Core Health & Fitness is a manufacturer of fitness equipment, most notably the StairMaster, Nautilus Strength, Star Trac and Schwinn brands. We recently published a case study about its use of Esker’s Collections Management tool after talking with Corporate Credit Manager Sy Mares. Below is an edited and condensed version of our conversation.
Esker: Sy, thank you for joining us today. We’re really excited to talk with you and hear about all the things you’ve done with your Esker solution. Could you start by stating your name, title and what you do at Core Health & Fitness?
Sy: Sure. My name is Sy Mares. I am the corporate credit manager for North America, Latin America, Asia and part of the Middle East. We have global accounts in the UK, Germany, Spain and throughout the globe. Core Health & Fitness is a manufacturer of fitness equipment, and we sell to gyms all around the world.
Esker: What is your IT environment like at Core Health & Fitness?
Sy: We use Oracle and Salesforce to drive our sales and opportunities. Once an opportunity makes itself into a sale, we push the order from Salesforce into Oracle. Once we release an order, Oracle invoices the customer. Each night, the system completes an upload into Esker. It’s very simple.
Esker: Were you a part of the process in getting Esker set up?
Sy: I was. In fact, I found Esker! When I first started with Core Health & Fitness eight years ago, we were utilizing a different collections management platform. But it felt really outdated and not nearly as dynamic as I wanted it to be. A generic email would go out to the customer without any of our logos or branding. We were unable to email invoices through the outdated platform to our customers — we would have to print them or attach a file to an email, or download first and then upload again. There was also no way for a customer to dispute an invoice online. So I started investigating other options.
Esker: Well, we’re glad you found us! After you chose Esker to replace your previous solution, what was the implementation process like?
Sy: It was really smooth. The Esker team basically gave us a document with all the information they needed and the format they needed it in. Our IT group looked at it, and they were able to write the script. It was relatively easy for them and within a month we were running parallel systems. After running parallel for a few months, we dropped the previous platform and started with Esker 100%. When we first thought of bringing on a whole new platform, our IT team was expecting it to be very difficult and to take something like three to six months, but we were fully integrated within a month and a half.
Esker: What stood out to you about Esker’s automation solution in particular over the other options?
Sy: There were so many things. We ended up going with Esker due to the dynamic reporting, customized dashboards, KPI reporting, cashflow reporting, performance reporting, and the fact that it offers live data that managers can use to mentor, coach and motivate their teams.
The executive summary dashboard is fantastic. We utilize that internally so we can show the finance coordinators what accounts they manage, what regions they manage, and customize it so that we can run our own KPI dashboards and measure the success of each individual. That helps us identify how many touches a customer is having and what the interaction is like. The customized KPI reports come in handy.
But one of the tools that really got me was the root-cause analysis. I’m a process-minded individual. I want to make sure cashflow and margins are at their peak, and I know that if there’s a problem with the process, we’re actually increasing our overall cost. So, with the root-cause analysis, we created various different types of disputes of root causes for an invoice not being paid, whether it be wrong pricing, should’ve been charged tax, quality issues, what have you. By creating all those root causes, if an invoice goes past due, my team confirms the reason from the customer and assigns the appropriate reason why. Then I’m able to run reports that show the root causes of our aging and can go to order management and say, “Hey, last month we had $100,000 worth of credit and re-bills because we had a pricing error.” After that, we can look at the issue and say okay, is it the user or do we have that price coded incorrectly in the system? Then we’re able to fix the problem and shouldn’t have it again in the future.
It doesn’t matter what line of business you’re in. I was in the beer industry before I got into the fitness industry, and prior to that was office products. If you’re able to identify the root cause of why you’re not getting paid, then you can look into what the overall process is and see if there’s something that can be changed so that it improves the overall turnaround of collecting your cash.
Esker: Definitely, that’s a great point. What other benefits have you seen since implementing Esker?
Sy: Most organizations use DSO as a measurable, but in our industry, it’s a little bit difficult to utilize DSO because there may be a sale that we decide to do an internal leasing program on, which then extends the overall timeframe in which it’s going to be paid — it’s not strictly 30 days. Instead we use the current ratio, which is taking your current balance and your zero to 30 balance, adding those together, then dividing that by your overall balance to get how much of your receivables are current.
In 2011, our current ratio was 65%, meaning 35% of our receivables were aged over 31 days. That’s millions of dollars that we weren’t collecting because of dispute issues and what have you. In 2012, we improved it to 75%, and then 65% in 2014. We implemented Esker going into 2015, and that year we jumped up to 84% current. It’s held steady between 85-87% most years since then, but today we’re at 95% current on a $19-20 million revolving balance, meaning 5% or less is over 31 days. That’s unheard of.
Esker: Wow, that is incredible! How did Esker play a role in that, if at all? Was it because you were able to identify those root causes or were there other things that helped too?
Sy: There were a lot of factors, actually. When we first started using Esker, one tool I took advantage of was sending out statements and daily invoicing. With the previous platform, we had to print and mail those invoices and statements, and a customer did not have access to their profile to manage their account. Giving the customer the ability to log into their account and download their statements, download their invoices, save them, print them, whatever they’d like, helped to start turning around the cash a lot faster because the customer was getting their invoices in hand that next day. At the same time, instead of having a monthly statement, we set up the rule to send out a statement every Tuesday.
So our customers get an updated statement on a weekly basis of what their balance is or what’s past due, instead of monthly. That’s an automated process that had an immediate impact, and we started seeing the cash flow increase and improve within a months.