Heinz Rotzoll - Improvement of KPIs in the area of accounts receivable

Project title	Optimization of accounts receivables management
Company	International logistics group (private equity)
Industry	Contract Logistics, Freight Management, Private Equity Shareholders, eight companies and 60 sites in Central European Sub-Region (Germany, Austria, Switzerland)
Revenues	About EUR 380m in Central Europe (CE)
Number of employees	About 2.900 in CE
Own area of responsibility
Budget	Budget of finance area of about EUR 1.5m
Number of employees	Leadership: Management of about 30 employees, thereof 5 direct reports SSC (Shared Service Center) Finance (Onshore SSC) SSC transactional finance and accounting processes in India (Offshore Accounting Factory)
Background for the assignment	Implementation of a standard requirement for a large, internationally operating private equity portfolio company
Situation within the company	Post-merger integration phase, business combination of the contract logistics and air and sea freight divisions (worldwide) High liabilities from purchase price financing Requirement to comply with loan agreements (“covenants”) Need to place accounts receivables management under central management and improve it significantly
Customer	Private equity shareholders
Autonomous role	Director Finance (authorized representative) Central Europe
Assignment	Improvement of accounts receivables management with the following objectives: Ensuring complete, contractually compliant invoicing of the services provided (“billing cycles”) Improving relevant key performance indicators (KPIs) Increasing the efficiency of the capital tied up in current assets (net working capital, NWC) Ensuring compliance with contractual requirements (“covenants”) from the sale and purchase agreements (SPA) for cash and net working capital (NWC) performance Sustainable improvement in cash flows from operating activities, reduction in interest charges from purchase price liabilities, improvement in financial result
Measures	Optimization of complex business processes with major customers (including DAX companies) with regard to contracts, services and invoicing Implementation of a central receivables management function Definition of relevant KPIs Conducting regular debtor calls, including with site managers (“cash is king” philosophy) Ongoing measurement (monitoring) and management of relevant performance indicators (KPIs)
Achieved results/outcomes	Ensuring complete, contractually compliant billing of services provided (“billing cycles”) Increasing customer satisfaction by improving billing processes and reducing transaction costs Improvement of relevant key performance indicators (KPIs), in particular Reduction in the proportion of overdue trade receivables (“overdue performance”) Improving the age structure of trade receivables (“ageing analysis”) Reduction in the proportion of unbilled revenues Reduction in the proportion of incoming payments that cannot (yet) be allocated (“unallocated cash”) Sustainably better cash flows and financial results
Special feature of the project	Dealing with large companies (e.g. DAX companies) is sometimes difficult due to their economic strength and complexity, e.g. optimization of business processes, payment of due invoices

Special features with regards to the style of leadership:

I ensured close and trusting cooperation in this project.

Contract-compliant billing and the improvement of key performance indicators (KPIs) require the involvement of various departments and individuals
From the company’s point of view, this is a “common problem” that can only be solved together
Establishing and maintaining contacts with various contacts at Group and company level as well as with the SSCs at BPO service provider level
Implementing and leading regular debtor calls to discuss performance and initiate measures to improve KPIs

I used “Job Design & Assignment Control” to ensure clarity.

Reviewing the organizational structure, updating job descriptions and clearly assigning activities and responsibilities
Adaptation of the organizational structure in Finance & Accounting by implementing the Billing & Accounts Receivables Manager function
Handover and promotion of personal responsibility, coaching and induction

I improved the framework conditions for success.

Providing clear definitions of key performance indicators (KPIs) and ensuring reliable ongoing measurement of these KPIs
Provision and automation of reports in relation to KPIs
Addition of an escalation process to the debtor calls to ensure that countermeasures are taken promptly by the responsible persons

I cultivated a constructive approach to stress and conflict.

Dealing with large companies (e.g. DAX companies) is sometimes difficult due to their economic strength and complexity
Constructively bringing about clarifications and decisions
Creating a fair and balanced equilibrium between the interests of the customer and your own interests
Acting as a “mediator” to balance opposing interests according to reasonable commercial principles
Ensuring relaxation / de-escalation in stress and conflict situations
Interest-oriented negotiation to find alternative solutions to settle claims, e.g. exchange bill financing, offsetting of mutual claims