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Saving Time & Reducing Errors with Automated Cash Allocation

Headquartered in Australia with operations in North America, Australia, New Zealand, Pacific Islands, and Asia, BlueScope is a provider of innovative steel materials, products, systems, and technologies. The company employs over 14,000 people and serves thousands of customers every day.

The Challenge

Prior to July 2018, BlueScope’s existing  cash  allocation  process was highly manual and time consuming. The company was not able to complete cash allocations each day, which resulted in a negative customer experience. The supply chain was also affected due to held orders and impact on cash flow.

“We take a line from the bank statement, match the line to a remittance advice, open the remittance advice, understand what the customer has paid, and go in and physically mark off those elements,” says Janice Thomason, manager for credit and working capital at BlueScope.

Standardization across the process was also difficult to maintain. “With a manual process, you have a higher user error rate. Maybe there is a credit controller who doesn’t follow process and decides to allocate to the oldest invoice, or they may allocate to the invoice that they should have collected but haven’t.”

Why BlackLine

Thomason had used BlackLine Cash Application prior to working at BlueScope. In fact, she had been the biggest advocate for implementing the solution at her previous company, campaigning to streamline and automate the manual accounts receivable processes over a period of four years.

“One day, a colleague was waxing lyrical about Cash Application and how it was changing the face of the world. I had just moved to Australia and it was my first week in the business. I started thinking, ‘Wow, this product would really help us.’”

However, getting leadership buy-in at the time was challenging.

“I was the new person, and I didn’t have any of the clout that you need before you can start to change processes. I kept making the business case for Cash Application, year after year. Finally, my new manager, who was very aligned to automation, saw the immense value in it.”

Post implementation, Thomason and her team saw rapid results. “We had no unidentified cash at the end of every day, let alone at the end of the week. And that meant we had a very clean bank reconciliation process, as well. It was a major, major improvement.”

As a result, staff had time to spend on other work, including billing. “At my previous company, we saved 700 hours with Cash Application, which is equivalent to around five FTEs. We took those hours saved and put those individuals onto billing, so they started invoicing more frequently. Our invoicing increased and our billing cycle increased. We were getting paid sooner, which impacted cash flow.”

When Thomason later joined BlueScope, she discovered—happily—that the company had already partially implemented Cash Application in one ERP, with intent to implement in four additional systems. However, the time savings weren’t yet where Thomason knew they could be.

“We began looking at what we could do differently to get the results I’d seen at my previous company. And it all came down to process. It’s really important to look at your processes when you’re bringing in a new solution. Change the process, don’t try to lift and shift the old ways into new solutions.”

Over twelve months, Thomason and her team worked to evolve outdated processes while implementing Cash Application into additional ERPs. They’ve since seen auto-allocation increase by 18%. “We were achieving auto-allocation in the mid 70s a year ago, and now we’re in the high 80s. Within the next five or six weeks, we’ll achieve a few more percentage points.”

The Results

Saved time. With BlackLine Cash Application, BlueScope has reduced the amount of manual work required for cash allocation—and enabled better liquidity management.

“We’ve eliminated some of the painful points of the old manual process. Most of the time, we don’t even have to use a remittance if the customer is known to the system. It just flows through,” says Thomason. “Fundamentally, the majority of our allocation is worked out the first time through a complete match to match without using the remittance.”

Streamlining allocation via automation has also benefitted customers. “We have fewer situations where customers are on hold because a payment wasn’t allocated correctly. That in itself has been very helpful.”

Increased visibility. Cash Application automatically applies payments to customer invoices, thereby increasing real-time visibility and reducing the time staff has to spend researching missing payments.

“Our credit controllers arrive at their desks in the morning and payments have already been allocated. They can see straight away which accounts are or aren’t on hold,” says Thomason. “As a result, less time is spent on the dunning process.”

Reduced errors. BlackLine has enabled organization-wide standardization of the cash allocation process—and a corresponding reduction in errors.

“With Cash Allocation, we have an automated one-to-one match. If there are several permutations of a potential allocation, then the system advises and we can intervene and choose the correct allocation,” says Thomason.

Rules and strategy drive the allocation and teach BlackLine which invoices should be selected for payment. “The rules are set in a specific order and the system runs through the rules sequentially to select the correct invoice to match to the payment reference. There is also a major knock-on effect in the bank recon, especially when there are many same-value payments.”