Prevent value leakage and accelerate recovery with data and analytics

The bigger and more successful a retailer gets, the risk of value leakage increases, especially since their profit margins are often thin. Errors, compliance failures, and inadequate controls threaten the bottom line, jeopardizing financial success in daily operations. It can occur in multiple areas, such as procurement, payment processing, inventory management, financial reporting, and compliance.

Genpact can help retailers tackle these common challenges by digitally transforming and modernizing the finance back office. Here's how we do it.

Major value leakage at retail companies typically arises in three areas: at the time of initiating invoices, post-payment, and post-sale. Finance and accounting (F&A) departments, despite being operationally expensive and often large, are poorly equipped and technologically fragmented, making it difficult to keep track of, prevent, and remediate leakage when it arises.

In our experience, there are certain areas within retail that are prone to leakage. Overly complex F&A processes that require lots of manual intervention is one. Another instance ripe for leakage is disjointed technology applications, causing frustration to both internal and external users. And when technology isn't integrated well with the retailer's contract database, it causes errors. All of this leads to overpayments, duplicate payments, incorrect collections, and fraud.

This lost value, often amounting to millions of dollars, regularly gets written off, slicing into retailers' profits.

Drawing on deep industry knowledge, plus our experiences working with six out of the top 15 retailers globally, Genpact brings an analytics-led approach to prevent value leakage from invoice initiation to post-receipt of goods and services, covering the entire spectrum of potential loss. And our solution tackles all three sources of error: people, processes, and technology. When we partner with a retailer, we start by identifying the key areas of opportunity to prevent leakage, looking for high-value dollar claims immediately, prioritizing their recovery, and then working smartly downstream.

Transforming accounts payable efficiency: Analytics, automation, and digital solutions boost profits

Our bespoke analytics-led approach is designed to find the root causes of leakage across 100% of suppliers and tackle the problem at the source, meaning errors don't arise in the first place.

In addition to fixing root causes of leakage, we also collaborate with retailers to redesign their accounts payable process. We introduce middleware that acts as a bridge between diverse tech systems and databases to seamlessly connect their technology to the contract database, removing difficulties in accessing data.

We give retailers the ability to predict resolutions by implementing Cora Orchestration workflows, and then, our AI engine drives error-free reconciliations and immediately identifies exceptions. This means the F&A department can play a stronger role in forecasting rather than just problem-solving.

We work with clients to optimize the retail value chain. We offer a bespoke strategy for regulated goods payments to streamline legal issues for swift claims processing. And we implement a system of engagement from the get-go to automate the invoicing process and alleviate stress on processing teams.

Precision in action: Streamlined integration and analytics enhance post-payment audit efficiency

Our structured query language tool with dynamic workflow and advanced analytics, all linked to Microsoft Power BI, handles the post-payment audit execution.

Our solution addresses inefficiencies in our clients' existing approach by streamlining personnel management and reducing losses from dated claims. We also optimize accounts payable through efficient, integrated invoicing processes to improve the user experience, which can become fraught by a fragmented and complex technology landscape. Then, we streamline the integration between contract databases, underlying transactions, and billings to validate allowances and rebates collected against the due amount and contract digitalization errors.

Smart cash management: AI-enhanced reconciliation for fewer store discrepancies

Our AI-enabled engine matches entries (reconciliations) and identifies exceptions, giving cash store owners more time to investigate causes, resulting in lower store cash losses. Along with small and medium-sized enterprises (SMEs) in relevant skill sets (data engineering, data science, automation, and functional capabilities), we also deployed an analytics product-oriented delivery system to report abnormalities in profit and loss statements (P&Ls) and detection of potential fraud early in the system.

Mismatches in actual cash amounts reported at banks versus recorded amounts from stores have a direct impact on P&L values, requiring retailer write-offs. This multifaceted challenge spans numerous stores and is monitored by the asset-protection team, which actively reports theft, operational failures, and system anomalies.

Our collaboration with leading global retailers has transformed their operations, yielding substantial benefits. For one such US-based retailer, our partnership resulted in the following achievements:

• Superior supplier and associate user experience across the value chain through smarter work allocation and follow-ups with the defaulters
• 40% gain in efficiency with a lower cycle time and improved productivity through touchless processes
• More accurate matching of invoices, delivering better claims and a reduction in erroneous deductions
• More streamlined processes and better metrics monitoring
• An increase in stores covered within the store cash audit remit
• 80% reduction in write-offs and a drop in erroneous deductions with more accurate matching

A US retailer faced problems such as duplicate payments, fragmented technology, inefficiencies, and a poor user experience, which resulted in high operational costs and potential fraud. Genpact implemented an interim solution for ongoing recovery while also designing a customized system with dynamic workflows, analytics, and Power BI. A Lean Six Sigma review of 12,000 invoice claims provided a road map for cash leakage prevention. In the first year, $26 million was recovered, a 73% recovery increase, with $2.6 million in annual leakages avoided. Program costs were reduced as the catch rate went up to 85%.

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