Success Story - How Employer Flexible Leverages Cash Forecasting Insights for Strategic Mergers and Acquisitions

Raymond Dobrosky 00:05
Well, appreciate everybody coming here. And it’s always tough right after lunch. Keep everyone’s attention, but we’ll do the best we can and make it free form. We’ve gone through, have an idea of what it is we want to talk about during the presentation so we look forward. Any questions you may y’all may have at the end. So we wanted to talk about forecasting and our we’re into a growth mode now within our organization. And within that growth mode is managing our cash with the ultimate goal of having to use less leverage in order to do acquisitions and and managing our cash flow enough so that we can do acquisitions from that. So and this is a quick agenda. I’m not going to spend a whole lot of time on it, but it talks about what it is that we’re doing, who we are today, where we stood today, and then our evolution to getting to HighRadius. And then from there being able to see a vision for the future for our goals. So a little bit about the about our company. We’re based in Houston, Texas. Our company currently has about 104 employees, give or take. This business has been around. And for those of you don’t know, we are a professional employer organization. And what we do is if you think about a paycheck certain and disparity ADP we do what they do accept it a lot smaller level right now than what they do and outsourcing our HR functions, whether it be actual HR hiring functions, payroll, we manage folks benefits, worker’s comp and it’s all on our FEIN number. So you bear no risk. We take all the risk from that. So the business has been around for about 16 years as a PTO, 19 years overall, as a partnership, as typical entrepreneurs. And Kelly will tell you the brief time she’s been here working with our CEO is a serial entrepreneur. And he they were doing recruiting and staffing and someone said, hey, can you guys do payroll? Yeah, we can do that. So next thing you know, we were doing payroll, but we didn’t know how to do payroll, so we outsourced that, the ADP. So it was just one of those things that we went along with and grew over time and that became the mainstay of the business. The other businesses began to drop off on the side. So with the Treasury landscape, this is my dream at the time before Kelly came on board of what we would have, we would have a Treasury function finance department going up into the founding partners. But it’s something that has never happened until just recently. So. This is our transition roadmap, and this is one of the most, I guess, revolutionary things that we have done. Company is kind of. Kind of played close to the vest on what they do. They don’t spend much on things. And but as we’re growing and emerging, we decided that Treasury is a function that we need to have. So I went down the path and talked, you know, talk to the owner about it. So, look, we don’t have a process. And also we didn’t we didn’t even have spreadsheets. Some of y’all at least have spreadsheets. We didn’t have spreadsheets. We went by intuition flew by the seat of our pants, kind of did this with cash because we’d been in the industry so long. So we knew in our mind we knew what we knew, but we didn’t know anything really. At the end of the day. So we started to build from scratch Treasury. And what that meant was and I’ll talk about it in a couple of slides later, talking about going in and saying, Okay, what do we have to do to build a Treasury Department? What’s all involved in that? And we began a process where we started looking at solution providers, and we’ll talk more about that later. But it was at this point in time that in this process where I had the opportunity to meet Kelly, who was working with one of our primary consultants. So I’d like to introduce Kelly and bring her in and have her walk through the remainder of this slide.

Kelly Grieshop 04:15
Thanks, Ray. Thank you, everybody. So, yes, so I’m fortunate enough to be working with Ray and the team of Employer Flexible. It’s really been an enjoying a joyful like nine months. So I, I can’t say anything more about that but really enjoy it. So, you know, when we I came on board, they had just decided to go with HighRadius, you know, for the TMS. So, you know, Ray had me on board. He said, okay, we’re going implement this. I want you to be the project lead for our side. You know, the subject matter expert from the Treasury. So, you know, we finally to go live when? About last week. So it was a it was a really enjoyable process. I’ve been through it before with other providers. This one, you know, it was really personal. I mean, personally, like, you know, felt like we had a connection, really get to know the team at high radius, you know, we had weekly calls, things like that. So, you know, we went down this path and we got more into it later, but we just knew that we needed to get somewhere, which is just not not knowing what our caches are we going to have the money to spend on an acquisition or not, you know, those kind of things and said, you know, we need something automatic. So that’s what we that’s what we were doing. And then what next? So, you know, like we said here, strategic, you know, we’d like to grow with acquisition and we need to know how are we going to fund those acquisitions and be able to look out past seven days that we look now. Right. So at least that’s. What we’re doing.

Raymond Dobrosky 05:35
So the objectives that we set out whenever we were going through this and again, not having known anything and I’m an accountant by background, CPA, mergers, acquisitions, Treasury has never fallen into my lap before until this. And that’s why bringing Kelley on board was such a strategic move for us because of her background and experience in Treasury functions. So these were the main pillars that we were looking at achieving throughout throughout this process and bringing Treasury on board. The visibility, the cash, and being able to be self-sufficient on our cash and managing our flows without dipping into credit lines that quote unquote, were, you know, surprises, which happened all the time. And then the cash reserves and centralizing with Kelly, you talked about, you know, be nice if we could pull everything in and look at our cash balances in one spot. So that was our ultimate goal with this year.

Kelly Grieshop 06:40
A lot of you’ve probably heard this before, so I’ll explain it. We all are very familiar with it. So we started with Excel based Jan one, you know, which was, all right, we got to we got to get our hands around this. What are we doing? You know? So basically, we have currently have four entities, all right. And we have about 20 bank accounts with three different banking partners. So it was just on a daily basis going out to those Web portals, downloading the banking activity, populating Excel, you know, working with our, you know, folks in accounting, you know, PR, you know, the different places to get those plugs for the forecast, you know, things like that. So, you know, we now do have visibility, which is key, right. And if I do get a call from Ray or one of other executive members about something, I’m able to go in and at least, you know, come back with an answer in and a valid, you know, close enough answer, write something that has some validity or support to it. But, you know, we want to get to that next step, which I’ll talk about later. But, you know, it’s all very manual, right? So it’s, you know, could be at times two or 3 hours a day that we’re working on this. So, you know, just I’m not a fan of manual activity. I just want to automate and be able to move on to the next thing so and make decisions easily. So basically after that’s done the day, end of the day, near the end of the day, we send out the reports, you know, to the controller Ray and the rest of the executive team for their review and any questions that they have.

Raymond Dobrosky 07:57
Yeah, it’s amazing. 16 years of a business and we did not even know cash a month out until Kelli put together spreadsheets and they man, they were successful despite themselves. So that’s that’s what I always told them. Whenever I was hired, I’m like, can’t believe you guys survived this long. But they did. So, you know, the biggest thing was no dedicated cash forecasting. The only thing that we ever did in the past was look at our PNL said EBIT is roughly cash, even though it’s not even as an accountant. It hurts me to say it, but it’s not cash. You know, Kelly knows where the cash balances are, and I rely on her for that. But we had nothing in place at that point in time.

Kelly Grieshop 08:47
I just want to make sure everybody heard that, because this is the first time he admitted this. And I think it’s on tape sa camera, right?

Raymond Dobrosky 08:54
Yeah, it’s on camera. Okay, I’ll delete that part, but. All right, so it it’s one of the things that we were basing our decisions on. No information. It’s little to. No, it was just gut feel and intuition. So it’s a scary place to live if you all been there, you know? So that’s what we wanted to move away from.

Kelly Grieshop 09:18
Yeah. So know this is kind of our wish list and our expectations from the high radius teams. So, you know, we want to have visibility to our cache like, like that. You know, we just push a button and we see it. We can also look at the forecast and have better forecasting accuracy and then be able to, you know, have reports that look very nice come from the system that we include in our month and reporting package. Right. So that’s really and we’re going to get that, you know, like I don’t know if I mentioned, but we just went live last week. We’re in hyper care. You know, there’s little hiccups mostly on our site from not people get the JL data over so you know but we’re working on it. So just really looking forward to being able to, you know, achieve these goals and that’s where, you know, we’re at and it’s amazing. It will be amazing. I already know. But yeah, through yeah. The weight and everything. So just looking forward to having more time to do other things. Okay.

Raymond Dobrosky 10:11
Very much.

Kelly Grieshop 10:12
So. This probably looks similar to, you know, what we’re doing now versus what we’re going to be doing, right. So it’s just basically showing the now instead of all this manual work that was on the back end before we had the forecast and liquidity position in place every day, you know, all of this is now automated, which is really cool. So, you know, you’ve got all of your files being sent automatically from our goal system to high rate. Is all of the bank reports going from the banking partners to HighRadius? Everything is automatically uploaded every day and once a week we have a revised forecast that will come out and you know, we can have all of that. So there’s an extra 2 hours, let’s say a day of time for us that we can do other things easily. Yes. You know, then, you know, we have the ability to see the forecast slice and dice things, you know, up to six months out, I think are going to be moving to 12 months at some point. So that’s awesome as well. And you know, again, then those reports can either be sent out or each of the individuals that we give access to can go in and look at the reports themselves.

Raymond Dobrosky 11:12
Where this is kind of reiterating one of the ones that we had talked about earlier. But Kelly just touched on it about saving on the time that she she currently spends in our people spending, just gathering and aggregating data, moving away from that aggregation of data gets us to focus on more valuable tools. Okay, what? Where is our spend going? What is our spend on if we’re missing forecasts on what we think balances should be that we’re reporting to management, and from that we’re making decisions? Do we spend $50,000 on X to 250,000 on Y? And we’re saying we have cash flow to do it. But if we don’t, in the past we were like y well, we don’t know. But now we know we can go back in and look and we can take a look at the forecast, see where the cash went sideways, see what we missed in our in our overall assumptions, which helps in with leads us to the middle one. We are a growth company. We’re looking at acquisitions. We’ve we’ve just completed one. We have about 3 to 4 more in the hopper for various various locations. And we really need to stay on top of the cash so we can meet our covenants that are out there. All of our positive, negative restrictions, we have ownership restrictions as well as other types that are tied into different financial credit facilities. So. And then, yeah, the cadence overall is going to be daily. We’re going to be looking at this stuff rather than trying to figure it out on the fly whenever we think we need it. Okay. This was a fun process right here. This is when I got the approval to look into this and they said, okay, let’s do Treasury again. I’m sitting in the office by myself. I’m the only person who has really accounting and finance experience, and we didn’t have any Treasury. So I went out and looked at various white papers from public accounting firms, from other Treasury, had about 35 or 40 people that we were looking at eliminated the ones that were very focused on larger companies that didn’t fit us, smaller ones that we were kind of it was a little bit too pedestrian for us and wouldn’t get us where we needed to be. And so we narrowed it down to about eight or ten. I’m not going to tell you who they were, but at the end of the day we brought in our GP to help us with that process because they had Treasury implementation specialists who understood the ones that we had left on our list. They helped us walk through the process and narrow it down and it came to one final decision, which we ended up here with high radius and never really look back on it. We just today we still feel like that was the right decision and it was during the time of the project implementation process after after we made the selection is when we hired Kelly because she came on board, she understood this. She was able to work and speak the Treasury language. Her and I were able to connect from that standpoint of understanding what it is we needed to do. And it was like a three month interview process roughly that she didn’t know she was going through. But my boss told me at the end of the day, you can’t do this, you need to hire somebody. And that’s when we brought brought her on board from there. So want to talk a little bit about the implementation and. Oh, sure, it’s up to you if you want. Yeah.

Kelly Grieshop 14:59
No problem. So yeah, no, I mean, as far as from the implementation standpoint, you know, at the beginning, it’s well, first of all, they set a timeline, right? So that’s very important. Right. And have the dedicated steps, you know, from beginning to end to go live. We had weekly updates. They are still going on with the team, which is awesome because there’s constant communication not just on those weekly calls, but you also have daily, you know, chats. Just, Hey, can you send me this file over things like that? So they’re very responsive. The team at hi radius, part of the process at the beginning is, you know, send us all of your GL data set of all your bank statements for the past, you know, three years, you know, if you have them, you know, in Excel and all that fun stuff so they can just start analyzing all the data. Okay. And then, you know, they’ll start reaching out, asking, you know, asking questions about, okay, you go through the file and tell us, you know, how do you want to categorize all these cash flows, you know, so we went through we developed all the outflows will be now these buckets inflows with these buckets and set it up that way. So it’s really tell tailored to what you need. Right. And they’re very, you know, receptive to helping you get what you need. And I gave an example earlier in a discussion was there’s a couple of things that reports that weren’t available by talked to our counterparts there and said, I’d like to see this, okay, we can build that for you. So they were able to build it. And that’s it’s been a good process.

Raymond Dobrosky 16:21
Okay. As far as the implementation process goes, the biggest thing that I will speak for myself that I liked was the amount of time that I need, since I don’t know if Sid’s here for this, but no, he didn’t make it. Okay. Sid was is sid and Anjali were fantastic to work with from our team, and they took the time to learn our data and they spent a lot of time going through it. It wasn’t a dump where they tried just simple, simple matching principles or try to get it to work. They wanted to understand our business, understand our data, and they had mad data scientists as what we referred to. So we kept hearing they had these data scientists who were working on it, data scientists. And Kelly and I had this vision of what do they do to these poor people? They have locked in a room over there in India and they’re not letting them out. And these people were just cranking on data all day long, just running algorithms. And Sid said, you know, that’s kind of what we do. So they have them over there. And it was fantastic because the feedback that we got and learned about ourself from the data that we didn’t know. So it it was a great experience from there and then tell you talk about unity and.

Kelly Grieshop 17:39
The user accepting acceptance. Testing was good too, covering all the different, you know, possible scenarios. And our goal was literally to break the system. And that’s what I explain on several our weekly calls was I’m just trying to break your system like every little tiny thing. I’m just trying to break it. And he’s like, Pass, pass. I’m like, Oh, so anyway, oh.

Raymond Dobrosky 17:59
Yeah, that’s a that’s a no somebody finish you 80 before the expert in broke quite a few.

Kelly Grieshop 18:06
Things. Well that’s because it was pass, pass, pass. But anyway I had a hard time sorry but no so. But no but I think goodness I don’t know how many line items there were I think was close to about 100, I think you tested. So you know, anything that I failed, you know, Anjali would contact me and we would just go over it directly. And she walked me through and show me what, you know, possibly the test was trying to get me to do so. Yeah, yeah, yeah.

Raymond Dobrosky 18:32
And with the adoption of the system, we’re starting new daily processes. So. Got the ten minute sign. Okay. This vendor implementation checklist is something that I will say. This is, you know, as was said earlier, I’m old. I’ve been around for about 35, 40 years in business and have done a lot of ERP over time. I’ve never met anybody who stuck to these schedules as rigidly as our team did. They were amazing. A They were up. They refused. One thing they did, they refused to change the time zone. So our call morning call from 730 got moved to 6:30 a.m. It was a little bit rough for six months, but we managed to do it. But they they stuck to it. They went through the timeline. They when they said that, you know, there was an issue they put out there when the resolution was expected and who owned it and they did it. And that’s kind of rare when you get a partner that you partner up with that commits to that and actually does it. So that was pretty good. But they they stuck to this whole, whole schedule.

Kelly Grieshop 19:43
Yes. So here’s, you know, where we are today in the go live phase. So, you know, all of the data is is automatically fed into hie radius system. Everything is in the cloud, right. And we have the two modules offered which is a cash management in the class for cash forecasting. So cash management, you know, banking data, bank balances, transactional activity as well as the forecasting which is based on our general ledger data that’s fed in weekly. And so, again, you know, I can go in reverse. We have access to you can go in and get that information, you know, slice and dice all the reports, look at the variance analysis, ask questions, you know, make updates to the forecasts for known items that may not be in there that might have changed and that we’ve had to update as a result of internal discussions. And so, you know, it’s just it’s it’s a good feeling looking at that.

Raymond Dobrosky 20:35
So it’s good to be almost home. Let’s see. This is on the first two items. This is something, ironically, that we were talking with Juan earlier on and I don’t know if she’s here. Kristy from PEO, we were talking. Yeah, there she is right back there. We were talking about it earlier. In it we look at I view it as being an accountant. It’s a three way match. For those of you who know what that is, it’s the accountants dream. So it eliminates possibility of all all issues with the exception of collusion for fraud. But anyhow, we would like to take this cash forecast and be able to do a six month forecast, compare it to our original plan that we had of where we thought we would be on a cash flow basis. Reconcile those two. Then when our actual results came out to a three way reconciliation between the accounts, that way we we can really zero in and make sure we’ve captured all the data, all the movement of cash, all of the transactions within the business. And it will only use that as a continuous process improvement loop for doing the cash forecasting in the future. Because the more that the business can let the Treasuring Kelly know, the better that she can plan for our cash and in forecasting in the future. So. Anything on there you want to talk about? No. No. Okay. Questions.

Kelly Grieshop 22:14
Yes. The cash. At this point, we’re just using it. Sorry. At this point, we’re just using it for just have all of our cash in one spot. Okay. And basically streamline our prior processes right. To free up the time. Now we are looking toward other solutions that we could leverage the cash management module for the bank recs. Yeah.

Raymond Dobrosky 22:47
Yeah. Thank you. In our bank rec, our bank reconciliation process is a nightmare because of the software that we’re on. Microsoft Dynamics, hey X and it’s there you go. So you’re probably takes you 5 to 7 days to do. All right. So we get we talk. Talk. We need to talk. Yeah, it’s it’s a nightmare. It takes us 5 to 7 days, man. Days to do a bank, correct? Do our bank cracks. It’s a nightmare. If we can find a solution can help us do that. I can essentially we can add almost a person worth of time during a given month. It’s so big. So that’s great question. Great question. It’s one I have nightmares over. Any other questions? Yes, sir. They want. Probably 7030 due to them.

Kelly Grieshop 23:48
I would agree, you know, there’s more heavy lifting on, you know, the Treasury side, you know, going through all the data and things like that and working with high ratings versus the it. Yeah. Yeah. And I think it’s also too because we already had a and I’m going to use it speak my it’s like we already had, you know, advancements, you know, as far as our EFTPOS and all these kind of things already going on with banks and ah, it was really awesome. So and knowledgeable in that area. But I’d say 7030. Yeah.

Raymond Dobrosky 24:19
Yeah. And the other ones. Yeah. Remember, you have a session after this? No, no, none at all.

Kelly Grieshop 24:34
But I’m with her, so.

Raymond Dobrosky 24:36
Yeah, I know. That’s. That’s the thing. Yeah.

Kelly Grieshop 24:40
I know. They are. Communication. For me. I mean, I was, you know, making sure that everybody every stakeholder, even if you thought maybe they are a stakeholder, was involved and at least aware, you know, included on the emails that you’re communicating and what you’re doing and making sure that, you know, it’s aware, you know, AP is aware, are aware, payroll is aware. Right. Because, you know, I’ve we’ve all been in that place where they’re like, why didn’t I know about this? You know? So it’s like having that mindset of like, okay, just communicate, get it out there and have a deadline is going to be missed. Okay? Why is it going to be missed? What can we do about it and make sure we communicate accordingly? Yeah, I think we go ahead.

Raymond Dobrosky 25:25
Yeah. For me on the implementation side, that was easy. It was making sure that I had her on board in all honesty, because I would not have been able to do this by myself because again, I don’t understand the Treasury speak. I understand mapping and taking, you know, accounts and our data and getting it mapped to something. But to have what it means when you roll out of cash forecast, that was lost on me at that point in time. So that was a big piece for me, in all honesty. So. Any other questions?

Unidentified 26:27
Don’t want her.

Kelly Grieshop 26:33
But you know. Well, I mean, from my perspective, I mean, I think that it would be it depending on the size of the organization, how your organization is set up. Right. So, you know, I would say that it would be led by Treasury and the Treasury team and then, you know, you would have an internal project team that as well includes a representative from the controlling area, you know, the accounting team, because, like you mentioned, you’re going to need that gelled out and there’s going to be specific questions that as a Treasury person and may not know. Right. So I think it would be driven by Treasury, led by Treasury and looping in controlling and having a representative, you know, a dedicated representative, but not full time.

Raymond Dobrosky 27:08
And I would agree with that completely. The one thing that it gave us was perspective of where else our data can be used and what it can mean to the organization overall is just preparing financial statements and sending them in. You know, when you look at that and then you look at cash flows and you look at categories that you’re spending on, you can do some real analysis and in cost cutting from the perspective of you can leverage your vendors, not not people cost cutting and things like that, but leverage your vendors and be able to stay on top of that. So having accounting involved is important and I’m glad I was, but I’m also I was also the project sponsor, so I had to be on it. And, you know, but then again, you know, you may sit here and think at the end of the day, this is like some type of, I don’t know, love fest or whatever. But it really was great having to work with her because of how well we work together when we do this. And I realize she’s leading this, I’m not and I have to lean on and rely on her to make those decisions. And when it impacts accounting, finance or the organization upstream or downstream, that’s when I have to alert Kelly and say, look, we may not be able to do that. Yeah. So it works out. It works out really well. I think.

Kelly Grieshop 28:28
It does. And then just touching on that, just going back to having that opportunity to interview like as a consultant before being offered a position for three months really was helpful. I don’t know that that happens very often, but you know, because you know what you’re getting into. Yeah, right. It’s not like you have the normal interview process and we were good. And then all of a sudden, you know.

Raymond Dobrosky 28:47
I thought I knew what I was getting into, but yeah, but that’s that. So yeah, it was, it was great. So any other questions? Bueller. The older. Oh, okay.

Kelly Grieshop 29:04
All right. Well, well, thank you all very much. Appreciate your time.

Raymond Dobrosky 29:06
Appreciate It.