Improving DSO in the Staffing Industry

Randstad Outsources Billing to Improve DSO, Reduce Costs and Improve Customer Satisfaction

The Challenge
Success often times comes with challenges. That’s what Randstad North America discovered as a leading employment service provider in the U.S. As a wholly owned subsidiary of Randstad Holding NV, a $8+ billion provider of professional employment services and the third largest staffing organization in the world, Randstad North America provides over 50,000 temporary workers each week to companies like Citibank, Ryder and Merrill Lynch. Randstad pays the talent weekly, and then bills their approximately 10,000 clients weekly. Due to their success, Randstad’s float – the money paid to workers before clients paid Randstad – approached $150 million. It was an expensive predicament.

To reduce the amount of float, the company looked to drastically cut its Days Sales Outstanding (DSO) and streamline the laborious, paper-intensive billing process.Randstad’s old system relied on outdated hardware and orphaned imaging software.

At the point where status quo was no longer an option, Randstad hired Steve McCord as Senior Manager, Billing, for his experience in solving a similar, if smaller, challenge at Delta Air Lines. Randstad's senior leaders assumed the existing system would be modernized. McCord offered an alternative: Outsourcing.

“When I arrived, they were very close to upgrading their internal capability,” McCord recalls. “On my third day here, I had to say, ‘Wait!  Accounts receivable is not our core competency.’  Management had not seriously looked at outsourcing, and I knew they should consider it as a viable alternative.”

Proven Success
Based on significant success at Delta, McCord called the service provider for a quick presentation. “I knew that once the team saw what they could do for us, the choice wouldn’t be hard,” he states. With a proposal in hand, McCord calculated that using the outsourcing firm would provide significant savings over a three-year period while improving service.

“IT wanted to insource and own the equipment and software. “By using API, my analysis predicted a reduced headcount of up to eight. And initially, outsourcing our invoices could save two to three days at a minimum in DSO, with additional cuts to follow.”  That translated into savings of millions of dollars.

Significant Innovation
Under the old system, staff at Randstad’s 400-plus field offices entered data from workers’ time sheets into the company’s computer system and express mailed the paper to a processing center in New York. The staff there scanned and stored all the paper and mailed most of the invoices. However, about 300 Randstad customers required variations on the standard invoice, and these were processed and mailed from Randstad’s corporate headquarters in Atlanta.

McCord inherited a staff of 25 who served these exceptions. “We were doing so many custom bills for so many people that we weren’t doing anything well,” he recalls.

Reduce Bill Processing Time: With the decision made to bring in API, McCord set up a three-stage rollout. In stage one, the paper timesheets are forwarded to the outsourcing service center in Two Harbors, MN, where the data from the computer system is sent both to the service provider and to McCord’s office in Atlanta. In parallel, API scans time sheets from over 400 locations. Every weekend, it associates time sheets with the appropriate invoices, prints everything each customer specifies, and mails those invoices with the supporting time sheets on Monday.

This procedure reduced processing time by two days and allowed Randstad to reduce its staff size. Electronic images were available to all employees, reducing staff involvement in filing and retrieving documents.

“This was a fantastic rollout,” McCord says. “It went without a hitch. We picked up a couple of unanticipated side benefits as well. Now we feel confident in destroying paper as appropriate. Also, our invoices are with spot color, so they look cleaner and crisper than our competitors’.”

Eliminate Paper: In stage two, electronic bill presentment was rolled out in a deliberate fashion and continues to grow each month. Savings in paper and postage are already apparent.

“Our long term goal is to eliminate paper,” McCord says. “Some customers were already asking to go paperless.”

Randstad customers enroll with API at a Randstad-branded website. When the provider posts invoices on the website, it emails enrolled customers a notification with a link. The customer logs on to the website to retrieve the invoice and any desired supporting documentation (time sheets, for example). The logon assures Randstad that the invoice has been seen. A report tells McCord if invoices languish, unseen.

“Currently, over 1,000 customers use the system, consisting of over 20% of invoices,” reports Greg Dyer, Senior Manager Accounts Receivable. “The rollout had a few minor bugs, all of which were overcome. We anticipate the number to mushroom to over 60% by the end of the year. In addition, DSO for eBilling customers stands at 1.5 days less than traditional standard invoices.”

“The goal is to give customers more options,” he continues. “Customers open a PDF, but they can also download the data for their own reports, analysis and feed into their ERP accounting systems.

Customers Pay Online: With completion of stage three, customers are able to pay Randstad online, with API managing the entire end-to-end process. Dyer stated, “While the number of customers paying by credit card today is not significant for us, we wanted a solution that tied credit card payment to invoicing without manual involvement. The billing solution allowed us to reduce one FTE and place payment responsibility back on our customers.”

Notable Results
McCord, Dyer, their superiors, and his staff revel in the project’s success. Through this and other initiatives, DSO has been reduced by more than 15%, and between New York and Atlanta headcount has been reduced by 35%. The predicted dollar savings proved very real.

Another significant success that cannot be quantified: customer satisfaction. “Before, our phones were ringing off the hook, all with customer service issues,” McCord relates. “Now we notice that we are not hearing any complaints!  I used to spend my days apologizing for delays and mistakes. I don’t receive those types of customer calls anymore.”

Today, with the increased business value of automated billing, e-Billing and e-Payment, cash flows are managed and costs reduced. Additionally, customers are pleased to have accurate bills, and more billing and payment choices to satisfy their needs.

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