Customer Success Story (Solectron)

Solectron Corporation-a worldwide provider of electronics manufacturing services to leading original equipment manufacturers-needed to gain greater visibility into cash inflows. Emagia Cash Inflow Manager streamlines and automates Solectron's receivables, collections, and deductions management processes. The results are reduced Days Sales Outstanding (DSOs), dramatically improved cash forecasting accuracy, and greater overall efficiency.

The Challenge
To optimize its working capital, Solectron needed to forecast its cash inflow situation at any given time during its accounting period. The biggest stumbling block was that each of its operating companies has their own geographically dispersed accounts receivables group. The multiple accounting systems and processes seriously hampered Solectron's ability to perform accurate cash forecasting and maintain control on receivables.

For example, the largest of Solectron's wholly owned operating companies, SMART Modular Technologies, uses SAP as its core back-office financial system. But the finance staff was forced to work around the SAP system due to inadequate functionality in receivables, collections, and dispute management, as well as cash forecasting. Staffers developed Excel-based tools to provide cash forecasts and reports on actuals-to-forecasts based on customer receivables portfolios.

These manual paper-based methods caused serious inefficiencies and inconsistencies in managing day-to-day operations within the finance organization, hampering its ability to make precise cash forecasts in a timely manner.

"We needed to get a better handle on our cash flow processes so we could generate accurate cash forecasts," said Jack Pacheco, CFO, Solectron Technology Solutions Business Unit. "We also wanted a solution that would slice and dice and analyze our customer portfolios, allowing us to manage a single customer's total exposure across all our different operating companies."

Solectron realized they needed a single integrated end-to-end cash flow management solution that could efficiently streamline all facets of the accounts receivables and accounts payable management processes, deliver accurate cash forecasting, and seamlessly integrate with SAP.


The Emagia Solution
Solectron evaluated several leading cash flow management solutions, but the search ended when they found that Emagia offered everything they required:

End-to-End Cash Flow and Working Capital Management Functionality - Emagia delivers comprehensive functionality in all areas of receivables, payables and enterprise cash flow management, including common underlying processes such as portfolio management and workflow-enabled dispute management.

SAP Integration - Emagia provides SAP expertise and standard adapters for integration with the SAP ERP system. Additionally, the Emagia team has developed interfaces that provide dynamic and real-time access into the most current state of a customer's collection status, including cash receipts and adjustments information.

Leading edge Web-based Technologies - Emagia's web-based architecture makes it easy to extend the collaborative environment beyond finance staff to customer service reps, salespeople, and even customers themselves.

"Emagia's structured implementation methodology, and out-of-the-box Enterprise Application Integration Kit for our back-end SAP system, kept the implementation very fast and within budget," said Ajay Birla, Vice President and CIO, Solectron Technology Solutions Business Unit. "Not only has Emagia Cash Inflow Manager provided great benefits to our finance department, but it also fills a gap in our IT strategy of providing our customers complete visibility of the entire supply chain, from sales order to payment history"


The Bottom-line Impact
Emagia's transformed the entire cash flow management process from outdated, manual, and paper-oriented to electronic and real-time.

Emagia's software solution quickly optimized the efficiency of the receivables process, and provides accurate cash forecasting functionality. Both accounts receivables collectors and their managers now have instantaneous access to real-time information on the cash forecast situation. As a result, Solectron's finance department can accurately forecast cash inflow over a rolling 12-week window, within its current and upcoming accounting periods.

Perhaps more importantly, Solectron has succeeded in releasing significant amounts cash from its receivables by reducing Days Sales Outstanding (DSOs) by 18 percent since implementing Emagia software in 2002.

"We are very impressed with Emagia and how it has improved our ability to control receivables, collections, and deductions," said Joanne Leung, Controller, Solectron Technology Solutions Business Unit. "Emagia gives us day-to-day visibility on our cash inflow and helps us report cash forecasts with accuracy. Relieved of performing repetitive administrative activities, our employees are now focused on increasing customer satisfaction and overall efficiency."