Standing up to be counted

There have been many different phrases coined in recent times to try and express the severity of the current economic recession. Only the BBC’s Robert Peston seems to have found the right words: “…this is no downturn like any we have seen since the Second World War….”

The impact of a recession is more keenly felt within the credit and collection world for several reasons: the role of cash collection itself gets tougher as the movement of cash slows and the risk of bad debt increases, whilst at the same time, internal pressure to control the cost of credit and collections activity also means that efficiencies must be found or productivity boosted.

Proving the value of the credit function
Headcount reduction within a credit and risk environment is disingenuous during a recession and probably the best example of false economy that I can think of. So how do you prove the value of the credit function during these tough times when pressed upon to do so?

To put it another way, there has never been a better time to definitively answer that sometimes-asked question: “So what does the collections team actually produce for the business?” However, is it enough to quote the usual responses to this question: effective cash flow; impact on working capital; improved DSO; mitigated risk; minimised bad debt etc? Wouldn’t it be great to be able to provide a definitive answer to this question by creating a revenue stream directly attributable to the collections team?

Inherent talent
Martin Kirby, AR manager for Bupa Health & Wellbeing (BHW) certainly thought so when, earlier in 2010, he decided to take a look at the generic core skills available to the business via the collections team and concluded that at the very epicentre of those skills was an inherent talent to “use verbal communication to control a conversation - with a fixed objective in mind”. He takes up the story:

“Core skills analysis is a useful exercise for identifying strengths and development needs across a team. However, consideration is seldom given to where else those skills may prove to be of benefit to the business. An almost ideal idiom might be ‘poacher turned gamekeeper’ (where revenue is the quarry) and I decided that the natural talents of the collections team were as equally suited to an outbound telesales role as they were to a collections role.

“After all, the collections team already have working relationships with the very same corporate customers to whom they would now be selling.

“It’s not that simple of course, as core skills always require refinement to the task at hand, and with this in mind, almost every member of the Bupa Health & Wellbeing AR teams undertook a series of short but focused training courses including product training; sales training; and operating system training (for the purposes of booking health assessments).

“This represented a steep learning curve for most team members and handily addressed another of those common areas that suffer during cost-conscious times: training.

“The people investment at managerial level was very significant as it has to be when driving a behavioural change and shifting paradigms. The enthusiasm of the team, however, to recognise their own core skills and especially their (potentially) increased value to the business (by cross-skilling) was immense.

“Naturally, core activities of billing, collections, dispute resolution and cash allocation could not be allowed to slide at the expense of making outbound calls for the purpose of securing health assessment bookings, so the teams were asked to undertake their normal roles with their usual diligence and effectiveness with outbound sales calls reserved as an evening overtime project.

Incentivised programmes
“This black belt project was incentivised on a risk and reward (commission) basis in order to maximise the opportunity and it took the team just three weeks to generate over a million pounds of B2B revenue – achieved by booking almost 2,800 health assessments,” said Martin.

At the time of writing, B2B revenues in excess of £2.5 million have been generated by the team in circa eight weeks. As Martin says, that’s quite a statement on behalf of a team made up of collectors, billing specialists, dispute administrators and cash allocators:

“After several weeks of booking B2B health assessments, the team settled into a regular routine of core activity during the day and outbound calls during early evening. During this time, individual ‘closing skills’ were discovered, developed and then finely honed to the point where the team was confident enough to take on B2C outbound calls (for the purposes of booking health assessments) in addition to B2B outbound calls and now, all B2C web leads generated via the Bupa website are dealt with by the BHW AR teams.”

The customer journey
Words such as “opportunity”, “conversion” and “sales lead” (seldom used within a traditional collections environment) became commonplace as did the celebratory “feel” of hitting a sales target with this positivity transferring back into the core function activities on a daily basis. The fringe benefits of this exercise, Martin identifies, are immense: “The AR teams now have a ‘wing to wing’ view of the entire customer journey from sales order generation to invoicing to collections and finally cash allocation – in fact the full credit cycle. What a great ‘Know your Customer’ statement!”

Relationships with corporate customers now exist on many levels, with the AR team interacting at every single level within a customer organisation – instead of just the traditional finance-to-finance team relationship.

Networking opportunities within a customer organisation are greatly improved as a result of the booking project – creating effective levers that can be utilised where escalation on payment issues may be required.

Using available knowledge
The AR teams’ knowledge of the BHW business is also significantly improved as a result of their multi-faceted relationship with the corporate customer and this has enabled the teams to respond more quickly and effectively to invoicing disputes by using new knowledge they have gained.

Furthermore, the number of errors made at the time of booking a health assessment (such as PO number for example) have reduced as the AR team fully appreciate the need for accurate data entry into the operational booking system and are acutely aware (from an invoicing perspective) of the impact of failing to capture all relevant information at the time of booking.

As Martin concludes: “The team’s success has been acknowledged at director level within the BHW organisation and on an individual level, all members of the AR team are better able to leverage internal career opportunities – well able to champion the newly developed skills they have gained with agility and flexibility at the forefront of those transferrable skills.”

So “what does the collections team actually produce for the business?” is a question no longer asked of all those working in the healthcare business – even in these economically challenging times.

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