Our CFO’s objective was the reduction of Bad Debt by 20%, while the management wanted to maintain a similar ROI, with 2 FTEs retiring.
While most organizations have separate departments for Credit and Collections management, Staples had a unique approach of unifying both departments so that they functioned together. The objective behind this was to streamline workflow and make it more efficient. The reality was quite different, as the Staples credit and collections department was very unorganized. With a team consisting of just 12 people, 2 handling Cash Application & the rest managing Credit and Collections, work was extremely hectic. Their processes were manual, paper-based, and importantly, their older ERP system wasn’t supporting their workflow.
The work division across Staples had 7 collectors managing 900-1000 accounts on an average individually, with aging buckets ranging up to 1000 days and they had to gather information from 20 different Customer Portals. So they had a hard time focusing and tracking different accounts, leading to increased aging accounts, lack of visibility across accounts for the leadership. Collections for selective accounts had been outsourced, making it difficult to track their collection status.
Everything from aging to strategizing, prioritization to call notes were restricted to a paper. Their invoicing, collections, cash process was manual, paper-based. The aging reports, prioritization, call notes were all collected separately, on paper. The team spent about four-six hours a week handling multiple statements.
Adding to the trouble, their ERP system, AS 400, had limited capabilities. It made recovering the collections difficult. The sales team wasn’t getting updates on the different accounts, further deteriorating Staples’ relationship with customers.
Staples is The Work Life Fulfillment Company, helping businesses of all sizes be more productive, connected and inspired — however and wherever they work today. With dedicated account teams, category professionals, innovative brands and a curated product assortment for business, Staples provides customized solutions to help organizations achieve their goals.
Business Supplies and
The CFO of Staples wanted to bring down their bad debt by 20%, and also reduce their DSO.
Staples wanted to break away from manual correspondence with the help of automation to fix collection issues sooner than later. By digitizing the correspondence, the collection team’s workload reduces, allowing them to focus on high-risk accounts.
With the workforce retiring; the volume of different accounts increasing, Staples management was looking for a solution that could automate low-value tasks. They wanted to automate worklists prioritization and correspondence so they could have analysts focus on higher priority or strategic accounts. This would also help provide visibility of activity at high-risk and other customers to the management.
With the Collections Software implementation, Staples managed customer growth at no additional cost while reducing their bad debt. The collections team could focus on high-value tasks like managing customer relationships and tackling high-risk collections. With automation, they were able to:
HighRadius Collections software helped Staples automate dunning for the low-risk accounts; sending out personalized emails to different aging buckets such as 90 days+ and 60 days+ was easier. And within a matter of a few minutes, the system could trigger bulk correspondence. Subsequently, the high-risk accounts which required the collection team’s intervention were automatically prioritized in the collection worklist based on specific rules. This process enabled the collection analysts to spend more time on specific accounts, creating better customer relationships.
With digitization, the leadership could zoom into account-level details, and the new process provides better visibility to the management and relevant stakeholders on the receivables landscape. The built-in reporting functionality helped the leadership track various performance metrics like aging reports, DSO, collection effectiveness index, among others. These metrics help forecast week-over-week collections.
At the same time, Staples was also able to compare the KPIs of its collection team. How many collections were they able to achieve, where they would need to focus their efforts, and so on. The new workflow helped employees improve their productivity.