So Your Software or Automation Initiative Has Been Approved, What Do I Do Now?, by Robert S. Shultz

Define the Project Purpose and Scope? It is Not all about the Technology

Any software or automation improvement addresses defined business objectives that impact multiple areas within the company. In order to pull off these changes effectively all stakeholders affected should be aware of and involved in the coming changes. Depending on the project and the company, the target audience may differ. As an example: You can’t consider changes in credit and collection software without involving such areas as sales, customer service/order administration, project managers, operations and IT, while keeping senior management informed. Every project has a defined mission that requires cross-functional buy in. Realistic objectives and timelines have to be agreed to. Roles have to be defined.

This takes planning and cross-functional communication. If you are heading the implementation team you will need a clear vision on how the changes will support company goals and performance expectations. Processes, policies and procedures may need changes and streamlining to best leverage the new tools.

Ready Fire Aim… Don’t get bogged down with long term major system implementations. They are hopes and dreams.

A solution provider will have to be vetted that meets your company’s requirements. This will involve a well thought out selection process where both you and the provider understand each other’s business needs, strengths and weaknesses. You will need a basis for your selection. Try to make this as objective as possible, looking at each potential provider with the same criteria. A well rounded score card that lists and weights your critical needs. The selection process should provide all the stakeholders involved an opportunity to participate. If you get buy in at this stage, there will be much less push back later.

No system is perfect or addresses all the needs of all the users. Often it is best to reduce expectations in order to actually get the basics in a reasonable time-frame. Credit and collections are tactical issues: The needs are immediate and have to be addressed today. Complex ERP implementations are strategic in nature. By the time the specialized needs of a Credit Manager are addressed, too much time is lost, the department fails to gain efficiency and results have not improved.

Making the Choice Between an ERP and a Specialized Solution

ERP solutions are robust and have many company-wide advantages. They are also complex, expensive and have long implementation cycles. Let’s face facts. Credit Departments typically have fewer headcount that other areas supported by an ERP. The value in spending research and development dollars for a minimal number of users isn’t in the cards.

Companies specializing in credit and collection software, billing automation, document management and cash administration, address the issues you are trying to resolve on a full-time basis. Credit and collections is not an after-thought, it is their market and revenue stream. They continually focus on user needs and spend R&D dollars to improve their product. Many have user groups you can participate in, that have a real impact on the next release. Implementations are easier and of shorter duration. Cloud based solutions require minimal use of your internal IT resources. Costs are surprisingly low.

Many are faced with this obstacle, “Oh we are putting in or upgrading our ERP next year. It will do fine for you. We don’t want to do any other projects in this area until after the ERP is up and running. We are going to implement the ERP straight vanilla. Anything you need will be in Phase 2 (i.e.: Never)” If that is the case, push hard for incremental improvements and results in a relatively short time-frame.

A Credit Manager has a strong position. You should illustrate a good return on the investment. Show how other departments and most importantly, your customers will benefit. An interim fix with a decent ROI will pay for itself before the ERP initiative is complete.

When the day comes and the ERP vs an interim solution is looming, do a gap analysis between the interim solution and the ERP. You are likely to be surprised by what you already have.

At the upcoming CreditScape Summit and Annual Meeting, you will be able to discuss how to choose a solution provider. Expert Panelists will give you insight on their experiences, victories and losses. You will have ample time to ask questions and network with others who are, or who have faced, the same technology challenges you have. This is definitely a good use of your time.

CreditScape
This is just a surface view of what it takes to convince management an automation initiative should be approved. Each of these points and more will be discussed in-depth at the upcoming CreditScape meeting in Newport Beach, CA on March 24-25 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Robert S. Shultz is a Partner at Quote to Cash Solutions (Q2C) LLC. He will also be moderating several of the panel discussions and workshops at CreditScape.

Read the other posts in this series here:

Justifying Credit and Collections Automation to Your Management, by Robert S. Shultz

Today’s Business Reality:

In today’s rough and tumble business environment the need for expense management, working capital and liquidity are key CEO and CFO concerns. Gone are the days of ready access to financing and smooth collection of accounts receivables. Timely management information must be available showing how the business is doing and where the opportunities for improvement are. More than ever companies must increase the productivity of limited order to cash management and staff. All this must be delivered with maximum customer service and satisfaction.

Companies must be able to extend credit intelligently, generate accurate and timely invoices, and quickly identify and correct customer disputes. Management needs to track performance metrics, trends and customer issues. Companies that do these things well are in a position to shorten their overall cash conversion cycle, reduce the need for borrowing and bring a company the liquidity it needs to survive and thrive.

There are many cost effective automation solutions in the marketplace focused on these issues. Many of these are cloud based. This simplifies implementation and few internal IT resources are needed. Even though the costs are relatively low, the functionality is amazing. Credit and other financial managers will find that the first hurdle is to convince management the suggested solution meets the acid test. They have to answer the question, “Show me the Return on Investment” (ROI).

Where to Start
The first step for a credit manager is to determine when volumes and performance challenges justify automation and the expense of a solution. The solution could be developed internally or acquired from a third party provider. The cost and likelihood of success with an internal option really depends on the resources available in the company.

Following are ten things to consider that fit any automation initiative. The following is not intended to be a complete list. It covers the key points you may include in a recommendation to senior management.

How would you answer the following question: What are the Compelling Needs for Automation?

In order to convince management to invest in any automation you must demonstrate the need in clear, real world and understandable terms. Here are ten things to consider:

  1. Is excessive overtime a routine in the department? Are you using temps to supplement permanent staff?
  2. If you benchmark Full Time Equivalents (FTEs) transaction volume is yours is low by comparison?
  3. Is your company growing, merging or acquiring but you are not able to hire additional staff for your department?
  4. Is Sales continually upset that credit reviews take too long? Is business lost as a result?
  5. Are collection results below expectations?
  6. Is your department stuck in a morass of unworked deductions?
  7. Are invoices often inaccurate or go out late?
  8. Are Sales and Customers impacted by order hold and release delays?
  9. Is management unsatisfied with performance measurements, reporting and the ability to status Customer balances?
  10. Is it impossible to accurately forecast cash flow?

As you can see if any or all of these factors are in play you will get the attention of your management with opportunities for significant improvements.

Where is the Money!
Soft savings such as process efficiency or improved customer service can help justify expenditures for automation. Actual hard cost savings will enable you to calculate the “ROI” and how long it will take to get there.

You should consider such things as:

  1. An increase in transactions per FTE will reduce the need for overtime, temps or permanent staff.
  2. Based on forecasted company and transaction growth automation will reduce the need to add staff.
  3. Automation of the credit approval and review process will speed decisions, avoid lost business and could reduce past dues and write-offs.
  4. Increased collection efficiency will bring in cash earlier, reducing borrowing costs, enabling the company to take all Accounts Payable discounts, provide working capital to invest in profitable opportunities.
  5. Timely or self-service invoicing will reduce invoicing delays, identify errors earlier and optimize the payment cycle.
  6. Cash administration/application improvements will identify customer payments earlier, avoiding unnecessary collection expense and speeding up the order hold release process, improving revenue and profits.

 

This is just a surface view of what it takes to convince management an automation initiative should be approved. Each of these points and more will be discussed in-depth at the upcoming CreditScape Summit and Annual meeting in Newport Beach, CA on March 24-25 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Robert S. Shultz is a Partner at Quote to Cash Solutions (Q2C) LLC. He will also be moderating several of the panel discussions and workshops at CreditScape.

Read the other posts in this series here: