Crompton Mitigated AR Costs and Improved Sales Productivity with FreePay

The Objective

To reduce DSO, increase the sales team's productivity, and reduce the overall cost of collections and reconciliation.

The Background

Crompton is a leading consumer electrical company with two business divisions - Lighting and Electrical Consumer Durables. Their products are available in nearly 150,000 retail points, serving a 3000+ dealers/distributor network.

The Numbers

0X

Faster Reconciliation

0Days

Reduction in DSO

0%

Dealers on FreePay

The Numbers

0%

Productivity Increase of Sales Team

0%

Reduction in Cost Involved in AR Collection and Reconciliation

The Challenge

The Crompton team faced challenges in offline invoice presentation and dealing with check payments, resulting in team productivity and potential revenue loss.

01 Invoice Processing and Sales Team Productivity

Invoices were printed and sent out. The sales team used to follow up on the pending invoice payments, collect checks, and deposit in the bank, which resulted in an estimated loss of 30% productive time.

02 Payment and Discounts

Crompton runs early payment discounts for its customers, but with check payments, applying the correct discount slab was difficult due to different check submission and payment realization dates.

03 Manual Reconciliation

Invoice payments were net-off adjustments (credit notes and cash discounts). Multiple invoices were clubbed and paid, and constant follow-ups were needed with distributors for payment breakup. The F&A team constantly needed additional workforce to avoid limit reset delays due to reconciliation delays.

04 Opportunity Loss and Limited Cash Flow Visibility

New orders could not be booked due to delays in releasing credit limits. Payments were made via checks, leading to delays in deposits with no visibility to the central finance team.

Our Solution

Global PayEX worked closely with Crompton’s finance, sales & IT team to deploy the Electronic Invoice Presentment and Payment (EIPP) Solution, FreePay.

01 Integrated with ERP & Portal for Customers

Integrated the EIPP solution with the company’s ERP and ensured that the outstanding invoices and credit debit notes were automatically picked up once generated and presented to the distributor via the FreePay portal. It resulted in the distributor getting an actionable invoice on the same date of invoice generation.

02 Discount Mapping

Mapped the early payment discount structure to ensure the correct discount structure is applied once the distributor initiates invoice payment.

03 Campaign Support & Payment Behavior Transformation

Global PayEX’s operations support team organized a campaign to on-board the distributors on the FreePay App and trained them to view invoices, adjust credit notes and pay the invoices. The operations team also worked with the sales team to obtain a one-time mandate from the distributors to change the payment mechanism from cheques to an ACH pull/Direct Debit.

04 Active Dunning

Active Dunning and In-App notification by the FreePay application helped distributors understand late payments and penalties and the benefits of early payments with options to schedule payments as per their cash flows.

05 End-To-End Reconciliation

The In-App payment handling and the FreePay-ERP integration ensured the transactions were reconciled without manual intervention.

The Results

The Crompton commercial team realized significant benefits with FreePay implementation. Now, Crompton's sales team can purely focus on sales and maintaining an excellent distributor relationship. Distributors have also benefited as the process has become transparent, seamless, and fast. Real-time reconciliation has helped the company release distributor limits instantly, even at month's end, with large volumes of transactions. The finance teams can now focus on more productive work rather than manual reconciliation, communications and ERP postings.

“A highly adaptable solution that has transformed the way we do business”

We have been using FreePay since 2017 and the improvement and efficiency it has brought in our collections and account receivables management has been remarkable.

FreePay has helped deliver electronic invoices to our Channel Partners in real time, process payments with all our business terms plugged in and taken care of our end-to-end customer account reconciliation.

Our Channel Partners have also been very appreciative of introducing FreePay to them especially for its feature capabilities, ease of use, transparency and customer support, without adding any cost to them.

Joseph Selvakumar , Vice President – Commercial ,

V-Guard Industries Ltd.