Good morning. You guys. Hear me out there? We’re good. No feedback. That’s good. That’s good. Good. We got some hecklers here. So we’ll do quick introductions. I showed up today. I thought we were doing the Three Stooges parody, but they told me they were presenting instead and said so I’m sorry. Unfortunately, you won’t get to see what we had planned. So just to give you a little bit of background, I am Joseph grass. I’ve been at DXP. I joined them in October of 2019. I came from a prior company. And one of the main reasons I was brought in was to basically take my background, so I’m actually a six sigma manager. So I’ve been doing Process Management, lean process management for close to 20 years now. And basically came into a situation where we didn’t have a lot of automation or processes. Everything was very manual. So okay. And then
Chason Dancer :
I’m Chason Dancer, and a credit manager. I joined in March of 2020. Pretty much showed up at an empty office at that time, but it’s been exciting ever since. Yeah.
My name is Steven Griebe, cash applications manager. I joined in February of 2020. And doing credit collections and cash applications for about 20+ years. Yeah.
Joseph Grass :
So. Okay, so give you a little bit of background on DXP and who we are. So our company is about 113 years old. So we’re, we’re up there in age. We were founded as a Southern engine and pump company in 1908. We rebranded somewhere around 1996 as DXP enterprises, and then we’ve just pursued a path of growth ever since then. We’re a very acquisition heavy company, we’ve probably bought 100 plus companies in the last 15 years alone. We just recently closed on an acquisition out of Tampa. So people always ask us, you know, what’s your endgame which is in the market? Well, we don’t really target a specific market. DXP goes to market through three different very specific silos. We have our service centre business, which is your brick and mortar store. We still at heart, do industrial distribution to all in markets. We also have our innovative pumping solution side. And then we have supply chain services. So some of our customers include Coca Cola, Boeing, Chevron, so it runs the whole gamut from small mom and pops all the way to big conglomerate companies. So, okay, we’re publicly traded. And we are headquartered here in Houston, Texas. On the northwest side, we’re about 2600 employees strong across the US, Canada, and the Middle East. So we have operations in Saudi and also in the UAE. So, okay, good.
Sorry.No, go back.One up.We’re a little technical challenge here. Okay. It’s not working. Yeah, they’ll fix it. Well, I’ll keep going. Our slides are not changing for some reason. So kind of talk about where we are. So give you guys some background, we actually are in the middle of a four product implementation right now with HighRadius. So when I joined and started kind of building an assessment of what we needed, and where our deficiencies were, one of the big things that stood out to me was, there we go, that we had a huge opportunity in the cash gap. So you know, outside of staffing issues, we saw a big opportunity to automate our collections, and our cash posting process. So on estimate, it was about a $30 million monthly gap that we had, and then, you know, we dove into some of the process efficiencies, and looking at where we could not only improve the processes internally for how we work, but be able to build some efficiencies for some other initiatives that we had going on internal at the time.
So I think we got a poll question. So what is the most important aspect of a vendor that you would evaluate for a finance transformation project? Those four choices?
Give everybody a second.Okay.Awesome.Okay. Yeah.All right.
So moving on. A lot of folks ask us why HighRadius . So I’ve worked with different systems over my career. And one of the things that was important to me was an already well established relationship. So I had a prior relationship with HighRadius. And so I kind of knew the ins and outs of who they were and what they were about, and what their capabilities were, my team was very familiar with them. So it was a very easy decision for us. And then the other key point for us as a company, was the fact that HighRadius has their own in-house implementation team. So you’re not going out having to hire a third party implementation partner to do that build design and roll out, they have people that were very technical, very knowledgeable, and were able to really dive in and understand some of the idiosyncrasies and complications of how we do business today at DXP. So two very important things. So looking at our timeline, it happened kind of fast, it feels kind of fast for us. So in February of last year, we went to radiance, in Dallas. So we got to see a kind of a snapshot of a lot of the new product enhancements that high radius had come out with. And so that really got us thinking internally, like how could we leverage some of this stuff, to help us achieve the targets that we had long term as a company, you have to also know that DXP has made the decision to centralize all of our accounting functions to our headquarters in Houston. So I’m actually functionally responsible for all worldwide credit and collections now. We have operations in Canada, and we’re going to be scoping in Canada as well. So we wanted a partner that would be able to understand that and, and be able to get us across the finish line with what we were trying to do. Somewhere around May, we were doing product demos of all the different products. In The June timeline, they presented a business case for us, when they presented that it was presented to all of us, including our CFO, our CIO. So we had all hands on board for those discussions and they By September, we actually did a referral meeting. So one of the guys that’s actually presenting today, Brian Lampkin with hntb. He was our referral on the Treasury side. So and then we signed contracts at the end of that month, and we went kind of with the Big Bang approach. So, we were in the process of deploying collections, Cloud EIPP, which is the electronic invoice presentment, and payment, cash apps cloud, cash forecasting cloud, we actually started in advance, it was one of those products that we we would be able to kind of start on the back end, because there’s a lot of interaction and connection with our bank, Bank of America. And actually, our Treasurer Bobby Kadena is here today. And she’ll be presenting, I think, this afternoon, already at 1/3. On that experience, so. Okay.
So kind of an overview on our project timeline. This looks really busy. You know, I wrote some notes here. So we actually slated on the low in 19 weeks to deploy all four products, okay. And then at the high end, 35 weeks. So, when you think about that, that seems like a long time to take to deploy. But there’s a lot of complications with our piece of the business, especially on our supply chain side and how we do billing, cash application side and how our customers pay us. And we’re also in profit 21. A lot of companies these days use Oracle, SAP, we have the dynamic of using P21. And then for our manufacturing business, we use sightline. So we have two different ERPs that have their own set of challenges. So this is pretty standard for a HighRadius implementation. And in the next slide will kind of illustrate that everything is staggered. So this is a great snapshot of our actual project timeline, it looks kind of busy. But you can kind of see that the collection cloud and the cash apps cloud, which we started almost at the same exact time,you know, kind of kicked off in June. And they really kind of lay over each other. And so we have to be very cognizant on our side, because we have a challenge of having a very small internal IT support team that has to handle a lot of the heavy lifting on our end to get data to HighRadius. So if we don’t stay on target with these weekly milestones, it can cause us to kind of slip into no man’s land. And we ended up being delayed in some ways on one of our one of our UI deployments, so Okay, so people are always asking, you know, why did you guys go with four products? Why didn’t you do it the normal way and just start with cash apps or start with collections? You know, really, we did think about that. But when we looked at it holistically and how our business model looks and what we were trying to accomplish, it just seemed like the right approach. You know, one of the things that I have to go back to is sometime around the end of August last year, DXP was actually a ransom attack, you guys might have seen it in the news, it was on Yahoo Finance. And so the rest, the Russians got us. And it really caused us to take a big pause in our business. And it put us in a standstill for a very short period of time. And we thought, Well, if we had this holistic approach to managing, you know, the AR side, we wouldn’t have been as impacted as much. And so that was one of the major deciding factors. Because that whole event caused DXP to take a step back. And we had to really take a second look at how we handle things like our IT security and security around our ERP system and so forth in had we had a cloud solution in place at the time, it probably wouldn’t, it would have had a lesser impact on our business.
So and on top of that, it really aligns with our business model has a heavy acquisition company, at times our AR is going faster than we can actually hire for to maintain and so some of the automation we’re getting, will help us close that gap and give us the time to get the right fit of employees in there. And it really accelerates it’s going to accelerate our cash applications, increase our cash flow to help us acquire more companies. So that’s a big game changer for us. Joseph Grass – Absolutely. So go back one expectation from HighRadius. So for us, you know the conversations around Single Sign On and sock one and sock two were very important to us for obvious reasons due to what happened. And so HighRadius made it really easy for us to align in that area, our CIO and our VP of IT, they’re very security focused. And so it was a great fit to be able to work with an organization that respected what we were trying to accomplish from the network security side and application security side. And it just kind of fit from that single sign on because everything we do now at DXP is centred around single sign on. And then also, you know, the ERP side, it was great to have somebody that was a partner with us in integrating that system feeding into our ERP. So with the cash applications cloud, there weren’t too many vendors out there that could assure us that when we get our application files feeding back into our system, that it would actually clear the receivables the way that we needed it to, or the way it was designed to. And, and that was one of the things that was really important for us.
Chason Dancer :
So four times a day, our ageing is getting updated as these applications occur. So we’re collecting in real time.
Joseph Grass :
Okay, so how do we work together? So these projects, they’re not for the faint of heart, especially when you take on product solutions at one time. So our days usually start with 9am calls with India, pretty much every day, we have daily projects or daily or weekly project meetings, it varies. We have a steering committee call, which is to kind of just make sure that we’re all heading down the same path. And then some of the tools that HighRadius has put in place for us is, you know, we have a really, as you saw a well defined project plan, we have a raid log that kind of captures any risks or actions or issues, decisions change log, if we’re, you know, we’ve had to make some changes on demand and then defects. You know, I would suspect that once we go live, or we’ve finalised testing on some of these, we’ll be able to capture any areas of deficiencies.
So how HighRadius is supporting us. One of the things I could say is they took a lot of time really trying to understand DXP and what we do, we’re a complicated business, because we’re not an industrial distributor, we’re not just a pump manufacturer, we don’t just do skid building, we are a lot of things to a lot of different in markets. And so the HighRadius team really took the time to dig in and understand our business. And one of the things that was key to us is they had expertise and profit 21. It’s hard to find people that have expertise in your ERP if you have an ERP that’s not commonly used. And they have the right people assigned to our project that understand how the data flows in and out and how it’s supposed to work.
Chason Dancer :
So as far as getting to know DXP are as is a segment, to kick it off was so thorough that I was just telling Aaron that I think that a number of high radius folks could step in and work for DXP, because they know what our needs are, how we work and what we need to do on a day to day basis. So that’s been a real thing that really stuck out.
Joseph Grass :
So some challenges that we’ve had. So one of the big issues for us is our days start early, because our project team is actually on the other side of the world. So they’re 10 and a half hours ahead of us. So while we’re on calls at nine o’clock and complaining, sometimes they’re over there on calls with us at eight o’clock 9:30 at night, you know, depending on how long these calls go. But it’s not that big of a deal. It’s been kind of great. And we built a really great report with that team. Our internal resources, as I said early earlier on where they were somewhat spread thin. So that can be challenging, because, you know, when I think about what’s important to me and my piece of the business, well, there’s other areas of the business that have that same level of importance, and we’re all pulling at our internal IT team at the same time to try to get things done. So and then staying on course, you know, we we really have to we have to check ourselves as an organization to make sure that we’re, you know, when were tasked with doing something by HighRadius, that we’re we’re trying to fulfil that task or get data back to them or whatever that specific thing is. So we don’t lose traction in our project timeline. So a little bit of results. So recently a few weeks ago, we walked through, we did kind of like an up and run of our cash applications tool. And I was really pleasantly surprised. So out of the gate, we hit 76% posting rate in one test. And I was actually expecting much lower numbers, I had already set my CFOs expectation that we’d probably come in somewhere around 60 to 65%. Just because I knew how complicated our process was with how our customers pay. So I was really knocked out of the park. For us, I was really impressed. Steve, our cash manager, I think he was kind of blown away when we saw this. And, you know, I’m one of those guys that I tried to, you know, under deliver and it or, you know, set the expectation low, and then knock it out of the park. And we’re, you know, we set it at 75 to 80%. Overall, once we go live, but honestly, I really think we’re going to be probably closer to 85 to 90%, out of the gate. So we’ve been really, really happy with that. So and by the way, that’s a big cost savings to us, too. We don’t have a large cash applications team, but we feel that their energy and focus needs to be on managing exception type work, and that’ll be a big area of savings for us.
So final comments from us. You know, I would just say that if you’re looking at doing something at the scale, that we did it, build strong collaboration with whoever you use, you know, whoever your project team folks are, just make sure you have that strong collaboration, and you take the time to get to know them as much as they take the time to get to know you guys. Make sure that you keep your sales partner plugged in. So we had a HighRadius sales rep from the beginning that we got connected with and, you know, even to this day, and we have a whole project team supporting us on a grand scale. But Lee has always been there when I have an issue or I just want to bounce something off of, you know, some idea or some thought she’s always a phone call away. And she’s stayed on top of things, she’s really gotten connected with the project team on the back end. And one of the things I found out recently, she’s been getting like a weekly report of how well our projects are going because she likes to, to be able to stay connected to make sure that she can get in front of stuff on the front end. And one of the things that’s very key is to be realistic, right. Whatever goals you set for your project, or the implementation or your process improvement within your organization, you know, make sure they’re smart goals and centre everything around that. And for us, that’s translated into my project theme. And when I came into DXP, I centred our whole AR transformation around three very key points, which were people, process and performance. And all three of those areas. When you think about it, you have to have the right people to do the job. And you have to have the right processes in place to allow them to do their job efficiently. And if you do that, it’s going to ultimately affect the performance of whatever you’re trying to achieve. And target.
So anyway, that’s it, q&a. Questions, comments? Got one.
So Where exactly are you in the process ? Are you 50% 75% ?
Joseph Grass :
Yeah, so Bobby is here on the Treasury side. I think they’re probably about 75%. Yeah. Okay. So for us, we’re about we’re actually in the build phase of the collection cloud. And we’re moving into the testing phase of cash applications. August 30th. And then we just started EIPP. Last week, which was this session so that’s very, that’s the data gathering and, and you know, trying to figure out what we need and how we need to look so right now. So we’re really excited. We’re really starting to see things start to happen. So good question. What else?
Questioner (2) :
Hey, Joseph, when you went into this, what target did you set cash apps?
Joseph Grass :
Originally, we set it at about 60%. So yeah. Low expectation over delivery. That’s my motto.
So it does have a question on it. You said DXP is a M&A company buying a lot of companies, are you first integrating them into your ERP, then into HighRadius? Because we have that issue a lot. And that’s Yeah.
Joseph Grass :
Great, great question. And, but I see Bobby’s frown up there in the audience because as a treasurer, it’s frustrating for her but so a lot of the companies that we buy and we targeted a lot of, you’ll see our last probably five or six acquisitions barring the one in Tampa recently was wastewater management company, most of them are centred around our innovating pumping side, we have a very strong, you know, pump business and we compete. So what you find with those M&A is, those companies tend to be smaller, and they tend to be in all kinds of crazy systems. So initially, DXP stance, this was prior to me and my team coming, they would let those conversions wait to happen for a while. But what we’re now seeing is we’ve decided to take this approach of, let’s just try to onboard them as quickly as we can. And so we’ve been integrating them faster into our main ERP so fast that we bought some companies at the beginning of the year and we literally within a week, integrated one of them right away. So we just find that it’s better because we’re trying to centralise everything into kind of that, you know, one vision for how we do business. It’s easier to do that. For us. I think it’s a lot more work on the back end, and it’s a little bit more challenging, just because you’re going from their mindset to the DXP culture. But what you find is you’re able to centralise things and build consistency around how we apply cash, how we collect, how we manage credit applications, and how, Treasury handles the cash for the company. So yeah.Good question.Okay, good. That’s our time, guys. Thank you. And we’ll be around if you guys want to stop us.