AlgoriQ improves AR visibility and boosts Working Capital Efficiency for Marico for its modern trade customers

The Objective

To reduce the time and efforts involved in reconciliation of payments

The Background

Marico Limited is one of the leading multinational consumer goods companies operating in the global beauty and wellness categories. Marico nurtures leading brands across categories of hair care, skincare, edible oils, immunity-boosting and healthy foods, male grooming, and fabric care. During FY 2020-21, Marico recorded a turnover of about USD 1.1 billion through its products.

The Numbers

0 Million

Euros unlocked

0 Day

Reduction in Daily Sales Outstanding (DSO)

0 %+

Straight Through Reconciliation (STR) - No Manual Intervention

The Numbers

0 +

Invoices and Debit notes Reconciled

0 %+

Deductions Reconciled

The Challenge

Marico followed a manual process for reconciliation as customers used to make payments without any intimation, and this was shown as unapplied credit in Marico’s books.

01 Manual Reconciliation

A team of eight to ten members were deployed to manage all recon-related operations at Marico for handling twenty of their Modern Trade customers which took over 3 days per payment. The team faced challenges in segregating payments, invoice reconciliation and accounting for deductions and disputes.

02 Unapplied Cash

Marico customers used to make payments without any intimation and this shows as unapplied credit in Marico’s books. Once the payment is received, the Marico team has to follow up with the customer for payment advice which was delayed by 2 weeks on an average.

03 Multiple Payment Advice Format

The payment advice coming from the various Modern Trade customers were in different formats leading to challenges in manually interpreting them and deciphering reasons for deductions like dynamic cash discounts.

04 Deductions and valuable time lost by the sales team

A significant time of the sales team was spent in assisting the accounts team with collection related activities which includes raising and resolving any disputes that arise in the process.

Our Solution

Global PayEX deployed AlgoriQ, an Intelligent Fund Algorithm driven auto-recon solution, designed for managing the reconciliation of payments made by its customers.

01 AI powered 3-way match for reconciliation

AI-based engine Intelligent Fund Allocation (IFA) matches the payment & the payment advice against outstanding obligations pulled from the supplier/seller’s ERP systems. The engine is programmed to learn from reconciliation paths and continuously improve its accuracy.

02 Auto posting in ERP

Details of fully cleared invoices along with payment details are automatically knocked off in SAP reducing manual intervention. Deductions found due to shortage or rate variance/customer claims are handled automatically via partial adjustments as per Marico’s posting rules. This helped in reducing unapplied cash.

03 Auto Reading of multi format payment advice

PayEX auto reads the data irrespective of the format almost instantly and initiates the reconciliation process against payment advice and bank MIS. Thus, reducing a lot of manual effort in deciphering payment advice data sent by customers.

04 Dashboard for deduction management

A dashboard is provided for Marico to input how the cash is applied for each of these unreconciled Debit Notes that were generated. The debit notes can be offset with Credit Note, Trade Discounts, Raise Dispute etc.

The Results

AlgoriQ has facilitated Marico to eliminate a significant amount of manual effort and intervention. The time spent on recon-related issues by the sales team was saved and Marico was able to see a reduction in unapplied immediately after the implementation. The time taken to reconcile payments was reduced from days to minutes, deduction identification and accounting was reduced from weeks to days within the first quarter; thereby reducing the amount of unapplied cash in the system at any given time, giving true picture of the AR at all times and bringing in working capital efficiency.

3M India has successfully deployed Global PayEX’s FreePay solution to improve the efficiency in our collection and account receivable management. FreePay digitized our invoice presentment, automated payment processing and took care of our end-to-end customer account reconciliation. Our dealers have appreciated the solution for its completeness, ease of use and transparency in doing business.

Ranjan Choudhury , Credit Risk Manager - Asia Global Credit Risk Management COE

, Treasury 3M – India