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Houghton International Adopts “Game Changer” Compliance Solution

Houghton International Adopts “Game Changer” Compliance Solution

Connecting a complex global customer base to reinvent critical compliance and credit analysis through automated, simplified decision-making

Houghton International is a world leader in industrial fluids, manufacturing specialty chemicals, oils and lubricants for customers across dozens of different industries—with a concentration of metalworking, automotive, aerospace and steelmaking clients.

In business since 1867, Houghton is privately held and headquartered in the U.S., with manufacturing and research facilities in 33 locations on six continents. This global footprint makes it critical for Houghton to have an efficient way to manage their global compliance needs.

In 2015, Houghton International celebrated 150 years of bringing the highest-quality specialty chemicals to important industries. With early roots in Philadelphia, the company is proud of a long history of collaboration and innovation built on a foundation of customer satisfaction that continues to grow through global partnerships.

The Challenge

Since the passage of the Sarbanes-Oxley Act (SOX) of 2002, Houghton International, like many companies, has developed new processes to assure compliance with the components of the Act, including:

  • Establishing a documented method of creating a bad debt reserve and accurately report accounts receivable balances
  • Mapping credit policies to an overall corporate strategy, regardless of the number of operating divisions, subsidiary operations or foreign locations
  • Providing real-time assessments of the customer base and be able to report material changes to the SEC within four business days

However, a sizable global customer base with complex corporate family trees due to acquisitions and mergers has made it more and more challenging for Houghton’s credit department to manage compliance. An outdated, manual credit reporting process further limited the credit department’s ability to respond quickly. The credit team was using procedures that required hours to piece together a snapshot of a customer’s financial situation.

How it Works

The time-consuming process required looking up customers one-by-one, noting their exposure, and totaling all current exposures before finding the company listing in DNBi. Then the credit team could finally get to the analysis of the account. Although Houghton’s credit management and sales departments have a collaborative relationship, the company was looking for ways to expedite the reviews and processes needed for approval without increasing business risk—a win-win for both teams.

Houghton engaged Dun & Bradstreet to identify opportunities for improvement in its risk management practice such as:

  • Understanding total exposure to customers with complex corporate linkages
  • Streamlining time-consuming manual reporting and compliance procedures
  • Improving cross-department collaboration and information sharing.

Introducing Portfolio Risk Manager for DNBi (PRM) let Houghton quickly cross-reference companies with complicated family trees and understand its total risk exposure, streamline processes and facilitate knowledge sharing between its sales and credit departments. PRM’s Corporate Family Linkage report provides a corporate family tree view, rolling up the accounts receivables (A/R) to the Ultimate D-U-N-S® Number and then, if needed, drilling down to find precise risk information for specific members in the family. The report grants quick insight into an entire corpo­rate family’s risk exposure, empowering credit managers to rapidly identify and take action on areas of high concern to remain in compliance with critical components of SOX.

And the Segmentation by Industry report enables Houghton to easily examine its exposure to risk by industry, solving for a time-consuming reporting request from Houghton’s leadership. Unlike manual reporting, this information is accessible and dynamic, with volumes of data aggregated into an actionable one-click report. The reporting functionality built into PRM has also simplified the way Houghton shares information with sales and collec­tions.

  • PRM’s Corporate Family Linkage report let credit managers expedite sales requests by having a full picture of a prospect’s exposure
  • Credit Limits are issued faster and credit managers can be confident that they are seeing the full picture when making decisions, which also helps when responding to on-hold orders.
  • A quick check of a company’s scores in DNBi, combined with the robust reporting of PRM, surfaces the total exposure of the corporate family so the credit team can expedite an order that’s been flagged. If a customer is over their credit limit, the risk management team can exact precise terms from the customer before releasing the order.

Results/ROI

This is a game-changer. I have been waiting 20-plus years for something like this, and it’s finally here.
Imelda Darin, U.S. Credit Manager, Houghton

“This is a game-changer,” says Imelda Darin, Houghton’s U.S. Credit Manager. “I have been waiting 20-plus years for something like this, and it’s finally here.”

By adding Portfolio Risk Manager to its DNBi credit risk management suite, Houghton is able to validate that credit policies are being applied consistently across all clients, and it is therefore in compliance with SOX requirements and the company’s global policies.

Houghton has also reduced hours of painstaking manual research to a few quick clicks. By setting or adjusting credit policies based on current risk profiles, trends in its portfolio, and benchmarks against national averages, PRM has made Houghton’s risk management processes more efficient and effective.

Simplifying the process of communicating risk management intelligence has provided Houghton’s leadership with greater understanding of its own business, and helped Houghton’s sales and credit teams work collaboratively.

http://www.houghtonintl.com/

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