Retail consultants warn that explosive growth of inflation in the FMCG sector is due in early 2022. Shortages of supplies and price rises further down the supply chain mean that grocery manufacturers will inevitably need to raise prices substantially as their reserves are drained from facing rising costs.
When costs rise in your supply chain, margins are depleted. There is only so long you can hold your prices before funding the shortfall in your margins becomes too great to bear.
What to do?
Minimise your costs to maximise your margins.
That’s precisely what our FMCG clients have done, and their Order to Cash teams was a vital part of that strategy. Two years on, and one such client is still investing heavily in production facilities. They continue to grow globally through selective acquisitions. Their investment in resilience and efficiency paid off, and it is still a crucial part of their corporate strategy.
So what is the link between profit margins and Order to Cash?
Automation. They used the Corrivo platform to add automation at key points across the Order to Cash process. Here are the components of their cost-crushing solution.
- Bulk e-Invoicing
Inputs to Corrivo from the ERP systems in all countries in which they operate result in inaccurate invoices being dispatched globally by various delivery methods, ranging from EDI to email. In one client’s case, PDF attachments and postal invoices are banned. They do not fit their sustainability pledge. Corrivo sends out secure links to an invoicing portal where customers can retrieve their invoices along with any other documents such as proofs of delivery.
- Track and Trace
The Corrivo platform lets them track invoice progress and see when invoices have not been collected, in which case they intervene before the invoice even becomes due. Combine this with reporting, and they can measure, month on month, how fast their teams are acting to ensure 100% invoice collection within ten days of sending, leaving the customer two weeks to pay on time.
- Segment-Specific Reminders and Dunnings
You know who your late payers are. You know who your best, high-value customers are. But this is anecdotal, not factual. The Credit Control team can slice up their customer base by monthly credit value and apply different collections strategies to each by analysing invoice history. Low-value customers receive a fully automated collections approach. Corrivo sends out reminders letters and Dunnings letters. If the invoice remains unpaid after the third Dunning, the last letter is set on repeat and keeps going until the invoice is paid or the customer has been chased in person. High-value customers are treated to an approach combining automated letters with scheduled calls.
- Unstoppable Queries, Claims and Dispute Team
FMCG customers often raise claims against invoices relating to special offers and promotions. Credit notes need to be raised, authorised and applied. And someone needs to keep track of this. Corrivo does it for them. The teams use the tools within Corrivo to track, log, schedule and manage interaction with customers over queries, including all communication with internal stakeholders and external suppliers such as logistics firms. The team is made up of their best case closers, whose work is made infinitely easier using Corrivo.
- Uploads and Downloads
There is a manual component to Corrivo – Credit Controllers can upload supporting documents to the system at any time, either for their reference or for the customer to collect from the portal. Likewise, customers can upload documents, which include excel spreadsheets showing their workings in respect of discount claims, keeping all the data, all the documentation in one place. It saves time. It provides an audit trail, and it eases the stress of the annual company audit.
It features in their annual report. They are looking for more ways to introduce it, and they are not alone. According to Deloitte,92% of CFOs from 130 Fortune 500 companies say they will increase automation in 2022. Why? Because of the dramatic cost savings it can yield, by handling manual and repetitive tasks, thus freeing up their staff for higher-value activities such as analysis and planning.
The ROI for e-Invoicing automation is fast and robust. It reduces the back-office cost of invoicing, taking cost out of the balance sheet—a thing of back-office processing as the hidden cost of sale. If measured on a per order basis, the reduced cost of processing each order improves profitability across the ledger. It is, as they say, a magic bullet in times of rising costs.