Transcript McKesson Document Imaging

FY14 Intern Final Presentation
Promo Collections
Prepared by:
Ahmad Abdallah
Prepared for:
Executive Team
August 9, 2013
FOR INTERNAL USE ONLY/PROPRIETARY & CONFIDENTIAL
McKesson Financial Center
Introduction
• Ahmad Abdallah
Myself
Team
• Promo Collections
• Manager: Judy Agee
• Promo Payment Method Analysis
Projects • Prepare SOP Documentation
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
2
7/16/2015
Promo Collections – Payment Method
Analysis Project
Objective
• Evaluate each supplier to identify best payment
method for McKesson by analyzing
• Highest Working Capital Gain
• Lowest Processing Costs
Expected Benefits
• Increase Working Capital
• Decrease Credit Memo Processing Cycle Time
Key Learnings
Next Steps
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
• Expected Working Capital Gain of $3 M
• Converting to ACH saves 14 Days, Web Portal
10 Days
• Transition suppliers to identified payment
methods
• Conduct training with suppliers to ensure smooth
transition
3
7/16/2015
Promo Collections – Brand, Generic and
OTC Payment Options
Current Payment Methods
Proposed Payment Methods
11%
17%
21%
Auto-Deductions
Auto-Deductions
8%
ACH
Cash
68%
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
59%
Credit Memos
16%
Credit Memos
Check/Wire
4
7/16/2015
Promo Collections – Brand, Generic and
OTC Payment Options
Cash Residuals
Current Process
6%
Cash
 Wells Fargo ACH (EDI 820 remittance)
 Bank of America (Check/Wire)
Payment=Invoice
35%
59%
Auto Deduction
Residuals
Unbilled/Unidentified
 Supplier accepts deduction without dispute
 Supplier sends follow-up payment via Cash or
Credit Memos
Credit Memo Residuals
Credit Memos
1%
 Manual Receipt and Posting
Invoice Date to CM Date
CM Date to Received Date
Received to Creation Date
Creation to Posting Date
Total Cycle Time FY 13
34
7
3
2
46
40%
Payment=Invoice
Residuals
59%
Unbilled/Unidentified
 EDI 812 – auto post to be developed
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
5
7/16/2015
Promo Collections – Brand, Generic and
OTC Payment Options
Proposed Process
Cash
Auto Deduction: No Change
 Wells Fargo ACH (EDI 820 remittance)
 Payment=Invoice (483 Suppliers)
 Bank of America (Check/Wire)
 Average Days Late: 6
 Recommendation:
 No Residuals
 Convert 78 additional Suppliers to ACH
 WC Gain of $2.6 M (based on 14 days
gain)
 No Processing Costs
Credit Memos
 Convert 64 Suppliers to Web Portal
Projected Working Capital Gain
100% Conversion
$2.6 M
50% Conversion
$1.3 M
25% Conversion
$650 K
10% Conversion
$260 K
 Gain 10 Days (7 Mail+3 Imaging)
 WC Gain of $700K (based on 6 days
gain)
 36% Processing Cost Savings
 EDI 812 - 10 scheduled for FY 14
 64% Processing Cost Savings
 Residual Options
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
 Gain 10 Days (7 Mail+3 Imaging)
 Residual Options
6
7/16/2015
Promo Collections – SOP Documentation
Project
Objective
• Prepare SOP documentation of best practices
for internal associates
• Processing Credit Memos on Web Portal
• Processing VIC on Web Portal
Expected Benefits
• Easy transition from processing credit memos
manually to the Web Portal
Key Learnings
• Simpler, less tedious processing on Web Portal
• Transitioning to Web Portal saves 37%
processing costs
Next Steps
• Continually update SOP as better practices are
identified
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
7
7/16/2015
• Company Culture
• Skit
• DC and Healthmart
Trips
• Internship:
Expectation vs. Reality
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
Key Take-Aways
“AHA” Moments
Final Thoughts
•
•
•
•
Lunch and Learns
Connections
Professional Knowledge
Identifying a Key
Strength: Adaptability
8
7/16/2015
Thank You
McKesson Financial Center
FOR INTERNAL USE ONLY – PROPRIETARY & CONFIDENTIAL
9
7/16/2015
APPENDIX
McKesson Financial Center
FOR INTERNAL USE ONLY/PROPRIETARY & CONFIDENTIAL
10
7/16/2015
Appendix
Working Capital Calculations
Projected Working Capital
Savings
Payment
Method
Fee for Service
defined in
contract
Avg
Days
Early/
(Late)*
AbbVie
Manual Credit
No
(55)
$11.6 M
$45 k
N/A
Amgen USA
Manual Credit
Yes – Credit
Memo
(21)
$10.7 M
$42 k
$6 k
Astra/Zeneca
EDI 812
Yes – Credit
Memo
(14)
$34.0 M
$132 k
$13 k
Manual Credit
No
4
$45.6 M
N/A
N/A
Bristol –Myers
Squibb
Manual Credit
Yes - CM
Designated
items only
1
$38.2 M
N/A
N/A
Novartis
Manual Credit
No
(1)
$75.0 M
N/A
N/A
$ 219 k
$19 k
Supplier
Boehringer
Ingelheim Pharm
Total
Actual
Payment
AutoDeduction
ACH
*Based upon document cleared date
McKesson Financial Center
For Internal Use Only/Confidential and Proprietary
11
7/16/2015
Appendix
Processing Cost Calculations
ACH
Credit Memo and Web Portal
Processing Cost- Bank of America
Avg. Time per Transaction
(Minutes)
Cost Per Hour Cost per Transaction
7.5
$30.05
$3.76
Processing Cost- Wells Fargo
Avg. Time per Transaction
(Minutes)
Cost Per Hour Cost per Transaction
4
McKesson Financial Center
FOR INTERNAL USE ONLY/PROPRIETARY & CONFIDENTIAL
$30.05
$2.00
Processing Cost- Proflow
Avg. Time per Transaction
(Minutes)
Cost Per Hour Cost per Transaction
11
$30.05
$5.51
Processing Cost-Web Portal
Avg. Time per Transaction
(Minutes)
7
Cost Per Hour Cost per Transaction
$30.05
$3.51
12
7/16/2015
Appendix
Processing Cost Savings
ACH
Web Portal
 64% Savings Compared to Credit Memos per
Transaction
Proflow per Transaction
Proflow to ACH Savings (per transaction)
Current Processing Cost
 36% Savings on Web Portal Compared to
Proflow to Web Portal Processing Savings (per transaction)
$5.51
Projected Processing Cost
$2.00
Savings
$3.51
Current Processing Cost
$5.51
Projected Processing Cost
$3.51
Savings
$2.01
64%
36%
 47% More Savings on Wells Fargo Compared to
Bank of America
BofA to Wells Fargo Savings (per transaction)
BofA Processing Cost
$3.76
Wells Fargo Processing Cost
$2.00
Savings
$1.76
McKesson Financial Center
FOR INTERNAL USE ONLY/PROPRIETARY & CONFIDENTIAL
47%
13
7/16/2015
Appendix
Residual Calculations
Cash Residuals
Credit Memo Residuals
Residual Analysis (Count)
Total Payments
Residual Analysis (Count)
1,516
Unbilled/Unidentified
88
Total Payments
6%
Payment=Invoice
894 59%
Residuals
534 35%
Unbilled/Unidentified
4,663
63
1%
Payment=Invoice
1,866
40%
Residuals
2,734 59%
Residual Analysis (Amount)
Residual Analysis (Amount)
Total Invoice Amount
$645M
Total Invoice Amount
$2,887M
Total Payments
$550M
Total Payments
$1,555M
Total Unbilled/Unidentified Amount
Total Residual Amount
McKesson Financial Center
FOR INTERNAL USE ONLY/PROPRIETARY & CONFIDENTIAL
$13M
$108M
Total Unbilled/Unidentified Amount
Total Residual Amount
$22M
$1,354M
14
7/16/2015