The impact to the business of a slow service to cash cycle (and why service managers should care?)
For most service managers, certainly within organisations above a certain size threshold, the impact of a slow service to cash cycle may not be immediately apparent…
Further, with the busy day to day operations to handle, many service managers and directors would be forgiven for looking at this as somebody else’s problem. In a narrow sense, they are correct.
A slow service to cash cycle is a challenge for the accounts receivable team to resolve if we look at the traditional business structure. Ultimately, suppose the cash is not coming quickly into the building fast enough to cover outgoings. In that case, the Chief Financial Officer, not the Chief Service Officer, will be looking to resolve this challenge.
Yet as we saw in the previous feature in this series of excerpts from an exclusive Field Service News white paper, not only can changes made by the service operations team in terms of the digitalisation of processes in the field reduce the service to cash cycle, but by driving these changes, we also open up the pathways to introducing additional revenue streams and reducing costs – both of which will impact the service P&L in a positive way – which the service manager then has a vested interest in.
However, looking further forward, the proactive and ambitious service manager or director should also see reducing the service to cash cycle as an area of focus that can benefit them and their team for several important additional reasons.
It provides a compelling reason for investment in Field Service Management tools
All too often, the service manager or director may see the need for investment in specific FSM tools. As they are the conduit between the business operation, the workers on the front line and the customers, often they have a more detailed understanding of where the field service operation may be failing or indeed flourishing – and are likely to understand the challenges better, and thus better evaluate which solutions are required.
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Modern FSM tools provide better visibility and simpler automation of processes across the whole service operation that will be at the heart of developing a shorter service to cash cycle.
However, the field service manager or director will still need to build a compelling case for the executive board to secure the required investment.
Ultimately, finance remains the dominant language in the boardroom and if it is possible to outline how investment in field service management systems can drive both an improvement in the service to cash cycle and potentially unleash new service revenue streams or enhance those already in place this will be a big step in securing the investment needed.
It can lead to a more transparent relationship with customers
One of the critical foundations of improving the service-to-cash cycle is establishing visibility within the service life-cycle at all touchpoints your organisation has with your customers.
As discussed earlier in this paper, by providing the field service engineer or technician with such visibility, we can reduce revenue leakage dramatically. However, the same tools to provide our field workers with such visibility are also easily translated into back-office roles – which can be particularly useful for the sales and customer success teams.
A field service engineer or technician producing an out of warranty invoice could easily trigger a notification for the customers’ account manager, who would have a unique opportunity to introduce a discussion around upselling additional features within the existing service contract or renewing a lapsed contract.
From a customer success perspective, the ability to have a deep-level overview of how the customer is utilising both the asset and their service agreement allows for more effective proactive suggestions that can help the customer better drive their productivity, shifting the relationship you have with them from one of a transactional nature to one of genuine partnership.
The same tools and processes that improve the service to cash cycle can also drive service profitability
Similarly, these modern FSM tools provide better visibility and simpler automation of processes across the whole service operation that will be at the heart of developing a shorter service to cash cycle.
All of the aspects we have discussed so far in this paper will all drive better long-term profits by boosting the key metrics that are so important for field service operations.
Simply by working through your processes and identifying which of these are the result of digital replication of legacy analogue ways of doing things rather than true digitalisation will also simultaneously reduce the service to cash cycle and improve critical areas of performance...
Reducing first-time fix rates: by providing our field service engineers and technicians more detailed insight into the problems they will face on each job and by providing them with easily accessible knowledge bases and even perhaps remote access to more experienced engineers, we can increase first-time fix rates and significantly reduce truck-roll costs.
Increase consumable revenue from the field: By giving our engineers access to seamless parts ordering, we can ensure that all consumables related to our assets are purchased from us and not third-party providers, ensuring we maximise our share of wallet with the customer.
Increase technician utilisation: By empowering our field service engineers and technicians to troubleshoot more quickly and effectively on each job, they are spending more time actively resolving the customer problems and less time identifying what the problem is. A slight reduction of 5 minutes per job per technician each day can quickly add up to 150 man-hours saved a year if your field workers undertake an average of eight jobs a day. Across a workforce with 100 field service technicians, that is over 60 days of reclaimed costs.
Ultimately, the benefit of moving to a modern FSM system for the service operation team are numerous, with improving a service to cash cycle being one of many upsides.
While it may be some of the other benefits of such an addition to the field service operation systems that the service manager or service director will benefit from more directly, the ability to include immediate financial benefits in any presentation to the board will be a huge factor in securing the investment needed.
Even if you have an adequate FSM system in place already, simply by working through your processes and identifying which of these are the result of digital replication of legacy analogue processes, rather than true digitalisation will also simultaneously reduce the service to cash cycle and improve critical areas of performance. This could help the service department secure a more prominent voice within the executive table and more central role in future business strategies.
In the final two features in this series of excerpts from this exclusive Field Service News white paper, we shall look at both process changes ways to leverage technology that can help you achieve this.
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