Case Study:

Reduced DSO significantly by implementing our EIPP solution

Objective

To increase electronic payments, reduce DSOs and reconciliation efforts.

Background

An American Multinational tools manufacturing company moved into freepay leveraging consent-based NACH and fund transfer through NEFT/RTGS into designated virtual accounts.

The Challenge

The dealers would mostly issue cheques and PDCs for payment.

  • Large financial leaks caused due to disputes with dealers as CDs were slab based but the realization dates would move to subsequent slabs. 
  • Payment made by NEFT and RTGS was a challenge as it was difficult to track the dealer.
  • With no access to outstanding obligations, CNs, and debit amounts, dealers couldn’t track dues. 
  • Delay in cheque deposit originated that led to credit getting blocked.
  • Partial Payment was a large challenge and finding the reason used up large bandwidth of all internal teams.
  • The costly month-end process involved recon teams to scan bank statements and reconciling it into the ERP manually.
  • Without access to a real-time view of incoming requests, no action was taken timely.

Our Solution

  • Additional Freepay Discount of 0.5% introduced, encouraging dealers to move into Freepay and eliminate cheques.
  • Dealers can view & pay from within Freepay where it automatically reconciled back at the ERP leading to short TAT for clearing credit lines.
  • The live dashboard enabled live view of outstanding obligations and payments made by customers.
  • Unique Virtual Accounts for each dealer allowed visibility of all NEFT/RTGS fund transfers with transparency.
  • Freepay managed the CD slabs which enabled efficient control without any “goodwill leaks”.
  • Freepay automated presentation of payments eliminating the manual efforts and errors.

The Results

Freepay enabled the collection by electronic to increase to 90% and reduced DSOs by 3 days – encouraging customers to move into electronic payments. Freepay cut short the reconciliation to same-day along with cost and collection activities reduced by 80%. SMS reminders and dunning features contributed to the faster collection. 

Leveraging freepay not only improved the process of existing receivables but also set up a platform to expand and get potential customers with a comprehensive customer experience offered. 

%

Electronic Payment Collection

DSOs Reduced

%

Effort Reduction

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