Back in the (cash) flow PROJECT 1

Rethinking customer billing

At Heritage Environmental Services, Chief Accounting Officer

Todd Williams has discovered the power and potential that Lean Six Sigma has for leading complex change throughout an organization. He and his team used data uncovered in the Lean Six Sigma process to point out problems, get alignment on solutions and create a culture shift that made a positive impact on the bottom line.

Todd’s team started with a high-level goal of reducing HES’s Days Sales Outstanding (DSO), the average number of days it takes a company to collect payment for a sale. DSO is impacted by two key areas:

1. The time it takes to get an invoice into a customer’s hands

2. How quickly the customer turns around that payment

Todd’s Green Belt project focused on the first of those timeframes while an additional Green Belt project, led by team member Jackie Morehead, focused on ways to ensure customers pay on time.

Getting invoices to customers

Initial analysis revealed what the team was doing well: On average, HES billed customers within four days of receiving waste at their treatment facilities. But there was also a set of transactions that was taking significantly longer to finalize.

Green Belts are trained in both Lean and Six Sigma improvement methodologies and complete a process improvement project as a part of their certification. They are then prepared to do additional projects and use the tools in their daily work.

“When our team set out to discover what was causing the delays, we found areas where other teams — Sales, Customer Experience and Operations — were impacting the invoicing process,” Todd said. With data in hand, the teams aligned on how to drive process improvement and invoice more quickly. “The actual data helped people see how their daily work impacted billing,” Todd said. “Once they understood, they were all in.”

Getting paid

Jackie’s project led to a clear awareness of how a culture of kindness and customer service had led many HES customers to take advantage of the company, paying more than a month late.

“We work hard to take care of our customers’ hazardous waste in a safe and compliant fashion. It’s not bad service to expect them to pay us according to terms we agreed upon,” Todd said.

Again empowered with data, the team drove a two-word culture change throughout HES: Customer Accountability. And a key element of that accountability is a policy on when to suspend service to customers who were really taking advantage of our kindness.

The new culture led to alignment among decision makers on when to refuse service to customers who weren’t being accountable. “People finally understood,” Todd said. “That moment was huge!”

Making money move

When Todd and his team began their Lean Six Sigma journey, the DSO was 100+ days and customers paid 40 days late. Today the DSO rate is 74, with customers paying an average of 21 days late.

“With these changes, our team has helped generate more than $16 million in cash flow,” Todd said. “And we’re not done yet.”

Teams in other business units are also leveraging what Jackie and Todd learned to improve their own DSOs.

Days Sales Outstanding (DSO) is the average number of days it takes a company to collect payment for a sale. Through the Lean Six Sigma process, Todd Williams and his team used data to change company culture and encourage more customers to pay on time.

PROJECT 2