Resolving Accounts Receivable Challenges in the Food Sector

Our client in the food sector had several concerns such as:

– lack of timeliness and completeness in entering customer invoices,
-deduction balances stranded in AR aging reports,
-delayed follow-ups leading to recoveries, and
-inadequate visibility into expected AR liquidation.

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Challenges

This is how our EA team solved their accounts receivables challenges:

Key pain points included:

Invoice Entry Issues: Lack of timeliness and completeness in entering customer invoices into the system.
Deduction Balances Stranded in AR Aging Report: Deduction balances stranded in AR aging reports, making it difficult to identify and address deductions.
Delayed Follow-ups and Recoveries: Inadequate or delayed follow-ups resulting in delayed recoveries.
Delayed Cash Application: Delayed cash application adversely affecting liquidity.
Weak Reporting Mechanism: Weak reporting mechanism providing inadequate visibility into expected AR liquidation.
Inaccurate or Unreconciled Customer Statements: Inaccurate or unreconciled customer statements/balances.
Limited Access to Customer Portals: Restricted or limited access to customer portal(s).
Outstanding Issues Tracking: Outstanding issues not being duly and adequately tracked.
Duplication of Invoices

Industry

CPG

Company Size

$80 million

Location

New York & Connecticut, U.S.

Date

May 2021- Ongoing

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Solutions

Ensured prompt entry of invoices and conducted periodic reconciliations of company AR ledgers with customer statements to identify missing invoices and initiate necessary follow-ups.
Identified deductions by separating them from AR balances within individual customer accounts.
Established a rigorous follow-up schedule, closely monitoring effectiveness to ensure timely recoveries
Recommended and assisted in the implementation of cash application within 24 hours of recovery, ensuring swift processing of funds.
Created and implemented backward- and forward-looking visibility reports showing balances due within a time window of 2 weeks and beyond, issued weekly.
Reconciled customer statements with company AR ledgers for customer subaccounts, ensuring accuracy and clarity.
Obtained client approval and credentials for accessing customer portals, facilitating investigation of customer balances and setting up remote access where needed.
Maintained an invoice tracker to follow up on pending invoices in the system, addressing issues like lack of approval or disputed balances.
Created a mechanism for identifying duplicate invoices by running weekly invoice reports.

Performance Snapshot

Inventory Accuracy Rate

12x

Annual Cost Savings

$900,000

Payroll Savings

60%

Inventory Accuracy Rate

>98%

Month-End Close

~50%
faster close

Lot Traceability

100% by item, location, lot code

Results

Our client experienced a transformation in their AR processes, with improved timeliness, accuracy, and visibility.
The implementation of robust follow-up schedules, cash application procedures, and reporting mechanisms resulted in enhanced liquidity and minimized outstanding issues.
The client now enjoys streamlined AR operations, increased recoveries, and improved customer satisfaction.
Through analysis and strategic implementation, our team at Expertise Accelerated successfully addressed and resolved a multitude of Accounts Receivable challenges for our client.
The tailored solutions not only rectified existing issues but also established sustainable practices for efficient AR management. Our client now operates with confidence in their financial processes, focusing on business growth and customer relations.
We are your partners in growth through high-quality outsourcing and staff augmentation solutions in accounting and finance and supply chain roles in the CPG industry that saves payroll costs and delivers efficiencies.

In-house Payroll Cost Avoided

Description	Amount
Accounts Receivable Senior Accountant	$120,000
AR Specialists (3 FTE Order, Invoicing and Cash Application)	$255,000
Chargeback Analyst (2 FTE)	$170,000
Total	$545,000

Deduction & Chargeback Recovery Improvement

Description	Amount
Unauthorized Chargeback Recoveries	$600,000
Logistics Short Pay Recoveries	$120,000
Total	$720,000

Working Capital & Process Efficiency Impact

Description	Amount
Accelerated Cash Application (DSO Reduction)	Not Quantified
Invoice Accuracy / Dispute Reduction	$100,000
Administrative Efficiency Gains	Not Quantified
Total	$100,000
Ongoing Annual Savings	$1,365,000

Summary Financial Impact

Description	Amount
Total Measurable Annual Benefit	$1,365,000
Less: EA Annual Cost – 7 team members	$224,000
Net Annual Savings	$1,141,000
Return on Investment	5.1 X

Results: Accurate Valuation, Zero Write-Offs, and 11× Annual ROI

Within weeks of implementation, the client saw measurable improvements across every keyoperational and financial area:

Inventory visibility expanded from zero insight to real-time tracking by item, location, and lot code
Month-end close timelines were cut in half, now completed within five business days with no post-close adjustments
Raw material reconciliations moved from manual, once-a-year efforts to automated monthly reporting
Write-offs and expired inventory were eliminated through consistent cycle counts and lot-code rotation
Customer chargebacks dropped sharply as finished goods were shipped within required shelf-life windows
Stockouts were reduced by more than 90%, ensuring stable production and on-time retailer fulfillment
Resource efficiency improved dramatically. The entire process is now managed by just two FTEs, utilizing a 60% cost savings through offshore deployment

The result? Over $900K in annual savings, a 11× return on investment, and a clean, transparent system that gives leadership complete confidence in every inventory decision.