Improving Overall A/R Efficiency with Digital Transformation of Credit, Collections and Cash Posting

Speakers

Beth Petrey

Corporate Credit Manager,
Summit Electric

Transcript

[00:00] Beth Petrey:

Hello, everyone. Welcome to improving overall efficiency using the credit collections and cash apps modules. I’m Beth Petry and the corporate credit manager for Summit Electric Supply, an electrical distributor out of Albuquerque New Mexico. We were founded in 1977. We provide electrical equipment and supplies to customers and we are ranked number 17th in the nation among electrical distributors. Going to go over our corporate challenges, when it comes to digital transformation and how we overcame some of those challenges. Our leadership team is very forward-thinking and they embrace the digital transformation and improving our technical world. The problem that we had was not that they weren’t on board, it was that they had no idea what was available to them or us. So in the past, we had leadership in our department. I didn’t even know what the department did daily or what would be needed to improve the department. So it took getting the right people in the right place and in front of our c suite team with the right product. The other option the other topics that we had to bring to them was the cost. That’s what most everybody looks at first and gives them analytics of how much the overall long term cost of going the digital transformation over the daily costs of the jobs that we did. How would it improve? How would that money be spent? How would it be? How would it come back to the company? The other topic that we got to use was our lean. While we’re not a manufacturer we do adopt the lean process and lean as the radical elimination of waste. We hate waste whether it’s wasted time wasted resource wasted money. We’re always looking for ways to challenge ourselves in reducing the waste in our company.

[02:25] Beth Petrey:

Our vision helped us get to where we are as well. Summit wants to be the best place to work and the best place to do business in the electrical industry period. Along with our mission statement, I will only highlight a couple of them that are serving our customers by adding superior value with our industry expertise, innovative systems, and commitment to them. We use ways. We try to find new ways to distribute transport stores and provide materials to our customers. We have onsite trailers sometimes they’re manned sometimes they’re not. We have. Snapped systems which are lockers. They can go and get the material that they need. We build them out weekly, monthly, daily whatever is required from the customer. So we try to think outside the box of what you typically think of as a distributor. We have reduced the amount of manpower that our customer has to use driving to our stores picking up equipment by providing it to them onsite. Some others are better by design is one of our missions doing it right the first time every time. The biggest waste of time is having to go back and redo work over and over. So getting the people trained and in the right places and knowing what is possible is important to us keeping our standards high. Ingenuity and finding a better way to do things. I’m one of those people that if you give me a task I’m always going to look for the easiest way to get it done. The shortest the fastest. But it has to be the right way. When we adopted HighRadius in 2018. We chose credit collections and cash apps modules. The challenges with the credit were, Oh sorry, I should go over our customers. Our customers are typically contractors. They’re out on jobs they’re building buildings they’re building hospitals they’re building, Oil plants. So we have a range of customers from small residential to commercial to industrial customers. Everybody knows how a credit application works. So we had specific needs within our industry that we asked HighRadius to step up to the challenge and find solutions for us. We use credit applications for customers all the time in our industry. We have a way of protecting our securities in our age by using jobs. I know that that’s not specific to every industry but we can maintain lean rights on a building or a property if something is being done on those properties. So we have what’s called Job sheets. and with a job sheet, we collect our customer’s information but also their customers’ information. A lot of times our customer is working for a general contractor who’s been working for an end-user or the owner of the property. So to maintain the lean rights we need to capture all of that information.

[05:42] Beth Petrey:

We gather the address of the job and the details of the job including what’s being done. There are different lean processes whether it’s commercial or oil and gas or even marine rights. So we have to know what the scope of the job is. When we used to before HighRadius we would get a piece of paper sometimes that was completed by the sales team sometimes by our customers. Typically if it came from the sales team it had the name of our customer and the address where the jobless that was it. No way of maintaining lean rights. We had no idea if the address was even right. Some of the time with HighRadius we were able to streamline that process. Also when we did the paper. We would be responsible in the credit department for calling all the parties that we could find that were related to this job gathering that information individually from multiple locations or people and then we’d also have to call people back looking for if it’s a public job. We had the bond right. So we would ask for the bond information or call someone else for tax information and it was always just a lot of phone calls and manual processing of our job sheets trying to get those people to give us all the information individually. When we went to digital transformation we were able to use the online credit application that HighRadius uses and create our job application. So it’s done online. We are different than the regular credit application, asks for the specific information that we need for our job and it is. Has required fields. They can’t go past the field that we need if it’s not completed. It also helped give one location that all the documentation can be uploaded into that specific location instead of having facts papers from here. Emails from here. Sometimes we would get a picture of a job sheet taken with a smartphone emailed to us and we would have to use that to put it together. So this has helped get everything in one place at the right time. This also allowed us to use HighRadius to seek approvals from those necessary parties. If it’s a certain dollar amount if it’s below a certain threshold of gross margin we like to make sure that all parties that are responsible for that number. So we can send those emails to our GDP straight out of HighRadius with all the information that we’ve gathered and they’re able to make those decisions or go back and speak to the sales team that’s responsible. Moving on to the portion of the collections. Before digital transformation and how many people can say this, I know at least one of you has the same problem. We had credit specialists that we’re working off the paper raisings. They were printing paper raisings highlighting some collecting alphabetically there was no rhyme or reason. Some of our team knew how to export into excel. Some of our team refuses to use Excel and still use those stapled papers flipping day by day making their collection calls.

[09:10] Beth Petrey:

And there was no consistency. We had again the ones that would use Excel and would probably also create their email template so they could use the same one over and over half the other staff or write the same emails every time typing the same words. So there was no consistency. How many days did you wait to collect? How many days did you wait to call that person again? There was no consistency at all among our entire staff. The only difference between the 1970s and the way we did. Collected our mature invoice where the ages were printed on reams of paper instead of the old green sheets. That’s the only difference. We had no improvements over probably 50 years and how we did our collection calls. And then we’d just dial for dollars. With digital transformation, we have a prioritized worklist and I don’t know if you’ve gone down and checked out the automation or the autonomous group but we have a worklist that we can work from. It prioritizes our customers by scoring the past two dollars percentage of past two dollars whichever bucket you want to choose from for aging you’ve sorted however you want. We can reach the low-risk customers that oftentimes were overlooked because the balance was just too small. You’re concentrating on the big dollars and the ones that are gonna make the difference for you. So this allowed our small dollars to receive automated emails from a HighRadius. We don’t even have to do anything to initiate it and we get paid a lot faster from those or we get paid altogether because they’re getting some sort of attention whereas. If you’re like anybody else you’re only going to go after those high dollars. Who cares about the hundred dollar balances some days when you’ve got millions to collect. And then we have corresponding templates. So besides the auto correspondence that automatically goes out, we have our set for a certain amount of days and in between, we ask our specialists to call. We also can send correspondents out. If we’re missing tax information or any kind of documentation that we require from them we can send it straight from HighRadius without having to type another email. It’s the same for everybody. Our HighRadius is set up so that each group of credits each credit specialist has their group or their markets so they are assigned to that market in HighRadius that automatically uploads to them and they’re working only their accounts. Sorry, I’m going too fast.

[12:04] Beth Petrey:

The collection cloud has helped our team focus on what they need to work on. How are they going to make the biggest impact on our AR dollars? We’ve reduced over 60 dollars. I can tell you by how much but a great deal because HighRadius has helped them focus on the areas that they needed to collect on. And they’ve become more efficient. The entire team works efficiently. Now that they’ve adopted HighRadius. I’ll go back to that and talk to that a little bit because I know that some asked questions about it. Did your team buy into the program when you first went on? Excuse me. And we did have resistance from a lot of ours. Veteran collectors going from paper to looking at a computer screen was some of the most difficult change that they had ever been through. Although we had an ERP system they did not collect out of that they would just pull up individual sheets and collect.

[13:10] Beth Petrey:

So getting them to buy in with our system was peer to peer. We had our specialists or experts on the subject matter. They were part of the implementation from the scoping to the testing to the rollout. So they were part of the entire process. And as they learned we were doing peer to peer training. So one of the credit specialists that was great in collections would train on collections somebody else that was best in making credit decisions trained the entire team on the credit decisions. So keeping them involved gave them ownership of the program. So that helped a little bit. Again only the experts were the most bought into the program when we first rolled out. It probably took us a year to get the rest of the team and it was just constantly asking them for what they researched what they found within HighRadius. The fact that they didn’t have to pull manual credit applications pull manual credit reports that were exciting for them but also a little worrisome. Everybody thought their job was on the line. If we just had to reassure them that we still need people.

[14:19] Beth Petrey:

Those machines can’t do everything for us. So. They eventually after about a year everybody bought into it and stayed on board. Onto our cash applications. We had a lockbox but we did not have any keystrokes which were more expensive than hiring our staff to do it. So we did everything manually once it came from the bank. We. Had to key in anything missing if we didn’t get a remit. We would also have to manually collect remittance calls for them. Everything was manual. Anything around hosting the cash. With digital transformation, we now get all of our ACH and our cheque payments go to our lockbox and then are downloaded straight to our system and our hit rate before exceptions before working the exceptions is about 60 to 70 percent. After our exceptions are worked within HighRadius before we push to our ERP is about 80 to 90 percent. So those exceptions are simple enough that our lock boxes are posted within an hour. So we have two cash applications people and. They have. We have. Changed some of their tasks and moved them to do some credit functions when they’re that way. Not. Part of the credit but they do some like trade references they invoice on portals. So we’ve moved the resources to be able to support credit a little bit more than just posting cash. We did not reduce our team at all. We did not reduce headcounts but we did allow our team to be more efficient, more successful and not leave three days worth of work on their desk waiting for them the next day. Some of the results that we’ve achieved by going digital using digital transformation is we’ve improved efficiency greatly. Just the amount of emails that are sent at one time that our credit specialists don’t have to type or touch. Has been a huge improvement in their abilities to dial for the dollars that are the difficult dollars to collect and work on.

[16:52] Beth Petrey:

Our DSO has dropped two-point nine days. As you know that’s not all just a car. So there are others. Other departments that. Affect that as well. But our DSO drop was pretty significant within the first six months of using HighRadius.
Does anybody have any questions about getting C-suite buy-in? I think most CFO CEOs are pretty forward-thinking and they want to keep up with technology. It’s just getting the right information in front of them and having that conversation. Doing some analytics with the cost. And kind of explaining to them. How weak we are seen in our company is non-revenue producing and how a non-revenue-producing department can be more efficient and save the company money. Many ways. But in this case, spending a little money helps them. Any questions before I go to my very last slide. OK.

[18:12] Beth Petrey:

I will be specific. We have two cash applications staff and then we have seven credit specialists. We did have a credit assistant who ran all of our credit applications or credit reports and did all the support. We have eliminated that position and added a credit specialist so that we did not reduce headcount. We just reallocated those people to be more efficient. So we have. Our staff has anywhere from about 10 to 18 million portfolios per month. So if that gives you an idea. We were able to kind of spread out the portfolio a little bit more.

[19:12] Beth Petrey:

Well. You. The invoiced hit rate is 60 to 70 percent. The 80 to 90 percent can match either a customer account or customer name. They might be able to move it to the account but the extra 10 to 20 to 30 percent are worked in HighRadius so that’s just a matter of the remnant couldn’t be read it wasn’t clear. They might use their P.O. number instead of their invoice number or something just. Just didn’t jive. So it’s usually simple. Fix.

[19:40] Audience:

So how much training did the team need and who did they get it from. Did you work in conjunction with HighRadius? Was the trainer a trainer and how do you know how that went?

[19:56] Beth Petrey:

We had at roll-out and implementation at the time we went live, or just before live or through live. We had a HighRadius associate with us from the development team so they were able to train. The subject matter expert who then trained the peers and he was there with us as well when training the peers. So it wasn’t you train one person and then that person goes train something that they know little about. We are still learning. You don’t get all the information you can in a three to four week period but it was a very easy transition during the implementation. I would say that the biggest hurdle was expecting it. And it’s still an implementation or working with I.T. that was probably the difficult part but we didn’t see any of that. So.
It does help to have that subject matter expert though you can get one person who knows credit, one person who knows collection and then one for cash apps and they can share their knowledge.

[20:56] Audience:

Hi. Regarding the credit card application were you able to take your credit card payments and do automatically the application to the embassies.

[21:07] Beth Petrey:

We don’t do credit card applications, ours is a credit application so we have credit applications online and then we have our job applications online. So we are. Where that exception is for credit cards where we only accept it if it’s the last. Option for us to use them. We are working. I did go to the credit card session earlier so that I can learn a little bit more. We just haven’t accepted that cost yet.

[21:41] Audience:

You were talking about your lean process and the job sheets. Is there a married software that HighRadius uses or a piece of their software that sends preliminary notices the client notices.

[21:55] Beth Petrey:

Good. I am going to talk about that just now. It just hit me. We are using some of the partners with HighRadius and one of them is not a partner yet but HighRadius is working on a partner. Can. Send your notices we’re trying to find a way to extract the information to that lean processing company so that they can send early notices every month they know what the balances are what’s passed you which jobs. Require early notice. So there’s a couple of partners we’re working with a third collection partner through HighRadius and it has been amazing. I’ve worked with. We just let go of other third-party collection agencies so that we can use them almost exclusively through HighRadius.

[22:46] Beth Petrey:

Anybody else. I’ll give you a cue. A few key points here. It’s easiest if you engage your people early. So that you can have them. As much involved as possible. From the beginning through the transition to the end. I think you get the most buy-in. Those subject matter experts were the two that bought into it the most. At this point, we’re considering doing training again. And switching it up so that the others that were not quite as knowledgeable now can be the trainer and train newer staff in it. I think that helps train the trainer. I love that. That option because it seems to put confidence in the person that didn’t have the competence to begin with and I think that’s where the issue lies just not having the confidence. We had to get through the Your job safely. We still need people, machines can’t make all the decisions, they can’t contact the customer. If we had we talked about at lunch if we let the machines do all of our jobs we’d have no customers to have the job for. They want a personal connection just like anyone else. Back to getting the buy-in. It helps if you align all of your objectives and establish the clear goals for this is why we’re going to digital transformation. This is what we intend to accomplish. How can we be successful? And then business first. Every decision that we made we put our customer’s needs first and that included our internal customers getting them trained to get them on board making them understand what it is that we were trying to accomplish as well. Sales. It was a little more difficult to get sales on board because it was a change for them. They don’t have time for a change they don’t have time for these documentations but when they learned that it was protecting their commission check as well it was helpful. So. That’s about it. Anybody else has anything.

[00:00] Beth Petrey: Hello, everyone. Welcome to improving overall efficiency using the credit collections and cash apps modules. I’m Beth Petry and the corporate credit manager for Summit Electric Supply, an electrical distributor out of Albuquerque New Mexico. We were founded in 1977. We provide electrical equipment and supplies to customers and we are ranked number 17th in the nation among electrical distributors. Going to go over our corporate challenges, when it comes to digital transformation and how we overcame some of those challenges. Our leadership team is very forward-thinking and they embrace the digital transformation and improving our technical world. The problem that we had was not that they weren’t on board, it was that they had no idea what was available to them or us. So in the past, we had leadership in our department. I didn’t even know what the department did daily or what would be needed to improve the department. So it took getting the right people in the right place and in front of our c suite team with the right product. The other option the other topics that we had to bring to them was the cost. That’s what most everybody looks at…

What you'll learn

  • Creating customized credit applications
  • Eradicate the traditional Account Prioritization techniques for faster Collections to prevent Aging
  • Improve Cash Flow and Reduce DSO by implementing an Automated Cash Application Process

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HighRadius Cash Application Software enables the end-to-end automation of the cash application process that covers major benefits such as AI-enabled data capture for remittances, auto-linking of payments with open invoices, cost-cutting on lockbox fees and easy compatibility with any system due to its ERP-agnostic Saas infrastructure. Apart from the major benefits that it has, there are some key features which can not be missed out, some of them are Email Remittance capture, Discounts and Deductions Handling, Check Remittance Capture, Web Remittance Capture, Invoice Matching, and RDC & Mobile Payments.