Cost Reduction Plan Saves 2000+ Man-Hours During Divestiture
Any cost reduction plan implemented in the context of an acquisition or a divestiture must take into account the transition of technology and utility invoices and services from one organization to the other. If not carried out efficiently, these operations can become a huge time draw for the Accounts Payable departments of both parties, and seriously curtail purported cost reduction benefits.
RadiusPoint handles all invoice processing and service transitions for clients around the globe during this type of large-scale operations. Our in-house team helps smoothing out the transition process for both sides. RadiusPoint prefers to get involved at the very outset of these projects to ensure deadlines are met, cost contained, and all technology/utility invoices and services transitioned seamlessly.
Problem
A Client sold a division of their organization that included telecom, long-distance, wireless, electric, gas, water/sewer, and trash invoices. As part of their cost reduction plan, the acquiring company hired RadiusPoint to handle the transition process and take over the monthly technology/utility billing and service management once all services were transitioned.
Challenge
RadiusPoint had to complete the Transfer of Liability on the invoices within deadlines. As invoices were consolidated for the most part, service sub-accounts had to be tracked and transitioned to new accounts. Additionally, due to the timing of the transition, the divesting organization was liable for costly early termination fees and shortfall penalties under a Minimum Annual Revenue Commitment (MARC). Finally, in view of the volume of documents to be handled and the scope of the negotiations to take place, the Accounts Payable departments of both companies were facing a huge HR challenge that the RadiusPoint team had to absorb.
Solution
RadiusPoint successfully completed the Transfer of Liability on the technology/utility invoices on time, obtaining all necessary documents for both companies to execute, then working with technology/utility vendors to ensure document validation. Once lines and services were transitioned, RadiusPoint audited all vendors’ invoices to confirm that lines/services were seamlessly connected and billed at the correct rates.
The RadiusPoint team worked with the vendors’ account teams on consolidated invoices to transition all sub-accounts over to new accounts. Using ExpenseLogic®, our proprietary SaaS platform, our team identified the line/meter inventories billed under each sub-account and worked with the account reps to set up new accounts under which the corresponding services were moved.
Through a mid-contract negotiation reducing the Minimum Annual Revenue Commitment (MARC), RadiusPoint was able to avoid early termination fees and shortfall penalties for the divesting company.
Results
All operations were completed on time, the transition process was smoothed out, and the cost reduction plan implemented efficiently.
As part of this cost reduction plan, RadiusPoint inventoried all phone lines to be moved over to the acquiring company and worked with the technology vendor’s representative to add the transferred numbers to the acquirer’s corporate account: instead of billing the acquirer at a casual rate on long-distance services, the account representative used the inventory provided by RadiusPoint to change the PIC/LPIC, placing the additional lines under negotiated corporate rates.
Hiring RadiusPoint to handle the transition of invoices and services enabled both client organizations to save 1,000+ man-hours of work each, relieving their respective AP teams from tremendous pressure.
In addition, RadiusPoint being in the unique position of working for both the seller and the acquirer, they both avoided the extraneous costs resulting from the usual pitfalls of an acquisition process.
In our experience facilitating the transition of technology/utility invoice processing and services in the framework of acquisitions and divestitures, the earlier our team is involved in the process, the smoother the process and the better the outcome. ExpenseLogic, our SaaS platform, plays a pivotal role in enabling our team to track and assign all technology lines and services to numbers, and all utility services to meters. This paves the way for better technology expense management and utility expense management as our clients benefit from billing audits, invoice processing, cost allocation, and granular business intelligence reporting.
We look forward to discussing and analyzing with your CFO, COO, and CIO the way our experience in TEM/UEM/MMS and our ExpenseLogic SaaS platform will support your organization in its strategic moves and cost reduction plans.
Additional resource:
Gartner’s 2021 TEM Report