V-Guard Optimized its Accounts Receivable with FreePay

The Objective

To streamline collections, reduce DSO, boost resource productivity and reduce cost.

The Background

V-Guard is a manufacturer of consumer products ranging from voltage stabilizers, electrical cables, electric pumps, electric motors, geysers, solar water heaters, electric fans and UPSs.

Being market leaders across multiple geographies and product lines for over 20 years, V-Guard caters to its end customers through 150,000 retailers and a 3000+ dealer/distributor network.

The Numbers

0Day

Reduction in Days Sales Outstanding (DSO)

0%

Time Saved by the Finance Team in Reconciliation and Posting Related Activities

0%

Increase in Productivity of the Sales Team

The Numbers

0+

Invoices and Debit notes Reconciled

0%+

Deductions Reconciled

The Challenge

V-Guard's finance and sales team spent significant time managing collections and reconciliation from their dealer network.

01 Payment Delays and Loss of Sales Team’s Productivity

The dealers did not have a live view of all outstanding obligations & credit notes. They had to call and ask for their customer ledger before making any payments to V-Guard. A salesperson would spend over 20% of their time resolving all the open items/disputes or due invoices for collection.

02 Handling Check Collections was Costly and Time-Consuming

Over 35% of collections were made via physical checks, and payment reminders were sent manually via email. The checks were received via multiple mediums (e.g., courier, salesperson). The finance team filled deposit slips, payment advice was created, and payment receipt entries were made in the system manually.

03 Manual Reconciliation and Loss of Sales

Manual reconciliation took more than one man-hour per payment, and the disputes would delay the release of credit limits. V-Guard predicted an average loss of 5-10% of potential business revenue annually due to delays in releasing credit limits.

04 Manual Handling of Discounts

V-Guard offers multi-dimensional cash discounts, which are date, product, and region-based. As a practice, V-Guard had to accept full payment on invoices and discount the dealer by generating a credit note. A lot of manual intervention was required to record the payments and to handle disputes about cash discounts on bank holidays.

Our Solution

V-Guard adopted Global PayEX's EIPP solution, FreePay, to address all these challenges around collections and reconciliation.

01 Portal for Customers for Complete Visibility

The dealers are given access to a FreePay portal (web & app) to view invoices/credit notes and to make payments. The payments are automatically reconciled back at the ERP, leading to short TAT for releasing credit limits. FreePay also provides a real-time view of the customer ledger of all pending and overdue documents.

02 NACH Replaces Check Payments

FreePay helped V-Guard to move all check payments to NACH. V-Guard further accelerated this change by not accepting check payments and pushing payers to NACH as a payment mode. It helped to reduce the cost and efforts involved in handling checks significantly.

03 Early Release of Credit Limits

Every payment made in FreePay is against invoices/DNs/CNs, simplifying the reconciliation effort drastically. Automated reconciliation helped release the credit limits early and avoid loss of sales.

04 Automated Dunning & Live MIS

FreePay has automated email and SMS reminders and In-App notifications for all new, due and overdue invoices. A live MIS dashboard is also provided to finance and sales teams across the hierarchy to view real-time outstanding obligations and payments made by their respective customers.

The Results

V-Guard saved 150+ man-days of effort by the AR team annually by automating the collections and reconciliation processes with FreePay. By driving the adoption of digital payment methods and replacing checks with NACH, over 50% of the daily check processing time was saved. FreePay also eliminated a significant portion of the sales team’s efforts in collections, thereby improving sales productivity. The automation also led to shorter TAT for releasing credit limits, minimizing the lost revenue.

“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.