Author: Author FAO

Processes – Record to Report (R2R)

Record to report / R2R This is the first list we shared on Tuesday… http://faoblog.com/processes-record-report-r2r/ Continuing with the R2R process listing from the last week, we cover the other areas of R2R, which now are closer to the CFO more than others. Record to Report (continued….) Fixed Assets Asset Setup Asset Master maintenance Asset transfer recording Depreciation recording an management Financial Planning and Analysis Financial & statutory reporting Building financial KPIs Tracking & reporting of financial KPIs Budgeting & Forecasting Budget Preparation Budget Analysis Forecast preparation Revenue forecasting Forecast Analysis Budget Variance Analysis Forecast Variance Analysis Budget consolidation Regulatory...

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Processes – Record to Report (R2R)

Record to report / R2R Today we commence the Record to Report stream, commonly known as R2R. In the initial stages we had given a list of processes that normally comprise of the R2R stream. R2R is a vast subject and depending on your client’s / principal’s needs, can take large proportions of an outsourcing engagement. As the processes mature, “Record to Report” or “R2R” is considered for outsourcing or moving to the back office. Although in my initial listing, I had shown reconciliations separately, however, since it affects multiple functions, depending on the function it can be classified differently. Here...

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Processes – AR – Credit Management

You saw what we could do from a shared service center / outsourcing perspective. http://faoblog.com/processes-ar-credit-management-5/ Now there is one very critical thing to take care of, the approval. Each client / principal will surely have their own unique requirements. A client which I am currently doing an assignment for has eight different production units, and each unit wants to run the business in the way it wants, to some extent driven by the market forces in their region. Each of these units are either East, West, Center / in the Northern region, and that changes the dynamics of their...

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Processes – AR – Credit Management

Did you pick up your free report from the Accounts Payable network? http://faoblog.com/free-report-power-real-time-visibility-automated-systems/ We talked about the end goals of a credit management process http://faoblog.com/processes-ar-credit-management-4/    Now a question arises, what can you do from an outsourced / shared service center perspective? One sentence answer is “Help the client / principal take the required decision” And for this, you need to do all possible research, summarize the research and present your findings to your client / principal. Depending on your need and the end objective, for an existing customer, you would collect historical data, market data, his payment patterns, his...

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Processes – AR – Credit Management

We talked about some things that need to be done for credit management for existing and new customers. http://faoblog.com/processes-ar-credit-management-3/ Now the question is, what are the end goals of doing all the analysis we talked about in the last two posts. The end goals would comprise of determining the following: The amount of credit that can be given to the said customer The duration of the credit Grace period for occasional payment defaults Clauses for default definition Penalties and interest components for defaults Period for which these terms will be valid Review frequency Credit termination clauses, containing events that...

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Processes – AR – Credit Management

Last post we talked about Credit Management for an existing customer. http://faoblog.com/processes-ar-credit-management-2/ For a new prospective customer, this becomes a little tricky. Analytics around the payment patterns for the last few years will not exist, and there will be no defaults. But the following points will surely exist: Market dynamics of the customer’s business and global trends of his industry Changes / challenges in the financial standing of the customer Regulatory influences on the customer’s business Competitive pressures and changes thereon Availability of alternative suppliers to the customer and the terms offered by them To add to this, you...

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Processes – AR – Credit Management

We introduced the credit management activity. http://faoblog.com/processes-ar-credit-management/ So, in brief, credit management is primarily done to conduct an assessment of a customer’s financial and market standing and getting to a conclusion on the amount and period of credit that this customer can be extended. Credit Management Process The credit management process can be fundamentally be classified into two components, For a new prospective customer For an existing customer Let me start with the easier part, credit management for an existing customer, as this activity is a good candidate for a back office / outsourcing operation. The moment I say...

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Processes – AR – Credit Management

We talked about various scenarios where in a collections / general segment, how customer support becomes critical and can be leveraged as a back office / outsourced process. http://faoblog.com/processes-ar-collections-customer-support-5/ Important thing to note is that though a lot of back office / outsourced units use this for collections sub-components, this goes much beyond that and often forms an independent process altogether. When we are talking of AR or accounts receivable processes, one crucial aspect is to determine and define the credit limits of various customers. The activity for this is called “Credit Management” Credit Management This process can comprise...

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Processes – AR – Collections – Customer Support

We read what comprised of customer support in an order placement process http://faoblog.com/processes-ar-collections-customer-support-2/ Let us look at support requirements for a material delivery process. This is again critical to customer satisfaction for your client’s business. Material deliveries will attract a lot of customer support requirement / need. The foremost is “by when” – each customer needs to have absolute clarity on the date when he will receive the material. Since this is based on multiple factors, like the date of dispatch, timelines given by transporters or the couriers / postal service, keeping a track of the same becomes crucial....

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Processes – AR – Collections – Customer Support

Prospecting stage requirements were shared for a customer support process. http://faoblog.com/processes-ar-collections-customer-support/ The next is order placement. Most of our readers, especially those working in back office / outsourcing units are familiar with this, especially for an AP process, like creating a purchase order, sending to the vendor etc. For a customer support activity, this is exactly the reverse of the AP process. Here you need to receive and register a customer’s order. We have already discussed this in an earlier post, haven’t we? Well today we look at the requirements of a customer support process for this. If you...

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Processes – AR – Customer Support

We read about the need for a settlement process: http://faoblog.com/processes-ar-collections-settlements-2/ Another process which is similar, in terms of process handling, but is crucial to any business is “Customer Support”. This process, as the name suggests is crucial for any business as the customers of your client will need support at all stages of a “buy” process. To understand this, let’s revisit what a “buy” process will be and at what stages a customer will need support. Prospecting stage – A customer or a to-be customer will need to understand what your client has to offer. He needs to understand...

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Processes – AR – Collections –Settlements

We introduced you to settlements and left you with a question – Why is really settlement resorted to? http://faoblog.com/processes-ar-collections-settlements/ Every business takes years to build, it spreads in various locations, geographies and regions. Key to any business are its customers, who over a period of time become quite loyal to the business, in the literal sense of the word. Most of your clients grew that way. To control any business and drive compliance, steady and timely deliverables, cashflow etc., some rules are defined, which may include numerous factors, like rewards for good and regular customers, penalties for defaulters. Now,...

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Processes – AR – Collections –Settlements

We shared the workflow of a dispute resolution process http://faoblog.com/ar-collections-dispute-resolution-workflow/ And then the process steps to the process http://faoblog.com/processes-ar-collections-dispute-resolution-3/ Oh and the last post was by a recruiter for a position in Bangalore… Did it fit your profile? http://faoblog.com/recruitment-bangalore-dgm-fa-solutions/ Coming back to our discussion topics on outsourcing / back office, one key point which follows dispute resolutions is settlements. In my posts earlier, we had talked about approval authorities. There are enough times in dispute resolution, that a resolution will need something to be done out of the way. Where your client / his representative will sit across a...

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AR – Collections – Dispute resolution – workflow

Dispute Resolution – Workflow We talked about the distinction between a disagreement and dispute. We also had an interesting definition insight from one of our readers – Hubert Kögler on this. http://faoblog.com/processes-ar-collections-dispute-resolution-2/ Let me share a workflow with you today on dispute resolution. (Click image for a larger view) Subscription and Guest Post: You may subscribe to the blog from the subscription box on the opening page of the blog. We have enabled a button on the top of the first page, which will enable you share your posts. If you wish to write about any of the current streams,...

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Processes – AR – Collections – Dispute resolution

We started on dispute resolution: http://faoblog.com/processes-ar-collections-dispute-resolution/ The very definition of the word dispute presumes a disagreement. The  fact that the understandings and assumptions can be different are fundamental to a disagreement, may lead to a dispute. Either your client or his customer can become rigid on some point pertaining to a transaction and claim that his contention is correct. The thin line between a disagreement and a dispute is defined by the fact that in a disagreement both parties have a different opinion about some clauses or happenings of a transaction, and are open to look at various terms...

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