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Re-Engineer Your Cash Flow Cycle

withOracle Credit and Collections Suite

A Case Study

Presenters:Anil MadhireddyMichael PuccinelliVeriSign Inc


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About Us

VeriSign Inc (NASDAQ: VRSN) is the trusted provider ofInternet infrastructure services for the networked world. VeriSignbrings Trust to the Internet with domain name andauthentication services allowing companies and consumers allover the world engaged in trusted communications andcommerce

Anil Madhireddy is a Senior Business Analyst in the EnterpriseIT Division of VeriSign Inc

Michael Puccinelli, CCE is the Senior Manager, Global Credit &Collections at VeriSign Inc


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Learning ObjectivesThis Session offers a case study on implementation of Oracle Creditand Collection Suite with Dun and Bradstreet Toolkit. As part of this

session, you will:1. Appreciate the need for automating credit assessments and how they

contribute to the quality of receivables & efficiency of the cash flow cycle2. Learn to use internal and external credit data in a scoring model to

determine customer credit limit & manage credit risk3. Understand the building blocks of collections scoring and strategies tomanage pre-delinquencies and serious delinquencies and help creditbecome cash

4. Know how to integrate credit and collections into an effective tool toenhance ROI

5. Understand how an effective credit and collections implementation led toan efficient risk management & collections strategies that helped improvecash flows and reduce write-offs


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Agenda1. VeriSign Credit & Collections Suite Overview2. Credit Management @ VeriSign

Building Blocks for Effective Credit ManagementIntegration with Dun & BradstreetVeriSign Composite Scoring ModelNew Customer ReviewsOrder Reviews & Enhanced Credit CheckingExisting Customer Periodic ReviewsIntegration with Credit Management

3. Advanced Collections @ VeriSignVeriSign Collections Scoring ModelCustomer Scoring & Collections Strategy MappingPre-Delinquency Strategies Key to improving DSOCollections UWQOther Key Features

4. What VeriSign Gained?5. Lessons Learned6. Q&A


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Building Blocks for Effective Credit Management

+ D&B Data

Paydex, Commercial Credit Score, D&B Rating & Financial Stress Score+ Internal Data

No of years customer did business with VeriSign & Weighted AverageDays Delinquent (WADD)

+ Credit Limits & Payment Terms+ Credit Review Cycle

Quarterly, Semi-Annually, Annually & On Demand

+ Risk ProfilesHigh/Low/Moderate

+ Sales Order Credit CheckingCustomer Credit Exposure vs. Credit Limit


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Dun & Bradstreet Integration

+ Oracle provides Out of the Box Integration with Dun & Bradstreet

Toolkit+ VeriSign can download D&B data for customers using this integration

from Credit Management


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Types of Credit Assessments+ New Customer Reviews

Review customer based on D&B data Credit Limit, Risk Profile & Review Cycle & Payment term assigned to

the customer based on review

+ Sales Order Reviews (Credit Checking for Orders) Orders credit checked comprehensively for the following 4 criteria

i. Standard Credit Check (customer exposure < credit limit)ii. Payment Terms on the order = payment term assigned to the customeriii. Amount 91 Days Past Due (if any) is not more than 10% of customer

outstandingiv. A credit review for the customer is not past due

+ Existing Customer Reviews Customer Accounts are automatically selected for credit review based on

the review cycle & last review dates


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Credit Checking on Sales Orders


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Credit Exposure Calculation (OM + AR)


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Case Folder Summary (Credit Management)


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Case Folder Data points (Credit Management)


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VeriSign Credit Scoring Model


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Credit Analyst Recommendations


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Customer Credit Limits


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Customer Profile


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Integration with Advanced Collections (Custom)


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Credit Review Trends


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Building Blocks for Effective Collections Management+ Customer Scoring

Helps score customers to determine the nature & extent of thedelinquency

+ Collections Strategies Determine the collections strategy to be used based on the

severity of the delinquency

+ Work Items Work Items get assigned to the Collection Analyst for Review

and Follow-up with the customer

+ Collector Assignment Model Help route strategy work items to collector based on

assignment rules


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VeriSign Collections Scoring Model+ At VeriSign, Collections Customer Scoring forms the foundation for

collections Activities. Collections Strategies & Work Items are

assigned to collectors based on Scoring.+ Customer Accounts are Scored on the following components:

1. Delinquent Amount on Account Open Invoices, Debit Memos, Chargeback and Guarantee transactions is

included in the calculation of Delinquency Amounts.2. Account Days Past Due

Highest Days Past Due of transactions on Customer Account.

3. Number of Delinquencies on Account Number of Delinquent Items on Account (Invoices, Debit Memos, Chargeback

& Guarantee Transactions are included in this determination)


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Snapshot of VeriSign Collections Scoring Model


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Score Strategy Work Item Mapping+ Pre-Delinquent Accounts are

managed by Pre-Delinquency

process+ No Work Item is generated for Early

Stage Delinquencies (grace periodfor customer to pay)

+ Work items are generated forDelinquent, Seriously Delinquent I &Seriously Delinquent II strategies.Collection agent options include:

Call Customer / Send call meletters/ 5 day demand/10 daydemand/final notice/ assignment ofcases to collection agency


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VeriSign Collections Life Cycle


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Collectors Universal Work Queue


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Collections Workbench


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Pre-Delinquencies Key to DSO+ Pre Delinquent transactions are not delinquent transactions but however

needs early stage collector review and a customer call given the high dollaramounts.

+ At VeriSign, a Transaction is considered Pre-Delinquent if the TransactionAmount > 25000 USD and Days Since Creation is > 7 Days though within DueDate.

+ Pre-Delinquent Transactions are identified by Oracle Collections and a workitem gets pushed to the collector prompting the collector to do one of thefollowing and close the work item

Call Customer to check if they have received the Invoice & if they are allset to pay on the Due Date

Send Pre-Delinquency Dunning Letter+ There has been a number of instances of prompt payments as a direct effect

of Pre-Delinquency follow-up process We recently identified an invoice for $1.55M which had a problem and

talking to customer early helped prompt payment. But for this process, wewould have known this issue a month later


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Pre-Delinquent Work Items Overview


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Other Key Features+ Ability to Assign Customer Accounts to Third Party Collection

Agency

Identify Accounts, Review Assignment, Final Transfer &Adjustment of open balance

+ Automation of Collections Correspondence using XML Publisher Call Me Letters, 5 Day Demand Notice, 10 Day Demand

Notice & Final Notice+ Customer Level key collections metrics:

True DSO, Annual Sales, Account Weighted Average DaysPaid, Average Days Late, Weighted Average Days Late

+ Promise to Pay & Broken Promises

+ Reassignment of Work Items


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What VeriSign Gained?+ Implementation of Oracle Credit & Collections Suite led to better

credit risk management, collections efficiency as well as Productivitygains

+ Productivity Gains helped reallocation of resources towards dialingfor dollars to help collections & cash flows

+ Cash Flow Impact:

91 Days Past Due Amounts reduced by 85% from the levels in2004

Current & 1-30 Days Past Due Amounts as a % of TotalReceivables increased from 62% in 2004 to 86% in 2004

Bad Debt Write off dropped from 5.9 million USD dollars in 2004to 2.1million USD in 2008


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Lessons Learned / Issues+ Advanced Collections:

VeriSign initially implemented collections scoring at transactionlevel which presented us with significant challenges (functional &system performance related). Now we have moved to customerlevel scoring and strategies

Collector routing rules were complex - now simplified with upgradeto IEX.H patch

+ Credit Management: D&B Integration gave intermittent errors/failures which was

corrected by a one-off Oracle Patch Maintenance of multi currency credit limits will be challenge the

suggestion is to move towards single currency credit limits and useglobal exposure Credit Usage Rules, a required configuration for Oracle Credit

Management, breaks in a multi currency environment promptingVeriSign to customize the workflow to prevent case folders fromthrowing errors


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Q&A

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