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Telecom operators and working capital management 2012 - Pursuing key initiatives - EY - Global

Cash on the line: Telecom operators and working capital management 2012

Pursuing key initiatives

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Operators have implemented a number of initiatives that focus on WC management.

As the challenges facing the industry around the world continue to evolve, most operators have intensified their focus on WC management.

Of the initiatives that have been implemented, the following are perhaps most significant:

  • Enhancing customer acquisition and risk management processes: Operators have introduced a number of measures to enhance their customer acquisition and risk management processes. These included revising and strengthening acceptance criteria, facilitating flexible risk-based payment requests, monitoring high usage, and training and incentivizing the sales force on contract risks.
  • Strengthening billing solutions: A further challenge for operators is that billing requirements for data delivered over multiple channels have grown increasingly complicated. Against this backdrop, most operators have continued to dedicate considerable resource to harmonizing, integrating and consolidating their billing systems.
  • Improving receivables management: Operators have continued to put great emphasis on improving billing and cash collection. A wide range of initiatives have been taken, including ensuring bills get out on time; monitoring existing customers’ payment performance and placing new customers into billing cycles with best payment performance.
  • Turning to supply chain partners: Most operators have turned to their supply chain partners to negotiate better terms and take advantage of supplier financing. Network sharing and outsourcing arrangements have also become more widely used.
  • Optimizing inventory levels: Operators have been increasingly shifting inventory ownership and responsibility to their suppliers, and placing greater attention on product and service life-cycle management. One of the areas where substantial progress has been made is at the retail level.
  • Managing interconnection agreements more effectively: Interconnect has remained an area of strong WC focus for operators. Recent initiatives include more frequent billing, shorter payment terms, payment of deposits and increased use of netting arrangements.
  • Identifying key metrics: Another challenge is ensuring that performance indicators keep pace with changes in strategy and shifts in the marketplace. One leading operator has been adapting and continuously improving its metrics, migrating from an approach largely based on “one size fits all” to a more granular approach.
  • Developing competencies: To deliver innovative and differentiated product and service offerings in a rapid and cost- and cash-effective way, operators have been seeking to develop new competencies, while also changing internal behaviors. This transformation has required people, process and technology to work more closely together.

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