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Marico Improved AR Visibility and Boosted Working Capital Efficiency for its Modern Trade Customers with AlgoriQ

The Objective

To reduce the time and efforts involved in reconciliation of payments.

The Background

Marico is a leading multinational consumer goods company operating in the global beauty and wellness categories. Marico nurtures leading brands across categories of hair care, skin care, 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

0Million

Euros unlocked

0Day

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, which was shown as unapplied credit in Marico’s books.

01

Manual Reconciliation​

A team of eight to ten members was deployed to manage cash reconciliation-related operations of twenty Modern Trade customers. It took the finance team over three days to process each payment. The team faced challenges in segregating payments, invoice reconciliation and accounting for deductions and disputes.

02

Unapplied Cash​

Marico's customers used to make payments without any intimation, and this showed as unapplied credit in Marico’s books. Once the payment was received, the finance team had to follow up with the customer for payment advice, which was delayed by two weeks on average.

03

Multiple Payment Advice Format​

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

04

Valuable Time Lost by the Sales Team in Deductions Management

A significant amount of time of the sales team was spent assisting the accounts team with collection-related activities, which included raising and resolving any disputes that arose in the process.

Our Solution

Marico adopted Global PayEX's intelligent fund algorithm-driven auto-reconciliation solution, AlgoriQ, to manage 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 and 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 per Marico’s posting rules. This helped in reducing unapplied cash.

03

Auto-Reading of Multi-Format Payment Advice

AlgoriQ auto-reads the payment advice, irrespective of the format, almost instantly and initiates the reconciliation process against payment advice and bank MIS. It reduces a lot of manual effort in deciphering customer payment advice data.

04

Dashboard for Deductions Management

A dashboard is provided for Marico to input how the cash is applied for each unreconciled debit note generated. The debit notes can be offset with credit notes, trade discounts, raise disputes, etc.

The Results

AlgoriQ has facilitated Marico to eliminate significant manual effort and intervention. The time spent on recon-related issues by the sales team was saved, and Marico saw a reduction in unapplied cash immediately after the implementation. The time taken to reconcile payments was reduced from days to minutes, and deduction identification and accounting were reduced from weeks to days within the first quarter, thereby reducing the amount of unapplied cash in the system at any given time, giving an accurate 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

Bridgestone India’s digital collections went from 22% before Covid-19 to 80% in March 2021. They unlocked around 7.8M USD over a 9 month period by adopting FreePay. Bridgestone has now reduced its day sales outstanding (DSO) or the average time taken to get paid after invoicing by 6 days. Around 75% of Bridgestone India’s 4500 dealers are extensively using FreePay. Bridgestone has received great feedback from the dealers on the seamless experience of their payment process which is a good win-win for both parties.

According to chief financial officer (CFO) Jyotsna Sharma, Bridgestone India has now reduced its days sales outstanding (DSO) – or the average time taken to get paid after invoicing – by six days, unlocking €7 million in cash flow over an nine-month period.

“Our digital collections went from 22% before Covid-19 to 80% today,” said Sharma. “We are expecting further efficiencies in our working capital as we look towards onboarding all of our dealers onto the platform. We have received great feedback from them on the seamless experience of their payment process so it’s really a win-win for both parties.”

“Digitalization of our finance processes continues to be a key priority for us at Bridgestone India. We are delighted to see great progress with JP Morgan’s solution that has helped us overcome some of the longstanding challenges around manual processes that we face operating in this market while staying compliant with regulatory requirements,” added Sharma.

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