Sun Chemical Significantly Reduces Errors in Cash Application Processes

Shared services center leverages Serrala FS2 AutoBank to automate cash application within SAP ECC 6

by Pierce Owen, VP of Research and Publishing, SAPinsider

SAPinsider recently interviewed Erin Carter, Manager Global Treasury Operations at Sun Chemical, the world’s largest producer of printing inks and pigments. Sun Chemical has more than $7.5 billion in annual sales and over 20,000 employees in sixty-three countries. About a quarter (26%) of SAP customers currently use an intelligent cash application solution, according to SAPinsider’s Assessing Intelligent Automation in Finance research. One of those customers, Sun Chemical, has found significant benefits in integrating Serrala FS2 AutoBank with SAP ECC.

This research brief shares the story of how Sun Chemical implemented Serrala FS2 AutoBank to reduce errors in cash application processes.

Manual Cash Application Processes Draw Resentment from Clients

Erin Carter works in Sun Chemical’s Cincinnati office, and her team does all the accounting for Sun Chemical’s treasury operations, manages bank accounts, and oversees the in-house bank.

Carter shared, “Before implementing AutoBank, we struggled with our cash application processes.”

When Sun Chemical went live on SAP ECC 6.0, Carter’s group took over the cash application and bank statement processes and immediately faced resentment from their business clients and partners. “They thought they could do it better themselves and could not understand why we could not get it right.”

Carter’s global treasury operations group took advantage of the available automation in

standard SAP ECC such as generating invoice numbers, but it had to consistently go to the IT department to increase the automation rules and tweak them for different countries.

At the time, Sun Chemical’s collections team had to look through bank statements every day to see what cash had come in for each account, which led to delays and mistakes.

In fact, Sun Chemical made mistakes on over 1% of all receipts. While individual employees committed some of these mistakes, many occurred due to lack of flexibility with the system automation rules. For instance, the Turkish team had to deal with many common words between customer company names. Carter’s would clear invoices from the wrong customers if their names shared one of these common words because they would identify the wrong IBAN for the customer. Once the customer’s data had the wrong IBAN attached, the SAP ECC system would continue to incorrectly clear the Turkish invoices, which they would then have to reimburse.

“The collector would ask us why this happened, but the system amplified mistakes,” said Carter.

Automating the Cash Application Processes

In 2017, Carter met with Serrala about FS2 AutoBank and found it to be a good fit. AutoBank could produce same-day statements, which streamlined the process with the collections team, who would no longer have to wait for statements to come in. Carter’s team could also create and modify the rules without going through the IT team.

In 2018, Carter’s team built their business case for AutoBank, got approval from management, and went live with the first phase of a roll-out in October 2018. The first phase covered the US, Mexico, and Northern Europe. From there, the second phase included Southern Europe, and then the third phase incorporated Central Europe and Asia. New business in Chile followed later.

AutoBank stores the customers’ and vendors’ IBANs and associates them with the correct tables in the AutoBank application, which synchronizes and integrates with SAP ECC in near real-time. Now, the team only has to update the AutoBank tables instead of customer master data and is able to see a customer or vendor’s information all on one screen. Autobank has a master data communication tool that the team uses when they see a change on a bank statement to tell everyone to update the tables.

Since the AutoBank implementation, Sun Chemical has increased automation across cash application processes by 50%. With AutoBank, it reduced tolerance issues and saw invoice errors shrink to one or two per week out of over 10,000 postings.

“We have seen a much-improved relationship with our collections team, our main internal customers, and can now verify a proposal process before anything gets posted,” said Carter.

Carter’s shared services team has also on-boarded new business, such as the new operations in Chile as well as some smaller acquisitions, without increasing headcount. It does expect headcount to increase somewhat

with a larger acquisition underway, but “not as much as it would without AutoBank,” concluded Carter.

What Does This Mean for SAPinsiders?

Based on our research and the interview with Erin Carter, the following considerations can help SAP customers improve shared service center processes:

  • Put solutions in place that empower the line of business (LoB) teams to set their own rules and modify their own data. The tolerance issues faced by Carter’s team caused many of the systematic errors on invoices. Now, they can create and modify their own rules without going through the IT team and have minimized errors.
  • Actively ask clients about pain points. Shared services centers exist to increase process efficiency and accuracy. When collectors and clients started complaining that they could handle their own accounts better than Carter’s team, she made it a mission to fix those problems.
  • When rolling out a new shared service solution, keep at least one employee dedicated to the legacy solution until the roll-out completes. Carter’s team did not want anyone getting confused about which accounts followed which processes. Therefore, they kept one employee dedicated to the legacy solution and the regions that had not yet rolled out until they finished rolling out to all regions.
  • If an automation solution starts causing more errors, look for an alternative that can both reduce errors and streamline processes. The rules in SAP ECC alone caused errors on too many of Sun Chemical’s invoices. They needed SAP ECC as their back-end system, and they needed to streamline processes — but not at the cost of too many errors. Therefore, they turned to AutoBank to automate cash application processes.

Following this strategic guidance should help SAP customers get the most out of shared service centers and cash application automation in a way that reduces errors and streamlines processes.

Attend SAPinsider 2020 to hear Erin Carter present this case live alongside 150+ other experienced SAP customers and Experts.

Pierce Owen, VP of Research and Publishing, SAPinsider, can be reached at Pierce.Owen@wispubs.com.