Microsoft sells products in every corner of the globe. Sometimes closing those sales requires the software giant to assist large customers with financing.

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

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

“We were completing between 40 and 100 transactions each quarter, and we didn't have good visibility into them,” Sardenberg reports. “It was hard to gauge the priority on each ask, and whether the solution was going to bring some positive benefit for the company. The sales organization has quotas to meet, but we're not just financing to meet quotas. My team needed a better view of whether a particular sale would have an incremental revenue impact for Microsoft.”

Another challenge was gauging performance of specific financing solutions, or of the program as a whole. “We didn't have a mechanism for monitoring performance in terms of whether we were delivering a solution on time,” Sardenberg adds. “We didn't have an easy way to track metrics, such as what types of requests we were receiving. Even monitoring approvals was a challenge. Making sure all the right people have approved a particular transaction is very time-consuming when it's all done through email.”

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

They took an “agile” approach to developing the tool. “The project had a broad scope, and we needed to make the tool available to our business groups as soon as possible because of an upcoming acquisition,” Sardenberg reports. “But we also needed to be able to fix any issues and bugs that the business groups raised after our initial launch. The agile method let us make changes quickly based on user feedback.”

Now, when Microsoft salespeople or members of other internal teams want to request a structured financing solution, they submit basic information—including customer name, revenue associated with the transaction, working capital implications for Microsoft, and a brief justification—to a secure online intake request form. The tool automatically validates that details such as the legal name of the 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 moves on to the Structured Finance group, who collect necessary documentation and additional commentary from the requester. “At this stage of the process, we establish the size of credit line that was requested, how much revenue the transaction will generate if we can offer a financing solution, how important the deal is to Microsoft as a whole, and what the priority of the request should be,” explains Sardenberg. They project the incremental revenue impact of the proposed financing, evaluate the benefits, and determine whether they have the budget to fund the proposal.

From there, the request is automatically routed to the internal teams that need to review structured financing arrangements: Legal reviews the contract, accounting considers whether the proposed financing would have accounting implications, and the tax group looks at any domestic and/or international tax impacts. If a proposal receives approval from these groups, it moves on to the business director within Structured Finance, who considers its business value to the company. Final approval comes from a Microsoft vice president, who confirms that the project makes financial sense for the overall organization.

This new process substantially reduces the amount of manual work involved in collecting data and coordinating reviews and approvals for structured financing transactions. “In the past, exchanging emails back and forth took a lot of time,” Sardenberg says. “There would be emails to collect information, emails to verify details, emails to correct or add more data. Now we're no longer sorting through hundreds of emails to find the information we need to support decisions. We can enter the intake number for a request and see 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 can see at a glance where pending requests are, and we can follow up if they get stalled somewhere in the process,” Sardenberg says. “We also make sure that each request has both a primary approver and a backup, so if the first approver goes on vacation, we'll pick up the request and get it approved without delay.”

In the two years since initial implementation of the tool, Microsoft's volume of intakes has increased by 30 percent due to the more effective intake process. Despite this growth in volume, the length of time that passes from request submission to implementation of the financing solution has shrunk from 87 days, on average, to 15 days, assuming bank agreements are already in place.

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

In the end, Sardenberg says, the tool has helped Microsoft boost revenue. “We're helping customers with their working capital, which means they can buy more products that they couldn't have bought without the financing. This has helped Microsoft gain traction in the cloud business, especially in emerging markets, which was a priority for us last year. It's really given us a competitive advantage, since we can evaluate and approve financing requests very quickly throughout the world.”