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Thursday, May 30, 2019

Buying Time in the Cash Cycle

posted by: Ben Heitner, Business Transformation Lead for AR, DJO

Leading organizations are actively pursuing a new approach to accounts receivables (AR), looking for ways to shorten days sales outstanding (DSO), reduce transaction fees and even strengthen customer relationships in the process. At our most recent Summit, Ben Heitner of DJO talked about implementing a new approach to AR, prioritizing efforts and setting strategic achievable goals.

The short story

DJO was recently acquired by a new public holding company. With this transition, it was understood that we would continue to operate fairly autonomously as long we continued to advance the financial picture. Speeding up the cash cycle was an obvious first target. Full disclosure, the channel president that initiated this project had prior experience with GHX and so was familiar with the collaborative approach that GHX engages and with the network effect from working with healthcare-specific solutions. DJO selected it’s fastest growing channel — surgical — as the first business unit to engage with GHX on a new e-payment platform. This particular business unit is unique to the company in that it experiences a longer payment cycle. Therefore, every day that is reduced from surgery to payment is valuable. 

The surprisingly short story, implementation

We went from the directive of “go do it” to “done” in just 110 days. The plan for ramping up seemed ambitious, but implementation was not an IT project and therefore not hindered by the usual technology delays. It could have been completed even faster but we were the stumbling block. As with most organizations, priorities can shift, resources need to be temporarily focused on other areas but the GHX team kept the implementation moving forward.

There is always something to learn

We achieved 94 percent of our first quarter goal and anticipate a similar result in Q2 applying what we learned so far from our initial rollout. We saw that by educating our sales team on the benefits of the new platform was a way to expand utilization with customers. Our sales team is positioned to advocate for us in this relationship that is already established, where there is ongoing communication and is a valuable opportunity to find a mutually beneficial solution. They can work with the customer and help them get what they need, early pay or acceleration, and we gain value on our side as well.

It would be ideal for us to completely cease acceptance of high-transaction cost cards, but that is not always realistic. Because of the variety of conditions that can impact payment goals and circumstances surrounding different account relationships, there will be times that a customer will need to complete payment through a different mode. But clearly, this e-payables platform delivers value on the healthcare provider side too because it’s not always us reaching out. We have been surprised by the number of customers that have found us on the platform first. These customers are communicating to us that they want to pay through the GHX ePay platform.

Strategically select the accounts where it will make measurable business sense to move to the new e-payment platform. Know where the barriers lie. Is it a growth area where the volume will make a big difference or is the current payment behavior serving the needs for both you and your customer? The key for us now is finding a way to bring the other business units over where the solution makes the most sense.

Next Steps

Everybody has their own happy path—how they want to pay and to be paid, we all live on priorities and market conditions. Now when we are asked, “Can we pay you another way?”, the answer is yes. We have limitations, but internally and from a customer experience perspective, we always want to be aware of what we can do better. 

We see the results from this implementation and will continue to increase the volume with the customer segment where we first engaged. Because of the initial results, we are actively expanding to other business units and engaging additional customer segments.

In order to optimize our efforts, we are addressing our approach to drive adoption and working with GHX to meet our new goal. The success of this implementation has led us to explore other GHX solutions for price alignment, to eliminate waste and to optimize processes so that we can prioritize more high-value work.

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