Photo of Sacha Deal, HSBC, David Meunier and Dan Ludlow, Microsoft, Mohit Manaktala, Bank of America Merrill Lynch and Barbara Harrison, Citi.

This solution was recognised in last year’s Adam Smith Awards as One to Watch – Project Rio 4 has now come to fruition with this impressive global cash applications solution.

The challenge

This entry was recognised in our 2015 Adam Smith Awards in the One to Watch category and it is clear that this was the correct decision now that Project Rio 4 has come to fruition.

The company objective was to become more agile and move faster, to simplify the way they work by re-engineering processes and implementing technology to manage some transactional activities. Historically millions of transactions processed by the BPO team were done manually, which (with the company’s expected growth) would result in Credit Services having to increase a number of BPO agents processing transactions thus increasing costs. One of the goals was to increase the speed and accuracy of cash application and reduce a number of agents required to do manual work.

This simple activity could take anywhere from a few hours or up to a couple of days between payment receipt and cash application for some payments, but by implementing some system and process enhancements this lag time could be reduced to a few minutes. Project Rio 4 was born.

The solution

The goal was to implement an automated global cash applications solution for four key banking partners. The aim of the project was to reduce the volume and complexity of the process of applying payments and reduce the lag time between payment receipt and cash application. In short, the Rio 4 solution covers five core elements:

• Enhancements to automated lockbox solution for cheque payment processing.
• Enhancements to automated EBS (electronic bank statement) for statement processing.
• More usage of the SAP standard post processing/clarification desk for manual allocation when the auto-matching fails.
• New applied and unapplied report from SAP.
• Automation of withholding tax (WHT) clearing.

“By re-engineering and automating our cash application process,” Marlena Luczak, Senior Credit Manager, Microsoft explains, “we created a Credit Services organisation that is capable of supporting Microsoft’s strategy to become more agile, move faster and to simplify the way we work. These transformations provided us with the capability to deliver significant efficiencies in processes and significant cost reductions.”

Best practice and innovation

The innovation solutions delivered under Rio 4 provide the fundamentals for future growth and create scalability, process efficiencies and productivity improvements that the supplier will deliver. Best practices are being demonstrated by technology enhancements and re-engineered process built with a view to grow the business and achieve a high-performing cash application function that will:

• Reduce manual matching thanks to an increased auto-match success rate.
• Improve collections and cash applications through regular updates and provides visibility of open payments.
• Improve speed with which cash is applied within the team.
• Maintain resolution speed by keeping the teams informed of payments applied (for review) and unapplied (for investigation).
• Generate reports with real-time information thanks to automated Lockbox and EBS thus increasing visibility of applied or unapplied cash.

“The delivery of Rio 4 would not have been possible without our BPO partner Accenture and a collaboration with four different banking partners,” Luczak adds. “The design of the solution was done by Microsoft engineering and Credit Services teams, together with the industry expertise brought by Accenture specialist SAP consultants, and allowed us to write a best in class business requirement document.”

Key benefits

• Enhanced CPE (customer partner experience) in line with the company strategy.
• Increased operational scalability thus indirectly improved working capital.
• Process optimisation.
• Increase delivery effectiveness.
• In the four months after implementation in December 2015, 42% of automation and 32% of semi-automation, leaving only 26% as manual (before Rio they had 80% of manual cash applications), a 66% reduction in manual processes, 6,616 individual payments were fully automated and 4,948 payments semi-automated.