Accounts Receivable Management for 3000 Strong Dealer Network

The Objective

To enhance accounts receivable management by digitizing the collection process primarily to optimize the working capital efficiency.

The Background

Goldmedal is a homegrown electrical company established in 1979. With 6,000 strong dealer networks across India, Goldmedal used traditional collection methods, i.e., checks & post-dated checks (PDCs), which were manually reconciled back to the company’s ERP after cross-checking with the distributors for the payment breakup and adjustments. Given the vast dealer base and multiple ongoing schemes, Goldmedal was required to innovate its revenue collection mechanism to keep better track of payments and improve its working capital efficiency.

The Numbers

0X

Faster Reconciliation

0Days

Reduction in DSO

0

Dealers on FreePay

The Numbers

0+

Invoices and Debit notes Reconciled

0%+

Deductions Reconciled

The Challenge

Goldmedal used conventional processes to reconcile their receivables. With an extensive dealer base and cross-payments from various divisions, the manual reconciliation process was time-consuming and resource-intensive, reducing working capital efficiency.

01 Cash Reconciliation Challenges

The dealers used to make combined payments, leading to challenges by the Accounts Receivable (AR) team to segregate and make separate ERP entries.

02 Time-Consuming Collections Management

Time loss through phone calls and emails with the sales team and dealers to cross-verify clubbed payments.

03 No Dynamic Cash Discount

There was no online platform for the dealers to view invoices in real-time and check/avail cash discounts (CDs) associated with the invoices. The finance team had to spend a significant amount of time reconciling the payments made by the dealers against the CD slab dates. It was extremely challenging during the month-end, quarter-end, and year-end, as most of the invoices were paid during those times.

04 No Cash Forecasting

With traditional payment methods like NEFT/RTGS and checks, it was difficult for the finance team to forecast the payments coming in. Traditional methods are dealer-dependent, and the company relied heavily on the dealers to initiate a payment.

Our Solution

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

01 Live Payment Updates

Live dashboard accessibility to Goldmedal's finance and business teams gave them real-time updates on the payment records of their respective dealers and the status of the payments in ERP. FreePay automated the presentation of the payments to the bank and provided success and failed transaction statuses to the ERP. It significantly reduced the risk of manual errors.

02 Unique and Customized Dealer Onboarding Solution

A complete digital approach for mandate verification was adopted for the onboarding process. Branches uploaded the soft copies of the mandates collected, and the FreePay support team verified the correctness. It helped in saving crucial time in the processing of mandates.

03 End-To-End Reconciliation Solution

With every dealer selecting invoices and making payments through the application, the reconciliation issues have been drastically minimized. It has also led to a reduction in customer disputes regarding invoice payments and an increase in the productivity of sales and finance teams.

04 Dynamic Cash Discounts

With FreePay, Goldmedal could provide multi-slab discounts on a real-time basis. Goldmedal could also pass on various products and seasonal incentives at an invoice level for different regions.

The Results

The vision of Goldmedal's accounts receivable management was to achieve 100% digital payments. With FreePay, this vision has materialized.

The sales team was given a target of 100% digital payment for all their branches. Every sales member made sure all their dealers were on FreePay. An additional digital incentive was passed on to the dealers for using FreePay.

“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.