John Kogan
Hi there, this is John Kogan. I’m the CFO of Armanino. And I’m here to tell you a bit about our journey on the path of growth and accounts receivable audit bench. All right, well, we’re here to talk about how Armanino needed some help on our path to growth, we need some help scaling, and how we got that help from our partners at a Highradius, which led to not only our ability to continue scaling at the rate we have been for the last decade or so, but also significantly increasing our AR and collections team productivity. A little bit about Armanino. We’re the 19th largest audit tax and consulting firm in the US. We have over 7000 clients that we serve in over 100 countries. And we’re very happy about the fact that we’ve earned a 72 Net Promoter Score just last year, and that’s over three times the industry average, we do that through providing great service to our client’s partner, which we’re going to be talking about tonight, because yes, accounts receivable is part of great service. And that’s something we care deeply about. Our Mannino is a unique firm, our goal is to be the most innovative and entrepreneurial firm and have a positive impact on the lives of our clients, and our people in our communities, we really take that to heart and everything that we do. We’ve been fortunate to have been recognized by a number of different organizations that follow our industry, and like to think we work hard every day. And certainly, our processes and our technology are core to our success in delivering for our clients. So today, we’re going to talk a bit about our journey, as I noted, the challenges of the recording business, how we had to automate to survive because we’re just getting crushed by the volume of work, and the challenges and efficiency of our work processes. We’ll talk a little bit about our AR landscape, how we did AR here pre-automation, and then talk about the transformation to automation and using a high radius. And then we’ll take a look at our results. So without further ado, let’s go ahead and jump in. Well, we’ve been growing very quickly, as an organization, massively, actually, we’ve been one of the top performing firms each year for the better part of the last two decades. And that has caused significant challenges. As you might imagine, Legacy processes were highly manual, they were built for a much smaller entity. And as we grew and grew, we clearly were outgrowing many of these processes, they’re slowing us down. They were causing issues for us that were economic issues. But beyond that, they’re customer issues, because our internal operations absolutely and directly impact how our clients perceive us. And we have some direct interactions with our clients around AR. And it’s just a very high visibility area. And we’re a partnership organization. And we have many partners. And believe me, when there are errors in accounts receivable, they’re not happy about that. So manual processes don’t do very well in a rapid growth environment. So this was a challenge for us. We were reaching the point where it wasn’t working very well to just add people anymore. So we genuinely had to step back, reassess what we were doing, and find a better one. So, you know, at this point in our life we had a decision to make, do we hire more people to handle more volume? Or do we invest in automation? Now, we’re a firm that helps other companies invest in automation and make it work for them. So of course, we’re going to look to automation to help ourselves. Now, we were growing very quickly, every few years, we were doubling. And we’ve been doing that for quite a while. So we had seen some significant scalability challenges. And, and as we look into the future, those weren’t going to get any easier. I mean, this is a great problem to have, but it’s a problem nonetheless. So we had to ask ourselves, How can we drive efficiency through all of our processes across accounts receivable.
John Kogan
And our challenge at its core was at the rapid expense engine was costing us a lot of money, increasing our overheads and it was having an impact on clients that were not favorable if and when we would make mistakes. And we were making more mistakes. Because when you bury people in a volume that they will be buried in complexity increases and errors increased. So, you know, what was our landscape? How did it look when, before we were doing the automation, we had to lockboxes, we had a lot of key in fees? So that’s when our lockbox provider was manually keying in missing data, which by the way, we would still find errors there. But anyway, high key in fees, we had multiple payment methods, but they were very separated from one another and didn’t sort of play well together in the eyes of our clients. And then we had no integration between our billing and ERP systems. So that was causing all sorts of manual challenges when it comes to simply the debits and credits and getting our transaction process done, internal. And we had imperfect client remittance information coming in from our lockbox providers. And this led to lower electric productivity because we spent a lot of time managing data. Every time we had to touch something, we slow it down every time we had to touch something, it was an opportunity for errors to creep in. So this was a really tough spot for us to be in. And what we were seeing was not only was there a rising number of invoices, but as our business grew, we had more complex clients, and clients who a single client would pay us through multiple methods that were coming in from multiple lockboxes, it was simply a highly complex, intensifying environment. So it wasn’t going to get better for us it was getting worse pretty quickly. So we took that step back, we asked ourselves, you know, what’s the right path forward? Here, it was clear to go digital. And we looked at a number of different solutions, we looked at creating a solution ourselves, since we create some solutions for our clients, as it is, but if there’s something reliable, that is tested and has a dedicated team behind it, that was really our preference for who to go to. So, you know, as we were looking at our digital transformation, of course, we did what you know, any good process focused company, we do when it comes to technology, which is you look at what you currently do, and you find the challenges that you’re dealing with. And then you look for solutions that can respond to those challenges. So here are a number of our challenges. This is a breakdown at a high level of our process. It was a completely manual process. First, we would aggregate our remittance data, we were key in missing data. And there was very frequently missing data. And we would go through manual matching of payments, which was fraught with all sorts of error, especially when your client count is as high as ours. And, of course, many copies of much larger client count than ours, but it’s highly complex. And the matching is just absolutely ripe for all sorts of challenges and mismatching. And we were coding manually, deductions and credits. And so also a big challenge, tracking those, understanding what the right codes are already used, and making sure they’re used consistently. And then we would post the ERP. So every one of these steps was slow and painful. And there was the possibility of error
John Kogan
the introduction along the way. And this point is really critical. Our folks never got a break to do anything other than tactical work. So even if we wanted to attack certain parts of this process, analyze them, and improve them, it was virtually impossible to get the space, the time away from doing the processes to actually look at all over and be strategic about how we can improve the process. So when we’re kind of caught up in a little bit, it was tough to move that look so that really helped drive us to our automated solution. So for me here, you know, we understood our core challenges. And we were looking for technology that there really is scratch each one of these issues here. Number one, automated Rubin’s aggregation, so that we can see everything from every client every remittance in a way that made sense to us in our collectors so that we can have one unified view of our witnesses. We were looking for automated Customer Identification. As anyone who deals with this at scale knows Customer Identification is not nearly as trivial as it sounds. There are lots of clients with similar names or one client that might go by multiple names, honestly, it’s incredibly complex and annoying for folks and time consuming to figure out, we’re looking for the automated deduction, coding, something that was sort of set and forget, by clients. So our folks wouldn’t have to continue to look back into history and make sure they’re using their codes for particular clients. And we wanted to get out of this email purgatory, where we would spend a lot of our time communicating internally amongst our team, or going to the partners asking questions, you know, more clients. You know, we were having to ask a lot of questions about things that nobody wanted to take the time to answer. And heck, we didn’t want to ask the questions, but we were forced to, based on the manual processes that we had in place, so the whole thing just kind of didn’t work. But we had a fairly good understanding of where it didn’t work. Now, the little bit more about the day, in a day, in the life of the collector, a lot of time was spent on this manual correspondence, and we really broke down a process, looking at how much time folks are spending and how they were going about their day. So there are hours a day email back and forth. There was no prioritization of their tasks or no real prioritization, we really couldn’t see much beyond what was directly in front of our faces at that time. So folks would handle things essentially, as they came in. And, you know, we had lots of interrupts so, you know, we’ve got to send an email to the client’s pause, put something to decide, remember to come back to it later, you know, talk about introducing the stakes was highly inefficient, challenging. So you know, even reminding ourselves that there were processes that had been interrupted and that we needed to pick back up was a significant challenge. And then we had no centralized way of tracking all of this. So each collector was essentially minding their own business and tracking things in a variety of ways from keeping lists and Outlook tasks to sticky notes on their computers. So the whole thing was, was a bit of a mess. So let’s talk about automating collections. This customer segmentation is really important for us. It helps us understand who we should be focused on, you know, there are high-risk and low-risk clients or clients with whom we have a long history or know history. So, you know, the system that we’ve moved to with a high radius has really helped us better understand what’s important to handle and what isn’t. And that helps us move prioritization.
John Kogan
So, prioritize worklist, this really helps us and the managers of our collection organization, you know, direct tasks, I mean, it takes almost as long to understand a $20 invoice as it does a $200,000 invoice actually, it might take longer, it depends on the invoice. But using a Highradius, we were able to prioritize what matters based on the clients and their history and also simply based on our appearance. So we went from randomized to a highly streamlined, great understanding of what we’re attacking when walking. Automated Dunning was huge. So getting out and writing customized emails to folks or even remembering that we had to do that. So now, this is a core part of our process. It’s definitely helped us scale definitely helped us become more effective at collection So far more automated. So that has been wonderful. We now don’t have extensive human touches on any collections until it’s already gone through a few automated steps. So we’ve made life much easier for us and dramatically reduce the number of touches in the process. And we also leverage the self-service portal for clients, they can now answer a lot more questions for themselves, whereas they used to have to contact us with every question that they had around any invoice, which was also a productivity killer. So that’s also taken a great chunk of our number of touches and processes out and allowed us to focus on what matters. And the results of all of this have been pretty stunning. Number one, we process way faster than we’re used to. So just takes us two days, beginning to end of the process for a typical receivable. And, you know, that would run anywhere from minutes at best two weeks as we were running things down with certain clients. So that’s dramatically reduced the amount of time for the cash process, and it’s been wonderful. It’s increased the timeliness of cash applications. That was a big bugaboo for the folks on the business side here. You know, we would, we would tell them that we hadn’t seen the cash payment yet, from a client, they would call the client, the client would tell them that they hadn’t fact paid. And we just hadn’t run it through our systems yet, or it was in a lockbox somewhere or out of the lockbox, and in our process, but we had no visibility to it. So that was really frustrating. That was actually one of the largest sources of complaints from across our organization was, hey, the customers paid. And, you know, they actually sent me an email of, you know, the ACH confirmation, or here’s a picture of the check, you know, clearing through their bank, why don’t we show it in our systems. So that was a great source of frustration, which we’ve cut down on dramatic and 75% increase in overall collective productivity, we can do more per collector. And that’s not even the best part of it is that they’re working on things that are more important to higher dollar value, and far greater dollar volume running through our process now than ever before. And it’s being done far more automatically. So that’s been just a series of waves for us, we have an over 70%, invoice match rate. So we simply don’t touch the majority of our payments. It’s an incredible thing. And as you can imagine, anytime we take touches out of our process, we’re saving. So this just dramatically, not only reduces errors but speeds up the processes. And the integration of our systems has been a little bit of magic here, directly connecting high radius to our ERP system, Sage intact, has once again just dramatically reduced, the time involved and also the introduction or the error. So that’s been a real set of wins for us and adds value in addition to the pickup of speed and productivity.
John Kogan
So that’s a quick run through our story. We started off very manually, with an increasing series of challenges around our accounts receivable. And it was becoming an intractable set of challenges. And we’re where we are today is highly efficient, highly automated, lower costs to process, higher speed, fewer errors, fewer complaints from both clients, and internal complaints from our partners and those who are serving clients. So the entire thing has been a win for us. And, you know, going through that process of understanding where our gaps were, and working with a great partner in Highradius throughout has just been fantastic for us. So that I guess is the medium short story. So with that. Okay, well, I want to thank you for listening. I hope our story will help you out if any of you recognize yourselves in our sort of before automation case, we are very happy with where we’ve gotten. It’s really great to use the technology behind radius AR automation. And we’re strongly, highly recommended for folks who are in that scaling situation. Need help? That was a great way to go for us. And so, thanks again for listening all the best and great
John Kogan
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