Understanding external and internal processes that can be refined to improve your service to cash cycle and boost your service p&l
Identifying obstructions that delay payment at the customer end – may sound like an obvious suggestion. Still, it is an important area to start tackling a poor service to cash cycle. How can we improve an area of focus if we do not know what obstacles are in our way?
The obvious starting point to identify this problem would be to go to your accounts receivable department to establish why they are given delayed payments. However, there is a danger that many of the reasons put forward may be what we might expect to hear rather than the actual root issues.
It is very easy to assume that delayed payments result from clients deliberately keeping payments back to improve their cash flow or simply that their accounts payable processes are an unwieldy mess.
Of course, this is the real world, and both of these situations do occur. However, oftentimes it is a case of being less an issue of malicious delays or incompetent peers on the other side, but just a need to better join the dots between your organisation and your customers’ account departments.
You can’t achieve this without a two-way dialogue, so the customer needs to be involved in the conversation. Another critical factor is that the customers you will need to hold such discussions with will be perennial late payers. However, it is crucial to make sure that the tone of such meetings is not accusatory and hostile but instead takes the approach of two partner organisations working together to improve a shared process.
For this reason, these conversations shouldn’t be left between the two respective accounting departments, whose relationships with each other are often transactional in nature. Instead, they should be led by the Service Director and their counterpart within the customer organisation but involving the respective accounts teams.
You need to understand your customers’ accounts payable processes better to avoid falling between the cracks if invoices are missing essential information.
If your contract has specific service invoice parameters, have your customers’ accounts department been made aware of these? Is there someone within your customers’ organisation that needs to authorise payment for invoices – if so, ensure that they are automatically sent each invoice as it is produced. Are there specific additional documents related to job completion required?
This content is available for FSN PRO members and also for a limited period for FSN FREE members. Please either log-in to access the paper or subscribe to FSN FREE on the button below in under a minute.
Data usage note: By accessing this content you consent to the contact details submitted when you registered as a subscriber to fieldservicenews.com to be shared with the listed sponsor of this premium content Go Mocha who may contact you for legitimate business reasons to discuss the content of this briefing report.
These conversations need to be had with someone with a reasonable level of authority on the customer side as they all involve give and take on both sides...
Do your customers make payments on a set payment run? Can your customer agree to a second payment run to accommodate your invoices if this is longer than your invoicing terms? Are you prepared to extend the invoice terms to fit alongside these parameters in exchange for a guarantee of all payments being made on the set payment run, with strictly enforced penalties for missed invoices?
These conversations need to be had with someone with a reasonable level of authority on the customer side as they all involve give and take on both sides. It may also be that the right person for your customer is reluctant to get involved in these discussions.
As we looked at in the previous feature in this series of excerpts from this exclusive Field Service News white paper, it is important to identify the ‘what’s in it for me’ aspect of this discussion. However, while it may be a small additional effort to set the process up correctly now, it does remove a potential area of friction that could, if left unchecked, impact the service they receive.
However, if handled correctly, these discussions should allow you and your customer to come closer as organisations and even be the first flagstone of a more partnership-based approach.
Map out the entire service workflow from triage to payment
Again, while on the surface, it may seem a rudimentary task and one that you feel you already have a firm grasp on, it is worth revisiting this to make sure that everything is outlined in a systematic and methodical approach that covers the entire service lifecycle. This should begin when a service requirement is actioned – whether it be a break-fix support request or proactive service call.
There are so many aspects of the field service process that we must consider; it is critical to have a complete understanding of each aspect of this process as at each step, there is an opportunity for fine-tuning – mainly through automation and digitalisation, which can see multiple options to reduce costs and boost revenue...
What is the process of logging the details of the call? How is this information related to the field service engineer or technician? What does the engineer need to know about warranty status? Is it a straightforward system of in or out of warranty, or are there grey areas? Do SLA parameters apply, and what are the penalties for missing them?
Regarding the job, will it be dispatched to the nearest field service engineer or technician, or does it require a specific skill set or even a particular engineer? How is the appointment scheduled with the customer? Are there specific times that the site is unavailable? Are there security dogs? Does the job require high working and so potentially a second field service engineer or technician for health and safety reasons?
Does the dispatch team have all of the relevant information to hand to make sure any such parameters are adhered to?
What information do our field service engineers or technicians require to complete the job onsite? Who are they to report to onsite when the job is completed? Are there specific data capture requirements, such as photographs of work met before and after? is ther additional data collected from the asset that should be collected? Whose signature is acceptable for authorising the work to be completed? Who produces the invoice?
Where is it sent? Is the field service engineer or technician expected to advise the customer of any further service requirements or consumables that should be ordered? Do they have access to this, or do they need to notify someone else?
Once the invoice is with the customer, what is the payment process? Can the customer pay directly with the engineer onsite? If there are payment terms – do you have follow-ups scheduled? Are these automated or manually undertaken? Once payment is received, what is the mechanism for updating the customers’ records in your accounting system?
As we can see, there are so many aspects of the field service process that we must consider; it is critical to have a complete understanding of each aspect of this process as at each step, there is an opportunity for fine-tuning – mainly through automation and digitalisation, which can see multiple options to reduce costs and boost revenue.
This can all be achieved while also delivering improved service to the customer and making the invoicing process more transparent and better aligned with the customers’ operations. In turn, this will reduce the service to cash cycle and increase working capital.
Want to know more?
This article is an excerpt from the exclusive Field Service News White Paper ‘Improving the service to cash cycle & boosting the service P&L through digitalisation’ which is available for FSN PRO subscribers and for a limited period FSN FREE subscribers also.
If you are already a subscriber and logged in, you can access the the white paper on the button at the top of this page.
If you have yet to subscribe, this button will instead open a pop-up for you to register for FSN FREE which takes less than a minute and will provide you with instant access to this paper and all premium content currently available to FSN FREE subscribers.
Additionally, if you would like to arrange a free trial with our partner on this paper Go Mocha, there is also a link in the further reading links at the bottom of the page that will take you directly to their sign-up form.
- Read more about FSM Technology
- Read more about Service Strategy
- Arrange a free-trial of Go Mocha FSM Software
- Access over 24 premium resources on selecting and implementing FSM Technology (PRO)
- Access over 40 premium resources on Digital Transformation (PRO)
- Take the FSN Service Leadership course “Understanding the Service P&L” (PRO)
- Take the FSN Masterclass course “Supercharging revenue from the field service team” (PRO)