“We have unlocked billions of dollars to empower businesses in cash flow planning”
It is established now that the new normal is digital-first. Both large and small businesses are
now realising that streamlining and digitalising accounts receivables and payables can free up working capital and make room for business growth. Global PayEX, a cloud platform for
working capital optimisation, is helping organisations, such as Stanley Black & Decker, manage
the new shape of data flows, elevate cost savings, and unlock millions locked up in cash
flow. Abhilash Edakadampil, CTO, in an interaction with The Machinist, elaborates on how
the company unlocks value to empower businesses in cash flow planning and deployment
while also creating value for their dealers and channel finance.
What are the key services you offer?
We provide key automation solutions on both the Account Receivables (AR) and Account Payables (AP) sides. On the AR side, FreePay: The Electronic Invoicing Presentment and Payment (EIPP) with straight-through reconciliation. FreePay delivers actionable invoices in real-time on mobile or desktop and enables payment in time which helps in accelerated collections, reduction in DSO, reduction in disputes/billing adjustments and reconciliation errors.
Our solution, AlgoriQ is an AI-powered intelligent fund application (IFA) solution for end-to-end automation of AR reconciliation. It auto-reads payment advice and bank receipt reports (MT940 etc.) in various formats and does multi-point data match of invoices for straight-through reconciliation in the ERP. The product also brings in sophisticated deduction management with aggregation, limit checks and dispute resolution to minimise unauthorised deductions.
Our other solution FinEX is a financing platform for AR and AP which extends working capital for both the channels and the vendors from a variety of lending partners.
Global PayEX has processed over $50 billion in transactions since 2015 while digitising 90 per cent of B2B payments for its customers. We have delivered a 20 per cent reduction in Days Sales Outstanding (DSO) while delivering actionable insights to CFOs. Several Fortune 1000 companies have adopted our FreePay, and AlgoriQ, an ML-based automated reconciliation/deduction management platform for institutional customers and their vendors.
How does AI/ML power your ALGORIQ engine?
AlgoriQ automates multi-way reconciliation using AI/ML for our customer’s modern trade, e-commerce, or institutional clients. The ML engine extracts the content and context of data from multiple formats of scanned data and direct downloads. Rule-based validations and enhancements are performed on data as the machine builds related lexicons at the customer and domain process levels. The machine-learning algorithm then performs intelligent record matches based on the context extracted and rules defined. Full matches are reconciled, and partial matches follow learning workflows. In addition, AlqoriQ now supports extensive deduction management.
Locked up working capital has been a pressing concern for B2B players. How did GlobalPayEX manage to address this concern?
Traditional methods and manual processes of AR continue to lock up billions of dollars of working capital across the globe. Our technology unlocks this value to empower businesses in cash flow planning and deployment while also creating value for their dealers by having better access to digital payments and channel finance. To cite an example, we managed to automate more than 70 per cent of a homegrown brand Goldmedal Electricals Account Receivables (AR) through FreePay. This translates into unlocking the potential of working capital worth Rs 1,000 crore nine days earlier.
With the adoption of the AI-powered cloud-based Software-as-a-Service (SaaS) solution, Goldmedal Electricals has seen the faster digital collection, 2X faster reconciliation, and a nine-day reduction in DSO, which together have enhanced working capital efficiency and increased visibility on company cash flows by 99 per cent. Around 3,000 dealers of the company have opted for EIPP, with an average addition of 75 dealers every month since June 2019. We provided Goldmedal Electricals with a real-time dashboard that tracks invoice status and payments received, which helps in reconciling the payment against the invoice into its ERP. In addition to automating AR, Goldmedal leverages the platform to offer multi-slab discounts, and product and season incentives by region to its dealers and distributors, most of whom are MSMEs.
You are also working with Stanley Black & Decker Inc. What solutions have you provided?
Stanley Black & Decker Inc. (SBD) is a Fortune 500 company and one of the largest American manufacturers of industrial tools and household hardware, and a provider of security products. It has a growing network of over 500 active dealers across India, SBD India team struggled with highly manual treasury workflows. Its AR teams spent a significant amount of time making calls and emailing dealers to follow up on payments and reconciling them against paper invoices using traditional excel spreadsheets. Further, with dealers paying via a combination of cheques and cash as well as electronic transfers, SBD also faced challenges in reconciling its cash flows across the various channels, resulting in delays in collecting payments and reduced working capital efficiencies. To address this, SBD collaborated with us and the association resulted not only in a 50 per cent cash conversion cycle by accelerating the collection of payments from dealers and reducing the day sales outstanding but also helped SBD unlock approximately $1.1 million in working capital through quicker cash conversion.
What’s your take on the increasing use of data analytics in improving working capital management?
One of the key indicators of the financial health of an organisation is its working capital management. Every CFO we meet has a clear agenda to improve its account receivable and account payable processes to release cash strapped in their operations. Digitalisation and automation of processes are great steps in reducing working capital. However, any measure implemented needs to be continuously monitored to make it effective. Data analytics, thus, becomes a key to having those proper insights into the challenges in the current as-is processes and the constant improvements happening due to the automation measures.
For example, tracking DSO is an effective way of understanding the reasons for a higher DSO like collections, credit terms, payment mechanisms, or disputes, and how effective the process change or automation is in helping to reduce the DSO. In addition, PayEX provides working capital analytics for corporates, with DSO tracking, cash forecasting, buyer payment behaviour, etc., which helps in a better return on capital employed. Our payment data and payment behaviour analytics is also aiding credit decisions by our panel of embedded banks and NBFC lenders for both AR and AP financing.