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20% Reduction in Bad Debt: Staples’ Collections Automation Journey with AI



George Uko

Manager of Credit & Collections,


v0:01] George Uko:

Okay, I want to start by introducing myself, I am with Staples- promotional products. As I go through the presentation, keep in mind, Staples-promotional products, anything with your company logo is what we do. So I’m not with the paper side of the store side, we are with the promotional side. So it’s an interesting experience as far as what we’ve been through with HighRadius and hopefully as I go through my slides, you could see what I’m referring to.

[0:36] George Uko:

Okay, for our agenda, what we’re going to talk about, we’re going to go into what we were looking for what we call the two-fold plan of the executives, what we were looking to accomplish by going with HighRadius, we had some very straightforward agenda that we wanted to go through to achieve. Another thing we wanted to do was to see as far as some of the different challenges, just like any organization, anytime you switch as far as your automation or get into automation, you’re going to run into some different issues. So we’re going to go over some of our different challenges, and then the other thing, which is a good thing, we’re going to tell you what our expectations were, what was it we were trying to do with the software and then finally, I’ll give you some of our results. Everything that we’ve done with HighRadius has been a great experience. So I’ll definitely share that with you. Once again, Staples, promotional products, Staples as a whole we have different entities. Most people are familiar with the Staples store, so your paper products, pens, pencils, etc. We also have the promotional side, the side I’m on, we sell office furniture, so quite a vast amount and then we even do the custom print for different companies. So let me start by going through what is two-fold what we’re looking to do, and this is what was presented by the executives for us to do. So at the time, we had two employees that were getting ready to retire.

So our goal was to get this automation through, push it through as far as our system. And by doing this, we were hoping to have a reduction of 2 FTE, two full-time employees. Other things we were looking to do, reduce as far as our bad debt, bad debt at the time we were running this, some different issues and hard part what we were finding, we were getting to all our work. A lot of it wasn’t the rep’s fault. It was just the volume of the different accounts and we couldn’t see adding additional staff, we really needed some automation to help us with what we were doing. So here are some of the different goals that we were looking for. So one of the first ones was to look at some of our higher dollar accounts. So let me start by kind of defining our high dollar accounts. With Staples promotional products, we may have a customer and say it’s Subaru, while a Subaru may have 200 or 300 dealers under Subaru. So you may have one corporate account and then 200 accounts under that. So what we ended up doing is starting to group as far as the accounts. As we group the accounts together, we worked directly with the customer to get these accounts cleaned up. So that was a huge win. And another thing when I say a high dollar, our high dollar accounts once again, we could segment them. And I think probably an easier way to say this is we started to segment our accounts.

So as you get everything in the system, you can start segmenting, we were on an AS 400 system at the time. So we had limited capabilities. So by putting in the HighRadius, we’re able to go in and segment them out. Other things, second point on here, we realized that some of our lower dollar accounts weren’t getting the necessary attention. So we hooked up with a local collection agency, did a great job with DNS collection agency and what we did is we started outsourcing some of the accounts. The hard part, some of my credit reps don’t understand 100% yet what’s going on, but their number of accounts they’re responsible for their portfolios has reduced. So the plus with that we’re getting more attention all around with our different accounts. And by doing that, something else to keep in mind, our DSO is dropping, we’re looking to get these accounts out the door sooner, and that’s lowering some of our expenses because the sooner we can get into the collection agency, the less as far as the cost. So that’s been a huge win for us.

[5:04] George Uko:

So let me hit some of the different challenges in some of these challenges as I go through them, not any different than any other organization. But if you could think of our team at Staples- promotional product, seven collectors, seven and 900 accounts to start with, that’s a lot of accounts to focus on. So they had a hard time getting the traction to work as far as the different accounts. And one other thing we found is the louder the customer was, the more they complained, the more emphasis they put on those customers. So they didn’t get a chance to dig through all their accounts. So this was one of the things that we ran into, and we wanted to put more focus on some of the different accounts. Another thing to keep in mind, prior to HighRadius, we were very paper-based so I would print out a report once a week, and they would work off as far as the paper report. So they would start working the account and they couldn’t work through. I mean, they would work through it the best they can, but it wasn’t 100% up to date. Something else with that our sales department wasn’t getting updates on the different accounts. I now send that aging out to my sales department of HighRadius. So our sales department at all times now knows who’s past due to how much so we want them out, we want them selling to the right customers. And then the other thing we ran into and we’re still working on, think of all the different AP databases that you work with, we’re trying to get all that fed through HighRadius, the more we can get fed through HighRadius, the better it’s going to be. Another thing we’re hooked up with an EIPP. So now the statements, the invoices, all that information the customer can now obtain themselves. So from a work effort perspective, this has reduced a lot of work for the representatives and along with that, they don’t have to print the statements we haven’t going through as far as the system.

[7:23] George Uko:

So here are some expectations that we had and this is very standard for most companies. One of the first things we wanted was to reduce our bad debt. At the end of the day if we could reduce our bad debt that will reduce some of our expenses. So one of my main goals was to reduce basically what the presentation says is bad debt by at least 20%. So by focusing on the different accounts, another thing with focusing on the bad debt, I was able to focus on the bigger accounts, and we were able to work directly with sales to get some of this cleaned up. Now because we reduce the bad debt, we also reduced our DSO. DSO took us a while longer to clear up, bring it down. We brought it down by about five days, and it’s still dropping. But what we’re finding is there’s a lot of different accounts with different issues that we didn’t know about because we couldn’t get into our accounts as fast. So that’s what the point is right there. Higher visibility, we can now see where some of the different issues are. Another thing that’s happened is because we have EIPP, the customers are seeing their invoices sooner. So because the customers are seeing the invoices sooner, they can now go in and they’ll contact us. We got charged freight and we shouldn’t be charged freight. So what’s happened is because of that, we’re now going in fixing the issues sooner versus later. So as we continue in our process, we’re going to see the DSO continue to drop. And probably one of the bigger ones, if you look at the bottom there, reduction of workload. So if you remember, what in the previous slides, I was saying the analyst started with 700 to 900 accounts. My goal at this point, they’re all down to about 350. So we’re going to continue to reduce as far as the number of accounts, but at the same token, because it’s reducing the expectations are changing. So now that it’s dropped, they should be touching each account at least once a week.

So behind the scenes, I’m working with them trying to get all these accounts worked and seeing what we could do to help. So let me kind of give you a little more detail with us. Think of as far as paper intense, we used to print all the statements, we used to print all the invoices. So literally once a month when we did the statements, the reps would probably spend anywhere from four to six hours a week handling as far as the different statements. Once we went to HighRadius, we were able to break this down and have it sent through the system. And you notice on there it says, automated correspondences. Something else we did is we segmented our accounts. So some of our accounts have different requirements. So when we send out letters for maybe one group of customers, they get the invoice, they also get the letter, another customer may just want the letter. So we have to kind of think of how we’re going to do this. And we’ve done this and I think we have over 40 different segments within our system. And that’s helped us control, one- the sales rep, but two- meet the needs of the customers. So by doing that, that’s kind of speed up the process for the customer, they now have what they need. And our call volume where customers are calling in requesting a copy of a statement, copy of an invoice has dropped tremendously.

[11:16] George Uko:

And, if you think about it, as that’s happened, that’s also increased our productivity. Because now we could go in, we could focus on the kids that really need the focus, versus doing all that manual work. That manual work was just a little painful to watch because we spent so much time doing that. And to be honest, I’m a person who doesn’t like paper. I want everything done through the system so that they don’t have to mess with the paper. The other thing with increased productivity, we started doing prioritization with the different worklists. Once a day I run through our accounts and on a given day, I may have 3200 different accounts I look at but what I do is that I separated out by bucket. And I make sure as I’m looking at the different reports, I brought in the last date the account was worked and asked to bring in the collectors notes. So when I run the report, I know the last action that took place on the particular account. And then it helps me go to the rep and say, “Hey, what’s going on with this account? What can we do to help you get this collected”? Another thing that this has done is it’s helped our sales reps because now they know we’re doing everything we can to get this collection. We want this issue resolved. We want the customer to outspend us.

And, at the end of the day, as far as our corporate goal was to go in to automate to reduce as far as the workload, our CFO was very direct with us to reduce the DSO, reduce the bad debt and find some automation. And because of this as far as our collection process, we’ve gone in there, I can now predict what it’s going to be week over week. Another thing I run reports on a monthly basis, so I could do a comparison by rep, I look at their 60 plus, so I know how many what the dollar is 60 plus, I also know the number of accounts that are out there. So on a weekly basis, I give a report to the analyst. That way they know what’s going on with their particular accounts. Prior to that, they wouldn’t know maybe to the end of the month, now they’re getting it on a weekly basis. So it’s changed as far as the way we’re doing it. And then from another perspective, once it’s on the report, downloaded to excel, I could highlight the particular accounts I want action on. I sent it to the supervisor, I sent it to the credit analyst, and now they need to get this resolved.

[13:56] George Uko:

So it’s changed as far as what we’re doing, and I think the big thing with this is visibility. As you get it on the report, you can now have a better sense of what’s going on with the different accounts. And this is one of the things I highly recommend if you have not done this, hook up a collection agency with HighRadius. This is called CAD, which is collection agency data exchange and what this does is this allows the credit analyst as they’re working the account, they, in turn, could send me a note and say, “Hey, I’m getting nowhere collecting on this account. What do you want me to do with it?” So what I do is we have a worklist that goes to between myself and our supervisor. We review all these accounts. If we deem it’s pretty much a dead end, we’re not going to get anywhere with it, we automatically refer it to the collection agency. So this is kind of streamlines what’s going on. But at the same token, I hold the credit analyst to deal with this, if they haven’t done their full work effort, we make sure they do this full diligence before we send it to the collection agency. We want the collection agency to collect, obviously. But if it’s something that we fail to do, we, in turn, need to get in there and get this done. So once again, we could do this. I’ll show you in another slide how easy this is. But the big thing once again, it’s a file, you just click a button, hit send all your information in HighRadius, transfer to the collection agency. In the old days, I used to have to fill out the forms, send the invoices and the statements. Now I just go ahead and click, it’s gone. And the best part about it is that the same token when the collection agency receives it, they start working on the account. So it’s a fast process, a great thing to do.

[16:07] George Uko:

This next slide, as you look at- this shows how we prioritize the different work. If you look all the way to the right where it says suggested actions, that’s telling the credit rep what they should be doing, the system will give them pay, you should be calling, you should be doing this, another thing we have a score in the fourth column from the left. So we score the different accounts, maybe by the dollar, the furthest pass to obviously is going to have a higher score. The goal behind this is to prioritize the work to get them to work, the higher score, if we have a customer give us a broken promise, once again, that has a higher score. So we could set the different scoring to get them to work these different accounts. So it’s a big thing for the reps. It’s been a change for them because they’re not used to some of this automation. But at the end of the day, it’s great because now they know where they should put their focus. If you haven’t done single click automated correspondence, this is probably one of the best things you can do. So with the correspondence, once a week, I send out a letter for anyone that’s 90 days+, I look at the different accounts and there are probably about 300 different accounts that I send out per week. And within a matter of about 20 minutes, all 300 of those accounts get hit with an email. Basically saying your past due, this is serious, let’s go ahead and make your payment. But it’s great because if you need to do like a bulk email, you could do it all at once. So the way you do this if you download your accounts, segment the ones that you want to be reloaded into HighRadius, and then you could send the letter. It’s great because what ends up happening is my reps are sitting over here, the minute I send out this letter, their phones are ringing off the hook. So because of that, now we’re getting more money coming into the door. So it’s a good thing to go ahead and use it.

Now, I was telling you before about the third-party collection agency, so if you look on the screen here, this is just a list of your different accounts. But all you have to do is click here on the left. And as you click the notice over here, it says ‘change customer status’. And you just put transfer to whatever your collection agency is. So once again, if you don’t have this hooked up, that is something I would definitely recommend because once again, I click here, and now the account is of the collection agency. The best part with this is once the collections agency receives it, I could see their notes. So I know they’re working the account, I know what’s going on and then on top of that, I’ll take some of their notes and provide feedback to my reps. So this way I could show what they were missing. So once again, you could go in and do that. Notice it’s got different actions turn over to TPA. So based on that note, I know we’ve reviewed it, and it’s ready to go to the collection agency. And what we’re finding at any given time, we probably send 60 to 80 accounts a week. So it just depends on how fast they get them collected. But this is helping us handle as far as our volume. So let me share some different results that we’ve achieved by doing this. Our past dues have reduced by about 27%. Another thing on here, our 60+ has reduced by 8% and our DSO has reduced by five to six days. Now it’s getting better. And this was one, it depends on your company as far as your different aging, a lot of things that we found by going through HighRadius, we have internal issues. So a lot of the orders weren’t getting entered correctly. So because of that, that was causing a lot of different issues. So our numbers here will continue to change. And as everything drops, we’re just going to keep getting better. But once again, get that collection agency, use your letters, set up different strategies, and that’ll help you achieve these or even better results.

[20:51] George Uko:

Any questions?

[21:05] Audience:

So, which module is specifically used with HighRadius? And how long did it take you to implement the solution and where did you implement it?

[21:13] George Uko:

Okay, we have three modules. We have EIPP, we have collections, and we also have a cash App. So we’ve put a lot of focus on the collections and the EIPP. EIPP is great because when they make the payment, on EIPP, we have it feed to the collection side. So now that updates as far as the store, and we don’t have to work those different accounts, getting everything implemented. And we are in the second year with the US and we’ve seen a huge reduction in our accounts, but one of our issues was just cleaning up some of our older accounts.

[21:51] Audience:

And was this just for North America or you do this globally?

[21:55] George Uko:

Both North America and Canada.

[21:57] Audience:

Okay. So the US and Canada. Okay, and it took like, I know you’re still in the second year, but did the basics get implemented within three months?

[22:07] George Uko:

We started with the collections module that was probably about four months to get implemented EIPP, probably about two months. And then the cash app took us about four months to do. But what we did is we staggered it, we didn’t do it all at once. And the plus side with the cash app- by the time we got there, the other ones were already implemented, and then they could pull the other information.

[22:40] Audience:

I’m Ben Piers from Ecolab, what was your collection software and dunning strategy before going to HighRadius?

[22:33] George Uko:

We didn’t have any collection software before that, we’re in the AS 400 system. I’m embarrassed to say that but we’re in the AS 400 system. So we were very limited in what we were doing and the hard part was what we wanted and what we could get. It couldn’t provide it and they didn’t want to update our existing system. So by going to HighRadius, that gave us the flexibility to finally fine-tune and get what we wanted.

[23:13] Audience:

Great, thanks.

[23:19] Audience:

How would you compare the costs of implementation and ongoing costs compared to the value you’re getting?

[23:27] George Uko:

Good question. What we’re running into right now, I would have expected us to see a bigger reduction in the number of accounts that are in our system. But what we’re finding once again, is we’re finding holes in our system. So in other words, when we get sales, and I don’t want to blame sales, but I’m going to blame sales, but when they’re pushing the orders through, they’re not getting the purchase order. All our different customers have different rules, different requirements. While they’re not following the rules, they’re not following the requirements, so a lot of our aging because we didn’t do it right in the first place. So what’s happening because of this, now we’re pushing back to sales. Now we’re pushing back to customer service. And we’re starting to fine-tune as far as the system.

Now, with that, it’s also a culture change because now that I have all the information, I told you before, like with Subaru, that’s a huge customer for us. They have like 200 different dealers, I now reach out to that sales rep and say, here’s a report for your dealers. Here it’s all 200. So now they have a piece of the game. So on some of them if we need to send the collections great, but we put them in the driver’s seat also because it’s a joint effort. But as far as the savings, it’s still calculating, I guess it’s a nice way to say. Right now we’re in our review process. So I’m putting together the numbers, but one number I’d like to kind of share is we had a bunch of 150 days pass two accounts when I first started, while there are about 1100 accounts at that time and you got a lot of movement. So there were a lot of old accounts that are out there.

Today, we’re down to about 350. So as we get everything to the right cleared, we’re slowly moving to the left. But it’s taken a little longer than I thought it would. But at the same token, it’s getting the group to work faster and not go against the system. So we’re putting stats in to hold them accountable also. We did, and the other thing to keep in mind as we’re doing this, the business is still growing. So we’re not adding additional staff. So it is actually working. It’s just hard sometimes to quantify all the different pieces of the puzzle. Personally, I’d rather have four modules get the credit module, so everything is entered correctly, feeds to the collections and so forth. Then the other thing we found, you’re gonna break here for a second. But the other thing we found is our reps were spending so much time on their emails, they weren’t working all their accounts. So what we did and what’s getting implemented is HighRadius will now read their emails, and if it has a promise to pay, puts it in the system. So we don’t need to look at those emails, because it’s just a payment commitment. So that’s going to transform as far as what they’re doing. So we have a bunch of wins coming. It’s just a matter of getting the team on board and showing them what’s going on.

[26:40] Audience:

I was just curious about how many accounts that you sent to collections, and was there an additional cost involved? Do you recoup that and did that impact your overall customer experience with those accounts?

[26:53] George Uko:

What we have to do is from a customer service experience, we had to look at those accounts on an individual basis. Because if it’s a dealer account under a big customer, we went back to the sales rep and said, “Are you okay”? So we put some emphasis on them. But by doing that, that helped us control what we send, because we can’t send all our accounts obviously to collections. In the initial setup, there is no initial setup to go ahead and set it up through the collection agency. So once again, there are some preferred collection agencies that are here with HighRadius today. I would talk to them and see what the different costs are. I can’t talk to you about what they would charge you but it’s based on volume. A lot of it’s based on the sooner you can get it to them, the lower the cost. But on a normal daily basis, we’ll send a couple a day. At any given time, we’ll have anywhere from 60 to 80 accounts at the collection agency. Thank you.

v0:01] George Uko: Okay, I want to start by introducing myself, I am with Staples- promotional products. As I go through the presentation, keep in mind, Staples-promotional products, anything with your company logo is what we do. So I’m not with the paper side of the store side, we are with the promotional side. So it’s an interesting experience as far as what we’ve been through with HighRadius and hopefully as I go through my slides, you could see what I’m referring to. [0:36] George Uko: Okay, for our agenda, what we’re going to talk about, we’re going to go into what we were looking for what we call the two-fold plan of the executives, what we were looking to accomplish by going with HighRadius, we had some very straightforward agenda that we wanted to go through to achieve. Another thing we wanted to do was to see as far as some of the different challenges, just like any organization, anytime you switch as far as your automation or get into automation, you’re going to run into some different issues. So we’re going to go over some of our different challenges, and then the other thing, which is a good…

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  • How critical accounts are auto-transferred to 3rd party collection agencies
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    HighRadius Collections Software automates and optimizes the credit & collections management process to improve collector efficiency, minimize bad debt write-offs, improve customer relationships, and reduce DSO. It provides a complete set of tools to optimize and automate the credit collections management process and enable the better prioritization of credit collections activities All the information you need (invoices, dispute information, POD, claims, tracking info, etc.) on each case is automatically presented in a collections work-space and is ready for use. Apart from the wide variety of benefits that it has, it also comes with some amazing features like CADE (Collection Agency Data Exchange), collector’s dashboard which has prioritized collections worklist, automated dunning & correspondence, dispute management, centralized tracking of notes, call logs & payment commitments along with cash forecasting functionalities. The result is a more efficient collections team that contributes to enhanced cash flow and reduced DSO.