The challenge:

The increased complexity of servicing credit and collections for small- and medium-sized businesses is just one of the many aspects of change that Microsoft is experiencing, as it moves from a licensing business for enterprise customers, to a devices and services business. During this change the role of Worldwide Online Credit Services (WOCS) will be increasingly important, as it will be collecting more and more revenue in future. It is in a new business, growing rapidly (100% year over year), and constantly expanding its international reach, and adjusting its business model.

As Asia Pacific becomes an increasingly important region for the company, Microsoft is making a major long-term investment to set up the infrastructure to compete for, and win Asia’s online and computing technology business. As part of this, “going global” in Asia means getting off the US dollar. Given WOCS’s focus on small- and medium-sized business, the ability to bill locally in local currency is critical to winning these customers’ business, and growing Microsoft’s revenues in Asia.

In addition, it should be noted that local billing and/or collection in local currency in countries with more highly regulated, or less liquid markets for their currencies, creates its own set of complexities for foreign exchange (FX) hedging for Microsoft’s treasury operations, as the cost and complexity to hedge are greater.

As Jose Luis Marti, Group Credit Manager at Microsoft explains, “the path is complex and challenging, but Microsoft is planning for the long-term, and all key MS Treasury teams are on board to make this happen – credit and collections, cash planning, FX hedging and cash operations just to mention a few.”

The solution:

Over the last 12 months, Microsoft has launched local billing and/or in local currency in 14 different countries in Asia such as Malaysia, Indonesia and China. More countries are to come in the next 12 months until the project is fully completed.

Launching domestic billing in the local currency required a whole series of events to take place for it to become established, including:

• Partnering with treasury, legal, billing, operations, and tax specialists to develop the implementation plan.

• Establishing a local legal billing entity.

• Obtaining office space.

• Setting up bank account and banking infrastructure – more complex to establish and operate in emerging markets.

• Setting up ongoing treasury, legal, tax, operations, billing, and sales teams.

• Finding credit information on local companies:

  • Because little to no financial information is available for medium and small businesses in emerging countries, credit and risk teams must use more basic information to validate a company’s existence, credit worth and legitimacy, eg confirming that the legal entity exists, date created and number of employees.

• Supporting the entire operation in the local language.

Best practice and innovation:

The Microsoft WOCS team have demonstrated best practice in managing the challenges that each country in Asia Pacific presents. Through developing a clear process and leveraging local and international knowledge the team has successfully billed in a number of local currencies giving Microsoft more ability to win business locally. As Marti concludes, “we are laying billing and collections foundations for doing business in emerging markets of Asia.”

Our judges felt the WOCS Team is certainly “One to Watch.”