A.I.C.M. National Conference Gold Coast 12th October 2007 Prepared & Presented by Colin Prosser FICM CCE

1. A.I.C.M. National Conference Gold Coast 12th October 2007 Prepared & Presented by Colin Prosser FICM CCE Back Office - Outsourcing in Australia & Overseas

2. My Background • 36 years in Credit Management & Accounting • Hold Diploma in Business Studies in Accounting - 1988 • AICM Member since 1985 • Fellowship Membership with A.I.C.M - 2004 • Hold Certified Credit Executive ( CCE ) Status – 1998 • AICM Councillor – Vic / Tas Div’n – 1997 to 99 & 2003 to 2006 • AICM President – Vic / Tas Div’n – 2005/6 • Currently AICM Director – Member Services – 2006 to now • Worked in various Industries over the years including Manufacturing, Media, Finance & Title Searching, Telecommunications, Local Govt, 3@Law, Supplier / Distribution – Retail, Wholesale & Service, Accountancy, Electricity Supply, Plant and Equipment, Construction / Building

3. My Employer’s Background Stamfords Advisors & Consultants • Been in Business for over 25 years • Has over 200 Employees • Has Offices in Perth, Sydney and Melbourne • Provide a wide variety of Accounting Services including: • Business Process Outsourcing • Assurance & Risk Management • Management Consulting • Business Advisory Services • Corporate Finance • Information Systems & Technology Consulting

4. Outsourcing “Definitions” • To contract outside ( jobs, services, etc.) the company rather than employ more in-house staff: e.g: a small business that outsources bookkeeping to an accounting firm. • Negotiated Agreement, creating understanding about services, responsibilities, expectations & priorities. • Strategically place business functions, by using an outside ( 3rd party) business to manage. • Complete tasks or duties for others and to do it cheaper, better & / or more efficiently ( improve productivity / results ).

5. When did Outsourcing Start ??!! • Recognised as starting in the 80’s ( called - work specialisation ) but what about these: • Middle Ages – Royalty and Nobles used Armies to fight battles, the Butler & Staff tend to their household, Serfs and Slaves to harvest their Food and tender their Animals / Stables • Industrial Revolution – Line Assembly Production – Components, Weaving, Packaging, Cars – Parts, Welding, Spray Painting & Assembly Robots / Mechanical Arms -Japan smaller / cheaper • Telecommunication / Computer Age - Marketing / Research / Polls by Phone / Message Bank – Home ( 101 ); Mobiles / Electronic Media ( save trees ).

6. IBM Hewlett Packard General Electric Reebok Fujitsu Microsoft General Motors Phillips Oracle AT&T Governments: Federal; State; or Foreign Banks: Deutsche; HSBC; and Bank of America Global Giant Companies – Outsourcing Overseas

7. Outsourcing Overseas Issues • Privacy Issues – Name, Address, DOB and Phone • Security Issues – Credit Card and Bank Account details • Australian ( ASIC/ACCC ) Debt Collection Guidelines Issues • Language Issues – Understanding & Comprehension • Different Time Zones (India, China, Indonesia, Mexico, Botswana, Columbia & Philippines) • Lack of Knowledge (only cover FAQ’s)

8. Everyday Outsourcing • Marketing & Call Centre by Phone ( your Goods / Services ) • HPA – Locked Bag ( Mail, Processing & Banking ) • Dry Cleaners & / or Ironing • Mechanic ( Grease, Oil change, Tune up ) • RACV Roadside Assist ( Flat Tyre, out of Petrol ) • Jim’s Mowing ( Lawn & Gardening ) • Babysitter / Child Minding Services • Takeaway Food / Restaurants • House Keeping / Maid Services • Taxi / Chauffeur • Surrogate Mothers

9. Types of Non–Core Operations that are Outsourced • Accounts Receivable / Credit Management • Accounts Payable • Billing – Invoicing, Standard Follow up Letters & Statements • Call Centre • Customer Service • Data Entry / Payment Processing • IT Server/s & Maintenance • Payroll • Human Resources • Procurement • Mailing / Printing / Photocopying / Scanning / Binding

10. Benefits of Outsourcing • Improves Cash flow ( Wages / Super ) , Administration Costs • Floor Space – Better Usage • Electricity and Telecommunication Costs • Gain Knowledge and Expertise • Better Efficiencies and Effectiveness • Better Computer / IT Capabilities • Skills Upgrade, Retention & Access • Save on Supervision, Staff Replacement & associated Costs • No Sick Leave or Annual Leave Issues • Re-invest saving in Core Business activities • Economic Issues less effect ( Interest Rates )

11. Reasons to Outsource • Tight Job Market - National Skill Shortage • National Un-Employment is at 4.3% • Greater Efforts made to retain Critical Staff • Higher Salary Packages • Concentrate on Core Business – Selling & Marketing • Detailed Reporting • KPI’s & Timeframes must be met • SLA – Service Level Agreement (Guarantee Performance Levels)

12. Service Level Agreement • Communication Tool between Parties • Lists a Start / End Date or a Period; Objectives; Fees / Costs • Outlines Service/s and Management Levels • Define Tasks, Duties and Reporting ( Frequency ) • Performance Agreement measure KPI’s and Deadlines • Monitor, Audit & Review of Service/s • Ongoing – Flexible Document – Review Annually

13. Possible SLA Duties & Responsibilities • Outline Daily, Weekly, Monthly, Quarterly and Yearly Reporting • Compliance, Insurance, Data Integrity, Records Management and Business Continuity Plan • Maintain and Update Credit Policy, Manual/s and Procedures • Communication lines – Phone, Email and face to face Meetings • Ledger/s Management – Phone Calls – Credit and/or Customer Service ( plus Feedback ) • Reconcile Bank Accounts, G/L Journals, T/B, Revenue Forecasts • Data Input – Transactions and Debtor Notes • Daily Banking

14. Possible SLA Duties & Responsibilities Continued • Budgets – Monthly Comparison - Actual to Forecast • Risk Management, Legal Action, Internal / External Audits • Minimize Doubtful and Bad Debt/s • Six (6) monthly review and discussion of KPI’s and Timeframes

15. Considering Outsourcing some Questions to ask Yourself • Can your internal processes be improved • Can Staff time be better spent • How effective and efficient are you • Do you have the right expertise • What would costs savings be ( 30% to 60% ) • How could you use the re-invest the savings • Can you better use the Floor Space

16. Example : Credit Department • Credit Manager, Supervisor & 8 Credit Officers • Old PC’s / Server, Accounting Programs and Microsoft Products • Cost of Phones, Electricity, Workstations, Floor space, Salaries, Super, W/Comp etc • Sick Leave, Annual Leave & Staff Replacement costs ( Down Time ) • Old / Non Functional Office/s ( affect Moral )

17. Example : Outsourced Credit Department • Experienced Professional Credit Staff • Leading IT/Computer Software • Latest Communication Technology • Must meet KPI’s, Deadlines & Reporting • Increased Efficiencies & Effectiveness • Scaleable Solutions (Large or Small) • Reduces/Transfers Risk/Responsibility

18. Questions ??