Case Study: Pernod Ricard USA

Brief

Pernod Ricard is one of the top operators worldwide in spirits and wine with strong positions on every continent and has developed one of the richest portfolios in the industry with brands such as Chivas Regal, Jacob's Creek, Jameson, Martell, Seagram's Gin and Vodka, The Glenlivet, Wild Turkey, Wyborowa, Wyndham Estate among many others. The company has North American operations in the United States, Canada, Mexico and the Caribbean.

The international drinks industry is a highly competitive marketplace where maintaining strong customer relationships in tandem with receiving on time payment, consistently, from a diverse client base are crucial success factors. Pernod Ricard were looking for control over their cash collection process. Like many businesses they have suffered where customers do not honour payment terms, therefore directly impacting cash flow and the financial bottom line. Continually chasing cash is a large overhead for any business and Pernod Ricard were looking for a solution to automate this process and strip out operational inefficiencies.

Here was the business process before the solution was implemented:

• Average days outstanding of 48 days
• Multiple payment methods being offered to customers
• Different payment terms applicable to different customers
• Inconsistent and irregular cash flow
• Payment terms not being observed, resulting in late payments and incorrect discounts taken
• Higher percentage of disputes
• No direct control over the customer decision making process for payment
• Manual Cash Application of receivables to AR

Solution

In the mid 1990’s, SAI New Technologies custom built a Customer Direct Debit processing solution for one of the world’s largest drinks conglomerates. The functional capability contained within this solution has been a key differentiator for other global companies, including Pernod Ricard USA, when deciding to use the SAI’s Direct Debits module for automated cash collection and application.

Direct Debits allows a company to take control of when your customers pay you. This solution, which is integrated to the worlds leading banks and financial institutions, enables you to automatically retrieve funds from your customer’s bank account on the due date of the invoice instead of waiting for the customer to decide to pay you.

The key features of the solution are:

• Enables a company to generate an electronic file of outstanding AR
• Integration with your banking institution (20+ banks have already been integrated with).
• Ability to maintain customer bank account information
• Generates pre-authorisation and remittance advices notes for customers (email & paper-based)
• Automated Cash application to open invoices in AR
• Manages partial payments, discounts, discrepancies and NSF (non-sufficient funds)
• Integrated with our bank reconciliation & cash dashboard solution.
• Fully Integrated to your AR and General Ledger

Results

Key benefits of this project included:

• Average days outstanding reduced to 32 days over 1 year period. A reduction of 50%.
• Cash application task reduced from days to hours.
• Gave greater control and enhanced visibility to the AR and credit control teams
• Significantly improved cash flow and reduced collection costs at Pernod Ricard USA
• Enabled better budgeting & cash estimation into the future.
• Reduced credit risk & bad debts.

Customer Comment: