Order to Cash (Time To Invoice) Libya

Author : Tahir Rafiq

Project Start Date:

ATR Consulting Limited

February 2011

TTI Workshop (Time To Invoice)

atr

Tahir Rafiq

Applying automotive best practice in the Oil & Gas Industry.....

1 atr

Agenda

Day 1

Start End Topic Presenter

8:30 9:00 Breakfast

9:00 9:15 Introduction Country GM

9:15 9:30 Project Overview Client Lead

9:30 10:00 Working Capital Overview Client Lead

10:00 10:15 Break

10:15 11:15 Current Process & Findings Tahir Rafiq

11:15 12:00 Analysis Tahir Rafiq

12:00 12:30 Lunch

12:30 12:50 Workshop Brief Tahir Rafiq

12:50 2:50 Session 1: Process Development & Presentations Group Participation

2:50 3:00 Break


1

2 atr

Agenda

Day 2


8:00 8:30 Breakfast

8:30 9:00 Previous Day’s Review Tahir Rafiq

9:00 11:00 Session 3: Process Development & Explanation Group Participation

11:00 11:15 Break


1:15 1:25 Workshop Feedback (Plus , Minus) Tahir Rafiq

1:25 2:25 Lunch

2

3 atr

Libya Country Summary Client Set Up

Baseline DSO

4. Base 20 5. Base 30 6. Base 40

Client Locations:

1. Tripoli Base – HQ 2. Benghazi Base 3. Base 10

Client Main Site is in Tripoli. GM, Operation managers,coordinators and billers are based in Tripoli.

A small team is based in Banghazi to support the operation in base 10

Base 10 is the main base. 80% of the activities arise from Base 10

Base 20 is the second largest base, it represents 15% of the activities.

Bases 30 and 40 are small bases and represent less than 5% of all activity.

Country Daily revenue Baseline DSO Baseline Accrual

Baseline Accrual % of Rev Baseline Past Due Baseline Past Due %

AR

Libya 500 250 days $20,000 230% $ 50,000 40%

Please note . Above figures have been changed because of confidentiality

Libya

3

4 atr

Time to Invoice Initiative

Project Participants

individuals / Groups

Global Project Team

Client side : Business Processes Director

Global Partner OTC Program Strategy ( Consultancy)

Regional Director – Global Program Management ( Consultancy)

Project Team

Client side - Libya Team Project Mgr

Tahir Rafiq – Country Lead ( Consultant)

Consultant – Country Support

Client side – MENA Region Business Process Manager

Consultant – MENA Regional Lead

Workshop Participants

Muftah Buzehra Imad Awad Sinan Mumtaz Fawzi Khatab Saif Alheureithi Shadi Saraf Amir Basha Wekhaa Abugaseam Nadia Bourouga Osama Amar Mohamed El Boraie Hamza Turki

Ahmed Badr Amjad Qaffaf Heba Shakmak Benoit Pinson Khalid Atti Abdu Salam Kichdan Ali Samin Hatem I.Albarouni Moussa Dahoumani Rifaat Seleem Sara Esheen Mohamed Mahmood

25 Participants

4

5 atr

Workshop Objectives & Guidelines:

Session is designed to stimulate open & honest discussion

All questions & inputs are welcome and encouraged!

Please do not interrupt your colleagues when they are speaking and let others finish their thoughts

No open laptops, phones on silent

Step out to take critical calls or wait until the next break

Please keep to the times stated on the agenda

Breaks are scheduled throughout the day

Breakfast & Lunch

The Client has undertaken a number of Global Projects to save costs and improve performance.

Finance & Accounting

Time to Invoice (TTI)

Credit & Collections

Indirect Procurement

Information Technology

As part of TTI, the project team has worked together with a number of key people across product lines, who helped to identify opportunities to decrease the time from Job Completion to Invoice

To date, improved order to invoice processes have been implemented in the US resulting in significant improvements

Workshop Objectives

Instructions & Guidelines

5

6 atr

Project Overview

Benchmark and Key Achievements

67

96 109

130

156

197

KS

A J

V

IRA

Q

UA

E

EG

YP

T

KS

A N

JV

LIB

YA

MENA Region DSO Stats

24-Jan 31-Jan 7-Feb 14-Feb 21-Feb 28-Feb 7-Mar 14-Mar 21-Mar 28-Mar 4-Apr 11-Apr 18-Apr 25-Apr

Assessment Phase

As - Is OTC Process Assessment Planning H

Identify and Validate In Country Participants, SMEs & Contacts

Send data request

Induction meeting with Country Manager

In Country Kick off meeting

Extract scheduling information from HR H

Send communication to interview participants (from Local leadership) H

Schedule and Validate In Country interview Location(s) H

As - Is Process Information Gathering H H

Interview primary SMEs to understand process, technology & people requirements H H

Identify major system functionality utilized H H

Gather and analyze data H H

Send communication to workshop participants (from Local leadership) H

Schedule and Validate In Country workshop Location(s) H

Schedule In Country Workshop - Formal Communicaton/ Meeting Invite

Document current roles, responsibilities & organizational structure H

Develop workshop presentation, templates and process flow strawman H

Conduct Country Specific Workshop #1

January February March April

Completed “As Is” process mapping.

Conducted process map and findings

validation sessions with key individuals.

Prepared analytics package.

Calculated baseline days to invoice (TTI).

Held project weekly status meetings

with the GM.

Identify and validate findings and recommendations.

Identify risks and obstacles.

Design new process that meets the business for now and future requirements.

Hold Workshop 2 to validate process design.

Implementation Plan

Key Achievements & next Steps

1 2 3 Key Achievements During this Workshop Next Steps

6

7 atr

Working Capital Overview

Economy Finance Markets Regulatory Market Strengths

Working Capital

Requirements

Policy/Culture Process Organization System/Tools Metrics

Operational

Customers Suppliers Product/Service Mix Business Structure International vs. Domestic Management

Strategic External

Ability to impact Low High

North America ,

53, 1

Eastern Hemisphere

, 37, 0

Latin America ,

10, 0 North America , 31

Eastern Hemisphere

, 46

Latin America , 23

North America , 22

Eastern Hemisphere

, 57

Latin America , 22

Revenue – $5 billion Revenue – $10 billion Revenue – $30 billion

7

8 atr

Current Process & Findings

Invoice to Submission 20.2 days

Job Completion to Entry in JDE 66.3 days

Entry in JDE to Invoice 23.1 days

Cau

ses o

f Delays

Limited connectivity in the desert resulting in long DT manual processing

Lack of focal point overseeing the entire OTC cycle

Inspection (for rented tools)

Signature of DT

Send DT from base to Tripoli

Waiting for PO / WO from customer

Reviewing the DT pack

Reviewing draft invoices

Submission pack to finance (month end skewing)

Issue final invoice

Translation of PO / WO / Contract

Advance payment for Tax

Tax letter preparation

Submission to customer

Customer Internal process

Rejection of invoices / review / re-submission

Payment

Total – 228.4 days

Submission to pay 118.7 days

Job Completion Date

Payment Date

Invoice Date

TTI – 109.6 days

138.9 days

Collection – 118.7 days

89.4 days

8

9 atr

Agenda

Day 1


8:30 9:00 Breakfast




10:00 10:15 Break

10:15 11:15 Current Process & Findings Lead Consultant (Tahir Rafiq)

11:15 12:00 Analysis Lead Consultant (Tahir Rafiq)

12:00 12:30 Lunch



2:50 3:00 Break


9

10 atr

Analysis : Current Process Maps

Sales Management Process

TTI – WFT Libya – Manage Sales Order

TS

G –

Sal

es M

anag

er

(Trip

oli)

Ope

ratio

n –

Sal

es C

oord

inat

or /

PL

Man

ager

(Trip

oli)

Cus

tom

er

Additional Notes: System(s) Referenced: Policy Referenced:

2.

OR

7.

Review final

quotation and sign

approval Sheet

1.

Send RFQ

12.

Receive RFQ

13.

Prepare quotation

4.

Prepare quotation

with Operations

(commercial

terms / proposal)

5.

Prepare quotation

with TSG

(technical proposal

and discounts)

6.

Finalize quotation

in the approved

format

11.

Send to customer

9.

Register in the

quotation log sheet

and uplift

documents on the

server

20.

Send to customer

3.

Receive RFQ

14.

Finalize quotation

in the approved

format

Normally, TSG manager should review

and sign all quotations that go out to

customers, but sometimes ops send

directly the quotation to customer

Start of Process

19.

Review and sign

the approval sheet

10.

OR

17.

OR

16.

Uplift documents

on the server

RFQ are received in different ways: by email, phone, fax and

even verbally in meeting. It comes to operations, TSG, BD or

even to GM.

This is the proper route in dealing

with RFQs, but because of shortage

in manpower, operations do not wait

for TSG and prepare quotation

Quotation can be sent by operations or TSG, no rules for that.

21.

Receive quotation

22.

Accept

25.

Send official

email / fax of

acceptance / PO /

WO

31.

Give go ahead for

operations

Quotation approved format (Word template) should be used

for all quotations that go out to the customer. But sometimes

Ops do not use the approved format.

Quotation is sent by email unless

customer asks for hard copy

23.

Negotiation

NO

End of Process

End of Process

24.

Review quotation

YES

YES

NO

15.

Sign quotation

8.

Sign quotation

18.

Send to TSG for

review signature

of approval sheet

(internal use)

Approval sheet is for internal use only. It should be attached

with the quotation and sent to different stakeholders for review

and approval (signature of the approval sheet). Ops

supervisor, Ops manager, TSG manager and GM are the

invited to sign the approval sheet. The approval sheet is then

filed with the quotation documents with TSG.

TSG coordinator checks on regular basis the server and

updates the quotation log sheet.

Some Ops do not uplift their documents on the server (no full

visibility for TSG on their quotations)

26.

OR

28.

Forward to Ops

Cc finance

29.

Update server

30.

Receive official

email / fax of

acceptance / PO /

WO

27.

Receive official

email / fax of

acceptance / PO /

WO

Generally Ops start the job with the letter of acceptance

only without waiting for PO.

For some product lines / customers, they do insist on the

PO and do not start the job before getting it.

For some product lines, it is not possible to get the PO /

WO before the end of the job because customer cannot

estimate the required job before hand.

TSG coordinator updates

the server and the log sheet

10

11 atr


Dispatch of Delivery Ticket to Tripoli

TTI – WFT Libya – Send DT From 103 to Tripoli

Bas

e M

anag

er

(Bas

e 10

3)

Adm

in O

ffice

(Trip

oli)

Cus

tom

er O

ffice

(Ben

ghaz

i

Reg

ion)

Ben

ghaz

i Offi

ce

(Ban

ghaz

i)

War

ehou

se S

uper

viso

r

(103

Bas

e)

Pro

duct

Lin

e S

uper

viso

r

(103

Bas

e) 1.

Prepare DT and

supporting

documents

6.

Receive DT packs

Excel spreadsheet

2.

Submit to admin in

103 base

3.

Receive DT pack

4.

Update the

Delivery Ticket

Register

5.

Consolidate packs

and send to

Benghazi

Twice a week by regular

taxi / pick up

10.

Send by Aramex

to Tripoli office

11.

Receive courier at

reception

12.

Distribute mail to

different product

lines

7.

Secondary Sign Off

Required from

Customer (Benghazi

region)

Additional Notes: System(s) Referenced: Policy Referenced:

NO

8.

Second signature

on the DT from

customer at HQ

YES

9.

Receive DT from

customer

End of Process

3.

Make a copy of DT

pack and file it

3.

Prepare packing

list

Excel spreadsheet

3.

Send a copy of DT

pack and packing

list to Base

Manager

Sirte follows this route

11

12 atr


Billing Process Part 1

12

13 atr

TTI – WFT Libya – Invoice Customer – Part 2

Submission to customer

Cus

tom

er’s

Offi

ce

(Trip

oli)

Acc

ount

Man

ager

(WFT

Trio

pli)

Acc

ount

s S

uper

viso

r

(Ben

ghaz

i Offi

ce)

Col

lect

ion

Sup

ervi

sor

(Trip

oli,

Mai

n O

ffice

)

Bill

ers

(Trip

oli,

Mai

n O

ffice

)

System(s) Referenced: Policy Referenced: Additional Notes:

28.

Make 2 or 3

copies of the

invoice pack

40.

Submit to

customer

41.

PROCESS:

Collection

Process

End of Process

Part 2

30.

Customer in

Benghazi area

NO

32.

Double check the

invoice pack

34.

Invoice pack ok

37.

Submit to

customer

35.

Ask billers for the

PDF version of the

invoices that need

changes

JDE not able to raise

invoices as per customer

requirements

YES

31.

Send invoice pack

to Benghazi office

YES

NO

38.

PROCESS:

Collection

Process

End of Process This process is designed for

Shell as Shell requires a single

focal point for all activities

(from order to cash)

39.

Customer deals only

with account

manager

NO

NO

YES

NO

YES

YES

42.

Submit invoice

packs to contract

holder

43.

Review with

Contractor holder

invoice packs

46.

Fix errors with ops.

and billers

44.

Invoices approved

by Contract holder

49.

Submit invoices to

client’s finance

department

48.

Sign invoices by

Contract holder

45.

Correction on site

possible

47.

Fix errors on site

with contract

holder

50.

PROCESS:

Collection

Process

End of Process

33.

Attach original fax

order / PO / WO if

any

Invoice packs are sent

with DHL or Aramex

36.

Manual adjustment

of the invoice pack

(font size, code of

prices, Ts & Cs)

Around 10% of invoices

are modified in Benghazi

office

29.

Keep a copy in

filing room


Billing Process Part 2

13

14

150

165

196

218

203 206

231

243 235

218

190 197

atr

Libya Aged Analysis

Root Cause Analysis Reveals a Bottleneck within Operations (33%)

WFT Libya Monthly DSO Performance ( Days)

33%

22%

14%

13%

7%

5% 3%

2%

Inventory Issues

100% Problems with Operations (DT, supporting docs…)

External Problem

Not identified

Not identified

Waiting for PO / WO Contract Amendment

Root Cause Analysis (Accruals)

14

15 atr

Agenda

Day 1


8:30 9:00 Breakfast




10:00 10:15 Break

10:15 11:15 Current Process & Findings Lead Consultant (Tahir Rafiq)

11:15 12:00 Analysis Lead Consultant (Tahir Rafiq)

12:00 12:30 Lunch



2:50 3:00 Break


15

16 atr

Lunch

Uninvited Guests

16

17 atr

Agenda

Day 1


8:30 9:00 Breakfast




10:00 10:15 Break

10:15 11:15 Current Process & Findings Tahir Rafiq

11:15 12:00 Analysis Tahir Rafiq

12:00 12:30 Lunch



2:50 3:00 Break


17

18 atr

Best case calculated TTI

Baseline TTI

Low

Eff

ort

M

ediu

m E

ffort

H

igh E

ffort

13 days

Findings

3 days

10 days

8 days

Current structure of the Billers role

No Performance Measurement or Targets in place to monitor the OTC Cycle

Impact in Days

There is a Gap of approx 20 days between JDE invoice date and the final submission date to the customer

Lack of focal points / Account Managers for Customers

5 days

Communication barriers between Finance and Operations, leading to inaccuracies in invoices 4 days

80 Percent of invoices are generated in the last 10 days 4 days

Invoice delay due to Inspection of tools , takes up to 10 days (FRE & Rental) 4 days

Different signoff requirements exist across product lines, with different supporting documents 2 days

Accumulation of DT's at Warehouse

Complicated pricing structure which is very difficult for staff to understand 2 days

DT's are handled in an ad hoc way in Tripoli 2 days

PO is issued after job completion, causing delays in the invoicing process downstream 1 days

DT's are sent to Tripoli via Benghazi 3 days

There are differences across product lines for recognising Revenue

There is a lack of follow up after Invoice Submission

110 days

45 days

Late return of signed DT’s by 3PL for sale items (LHS + CEM) 1 days

TTI Best Case Calculations

Initiatives with time savings in Days

18

19 atr

Group 1

Group 2

Group 3

Group 4

Findings

Manage Contracts

Manage Sales Orders

Manage Delivery

Invoice Customer

Finding 1

Finding 2

Finding 3

Finding 4

People 1 People 2 People 3

System 1 System 2 System 3

Process 1 Process 2 Process 3




















































































People

Process

System

Post it Notes

Workshop Out Put Logic

Each recommendation or solution can be further broken down Into themes

Process Development Workshop

Output : Group Findings Matrix

19

20 atr

Session 1 : Process Development & Presentations

Findings Manage Contracts

G1 Manage Sales Orders

G2 Manage Delivery

G3 Invoice Customer

G4

Finding 1

Different signoff requirements exist across product lines, with different supporting documents

There are differences in methodology across product lines for recognizing Revenue

Invoice delay due to Inspection of tools , takes up to 10 days

Current structure of the Billers role

Prompts Prompts Prompts Prompts

1. How can we speed up the process of acquiring a signoff (DT + Timesheet)? 2. What criteria should determine if a secondary signature is required? 3. How many days are acceptable, when waiting for a customers signature? 4. Can we get the DT signed at rig site, rather than the Drilling Office ? 5. Is it necessary for a customer to sign a DT for sales items in addition to a loading note ?

1. When should we book revenue? 2. Which method or process should we follow to book revenue? 3. Is there consistency across the business for booking revenue? 4. Should we book revenue before receiving the purchase order from the customer? 5. What is the impact of accruals on customer credit limits, when booking revenue? 6. How should we book revenue for new customers?

1. How can we speed up the inspection process? 2. Is this a resource issue? 3. Should we wait until inspection is complete to invoice the customer? 4. What other options do we have to ensure compliance ?

1. How can we make their role more challenging & interesting? 2. What can we do to integrate them more into the business ? 3. Are the contracts too complex and too large for staff to search for key information to verify DT queries? 4. Do invoicing staff understand requirements with regards to supporting documentation for all customers? 5. How should we track and communicate invoicing requirements to all concerned staff ?

20

21 atr

Findings Manage Contracts G1

Manage Sales Orders G2

Manage Delivery G3

Invoice Customer G4

Finding 2

Lack of Focal Points / Customer Account Managers

Communication barriers between Finance and operations, leading to invoice Inaccuracies

DT's are sent to Tripoli via Benghazi

80 Percent of invoices are generated in the last 10 days


1. How can we improve the management of the OTC Cycle by achieving better; - Visibility? - Trackability? - Ownership? - Improved Customer Account Management? 2. Top two customers represent 50% of trade AR against 40% revenue?

How can we increase communication between Finance & Operations? 1. What, When, Where & How often should they communicate.? 2. Should the communication be formal or informal? 3. What should be tracked & measured? 4. How will you deal with outstanding issues (measure & track)?

1. Why is it necessary to send DT's to Benghazi? 2. Why does a DT need to be processed in Tripoli ? 3. Can we start processing the customer invoice before the DT arrives in Tripoli? 4. Where are the biggest opportunities for improvement?

1. How can we prevent this skew of invoices towards month end.? 2. Can we start the billing cycle before receipt of original DT? 3. What is a reasonable cycle time for invoice conversion from receipt of DT?


21

22 atr

Agenda

Day 2


8:00 8:30 Breakfast

8:30 9:00 Previous Day’s Review Lead Consultant (Tahir Rafiq)


11:00 11:15 Break


1:15 1:25 Workshop Feedback (Plus , Minus) Lead Consultant ( Tahir Rafiq)

1:25 2:25 Lunch

22

23 atr

4

17

9

System Process People

Group Session 1 Output

System 13%

Process 57%

People 30%

Group Session 1

57% of Recommendations were Process based

23

24 atr

1

16

9



System 4%

Process 61%

People 35%

Group Session 2

61% of Recommendations were Process based

24

25 atr



Manage Delivery G3

Invoice Customer G4

Finding 3

No Performance Measurement or Targets in place to monitor the OTC cycle

PO is issued after job completion, causing delays in the invoicing process downstream

Accumulation of DT's at Warehouse There is a Gap of approx 20 days between JDE invoice date and the final submission date to the customer


1. Which Key Performance Indicators should we measure to assist and monitor the OTC cycle? 2. What reports are available or need to be available in JDE to monitor performance?

1. How can we reduce delays in receiving Purchase orders (PO) or Works Orders (WO) from the customer 2. Should customer PO/WO be recorded and tracked ? 3. Who should take ownership of recording & tracking PO/WO ? 4. Who else should be part of this process? 5. When should we follow up with the customer ( for PO/WO) & who should be responsible ?

1. Should this be part of Warehousing’s responsibility ? 2. Should this responsibility be part of their main job ? 3. Is this responsibility interfering with Warehousing’s main job? 4. Who should be responsible for making sure that the DT is dispatched from the base?

1. How can we reduce the time it currently takes for the taxation process ? 2. What are the constraints / flexibility regarding taxation legislation 3. Do we have to wait till invoice generation before we start this process ? 4. How can we reduce the time it currently takes for the translation process ? 5. Is the company translating the PO's taking a long time? if so what can we do ? 6. What can we do to speed up the process ?. 7. What other documents do we need for the process?


25

26 atr

7

15

7



Out Put

Recommendations

System 24%

Process 52%

People 24%

Group Session 3

52 % of Recommendations were Process based

26

27 atr

Lunch

Happy Guest

27

28 atr



Manage Delivery G3

Invoice Customer G4

Finding 4

Complicated pricing structure which is very difficult for staff to understand (leading to invoice inaccuracies)

Lack of Training on JDE, resulting in limited usage of the system

DT's are handled in an ad hoc way in Tripoli

There is a lack of follow up after Invoice Submission


1.How can we improve accuracy of pricing? 2. How can we reduce the amount of pricing verifications required on jobsites between the field staff, the base and HQ.? 3. Is the discount mechanism too difficult for operational staff to understand? 4. Is the price book shared with front line staff and is it up to date? 5. Going forward should field staff have access to pricing information?

1. How can we increase the usage of JDE ? 2. Is everyone using the system effectively ? 3. What is the current level of usage ? 4. Do you think JDE should replace shadow systems (excel) ?

1. How are the DT's received and managed when they are delivered from Benghazi ? 2. What are the major issues with the existing process ? 3. How can we improve the distribution process at Tripoli ? 4. Who should be responsible for making sure that the DT is despatched from the base. ?

1. Are rejected invoices recorded and tracked? 2. Are we receiving written explanations from customer regarding rejections? 3. Are the reasons for rejections recorded and challenged? 4. How can we reduce the resubmission lead time ?


28

29 atr

Group Session 4


4

8

7



System 21%

Process 42%

People 37%

29

30 atr

16

56

32


Consolidated output from S1,S2,S3,S4

System 15%

Process 54%

People 31%

Group Session Consolidation & wrap Up


30

31 atr

End of presentation

Tahir Rafiq Feedback would be greatly received and appreciated

31

Order to Cash (Time To Invoice) Libya

Leadership & Management

po wo

signoff requirements

process development

findings lead

final submission

quotation

collection

jde invoice