Outsource Revenue Management
How many billing companies can tell you what they are going to do for you, document the process of achieving their goals, then show you how they did it? Well now you know of at least one - HSI.
Using a snapshot of your revenue database we can benchmark your performance over the entire period for which historical data is available. Based on our findings, we can tell you what improvements we could make and the financial value of those improvements to your organization. We then continue to track those same key performance indicators, plus much more, and report our progress in detail at the close of each month. With HSI and FlightLink Analytics, you can know as much or as little about your market and your accounts receivable as you want to know - but most importantly you will understand exactly how your billing partner is performing with your accounts. This understanding is critically important for making accurate projections of future cashflows, as well as good business decisions.
Actual Case Study
This case is presented to demonstrate HSI's ability to perform superior revenue management services.
THE CHALLENGE:
The accounts receivable balance had been growing steadily for at least a year, including the estimated collectible portion (the Net AR). The HSI team knew this could only happen if monthly cash collections consistently lagged behind monthly net earnings.
HSI REVENUE SYSTEM RESULTS
HSI dramatically reversed this trend immediately upon assuming responsibility for this client's accounts (Chart A). We started collecting more each month than the estimated net earnings for that month and quickly reduced the Net AR accordingly. The questions are: how did we do it, and how sustainable is an improvement like this over time?
Clearly it is not possible to collect more than you earn, except during a period of recovery from poor performance when cash from current period earnings can be supplemented with cash from a bloated AR. Nevertheless, in this case there were (as there generally are) two independent sources of improvement: both the collection speed and the collection rate were significantly improved (charts B and C). The faster collection speed, measured in fewer days' sales outstanding (DSO), can produce a tremendous influx of cash, but there is a limit beyond which substantial further improvement is not possible. When this level of optimum performance is reached, monthly cash collections must equal new monthly net earnings (+/- in a given month), and those heady big cash days of the early recovery months will become fond memories.
However, the second source of performance improvement, increasing the collection rate, while less dramatic in the short term lasts indefinitely and results in more earnings per transport for as long as the improved performance can be sustained (which you should expect to be forever, given consistent market conditions). Compared with DSO improvement, which can produce lots of cash quickly for a limited time, collection rate improvement can generate much more total cash over the long term even if the short term impact is far less dramatic.
As an executive, your future planning depends on understanding the particulars of your revenue performance and that means you need a billing partner that both understands them and has the capability to effectively communicate them to you. We believe no one does this better than HSI. And we're looking for a few good partners.
