2. Global Credit and Collections for All Economies
Michael Puccinelli, VeriSign Tim Graham, Oracle
Anil Madhireddy, VeriSign Julia Baeva, Oracle
3. The following is intended to outline our general
product direction. It is intended for information
purposes only, and may not be incorporated into any
contract. It is not a commitment to deliver any
material, code, or functionality, and should not be
relied upon in making purchasing decisions.
The development, release, and timing of any
features or functionality described for Oracle’s
products remains at the sole discretion of Oracle.
4. Agenda
• Credit and Collections Challenges Today <Insert Picture Here>
• Oracle • VeriSign
• Operations Snapshot • Credit & Collections
• Process Before and After Suite Overview
• Challenges • Credit Management
• What We Gained • Advanced Collections
• What We Gained
• Q&A
• Conclusion
5. Financial Crisis – One Year Later
• Zero % fed funds rate
• Calls for new regulations • Trade credit instead
and more government of bank credit
oversight of financial
industry • “Quiet” bankruptcies
• Multi-billion bailout • Trade credit fraud
6. Oracle Advanced Collections
Customer
Automated Segmentation, Prioritized and Comprehensive
Administrative Scoring, Automatically and Transparent Management
Processes Strategies, Scheduled Customer Reporting
Filters Work Items Interactions
Real time customer Real time payments
balances
Oracle Receivables Oracle Payments
7. Oracle Credit Management
Credit Policy
Manual and
with Credit Credit Risk
Automated
Automated Analysis and Management
Credit
Scoring and Decisions
Applications
Checklists
360°
360° Customer View
Oracle Financials Dun & Bradstreet ®
9. Some Background Information
• Oracle’s Business Model
• Global Sales Teams
• Oracle Support, 24/7 services
• Oracle Consulting Services
• Oracle University
• Oracle’s Customers
• Fortune 50 to Small Business
• Partners and Alliances
• Vendors
Founded in 1977. Headquarters in Redwood Shores, • Operations Scale and Scope
CA.
• $23.2 Billion Annual Revenue
• > 320,000 total customers • 231,000 Credit Accounts
• > 86,000 employees • ~ 260 Credit & Collection
Employees
• 71 Operating Units
• AR Balances up to $7.2 Billion
10. Global Credit & Collections
Romania SSC
85 C&C analysts
Tim
HQ
India SSC
Costa Rica SSC 128 C&C analysts
27 C&C analysts
11. Project Goals
Update Oracle’s Credit & Collections Systems
• Replace Oracle Receivables’ Collections Workbench
with Oracle Advanced Collections
• Move to a Risk-based Collections Model
• Manage Customers by Credit Lines
• Automate credit processing (holds, scoring, reviews)
with Oracle Credit Management
• Simplify, Standardize, Centralize & Automate
12. Old Paradigm: Focus on Transactions
and Manual Search for Work
Collections Process
13. Our Approach to Collections
Utilize Advanced Collections to automate our Risk-
Based Collections Process
• Include risk factors in collections’ scoring and strategies
• Replaced manual processes with automation
• Use Work Queue to push assigned work to collectors
• Automate dunning
• Integrate with Oracle Payments for automated payment processing
Track and meet KPIs
• Corporate DSO
• Cash Targets
• Aging % over 90 days
14. Risk Based Scoring Model -
Collections
Data Point Relative Weight
% of Account > 30 Days Past Due 25%
Weighted Average Days Paid Late 30%
Total Amount Past Due 25%
Write off History 10%
Weighted Average Days Past Due 10%
15. Collection Strategies
$ Amount Owed
Pre-Del 1 - 15 16 - 30 31 - 60 61 - 80 81 - 120
Hard (0-45) Medium (46-75) Soft (76-100)
Days PD Action Days PD Action Days PD Action
Invoice Date 1 Call #1
15 Call #1 15 Dun #1
+20, 5 Dun #1
>$100K = 15 Call #2 25 Dun #1 30 Call #1
Courtesy 20 Dun #2
30 Restrict LC 45 Restrict LC
Call 25 Call #3
30 Restrict LC, Call #4 35 Call #2
60 Call #2, Sup/Cr Hold
40 Call #5 45 Dun #2
75 Call #3
50 Dun #3
60 Call #3, Sup/Cr Hold
60 Call #6, Sup/Cr Hold 90 Dun #3
70 Call #7 70 Dun #3
120 Final Demand/Legal
80 Final Demand/Legal 90 Final Demand/Legal
16. New Paradigm: Focus on Delinquent
Customers and Automated Processes
Collections Process
18. Our Approach to Credit
Utilize Oracle Credit Management to automate the credit
workflow and systematically enforce our Global Credit
Policy
• Single global scoring model
• Automate credit limit usage and credit holds
• Single customer case folder contains all information analyst requires
to make credit decision.
• Integration with D&B datapoints
Expected ROI
• Increased TAT in credit requests
• Reduction in bad debt write off’s
• Manage growth with existing resources
• Increased Global Operational Efficiency
19. Credit Scoring
Scoring:
• Customer Financial Data
• Internal Metrics
• Payment history, high credit, current account aging, disputes
• Sales forecasts
• External Data
• D&B, S&P, Moody’s ratings
• Media reports
• Country Risk Ratings
Credit Limits
• Based on score
20. New Paradigm: Automated and Systematic
Credit Policy with Reduced Workload
Credit Process
Order exceeds
customer credit
New Account Annual Credit limit (from OM,
Created Review Inititated
New/Periodic Account Review
OKS, PA)
AR Credit
Check
External Data Process puts
Entered Via order on hold
Checklist
Order on Hold
Credit file created
Automated Credit
Scoring
External Data
Credit Entered via
Classification checklist
Assigned
Order released,
Automated Credit
Credit Review
Scoring
Credit Limit date set
Assigned
- Automated Process
Credit account - Manual Process
New Credit
established, Credit New Credit
Classification
Review date set. Limit Assigned
Assigned
21. Project Challenges
• Moved to Regional SSC Model
• Romania in 2006
• Costa Rica 2008
• Teaching ‘Old Dogs New Tricks’
• Fundamental shift in credit & collection processes
• Global Training
• ~ 260 Credit & Collection Employees
• Operational restrictions
• AIT resources
• Close period restrictions
• Patching schedules
22. And the Results So Far…
• Global DSO
• Q4 2007 - 62
• Q4 2008 - 63
• Q4 2009 - 58
• Global Aging % > 90 Days
• 2007 – 3.09%
• 2008 – 4.16%
• 2009 – 2.48%
24. About Us
+ VeriSign, Inc. (Nasdaq: VRSN) is the trusted provider of Internet
infrastructure services for the networked world. Billions of times
each day, our SSL, identity and authentication, and domain name
services allow companies and consumers all over the world to
engage in trusted communications and commerce.
+ VeriSign, Inc. credit collection organization consists of shared
service centers
▪ @ Mountain View CA, covering the Americas
▪ @ Geneva, Switzerland, covering EMEA (Europe & Middle East)
▪ @ Sydney, Australia, covering the Asia Pacific Region
25.
26. Building Blocks for Effective Credit Management
+ D&B Data
▪ Paydex, Commercial Credit Score, D&B Rating & Financial Stress
Score
+ Internal Data
▪ No of years customer did business with VeriSign & Weighted Average
Days Delinquent (WADD)
+ Credit Limits & Payment Terms
+ Credit Review Cycle
▪ Quarterly, Semi-Annually, Annually & On Demand
+ Risk Profiles
▪ High/Low/Moderate
+ Sales Order Credit Checking
▪ Customer Credit Exposure vs. Credit Limit
27. Types of Credit Assessments
+ New Customer Reviews
▪ Review customer based on D&B data
▪ Credit Limit, Risk Profile & Review Cycle & Payment term assigned
to the customer based on review
+ Sales Order Reviews (Credit Checking for Orders)
▪ Orders credit checked comprehensively for the following 4 criteria
i. Standard Credit Check (customer exposure < credit limit)
ii. Payment Terms on the order = payment term assigned to the
customer
iii. Amount 91 Days Past Due (if any) is not more than 10% of customer
outstanding
iv. A credit review for the customer is not past due
+ Existing Customer Reviews
▪ Customer Accounts are automatically selected for credit review
based on the review cycle & last review dates
34. Building Blocks for Effective Collections Management
+ Customer Scoring
▪ Helps score customer accounts to determine the nature & extent of
the delinquency
+ Collections Strategies
▪ Determine the collections strategy to be used based on the severity
of the delinquency
+ Work Items
▪ Work Items get assigned to the Collection Analyst for Review and
Follow-up with the customer
+ Collector Assignment Model
▪ Help route strategy work items to collector based on assignment rules
35. VeriSign Collections Scoring Model
+ At VeriSign, Collections Customer Scoring forms the foundation for
collections Activities. Collections Strategies & Work Items are
assigned to collectors based on Scoring.
+ Customer Accounts are Scored on the following components:
1. Delinquent Amount on Account
– Open Invoices, Debit Memos, Chargeback and Guarantee transactions is
included in the calculation of Delinquency Amounts.
2. Account Days Past Due
– Highest Days Past Due of transactions on Customer Account.
3. Number of Delinquencies on Account
– Number of Delinquent Items on Account (Invoices, Debit Memos,
Chargeback & Guarantee Transactions are included in this determination)
36. Score – Strategy – Work Item Mapping
+ Pre-Delinquent Accounts are
Score Strategy managed by Pre-Delinquency
process
90 Pre-Delinquent + No Work Item is generated for
Early Stage Delinquencies (grace
period for customer to pay)
40-89 Early Stage Delinquent + Work items are generated for
Delinquent, Seriously Delinquent I
& Seriously Delinquent II
26-40 Delinquent strategies. Collection agent
options include:
▪ Call Customer/ Send ‘call me’
20-25 Seriously Delinquent I letters/ 5 day demand/ 10 day
demand/ final notice/
assignment of cases to
1-19 Seriously Delinquent II collection agency
38. Pre-Delinquencies – Key to DSO
+ Pre Delinquent transactions are not delinquent transactions but however needs early
stage collector review and a customer call given the high dollar amounts.
+ At VeriSign, a Transaction is considered Pre-Delinquent if the Transaction Amount >
25000 USD and Days Since Creation is > 7 Days though within Due Date.
+ Pre-Delinquent Transactions are identified by Oracle Collections and a work item gets
pushed to the collector prompting the collector to do one of the following and close
the work item
▪ Call Customer to check if they have received the Invoice & if they are all set to
pay on the Due Date
▪ Send Pre-Delinquency Dunning Letter
+ There has been a number of instances of prompt payments as a direct effect of Pre-
Delinquency follow-up process
▪ We recently identified an invoice for $1.55M which had a problem and talking to
customer early helped prompt payment. But for this process, we would have
known this issue a month later
▪ Average savings of around 1m$ a month which would have otherwise gone
delinquent
40. Real-time Credit Card Authorizations
+ VeriSign has enabled Advanced Collections Integration with Oracle
Payments that has real time Integration with BEPs like PayPal,
Paymentech, Citibank etc
+ Thanks to the above Integration, Collection Agent can process real time
credit card authorizations from Advanced Collections and process payment
immediately
41. What VeriSign Gained?
+ Implementation of Oracle Credit & Collections Suite led to better
credit risk management, collections efficiency as well as Productivity
gains
+ Productivity Gains helped reallocation of resources towards dialing
for dollars to help collections & cash flows
+ Cash Flow Impact:
91 Days Past Due Amounts reduced by 93% from the levels in
2004
Current & 1-30 Days Past Due Amounts as a % of Total
Receivables increased from 62% in 2004 to 92% in 2009
Bad Debt Write off dropped from 5.9 million USD dollars in 2004
to 2.1million USD in 2008
42. <Insert Picture Here>
Q&A
Michael Puccinelli, VeriSign
Anil Madhireddy, VeriSign
Tim Graham, Oracle (Credit and Collections)
Julia Baeva, Oracle (Development)
43. Global Credit and Collections for All
Economies
Why Oracle Credit Management? Why Oracle Advanced Collections?
1 Adjustable Automation 1 Centralized Collector’s Work Queue
Improved efficiency and STP Improved collections results
2 Consistent Credit Policy 2 Segmented Strategies
Improved portfolio risk Tailored customer
messaging
3 360° Customer View 3 Configurable Scoring
Best practice Best practice
44. Participate and Learn More
At Oracle OpenWorld On the Web Among Peers
• Oracle Financials Strategy
DEMO http://blogs.oracle.com/financials
grounds
• Oracle Mix
http://mix.oracle.com
Receivables and Revenue AR, Credit and Collections SIG
Management: Demo Pod S052 • Release Content Document for
(Moscone South) 12.1: Metalink Note ID 561580.1 Group Leader: Cathy Cakebread
cathyc@cathycakebread.com
45. For More Information
search.oracle.com
Credit and Collections
or
oracle.com
mpuccinelli@verisign.com amadhireddy@verisign.com