STREAMLINING PROCESSES TO SUSTAIN GROWTH

Joe Bauer

Commercial Loan Officer

Fidelity Bank

josephb@fidelitybankmn.com

fidelitybankmn.com

Topic: Banking / Finance

Small businesses are challenged with finding growth opportunities in today’s economy. Making drastic changes to the business plan can be intimidating, but staying competitive may mean looking beyond the way things have always been done. Here is the story of one company who took on this challenge successfully.

Background: Property Claim Solutions is a general contractor in the insurance restoration business. When homeowners experience damage from fire, wind, rain, hail, etc. they can utilize PCS to get repairs done, quickly and efficiently. www.propertyclaimsolutions.com

Challenge: When homeowners receive reimbursements from their insurance company after making a claim, the checks are typically made out to both the homeowner and their mortgage company. PCS is not able to be paid in full until multiple steps are taken in dealing with the insurance company, the mortgage lender and finally the homeowner. Thus, it can be difficult and time-consuming to collect payment. Why? The mortgage company is in no rush to endorse the check over for payment. The homeowner may have a tough choice to make, especially in tougher economic times. Do they pay PCS or pay their utilities, or car payment, or put food on the table. This is a constant challenge for PCS and its competitors, but it became more noticeable as PCS continued to grow and cash flow worsened.

Also, the structure of PCS didn’t lend itself to a dedicated cash flow management system. The culture of the organization is one of sales, which is why they had rapid growth in the industry. However, they did not have the resources to effectively manage their accounts receivables and collections.

Solution: In April 2010, they used a recruiting firm to hire a controller. In a word, she “professionalized” their credit and collections department. The workflow process from sales to billing to collections was streamlined. PCS’s daily cash flow improved with an alignment of their accounts payable system. Structure was implemented to their collection calling, reducing Days Sales Outstanding (DSO) from 37 to 23 days.

Lessons Learned:

• Be honest with yourself, as an owner, about what is NOT in your skill set- and be willing to invest in talent that can bring to your organization the skills you lack

• As your company grows, be on the lookout for areas and functions that need to be streamlined and systematized

• Don’t ignore credit and collections as an area in your company that can make or lose a lot of money