing the invoice-to-cash technology suite helped create an innovative Business Process as a Service (BPaaS) model for an accounts receivable operation (see Figure 5).

Business impact

The client made good use of Genpact’s ability to apply business process management expertise and methodology in ways that create value beyond cost savings. The project delivered high-value financial outcomes through productivity gains with consolidated and streamlined operations.

For more information, contact: banking.solutions@genpact.com and visit, genpact.com/what-we-do/industries/banking-financial-servicesgenpact.com/what-we-do/business-services/finance-accounting

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