Crompton mitigates AR costs and improves sales productivity with FreePay

The Objective

To reduce DSO, increase the productivity of the Sales team as well as reduce their overall cost involved in 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 Challenge

Offline invoice presentment, cheque payments, loss of team’s productivity and loss of potential revenue.

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 cheques 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 cheque payments it was difficult to apply the correct discount slab due to different cheque submission and payment realisation dates.

03 Manual Reconciliation

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

04 Opportunity loss and cash flow visibility

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

Our Solution

Global PayEX worked closely with Goldmedal’s Finance, Sales & IT team to deploy their Electronic Invoice Presentment and Payment (EIPP) Solution called FreePay. The PayEX team quickly put the following into action:

01 Integrated with ERP & Portal for Customers

Integrated the EIPP solution with the company’s ERP and ensured that the outstanding invoices, credit debit notes are automatically picked up once generated and presented to the distributor via FreePay portal. This 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 that the correct discount structure is applied once the distributor initiates invoice payment.

03 Campaign Support & Payment Behavior Transformation

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. PayEX operations team also worked with the Sales team to obtain a one-time mandate from the distributors to change payment mechanism from cheques to an ACH pull/Direct Debit.

04 Active Dunning

Active dunning and in-App notification by the FREEPAY application helped distributor understand about late payments and penalties thereof as well as the benefits of early payments with options to schedule payments as per his/her own cashflows

05 End-To-End Reconciliation

The in-App payments handling and the FreePay - ERP integration ensured that the transactions were reconciled back without any manual intervention

The Results

The Crompton commercial team has realized significant benefits - as they can channel their team to purely focus on sales and maintain an excellent distributor relationship. Distributor benefits - the entire process has become transparent, seamless and fast. The real-time reconciliation has helped the company to release distributor limits instantly even at month ends which has large volumes of transactions. The F&A (finance teams) can focus on more productive work rather than on manual reconciliation, communications and ERP postings.

The Numbers

Productivity Increase of Sales Team

Reduction in Cost Involved in AR Collection and Reconciliation

Testimonial

We were use to do collection through cheques and NEFT/ RTGS via Virtual accounts. The following are the challenges:
Collection of the cheques by the sales team and finance has to give the same to the bank collection agency and should keep a track of the deposit of the on the due date.
Manual adjustment of the invoices of the dealers against the payment done by them.
Dealer has to connect with the sales team/ finance team to know the due invoices
Manual Reconciliation of the collection.

We started our journey with the FreePay with the pilot of few dealers to have a feedback on the dealers experience and functionalities of the FreePay. After couple of months we got positive feedback from the dealers as well as from the Crompton team. Now we are having almost 500+ dealers on the FreePay.
During the journey of 2 years we found that FreePay is very good collection tool and following are the key strengths:
Knowledgeable implementation team, so development is quick.
Software is customizable to the requirements of the corporate.
App is very user friendly and dealers are able to see outstanding as well as all credit notes and can make the payments at a click.

Quick query resolution by the FreePay team.
During the current lockdown situation dealers used this app at most for doing the payments.