Process Improvement Tools Save Money and Boost Credit Score Case Study
It’s easy to know when a business has a good accounts payable and receivable process. The business’ bills are organized, they’re all in one place, and they get paid on time. Invoices are sent out in a timely manner and followed up on. Good processes are apparent in other ways, too. The business owner knows how much they have in accounts payable, has budgeted for it and is prepared to send out 1099s in January.
Having the right processes in place can save a business money and boost their credit score. Yet, many companies do not have good processes. These companies do not have the knowledge, time or expertise to make the needed improvements.
First Steps Financial recently helped a client with significant process challenges.
The business had employed an office manager to pay bills, run payroll, invoice clients, and handle accounts receivable. Regrettably, this office manager quit without notice. The business owner then discovered that the office manager had no business processes in place for performing these tasks. Bills were tossed onto a pile on the manager’s desk and misplaced instead of being filed. The manager had forgotten to tell the business owner about some bills, which had not been paid on time. There was no system for reminders about when the bills were due. The office manager had stopped answering the phones to avoid calls from creditors.
First Steps Financial also discovered that the company had about $400,000 outstanding in accounts receivable. About 50 percent of the unpaid invoices were a year old.
First Steps Financial overhauled accounts payable and set up an online system. This included a secure approval system for paying bills on Bill.com. First Steps Financial contacted the vendors to request that they email their bills into Bill.com. This process improvement tool reduced the amount of mail coming into the office and eliminated the need to open and file the bills. The online system sent email reminders when bills were due and required the business owner to approve payment for each bill. Bill.com provided a secure way for the business to pay bills without providing access to their bank accounts.
First Steps Financial also tackled accounts receivable. They followed up with each client with an overdue invoice by resending an invoice with new contact information. They also continued to follow up with letters and phone calls.
Within two months, First Steps Financial had all the bills on a payment cycle. They also collected 80 percent of overdue accounts receivable within six months. As a result, the business’ credit score soared, and the business owner was able to secure a loan at a better interest rate, if needed.
First Steps Financial eliminated the need for an office manager. With the new process improvement tools, First Steps Financial did everything online. Moreover, First Steps Financial was faster and provided more expertise than the full-time office manager.
The cost to the business for these services was 33 percent lower than the annual salary of a full-time office manager, and they were able to collect on $320,000 of accounts receivable that might have been lost otherwise. The business owner saved on office space because First Steps Financial works off-site. They also benefited by having access to a team of business experts who stay up-to-date with the latest process improvement tools in the industry.
Would this be right for your business?
Process improvement tools save money and boost credit scores. To find out how First Steps Financial can help your business, call 609-759-5881 or email firstname.lastname@example.org.