VOLT Streamlines Credit Risk & Receivables Management with Six Sigma Quality and Saves $1 Million Using EMAGIA

Volt Information Sciences Inc. (NYSE:VOL), a $1.9 Billion temporary staffing firm, needed a system around credit and collections to meet with a company-wide commitment to Six Sigma. Volt chose Emagia as their technical solution to build an efficient credit and receivables process in compliance with Six Sigma methodology for a system that would withstand changing business environments and ensure future advance. Since implementing the Emagia solution, Volt has seen significant reduction in bad debt totaling close to $1 million, savings of $200 K from overtime pay stemming from system automation of repetitive tasks, tighter control of DSO and most promisingly, Volt was able to further its Six Sigma initiative to build a sustainable solution platform for future growth.

Volt Information Sciences, a $1.6 billion temporary staffing agency, was faced with the challenge of managing over 150,000 invoices a month and related credit limit requests from its broad base of 7000 customers. Volt customers span from micro-businesses to Fortune 100 companies, requiring an accurate and efficient system to qualify and prioritize new customers in order to properly manage receivables and disputes. Improving its credit-to-cash cycle was considered to be a key component of reducing Volt’s bad debt expense.

Volt has a company-wide commitment to Six Sigma and realized its transaction quality could easily be applied to its receivables department. Understanding that the most effective and long-lasting route to a high quality process begins with a good foundation, Volt embarked on a Design for Six Sigma (DFSS) initiative centered on its credit and collections process. After evaluating a number of solutions, Emagia was clearly seen as the best fit for Volt’s Six Sigma driven receivables department.

The Challenge: Streamline credit risk and receivables management

Volt’s credit and collections department had been using its PeopleSoft ERP and other systems to perform its credit and collections activities in a patched and ad-hoc fashion; the process was inefficient centered on highly manual tasks and paper-driven processes with limited reporting capabilities. Volt’s credit manages were hindered by paper forms and stale data; by the time they identified a problem, the company was already in reactive mode. Researching billing disputes by customers would result in lost productivity and frequently lead to the open item being written off. Inability to prioritize higher accounts with more potential to impact cash flow affected cash collections.

The complexities and transaction volume of Volt’s industry posed challenges both within the credit qualification and receivables management processes. Volt was struggling to gain a comprehensive view into its A/R portfolio. The credit and collections team was unable to identify customer payment patterns and value receivables exposure resulting in credit risk to its customers. This need for both a streamlined process and operative supporting system prompted Volt to approach its credit and receivables with a Six Sigma design anchored with first-class technology.

The Solution: Fuse advanced Emagia cash flow solution with Six Sigma methodologies to elevate receivables performance

Volt chose to implement the Emagia solution as their technical tool around collections, dispute management and analytics in the credit-to-cash cycle. Below are a few of the Emagia functionalities employed at Volt:

• Complete, end-to-end visibility into receivables portfolio with clear view of A/R exposure across broad base of customers
• Intelligent collections workbench providing instant, consolidated access to all necessary accounts and supporting documents
• Automatic prioritization of collectors’ daily tasks maximizing value-added time and efficiency
• Disputes stuck in resolution process automatically escalated to higher levels of management via email with instant access to online timecard information
• Automation of repetitive tasks such as emailing, faxing of invoices, statements, dunning letters, etc.
• Work-flow enabled collaborative dispute resolution
• Comprehensive aging / dispute resolution / receivables management reports to accelerate cash collections and to identify and limit credit risk exposure
• Flexible business rules to create collections strategies to align collectors’ tasks with company’s financial objectives and ability to highlight opportunities for process improvements

Emagia’s cash flow management solution exceeded Volt’s requirements for ideal cash flow. Integration to Volt’s PeopleSoft ERP and timecard systems enabled the consolidation of receivables information across more than 300 offices and drove faster dispute resolution. Additionally, Emagia provided a high level of customer service and post go-live support, ensuring a smooth implementation with sustainable results.

Bottom Line Impact: Significant reduction in bad debt expense; Savings surpass original expectations

Using the quality driven approach of Six Sigma methodology to A/R along with the best-in-class technology of Emagia has paid off for Volt. The end result of the process was the following:

• Over $750,000 savings in bad debt write-offs
• Over $150,000 savings in overtime pay and direct expenses
• DSO reduction for critical customer accounts
• Flexible, reliable Six Sigma based platform for sustained growth and continued ROI

The process improvements and cash flow management solution have significantly improved cash flow and brought in savings of nearly $1 million with additional, ongoing savings projected in the future. Lastly, the Emagia application provided a technical foundation to drive Volt’s Sigma initiative with a continued focus on ongoing improvement.