Pepsico Case Study

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Sold and delivered goods remain a gift until they are eventually paid for. There are many ways that invoices are provided to over 36,000 customers in the U.S. It usually depends on how the product was delivered and/or how the customer would like to receive their invoices. Some invoices are provided electronically, while some customers receive paper invoices. Some customers have an open process while others have a balance forward process. Some customers don’t receive any invoice at all. Invoices are issued with each product delivery and daily. There were over 24 million invoices issued in the year 2013. Large customers usually pay daily or weekly, while smaller customers pay similar to how they pay their other vendors and operating costs like water and electric. Negotiating timely payments is important to PepsiCo. There are two different systems for billing, one for Warehouse and one for DSD. Each billing uses the system that manages the receivables. The billing system for the Warehouse is in SAP and the billing system for direct store delivery (DSD) is HHC. The key difference is that the Warehouse will be in pallet quantities and the DSD will be in “each” units. The invoice total for Warehouse Wal-Mart, for example, could be $25,000 - $50,000 and the DSD would be $2,000-$5,000. Weekly warehouse invoices might total 200 per week versus 36,000 DSD invoices. Ultimately, the warehouse has low invoices but high dollar amounts, and DSD has high volume of invoices and low dollar amounts.
Warehouse Billing
When the warehouse fulfills an order, an invoice is either provided electronically, via paper or sent by a third party AP consolidator. AP consolidators are manufacturers and/or vendors who send invoices in a defined format to a third p...

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...t to automate enforcement is made. To help ensure receivables are paid timely, the accuracy of pricing and billing is critical to collections. Also, managing outliers default in payment is part of the total relationship PepsiCo has with its customers. This could be done via trade spending which is getting special placement and/or pricing for PepsiCo’s goods while giving the retailers a way to monetize prime store real estate. This helps the retailer increase sales growth. Another way to manage the outliers is with the terms for payment. Most industries have standard terms, Warehouse versus DSD. The terms could be reduced from net 30 to net 25. PepsiCo’s write-offs in 2013 were less than $2 million (Wyatt, 2014).
PepsiCo conducts business in the spirit and compliance of the Robinson-Patman Act. PepsiCo avoids preferential treatment of prices or terms to any customer.

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