Randstad outsources billing to improve cash flow, reduce costs, and improve customer satisfaction.

by J. Peter Donlon, API Outsourcing

Success is often accompanied by challenges. That’s what Randstad North America discovered as a leading employment service provider in the U.S. A wholly owned subsidiary of Randstad Holding N.V., a $8-plus billion provider of professional employment services and the third largest staffing organization in the world, Randstad North America provides more than 50,000 temporary workers each week to companies such as Citibank, Ryder, and Merrill Lynch.

Randstad pays the workers each week and then bills approximately 10,000 clients weekly. This process meant Randstad’s float—money paid to workers—approached $150 million, an expensive predicament. To reduce the amount, the company looked to drastically cut its days sales outstanding (DSO) and streamline a 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 Randstad’s old system relied on outdated hardware and orphaned imaging software.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.”

Based on his success at Delta, McCord engaged API Outsourcing. “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.

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 paperwork 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 recalled.

With the decision made to bring in API Outsourcing, McCord set up a three-stage rollout. In stage one, paper timesheets are forwarded to API’s service center in Two Harbors, MN, where data from the computer system is sent both to API and to McCord’s office in Atlanta. In parallel, API scans time sheets from more than 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. Electronic images were available to all employees, reducing staff involvement in filing and retrieving documents.

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.

Randstad customers enroll with API at a Randstad-branded web site. When the provider posts invoices on the web site, it e-mails enrolled customers a notification with a link. The customer logs onto the web site 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 alerts McCord if invoices languish.

“Currently, over 1,000 customers use the system, consisting of over 20 percent of invoices,” reported 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 percent by the end of the year. In addition, DSO for e-Billing customers stands at 1.5 days less than traditional standard invoices.”

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 API solution allowed us to reduce one FTE and place payment responsibility back on our customers.”

NOTABLE RESULTS
Through this and other initiatives, DSO has been reduced by more than 15 percent, and between New York and Atlanta, headcount has been reduced by 35 percent. In addition, customer satisfaction rose.

“Before, our phones were ringing off the hook, all with customer service issues,” McCord said. “Now, we notice that we are not hearing any complaints.”

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.