When Chief Financial Officer, Ben Harrison arrived at the company, their credit facility was maxed out. They had substantial amounts of uncollected receivables, angry vendors, and were heading towards violating their banking covenants. They had spent the last 13 months with a remote resource on an interim basis that did not provide mentorship, guidance, or even general direction to the AR and AP staff. This had created a perfect storm of liquidity problems and strained relationships with vendors and the bank that provided their lending. When Ben began investigating the source of the cash flow problems the company was facing, he discovered a variety of competing demands on the cash position of the business\u2014vendors were being paid 90 days past due, customers were paying in an average of 85 days, and the maxed-out credit line was hitting the company hard on their cash-only interest payments.<\/span>\u00a0<\/span><\/p>\n

$\"Ben$

Ben Harrison, Chief Financial Officer<\/p><\/div>\n

The first task Ben took on was to begin to elicit private feedback from the other teams in the organization, especially with the subsidiary businesses and sales team around where the failures were occurring. Through multiple conversations with the VP of Sales, as well as the presidents of the two subsidiaries, Ben began rebuilding bridges between the departments that had decayed and utilized their feedback to propose critical process changes within both the order-to-cash and procure-to-pay processes. Because the pain points in the procure-to-pay process were ultimately a result of deficiencies in the order-to-cash process, this required Ben to address both areas simultaneously. Given the situation, he aimed to find flexibility and accommodation with the companies\u2019 vendors by providing them clear, honest communication and a firm commitment to resolve the past due balances as quickly as possible. <\/span>\u00a0<\/span><\/p>\n

One of the major changes Ben made to the procure-to-pay process that turned out to be highly successful was providing the operational leaders in the business with a budget for each biweekly check run. By moving check runs to biweekly on the weeks when payroll did not clear, Ben created a smoothing effect on cash outflows and predictability into a process that had previously been purely reactionary as various vendors threatened to cut off credit accounts. By providing the three key stakeholders in operation for the operating entities with a budget each check run, and soliciting their input on which vendors to pay, he gained one hundred percent buy-in from colleagues while also keeping them informed with transparency they had never enjoyed before.\u00a0<\/span>\u00a0<\/span><\/p>\n

While working one end of the cash flow challenge with the vendors, Ben also identified critical failures in the order-to-cash process that ranged from contract administration to invoicing and ultimately, with collection efforts. One of the major hurdles cleared was the creation of a new position for an Assistant Controller within the department, which provided a valuable stopgap for Ben to delegate key tasks including direct observation of the invoicing process. With an additional teammate to help tackle the challenges in this process, critical deficiencies in timeliness, communication and effectiveness led to the replacement of an underperforming team member and an upgrade of the clerk position to a Staff Accountant that provided more long-term upside potential in that role. Given the limited size of the team, and the critical nature of the responsibilities of the position, the upgraded position was not only merited but necessitated as the business continued to evolve and grow. <\/span><\/p>\n

By eliminating silos and engaging with counterparts across the other departments, Ben created a model for the entire shared services team to follow that included direct communication between peers regardless of department, something the organization had eschewed in the past. The result of the leadership Ben provided led to highly successful process changes, personnel changes, and liquidity for the company. Days sales outstanding was reduced from 85 days to 40 days in 180 days; those collections translated into paying vendors within terms rather than 90 days past terms. The outstanding debt of the organization was reduced by 31%, which resulted in cash interest payments being reduced by $40,000 a month. Ben positioned the company to reinvest $8M in their fleet in 2022, something they wouldn\u2019t have believed possible when he arrived in 2019. <\/span>\u00a0<\/span><\/p>\n