The surprising face of Business Services

OR

Life repeats itself and the 80:20 rule is right most of the time.

I was reminded of the other day of the well known if oft forgotten business fact that “it’s easier to spend money than it is to get it”.

Following clear, if a little high level requirements from a client, I was seeking a good source for the processing of Direct Debits to include importantly, all the associated administration. The client simply wished to receive the money into their account having outsourced the whole caboose. The money in question would be the result of two separate business activities. One a membership fee, for the usual services provided to members of professional bodies, the other a service to consumer clients of the members. So far so good. However the simple desire to see money accumulate in the bank account was going to prove a little more allusive.

As a Business Services professional I am able to use my natural ability A) to see the broader picture and B ) identify the implication of implementing a specification, usually more correctly described as the implication of the unspecified elements.

The executing of the DD facilities can be very efficiently outsourced, indeed the usual issue faced by prospective outsourcing organisations is not the difficulty of finding an outsourced solution provider but rather, how to avoid the less professional, or those only too willing to make life seem simple and cheap, but only to hit you with extras after you have signed the contract and squinted at the small print. I know some excellent operators who can very efficiently and effectively execute all aspects of setup, execution and depositing of payments on behalf of their clients.

Now the surprising aspect of Direct Debit facilities is not the DD’s that happen, but the administration overhead, of those that don’t or won’t! The cancelled DD, those executed against accounts with insufficient funds, those that execute only to have the customer question why!

All these require action on an individual basis; moreover the action is not simply a financial process but one which involves the subject of the DD i.e. membership or a service or goods provided. For this reason it is complex because it involves both the DD operator and the originating organisation. By way of example take the cancellation of the membership fees at the processing preparation stage. Some 4 or so days before the DD is to be taken the managing company will prepare from the existing records database a master list of the DD’s to be processed.

Using the advantage provided by DD’s that they are ‘pulled’ and not ‘pushed’ this list is checked to ensure that the target accounts A) exist and B ) are set to accept the DD request. As a result a sub list will be generated which contains details of those DD’s which received a negative indication at the preparatory checking stage.

What happens to the items on the list? Who takes action and what action do they take?

Okay at its basic level of logic the DD facility provider could contact the member and simply state the result of the preparatory check and advise the a recheck will be done in ‘n’ days followed by collection of the monies due for this period e.g. month, and would they kindly ensure that DD will be supported.
However even the amateur Sherlock’s amongst you will have spotted that this simplistic the unitary logic has itself the potential to do nothing but inflame in some instances an already inflammatory situation and for a membership organization a very good or role of thumb ‘don’t rile’ your members could very easily be broken

For instance:

1) the member has resigned or cancelled their membership

2) they have changed banks.

3) they have just moved to pay by standing order.

4) they have just paid for the whole year by check and cancelled the DD on their account.

Or

1) What will the DD facility operator do if they don’t fix the DD.

1.1) cancel the membership?

1.2) give them another chance?

1.3) role the collection over to next month?

Forget the actual answer the more important point is that it is not in the gift or authority of the DD operator to decide what to do. Indeed their remit simply extends to progressing with a timely collection of all DD’s shown to be up to the task followed by the timely transaction of the collected funds to the client’s organisation.

So who does sort out the situation? Well clearly the responsible party is the client organisation within which if they are not careful the membership department will add to its complement in order to handle the ‘new job’ - contacting members who won’t or don’t happen to sort out corrections.

1) had they cancelled?

Y = take off the DD list

N = get them to set up the DD again

2) changed banks………….

Etc. etc.

All this takes time and time is money! None of this was necessary before DD’s were introduced and whilst there was always a job to do in collecting membership fees and still is for those who have not moved to DD all there is now is an extra party involved in the end to end process and as a result of simple means of reducing business costs can easily result in extra cost (spending / losing money) and also very possibly riling in the process the membership.

These unforeseen costs can be avoided by early and judicious engagement of a Business Services organisation. Taking the time to develop and test sound end to end processes, and procedures which will catch and handle even unseen ‘obstacles’ will avoid new and ongoing costs including the cost generated by the intangible damage to one’s reputation with your customers emanating from any perceived left and right hand disorganization.