Mergers & acquisitions tend to generate their own margin-depressing cascading effects at Procurement and Accounts Payable levels. Even for a well-staffed organization of a large size, the onboarding of new vendors offers real challenges in the form of data overload and uncontrolled processes.
We published multiple case studies on the topic, showing how the seamless TEM/UEM process we implement helps reducing these negative effects. Our objective is in part to preserve the intended cost savings and cost avoidance benefits of mergers, and in part to harness future TEM/UEM cost creep. This short case study gives another example of the effect of our BPO services.
Challenge
A nationwide manufacturer/retailer had retail stores and manufacturing facilities across multiple states. They were considering to hire RadiusPoint and use our SaaS platform ExpenseLogic for their utility bill management. However, they were reluctant to make a decision as they thought it would eliminate a position in their Accounts Payable department. Yet, the manufacturer was experiencing fast growth, both organically and through mergers & acquisitions, at a rate of almost 100 stores per year.
As a result, they were experiencing bottlenecks and other non-optimum situations:
- Routinely handled 30,000+ invoices monthly
- Didn’t have enough time to review monthly vendor statements
- Store growth heavily taxed Accounts Payable resources, with even more pressure ahead.
Opportunity
RadiusPoint offers an expertise of 30+ years in utility bill audit and management. We have developed the technology and know-how required to process, audit and pay the utility bills of any large organization —whatever its size— in a cost-efficient manner. Additionally, our MACD Help Desk system enables clients to add new locations to their user account effortlessly. These
RadiusPoint’s proprietary software, ExpenseLogic®, also automates the big-data reports necessary for budgeting, forecasting, conserving energy, etc. This granular business intelligence becomes vitally important when a management team pursues aggressive growth through mergers & acquisitions.
Solution
Eventually, this organization retained RadiusPoint to process and pay all of their stores’ utility bills, as well as to set up all new locations as they were created or acquired, thereby ensuring that utility services were connected or changed over on time and seamlessly.
What did we accomplish?
- RadiusPoint took over our client’s utility bill processing and payment, with the benefit of a monthly billing audit
- The new set-up relieved some of the pressure weighing over the AP team, enabling them to review other vendors’ monthly statements for accuracy
- No utility invoices were dropped or utility services disrupted at any of the acquired stores
- Our client was able to avoid hiring two new AP staff to handle the new locations coming onboard.
End Result
RadiusPoint effectively eliminated the pain points of utility bill management in the context of a rapid growth by mergers & acquisitions, and generated a very significant 500% average annual ROI for our client.
A final note on mergers & acquisitions
Based on our experience, non-optimum situations will inevitably develop during a merger or an acquisition, with negative cascading effects. These typically unfold in this way:
- Accounts Payable staff will experience a sharp increase in their workload
- The onboarding of new vendors (from the acquired business) will generate its own errors and omissions
- The Accounts Payable team will have less time to assess procurement contracts and proceed with billing audits
- The acquisition’s utility services may not be properly inventoried and tracked to the meter number
- Billing errors will slip through the cracks, with significant associated costs for the acquirer
- These shortcomings will negate some of the intended benefits of mergers & acquisitions, reducing their prospective ROI
- These errors may go undetected for years, amplifying the effects of unnecessary costs on the P&L
It is fully possible to eliminate the negative cascading effects of mergers & acquisitions by hiring a TEM/UEM specialist like RadiusPoint from the inception of an M&A operation and its subsequent integration process.
RadiusPoint has developed a full methodology to prepare adequately this BPO intervention, and implement it smoothly during the very early phase of an integration, thereby ensuring intended cost savings and cost avoidance benefits won’t evaporate in the process.
In ExpenseLogic, our proprietary business intelligence SaaS platform, billing audit, correction, and processing to payment is a straightforward matter. Our team of experts sets up the account and the data capture process in such a way that all technology and utility bills are tracked to the line, meter, and location.
The big data-like analytical reporting capabilities of ExpenseLogic then give our clients’ management team the actionable business intelligence needed to make faster and well-informed decisions.
If your organization is in the process of acquiring a target company, or adding new locations through organic growth, there is no better time to call us and avoid the above cascading effects. Consult with our experts, and have a clearer roadmap to a successful outcome in terms of ROI, cost savings, and cost avoidance in the context of your mergers & acquisitions program.