White Paper Created by:
Innovative RMR Solutions, LLC
John M. Mickner, President/CEO

Executive Summary

With today's economic challenges, most businesses are cutting costs- both variable and fixed costs. In many cases they want to expand their geographical footprint, increase their customer base, or simply maintain the same level of service their customers are used to. In a business world of ever increasing regulation and rising service and HR costs, this sounds impossible, right? As a CEO, CFO, or Accounting or AR department manager, you are responsible for growing the company, hiring and training additional employees to accommodate this growth and, of course, do this while holding the bottom line to stay competitive in the market place. The pressure seems to come from everywhere and your staff feels it too. How can you balance the needs of cutting costs, while at the same time hiring additional workers to make the expanding business successful? We believe that to do this, companies should invest in a virtual staff strategy. So do a number of highly respected consulting companies who define a virtual workforce or staff as:

A group of employees who do not work in a corporate headquarters. These workers could include mobile workers, telecommuters, branch office employees, business partners, contractors, outsourcers, and others types of workers who do not come into an office on a regular basis.

To understand the growing trends around virtual staff strategies, Innovative RMR Solutions and its strategic partners decided to attend expos and conferences and held one on one interviews with CEOs CFOs and Accounting and AR managers in the Electronic Security, Pest Control, Waste Management and Propane industries. Since we have clients in each of these industries, we were able to get solid, first hand information to better serve them and to help us to improve our strategies.

We found many commonalities:

• These industries are all subscriber and service based
• Companies in all of these industries depend on Recurring Monthly Revenue (both current and new) and competition is fierce.
• Companies in these markets are actively seeking to expand the business while at the same time improving their customer service practices and cutting costs where possible.

This makes a great case for virtual staff solutions.

Virtual Staff Solutions bring many benefits to any RMR type business such as:

• Reduced print/mail and supply costs by a minimum of usually 25% with most saving more.
• Improved worker productivity
• Help to meet business objectives
• Improve customer service
• Less costly business expansion

Virtual workforces bring many benefits to the business such as reduced facility and variable costs, as well as improved worker productivity, which are top priorities for more than three-fourths of the organization we spoke to.

Organizations Must Cut Costs - But Not At The Expense Of Growing The Business

Table 1: In the Current Economy, Lowering Costs Is a Top Priority

Given the current economy, how important are the following priorities for your business over the next six months?
Results as a percentage of all participating companies

• Improving customer service will be a key priority for the next 18 months and beyond. In ordinary recessions, organizations are forced to cut costs wherever possible. However, in today's economy, simple cost cutting won't do. Why? Because organizations must look to the future now and be competitive today. This means balancing simple cost cutting with strategic spending. Therefore, now is the best time to kick customer service organizations into high gear. Why? Because customers remember how you treated them in the tough times. Because of this, it is not surprising that, looking forward, more than 85% of companies named improving customer service as a top priority. Remember, in this economy, it is more affordable to keep an existing customer happy than to acquire a new customer.
• Yet focus on expanding the business cannot be overlooked. Today's companies are looking beyond the here and now. They are looking at opening more branch offices, working on mergers and/or acquisitions, and using customer service contacts to upsell more products and services and get referrals.

Companies Will Recruit, Develop, And Retain Talent To Meet Their Growth Objectives

With business expansion driving many of the critical decisions being made over the next year, companies will need to tap into their human resources department for help. Why? Because building up an employee base to tackle this new growth will be the key to the business success. This puts pressure on HR departments to meet these new business requirements by attracting and retaining top people. H.R. personnel will:

• Focus on attracting top talent . . . In times of a struggling economy, companies can be much more selective in who they choose to attract and retain. And in doing so, companies tell us that they are open to a much more diverse set of workers than may have been utilized in the past: remote, part-time, and outsourced workers.
• . . . while simultaneously trying to lower the costs of recruiting. With all of the hiring that must occur as the economy recovers, HR professionals must find ways to cut costs associated with recruitment. Some potential ways this cost cutting can occur is through the hiring of outsourced workers. They also eliminate the costs of benefits, taxes, worker compensation, etc.

Table 2: Worker Retention And Satisfaction Will Drive HR Decisions

"To the best of your knowledge, how important are the following priorities for your human resource (HR) department over the next 12 to 18 months?"

To meet this worker recruiting and retaining need, many organizations are looking to enable more effective virtual workforce programs. Not only does a virtual workforce promote a better work environment for employees, but it also benefits the business as well.

Virtual Workforces: The Key To Cost-Effectively Growing Company Talent

Virtual Workforces Promise To Solve Top Business And HR Objectives ... and can do a lot more than support the business's changing worker population; they can also help companies meet their overall business objectives, such as expanding the business, and HR objectives, such as improving satisfaction. Virtual workforces allow companies to:

• Reduce facility and travel costs.
• Improve worker productivity and customer service.
• Improve employee satisfaction and work/life balance.
• Solve the top HR priority - worker retention.

Table 3: Improving Worker Productivity And Customer Service Drive Business Interest In Virtual Workforces

"Of the following, what are your business interests in moving toward a virtual workforce?"

Table 4: Worker Retention Drives HR Interest In Virtual Workforces

"Of the following, what are your human resources interests in moving toward a virtual workforce?"

IT Departments Are Critical In Executing A Virtual Workforce Strategy

To meet the business objectives that today's organizations demand, such as lowering the cost of facilities or expanding the business quickly, IT must step in. IT is the critical lynchpin that can create and support a virtual workforce strategy that will enable organizations to see the cost cutting and expansion they need.

Critical to the support of "anytime, anywhere" workers. Eighty percent of our respondents told us that providing anytime, anywhere support to workers was very important to their IT departments. Furthermore, more than 85% of respondents believe that providing workers with access to their applications and data, regardless of their location, are other important hot buttons for IT departments.

... Supported By Traditional Infrastructure

Networking infrastructure. When supporting a virtual workforce, there are three key technology components that deliver a productivity environment to users: 1) the virtualization technologies (usually housed in the data center); 2) the end user device; and 3) the networking infrastructure that connects it all together. Using technologies such as WAN optimization and VPNs, organizations can provide workers with a quality connection and experience when connecting remotely to company resources, while at the same time assuring that all connections to desktops, applications, and data are secure - solving top IT concerns from our respondents.

While all of these virtualization technologies and traditional infrastructure have their place in supporting a virtual workforce, it is important to note that each of these solutions puts more control back in the hands of IT and helps them meet business objectives.

Take A Three-Step Approach To Make A Virtual Workforce A Reality

Creating and supporting a virtual workforce is not easy, yet we know it will be key in helping organizations meet their objectives in areas such as lowering costs, improving customer service and expanding the business. Thankfully, IT now has the tools at its disposal to implement a secure and compliant virtual workforce. This means that IT is no longer the inhibitor to business success, but instead, it can align with business needs in a cost-effective manner. To get this right, we recommend that companies focus on three key initiatives.

Step One: Make The Business Case For A Virtual Workforce Program

Growing the business is no easy task - especially when you consider all of the costs associated with doing so, namely the new facilities and IT infrastructure that will be required as well as the recruiting costs for the new workforce that will be needed. Additionally, improving customer service in many cases means putting employees where your customers are - so, again, new offices means more expenses.

These real-life problems are great starting-off points for building your business case for a virtual workforce. Consider the cost savings of hiring virtual employees for your newly targeted areas at a flexible location instead of a headquarters office.

Consider the revenue opportunities of keeping your employees near your customers without the high costs of operating a full IT infrastructure in your branch office. Alternatively, think about the increased recruiting base your HR team would have if location didn't matter - if hiring the most qualified worker meant just that, and not just the most qualified worker in a specific city. All of these criteria should be considered when justifying your virtual workforce program.

Step Two: Start With A Small Departmental Or Location-Based Pilot

Next comes the thought exercise: Where will a virtual workforce fit well in your organization? Is there a department or business function that has more needs than another? Is there a branch office that is not filled to capacity that could be closed if employees worked from a virtual location? Would outsourcing print and mailing of invoices free up staff to perform more critical or growth oriented tasks? Would you like to make welcome or customer service calls to newly acquired customers in the sweet spot hours without tying up staff?

Regardless of your scenario, find the group (or groups) that you feel would most benefit from going virtual and set up shop.

Step Three: Demonstrate Benefits To Expand Your Virtual Workforce

With your small pilots in place, it's now time to take a step back to see where your cost savings existed. Where did this test group face challenges, and where were the benefits? Make sure that current objectives are being met with the program, such as faster growth opportunities, serving more customers at a lower cost, and improved worker satisfaction and retention. Work through any potential concerns they raise and extend the pilot to new groups with different demands. You will find that in no time, your virtual workforce - supported by client virtualization technologies - will enable your business to meet your objectives: cutting costs, but not at the expense of growing the business.

Business process outsourcing is not a new idea-just more timely and attractive now. What has changed is the flexibility and offerings available from outsourcer's like CTP Solutions. The current economy and new technological demands are leading more business billers to transfer certain processes to outsourced providers.

Third party outsource vendors compete for your business.  Vendors like CTP Solutions must stay competitive by hiring qualified staff to maintain and support the latest technology that drives savings.

Labor intensive business process activities can often be performed faster, better and more cost-effectively when outsourced to providers who can share economies of scale. The bad economy hastens the business managers need to free up scarce cash for deployment to core business functions.

Providers like CTP Solutions offer a greater flexibility in solutions. Businesses today are increasingly receptive to outsourcing. This makes the business case for outsourcing more appealing for traditional businesses.

Through outsourcing, an organization’s cash is freed up by reduction in the amount invested in the business operation, and hence can be invested in more productive areas. Business process outsourcing provides a strategic alternative that meets all of the P&L manager’s business objectives in a severe economy.

This paper will examine the business outsourcing cycle and describes one companies dilemma  and how they used CTP Solutions as a third party outsource provider to cut costs quickly, avoid new capital investment, remove assets from the balance sheet, and address reporting and compliance burdens.

Overview
Through growth, acquisitions and mergers, this business grew to a dozen companies serving 140,000 residential and 20,000 commercial and industrial customers in 17 counties. This expansion presented numerous challenges integrating efficient business processes. The need was to improve the delivery of bills, statements and collections services across a diverse group of companies, while enhancing customer loyalty. Accomplishing these goals as economic conditions worsen required a solution that also cut costs.

Company
This business was founded in 1972 and has 5 major divisions in different services and geographical districts integrating all divisions with a single solution would enable substantial benefits in the following areas:

Economic Factors
Headlines continue to broadcast bad news about our current economic crisis. The weakening economy is forcing companies large and small to implement dramatic cost-cutting measures to offset losses. Corporate billers have not been immune to this crunch. With less money available, many consumers are strapped for cash and unable to make their payments for utility services, insurance, medical bills, retail shopping and more. According to a recent poll in the U.S. regarding payment delinquency, 13 percent have a credit card payment that is 30 or more days past due, 9 percent have a loan 30 or more days past due, which is a 58-percent increase in the past year. Six percent have a mortgage payment that is 30 or more days past due, a 65-percent increase in the past year.

Outsourcing Alternative
The current environment has driven businesses that just a few years ago had no interest in outsourcing business processes to reconsider their stance. The pendulum began to swing sharply away from investing in in-house systems and staff.  Currently, about 61 percent of businesses manage their core business processes in-house. Outsourcing is now more popular than ever as capital investment for operations is tightly rationed, limiting outlays to those compelling business cases, high returns on investment (ROI) and low risk. Consequently, long-term infrastructure investment decisions, including non-mandatory investments in non-core business processes, are being deferred while management focuses on short term strategic necessities.  In the current recession, business managers with P&L responsibility must take immediate actions to improve their organizations.

Budget Shrinkage
Flat and declining budgets make it harder to maintain service levels that meet or exceed Customers' needs and expectations. There is intense pressure to cut costs, stretch budgets and keep business processes in compliance. Resource constraints make it increasingly difficult for business to maintain and retain customer brand loyalty.

Eighty percent of companies identified cost cutting to be the key financial driver for outsourcing, according to a recent survey. Many companies identified that the priorities are to reduce discretionary spending and cut costs through consolidation and outsourcing. Outsourcing of business processes is becoming increasingly attractive, because it delivers the following benefits:

CTP Solutions
TThe outsourced business processes offered by CTP Solutions is their core competency. They understand that success means meeting the needs of their customers by concentrating on their core functions. CTP appreciates that a quick and efficient application of best practices and keeping their products and services on the cutting edge are requirements. They must deliver preeminent service, including increasing resource capacity when necessary and remaining compliant with both the agreed upon service levels and the customer reporting requirements.

CTP as a third party provider is an essential partner for business billers. CTP consistently demonstrates strong evidence of savings from outsourcing business processes. Savings for business billing is 25-30 percent lower versus in-house budgets for the same processes.

Getting Paid
The primary objective is to get paid for services already delivered. In these challenging times, it is critical that organizations receive and post customers' payments quickly and accurately. However, the world of collection tools and lockbox processes are changing rapidly: Declining paper check volumes, the increase in electronic payments and the advent of multiple consumer convenience payment channels are only a few examples. It is not an easy option for any business to update these process operations while also managing their service costs. Business billers need to determine if their existing systems can readily adjust to this evolving world of payments and if they can keep pace with rigorous reporting and compliance requirements, while still keeping up with the ever changing best practices.

Most billers have found their in-house solutions nearing the end of their technological life, resulting in an immediate need for financial investment. For many midsized billers, the question is whether or not they have reached the tipping point where it is no longer economically practical to continue handling their remittance/lockbox processing in-house. Along with system issues, every business needs to examine staffing expenditures. Two thirds of payment processing costs are staffing related; therefore, cutting headcount can quickly save cost.

The key functions performed by in-house staff include mail preparation, extraction, keying and balancing. CTP as a third party vendor can provide these activities and other 24/7 staffing activities more cost effectively and efficiently due to volume based economies of scale. In addition, new availability policies for paper check payments converted into ACH debits via ARC and Check 21 based Image Cash Letters (ICLs) have created an opportunity to extend deposit cutoff times and permit payment processing work to be spread advantageously throughout the day and across facilities. This can improve operational efficiencies for larger processors that often have multiple facilities distributed across the country.

Deliver Bill and Statements
The next concern is to deliver bills and statements promptly to improve collections and reduce Days Sales Outstanding.  Accuracy is a key to prevent any delay in the payment process. Efficient billing systems help organizations maximize their receivables management operations and reduce the expenses associated with supporting a variety of communication and payment methods - platforms. For example, using full process or highlight color and flexible billing stock on paper statements can lead customers to respond to the bill sooner— up to 30 percent of recipients will pay more quickly than with black-and-white bills. Similarly, electronic bill delivery can improve cash flow by speeding up payments and reducing mail float, while paper bill suppression helps provide significant incremental cost savings. Major benefits can be achieved in the short term by leveraging the latest paper and e-billing services, but billing may be a difficult area to fund given other competing priorities in the current economy.

For this reason, the company decided to outsource their print and mail functions to CTP Solutions experts. As electronic delivery is growing, document archival solutions are required with integration capabilities. CTP Solutions specialized statement printing and mail shops are going beyond merely supplying companies with billing delivery, traditional remittance processing and/or electronic bill payment. CTP Solutions is helping companies leverage their entire statement and receivables processes through state-of-the-art communications and payment tools. With all of these payment choices, billing is becoming increasingly intricate, and meeting expectations can be overwhelming, if not impossible, without assistance from third parties who can provide up-to-date and readily integrated systems. As with the management and implementation of other business processes, it is expensive for any business to maintain expertise and systems to deliver services economically in this complex and ever-changing environment. CTP Solutions reduced the complexity while cutting costs.

Paper Bills and Statements Are Declining
Paper statement print and mail is forecast to follow a downward trajectory. United States Postal Service research shows a small but important decrease in the number of paper bills and statements received per household between 2005 and 2008. This is a sign of a turning point as consumers are increasingly adopting e-bills and Paper-Turn-Off (PTO) of monthly statements for convenience, for environmental benefit and to reduce costs. Recent studies report that respondents regularly received at least one e-bill.
                                                         
Consumers indicate that the most appealing features of e-bills were due-date reminders, convenience and assurance that bills are never paid late. Some billers today are charging fees for paper statements which encourage customer adoption of eStatement delivery integration with bill pay Web sites. Through a variety of methods, a company can reduce costs by driving faster adoption of paperless billing. The cost and benefits are significant, but the shift creates the need for careful investment and resource planning when it comes to print and bill - statement delivery. The best results are realized when print and e-billing operations are integrated to drive maximum efficiency in bill messaging, customer-preferred bill delivery method and bill treatment based on payment history, all of which can be successfully delivered in a more cost-efficient approach by CTP Solutions.

Compliance Requirements 
Compliance requirements for most companies is becoming more difficult, especially due to the conflict between how customers’ information is presented to them, how data must be protected against breaches and fraud, and how to provide various government agencies with information.

Retain and Grow Customers
The third focus during this economic downturn should be retaining profitable customers and minimizing charge-offs. In normal times, businesses apply traditional predictive analytics to maximize customer acquisition, minimize credit risk, and drive retention and usage. Today, marketing analytics and risk models must change direction rapidly to drive a laser-like focus on profitable customers for both acquisition and retention. The models must predict default rates using nearly real-time assessments, optimize collection tactics on slow paying customers, re-price unprofitable accounts and reduce risk by lowering credit limits and/or closing inactive accounts. Traditional methods of mathematical model building and campaign execution are simply too slow and often inaccurate given the potential for rapid deterioration of customers’ personal financial situations. The campaign management systems used to support modeling, data scoring, list compilation and customer communications are IT resource intensive to set up and expensive to acquire and maintain. Many billers can execute only three to four new campaigns per year, but need to be testing three to four times that many in order to meet the changing needs of the business. Hosted outsourced marketing analytics tools from CTP Solutions are available and able to help businesses meet their needs for new customer acquisition, customer risk management and customer retention campaigns.

Outsourcing Benefits
The desire to integrate business processes was advanced by the current business environment.  Today many companies outsource to CTP Solutions services such as remittance processing - bill - statement print and mail - eStatement delivery and lockbox services which integrates all business processes saving time while becoming more efficient and improving the bottom the line.  

Problem - Print and Mail - Reduce the cost of postage and staff
     Solution - Develop and Integrate electronic delivery of bills and statements which enables customers to select between USP delivery or electronic delivery. Integrating the Print and Mail processing with an Online Billing Solution to enable customers electronically to receive and pay bills in a secure and timely manner.
     Savings - Projected Cost Savings for 2010 $19,160
     Additional Benefit - Improved Cash Flow - electronic delivery reduced time and enabled customer to pay online.

Problem - Collections Activities - Ineffective and costly in-house and outsourced collection efforts
     Solution - Developing a cost effective Collection Program designed to meet the Waste and Environmental Services Group's specific needs. The new solutions improved the resolution rate of delinquent accounts by 12% and greatly reduced Bad Debts.
     Revenue Recovered - Projected Additional Revenue Recovery for 2010 $47,695
     Additional Benefit - Customer retention and internal staff relieved of the burden of collection calls

Problem - Merchant Processing - Excessive Credit Card Costs
    Solution - Utilizing CTP Solutions Merchant Processing Solution that specializes in the Waste Industry
    Savings - Projected Annual Cost Savings for 2010 $48,000
    Additional Benefit - Improved reporting and customer support

Problem - lockbox Processing - - Lockbox processing costs -lockbox "exceptions" are very expensive to process at times costing over twice the normal item processing cost. All payments that are generated by Online Banking Payment Applications will not include the remittance stub from the bill, hence this becomes an "exception" and an expensive item to process.
     Solution - Check Intercept- an application included in CTP Solutions Online Payment system that intercepts Online Banking Payments that are "drawn in". Enabling "processed as payment" eliminating the need for the payment to be sent to the lockbox processor
    Savings - Projected Annual Cost Savings for 2010 $11,840
    Additional Benefits - Eliminating the need for the internal staff to match up the "exceptions" manually.

Combined Savings - Projected Total Annual Cost Savings for 2010 $126,69