Firm Focus: Cut the fat, tighten control, sweeten the bottom line
Details, details. So often the success or failure of a business is in the details that get away from us. That's the basis of how Business Strategy, Inc. got started one day while three friends were having lunch. They recognized a common problem that wasn't being adequately addressed, that is, businesses were leaking cash, mostly through their accounts payable. There were other firms around that could plug the leaks, but none of them identified and dealt with the roots of those leaks. Before lunch was over, Dan Geelhoed, Duke VanDyke, and CPA Charlie Fayon had sketched out a new venture on the proverbial "back of the napkin." That was in 1990.
Leap forward 18 years. BSI has developed into a company that comes alongside businesses to streamline processes, cut out the operational fat so they can concentrate on their core competencies, and beef up their bottom line revenues. BSI is still operated by the original three partners, with the help of 100 employees.
Headquartered in Grand Rapids, Michigan, BSI has audit associates scattered around the country, and sales offices in Atlanta, Chicago, Cleveland, Los Angeles, New York, and Phoenix. While most industries can benefit by the services BSI provides, they have additional expertise in manufacturing, retail, supply chain management, and healthcare.
So how can this company help CPAs better serve their clients?
BSI has gained wide recognition and an impressive list of clients (many on the Fortune 1000) by improving back office operations. They started with expertise in assessing transaction controls and procurement/payment procedures, and then combined those consulting services with traditional recovery audits including contract compliance reviews.
Many highly skilled business owners are not able to read and interpret contracts. After all the work of negotiating the terms, they often don't realize that the vendors are not living up to the agreement. BSI's auditors examine the front end, to determine if contracts are being adhered to as planned. For example:
- Is the correct price being charged by vendors?
- Are discounts given per the agreement? If so, is the client taking advantage of potential discounts?
- What about rebates?
- Are duplicate bills slipping through the cracks?
Another huge problem is duplicate billing, says Fayon. It's not uncommon for busy AP clerks to receive and process multiple copies of the same bill or pay from an invoice and later, a statement. These are just two reasons why accountants contact BSI to work with their clients. From procurement to disbursement, these auditors and consultants get the devil out of the details. By applying processes that are still unique within their industry, they spotlight system weaknesses that made errors possible in the first place, recommend solutions for strengthening those areas, and pursue recovery of identified overpayments on behalf of the client.
Two other factors separate BSI from their competitors:
- Minimal disruption to the client
- Fees based on results
Unlike most types of audits, clients undergoing a recovery audit are free to continue their work with little interruption. Auditors take a read or "dump" of the client's data, then analyze it offsite. Later, they return with a list of recommendations and stick around to help the client implement the changes. If no errors are found, no fees are charged. BSI auditors work according to a structured plan designed to recover the most lost revenue possible for the client. Ideally, says Fayon, as the auditors find leaks and help clients repair them, subsequent audits will turn up fewer and fewer errors. Some competitors call that losing a client, but Fayon calls that the definition of success. So does Chris Doxey.
Doxey joined the firm recently as their Vice President of Business Development. Before landing at BSI, she spent 25 years in auditing, where, she says, she noticed a troubling trend. Over time, she saw that some auditors were significantly lowering their standards. That's one reason why she was particularly glad to join BSI, where the auditors have skill sets that competitors just don't have. "They do audits right. They look for business improvement for their clients, even if that means they will work themselves out of a job." That's also why Doxey says, "Charlie Fayon is one of the most respected CEOs in the recovery industry."
Currently, Doxey is working on a best practices toolkit or "suite" of best practices for Sarbanes Oxley. "This is what we present with the management reports," she says. This is one of the ways that BSI shows clients how to do better business, rather than just giving them a list of problems and collecting a fee. "It's all about controls, cost improvements, and process efficiency," says Doxey.
Over the 18 years since they started business, BSI has responded to client needs, and that means their core competencies have evolved into a family of services. Recently they've added two new areas of specialization. Doxey refers to these areas as their three-legged stool. The first leg of course, is audit recovery. The second, document management. And the third, wireless account management.
The need for document management is becoming enormous, says Doxey. One of their biggest clients is Universal Forest Products where they've installed document management systems at over 90 locations in the U.S., Mexico, and Canada. The new systems tie together all of the departments within each location, including accounts payable, payroll, human resources, ordering and e-forms. Now their processes are all accessible through the company's intranet. The net effect of the work BSI has done is that operations are smoother and more coordinated. Best of all, the client is enjoying a 35% reduction in recurring costs… or $1.3 million annually.
Wireless account management is also turning into a real growth area as businesses increase their reliance on wireless technology. For large companies, this can be a massive undertaking to handle internally. That's why they like to outsource the management to BSI. One of their clients, an energy company called PEPCO, has over 4,000 phones that have to be tracked. With numbers like that, management can quickly get out of control. BSI handles employee acquisition and contracts as well as manage the minutes, overages, and phone bills. "The managers can log in and run reports and know exactly where they are," says Doxey. Have they seen satisfactory results? You be the judge. BSI decreased their management time and expense, reduced downtime and increased productivity. All of that resulted in reduced recurring costs of $1.4 million annually. How long did it take to implement their recommendations? Just 120 days.
For BSI it's all about doing better business. The auditors help cut the fat, streamline processes, and free up money that was previously wasted so it can be directed into profits or additional investment. Their long list of satisfied clients is proof enough that they are on the right track. As the saying goes, "nothing succeeds like success," and in this case, success is a three letter word... BSI.