Vendor Case Study: Huntsman Corporation Improves Cash Flow by $25 Million with AvantGard Receivables
February 10, 2010
Molly Pryor, Assistant Treasurer at Huntsman, is based in The Woodlands headquarters. “We wanted to find ways of managing corporate growth while keeping our operational costs down,” said Pryor.
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Note: The following case study is vendor-submitted content which Credit Today has not written or endorsed but which we feel may be of value to our Members. Huntsman Corporation, the U.S. based global manufacturer and marketer of differentiated chemicals, deployed AvantGard Receivables to centralize its regional operations, systems and processes. The outcome has been improved cash flow, a reduction in days sales outstanding (DSO) by five days and a complete return on investment in less than six months. Background:
Huntsman Corporation (Huntsman) is a global manufacturer and marketer of differentiated chemicals. Its operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging.
Originally known for pioneering innovations in packaging and later, for rapid and integrated growth in petrochemicals, Huntsman today has more than 12,000 employees and operates from multiple locations worldwide. Effective management of accounts receivable is a critical area for companies to target for process improvements, as it is a key driver of cash, cost containment and customer relationships. Aware of this, Huntsman set out to locate an accounts receivable solution that could facilitate them in cutting operating costs and improving processes. Structure:
Huntsman is a vast organization with accounts receivables around the globe in locations including Houston, Texas; Sao Paulo, Brazil; Mexico City, Mexico; Bogota, Colombia; Everberg, Belgium; Wilton, UK; Ternate, Italy; Singapore; Panyu, China; and Melbourne; Australia. Each of these locations centrally report to the credit and collections hub in Houston. The expected headcount for Huntsman's entire collections operations is 85 people for 2010, which will include a new location that will be established in Mumbai, India. Challenges:
In 2006, Huntsman set out to find receivables management technology in an effort to centralize its numerous collections operations and systems, streamline order-to-cash processes and support its Six Sigma process improvement initiatives. A first step in achieving these goals was to locate a solution that could automate a number of manual processes, such as e-mailed and faxed payment reminder notices and dispute routing. This would free up a tremendous amount of time for the collectors to devote to touching more accounts throughout the day and collecting on more past due funds.
 The AvantGard system has centralized and streamlined our operations and essentially changed the way that we collect. We now have a very methodical, consistent approach in place. Additionally, the solution paid for itself in a matter of six months--you cannot beat that. 
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-- Molly Pryor, Assistant Treasurer, Huntsman Corporation
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Implementing automated controls and a standardized workflow for individual collectors to refer to each day was another priority for Huntsman. Management reasoned that by introducing automation and a strategic method of collecting, the company would be equipped with the necessary tools to drive down past due accounts receivables and lower DSO. The immense size of Huntsman's operations also made it important for management to have full visibility into the global operations. Therefore, an accounts receivable management solution that could offer an efficient process and unified view of this essential information was of key consideration for Huntsman. Molly Pryor, Assistant Treasurer at Huntsman commented, "We wanted to find ways of managing corporate growth while keeping our operational costs down. We were looking for a solution that was backed by a reputable vendor, which could offer us data transparency, control, and support for ongoing process improvements." Solution:
After a thorough vendor evaluation, which included on-site vendor visits and comprehensive product demonstrations, Huntsman chose SunGard's AvantGard Receivables solution to support its short and long term collections goals. A committee comprised of the treasurer, director of credit, credit manager, credit analysts, the Six Sigma group, and IT made the final decision to go with the solution. Key decision-makers were also impacted by positive referrals and feedback from other SunGard customers. The timeframe from Huntsman identifying the need to deploying an order-to-cash management software solution, including the actual implementation, was approximately six months. SunGard's AvantGard Receivables solution is a fully integrated, web-based order-to-cash solution that enables companies to achieve significant financial and operational benefits, as it drives automation, workflow and collaboration across the order-to-cash cycle, with detailed analysis and reporting for strong decision support. The specific functionality that Huntsman relies upon is the collections application, for driving collections activities with a strategic, rules-based engine, and the dispute application, for the automatic assignment and routing of disputes.
We wanted to find ways of managing corporate growth while keeping our operational costs down. We were looking for a solution that was backed by a reputable vendor, which could offer us data transparency, control, and support for ongoing process improvements.
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-- Molly Pryor, Assistant Treasurer, Huntsman Corporation
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The solution was initially rolled out in the US in 2006 and in 2009 Huntsman's European operations also adopted the collections technology. Looking forward, Huntsman expects to roll out the AvantGard functionality for dispute management to its European operations. Furthermore, the company plans to deploy AvantGard Receivables in the remainder of its locations in 2010. This will include users in Asia and South America. Results:
Automation: Huntsman has benefitted from a dramatic decrease in manual processes, which is allowing productivity rates in the global collections operations to soar. Collection analysts are also pleased because they no longer have to devote time to sending faxes, routing deductions and disputes to the appropriate person, or typing payment reminders by hand, because AvantGard Receivables handles these functions automatically. As a result, there has been a sharp increase in the number of customers a collector is able to contact per day. Structure: With AvantGard Receivables, Huntsman has gained a streamlined and methodical approach to handling its collections activities, as well as internal controls to drive this approach. This means that collectors are no longer left to guess which accounts they should be touching, and in what order. Instead, the AvantGard application automatically prioritizes and sets up a workflow queue, giving them structure for their tasks each day. Visibility: Management has gained an improved scope of visibility into the performance of the collections operations as a whole, by region and even by individual collector. This real-time access to accounts receivable information has given the company the tools necessary to identify areas for improvement and make more strategic business decisions. Cost Savings: Driving down DSO was a key goal for Huntsman when they deployed AvantGard Receivables. This accomplishment was realized quickly with the company reducing DSO by five days over the span of just a few months. Automated follow-ups and processes have also contributed to a 50% reduction in past due accounts receivable (of greater than 180 days), which is equivalent to a $2 million cost savings. Overall, Huntsman estimates that using AvantGard has yielded them a $25 million increase in cash flow.
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