Leading Aluminum Producer Leverages Finance and Administration Business Process Outsourcing
The Client
The client is the world's leading producer of primary aluminum, fabricated aluminum, and alumina. It is a multi-billion dollar company and is a champion in reporting financial results by publishing it very quickly after the closing date.
Business Need
Faced with significant pressure to maintain/grow the bottom-line (fluctuating profits over past few years posing a challenge for growth) there was a requirement to cut the cost drastically. Management has set aggressive target for time-bound cost containment.
Key Challenges
Due to the aggressive target for cost reduction, there was a need to complete the transition within a short time. The volume of data was considerable. There were around 1.8 million AP invoices per annum with a vendor base of around 30,000. The AR invoices volume was close to 85,000. This meant setting of a large team and training them in a very short time.
Our Solution
For the Accounts Payable services were provided in the following area
- PO Based invoices
- Non PO invoices
- Emergency invoices
- Recurring payments
- Void checks
- Debit/Credit memos
- Vendor reconciliation/ inquiries
- Generating 1099 reports
- MIS activities on AP
For the Accounts Receivables, following areas were covered
- Applying receipts to invoices
- Follow up on outstanding items (missing information etc)
- Report on unapplied receipts
- Write offs - small amounts
- Debit/Credit memos
- Customer reconciliation/inquiries
- MIS on receivables
- Ageing report on outstanding etc.
Multiple shifts solution was recommended to reduce the cycle time.
Business Value
Outsourcing the F&A activities resulted in immediate cost benefit up to a whopping 40-50%. This was vital to keep the costs down and thereby increasing the bottom-line of the company. With the reduction in cost, the process performance was also improved. The productivity improvement was 5% p.a. and a two-fold increase in processing cycle time by employing multiple work shifts. Better stakeholder service levels were achieved through manpower quality arbitrage.