Microsoft sells products in every corner of the globe. Sometimesclosing those sales requires the software giant to assist largecustomers with financing.

“With the current state of world trade, customers are lookingfor longer credit terms and suppliers are looking for ways tomaximize liquidity from their receivables to increase their sales,”explains Damaris Sardenberg, senior finance manager in Microsoft'sStructured Finance group. Bridging this gap in cash flows is themission of the Structured Finance group, which provides customizedfinancing solutions such as factoring, channel financing, andsupply chain finance to Microsoft's customers and partners.

A couple of years ago, the group was providing a great serviceto customers, and to the Microsoft sales team, but it was doing soinefficiently. It received requests for financing via one-offmeetings and email conversations.

“We were completing between 40 and 100 transactions eachquarter, and we didn't have good visibility into them,” Sardenbergreports. “It was hard to gauge the priority on each ask, andwhether the solution was going to bring some positive benefit forthe company. The sales organization has quotas to meet, but we'renot just financing to meet quotas. My team needed a better view ofwhether a particular sale would have an incremental revenue impactfor Microsoft.”

Another challenge was gauging performance of specific financingsolutions, or of the program as a whole. “We didn't have amechanism for monitoring performance in terms of whether we weredelivering a solution on time,” Sardenberg adds. “We didn't have aneasy way to track metrics, such as what types of requests we werereceiving. Even monitoring approvals was a challenge. Making sureall the right people have approved a particular transaction is verytime-consuming when it's all done through email.”

Sardenberg and her team set out to build a tool based onMicrosoft SharePoint that would streamline requests for structuredfinancing and consolidate information in one place. Through aseries of interviews with internal users of Microsoft's structuredfinancing solutions, the project team determined that their newtool needed to be scalable and compliant with Sarbanes-Oxley (SOX).It needed to be secure and to provide an audit trail showingapproval workflows for each transaction. Finally, Sardenberg says,the tool needed to provide intelligence about requested andapproved transactions.

They took an “agile” approach to developing the tool. “Theproject had a broad scope, and we needed to make the tool availableto our business groups as soon as possible because of an upcomingacquisition,” Sardenberg reports. “But we also needed to be able tofix any issues and bugs that the business groups raised after ourinitial launch. The agile method let us make changes quickly basedon user feedback.”

Now, when Microsoft salespeople or members of other internalteams want to request a structured financing solution, they submitbasic information—including customer name, revenue associated withthe transaction, working capital implications for Microsoft, and abrief justification—to a secure online intake request form. Thetool automatically validates that details such as the legal name ofthe customer match the information in Microsoft's financial system.Discrepancies are sent back to the requester to correct.

Once the basic information has been validated, the request moveson to the Structured Finance group, who collect necessarydocumentation and additional commentary from the requester. “Atthis stage of the process, we establish the size of credit linethat was requested, how much revenue the transaction will generateif we can offer a financing solution, how important the deal is toMicrosoft as a whole, and what the priority of the request shouldbe,” explains Sardenberg. They project the incremental revenueimpact of the proposed financing, evaluate the benefits, anddetermine whether they have the budget to fund the proposal.

From there, the request is automatically routed to the internalteams that need to review structured financing arrangements: Legalreviews the contract, accounting considers whether the proposedfinancing would have accounting implications, and the tax grouplooks at any domestic and/or international tax impacts. If aproposal receives approval from these groups, it moves on to thebusiness director within Structured Finance, who considers itsbusiness value to the company. Final approval comes from aMicrosoft vice president, who confirms that the project makesfinancial sense for the overall organization.

This new process substantially reduces the amount of manual workinvolved in collecting data and coordinating reviews and approvalsfor structured financing transactions. “In the past, exchangingemails back and forth took a lot of time,” Sardenberg says. “Therewould be emails to collect information, emails to verify details,emails to correct or add more data. Now we're no longer sortingthrough hundreds of emails to find the information we need tosupport decisions. We can enter the intake number for a request andsee the whole history, who has approved, and all the attachments.It's straightforward.”

This also provides a clear audit trail for every transaction,which assists with both internal audits and SOX compliance. “We cansee at a glance where pending requests are, and we can follow up ifthey get stalled somewhere in the process,” Sardenberg says. “Wealso make sure that each request has both a primary approver and abackup, so if the first approver goes on vacation, we'll pick upthe request and get it approved without delay.”

In the two years since initialimplementation of the tool, Microsoft's volume of intakes hasincreased by 30 percent due to the more effective intake process.Despite this growth in volume, the length of time that passes fromrequest submission to implementation of the financing solution hasshrunk from 87 days, on average, to 15 days, assuming bankagreements are already in place.

Reporting is one more benefit. The tool feeds data intoMicrosoft Power BI dashboards that give the management teaminsights into the number of structured financing requests coming inand characteristics of those requests. “If we're getting a lot ofrequests from a particular market, then we should be able to usethe data to provide explanations,” Sardenberg says. “For instance,if requests from Latin America spike, it could be that astrengthening dollar is reducing companies' ability to pay ourdollar-denominated invoices. This gives management insight on whereour focus should be.”

In the end, Sardenberg says, the tool has helped Microsoft boostrevenue. “We're helping customers with their working capital, whichmeans they can buy more products that they couldn't have boughtwithout the financing. This has helped Microsoft gain traction inthe cloud business, especially in emerging markets, which was apriority for us last year. It's really given us a competitiveadvantage, since we can evaluate and approve financing requestsvery quickly throughout the world.”