Professional-Services Firm: Improves Cash Flow & Resource Utilization with Process Standardization, Automation

Situation: rapidly analyze operations and build momentum with quick implementation wins

This 600+ employee, private-equity-backed professional-services firm offers engineering and consultative services to numerous industries—ranging from utilities to oil and gas to infrastructure projects—across the country. Yet external and internal forces were hampering the CEO’s attempts to implement his strategic roadmap:

• Competitors were using the latest technology – including Artificial Intelligence – to do the same work faster and for lower prices.
• Overly complex processes resulted in delayed invoices and write-offs, resulting in cash-flow issues.
• Multiple systems created excessive—and often redundant—data entry by staff.
• Project proposal and setup data quality issues complicated resource planning, forecasting, and allocation. Highly-paid project managers and were flooded with avoidable administrative work – e.g., correcting timesheets.

The CEO, a 20+ year veteran of the company, needed to bring on board the managing directors of each division (5 total) to transform the organization. He enlisted The Lab to rapidly analyze wall-to-wall operations and build momentum with some quick implementation wins.

Project approach, Objectives

Phase I of the two-phased, company-wide effort started with process-mapping the current state for all key work activities spanning the entire lifecycle of a typical engineering project, including:

• Proposal
• Time & Expense Entry
• Project Setup and Launch
• Billing & Collections
• Project Execution

The Lab then benchmarked current-state operations against our proprietary industry best-practice process models. This best practice “gap test” exercise identified several areas of improvement. While the findings were not unexpected, the quantification of the issues, documented in detail during Phase I, provided the executive team with a business case to launch implementation.

Key findings:

• Scalable capacity, company-wide: 17% to 28%
• Process improvement opportunities: 125+ documented
• DSO delays traceable to avoidable billing errors: 20% to 25%
• Past-due invoices resulting in write-offs: 5%+

The Phase I findings were packaged into an implementation work plan that included 5 discrete “modules” for the executive team to choose from. As an implementation pilot, the CEO selected the module designed to address the organization’s cash flow issues. The CFO was appointed to sponsor Phase II implementation and report progress up to the board.

Implementation Work Plan Examples

1. Reduce non-billable hours for project staff

The Phase I findings revealed that project managers and managing directors were spending 25 to 30 percent of their time on invoicing. Another 20 staffers were dedicated solely to reviewing entries and invoices for accuracy. Contractors submitted one-off Excel templates for billing, which admin staff manually processed for time entry. The billing error-rate exceeded 90 percent—with most errors uncovered at the end of the billing process.

To address these issues, robotic process automation (RPA) was introduced to automate the review of invoice entries—and provide suggested remediation actions for invoice-approving managers. New rules and logic automatically captured timesheet errors—with dashboards installed to provide visibility to these errors as well as those for expense sheets and invoices.

2. Upgrade and standardize project setup

The current-state process-mapping from Phase 1 revealed that there were multiple ways to perform the same, simple tasks, such as creating proposals or setting up a new project in the ERP and other systems. In addition, external project trackers were being created in isolation by project managers. These multiple trackers alone led to duplicate data entries—and errors that cascaded across multiple systems.

To begin implementation, standardized, digital project setup forms were designed to capture the data required to configure a new project in the ERP and other systems. These forms were used as
input for automations that reviewed and add automatically entered the data in each system. These “bots” achieved several objectives:

• Decreased billing errors: Reduced downstream time entry errors from project staff by over 30% by limiting the number of available labor codes for each project.
• Reduced manual entry: Eliminated 40 to 60 minutes of manual, error prone setup work for each project – nearly 3,000 per year.
• Improved speed: Decreased delays in new project setup, eliminating the need for one-off trackers created by project managers.

3. Accelerate invoice payment

Fully 30 percent of outstanding invoices were beyond the 45-day contracted payment terms:

• Aging on past-due invoices averaged 110 days—more than 2x
• Ten percent of invoices were past due for more than a year
• Five percent of invoices were eventually written off due to errors or delays

In addition, there was no centralized location for viewing outstanding invoices.

To address these issues, a standardized escalation protocol for was introduced for invoice collections. New dashboards provided visibility into invoice errors and outstanding invoices. And RPA automation proactively generated invoice follow-ups, with response tracking fed directly to internal project managers via interactive Microsoft Teams notifications.