Account Receivables - A Change Management Story

 
Background of Change:

At a #nationwide contractor company, there was a huge mess in issued #invoices for 2 main customers. An unbelievable mixed up of all different #equipment or #service invoices. a pile of more than 1000 old, existing contracts, including or excluding #tax, including or excluding premium calculation, completely or partially #reconciled. It was nearly impossible for a project manager to dig through previous projects' invoice background. There was no single database to include all necessary information of all invoices together and in one place. However, all necessary general information of contracts were stored in the #ERP and were #accessible for daily work needs.
This was a correct initiative for company top levels to find a #solution, fix previous invoices or contracts and of course prevent #future difficulties.

Environment:

For several years #Accounting (Finance) department and #Project controllers worked on these #chaotic parameters and some of them became masters of disordered #analysis. In the eyes of other departments such as Sales, Product, Service, QA, Administration, ... this was not a big deal at all, because the whole pile of invoices most of the time has no effect on other departments. They could easily ask the accounting department to find whatever they liked, if they needed. In general, major motivation to change existing situations was only inside company top levels in order to have a view and discover what is the data. People in the #Finance department were working with this pile for years and this issue was not an important #priority to them while other departments had no idea about the #problem at all.

Solution execution:

Sometime in mid-May of that year the Accounts Receivables Realtime (ARR) solution arrived in the shape of an #IT #system. Since it was a #pilot, it was a #standalone system and not integrated to ERP, of course with different ways to run, new ID and password combination required together with unavoidable headaches for the IT department.
Board of directors assigned a high-level manager from the #Strategy department with full #authority to #lead this pilot project and #engage all related departments. This high-level manager was #famous for few #Quick #Wins and of course for his inability to #communicate with others and with almost zero #English #language skills.
He started with forming the #committees inside each account (business unit) in order to delegate Accounts Receivables Realtime (ARR) solution tasks. One committee included the head of the business unit, head of the respected #delivery #team, project finance controller and a random person from the finance department who was not a fixed person because of limited #human #resources. Naturally a finance employee with better skills was to be taken by a stronger business unit.

By this it was somehow the end of May that year and entering the end of half year month, June. Which typically was an important month to #wrap up half year #sales and #delivery projects. Traditionally this month (June) had the most important role in the department and also in personal #KPIs and an inimitable impact on #bonus, #appraisals, #career growth, #salary and #budget of departments/employees.
After two - three short #training sessions, the pilot project started by entering all contracts and invoices from papers into the system. Each business unit had to enter around 200 to 300 contracts' data in detail, into the ARR system. On average there were around 25 to 40 invoices for every single contract and it was not possible to do this task within two weeks which was prescribed time-line by the project leader, and logically project progress was much slower than expectations. Project leader scheduled every day meeting to follow up all details with all of every single committee member!

Finance department started to #complain about #workload and at this stage tried to flinch from responsibilities. Project leader, as a stubborn leader, found 2 ways to achieve some kind of success on this project by using his authority from board of directors:

1- Utilize more human resources inside each business unit. The employees without any training, who even were not familiar with finance terms and #jargon.

2- #Punish the committee who was slowest among others. Because there was no committee to achieve pre-assigned targets yet.

Chaos:

By mid-June that year, most of the resources in business units were involved in the ARR project by force, working 7 days per week and around 12 to 14 hours per day. Thanks to these magical hardworking employees, all details of invoices and respected contracts #migrated from #paper to this system, but:
1- There was a huge #inconsistency in data, especially compared to ERP system data. Untrained employees' mistakes, software fields limitations for invoices with big amounts, lack of #support from software programmers, Unclear #goal setting, piles of unnecessary data which have already entered into the system, ...
2-   Board members in #charge of sales and delivery, did not bother about the ongoing ARR project, only emphasizing and pushing business units to wrap up and realize related KPIs of sales/delivery projects by the end of half year and expecting things to be as usual.

Failure:

Despite all efforts of involved people and high levels' #persistence and #insistence, most of the data in the ARR system was not #operational and usable. In early July that year, this new system was presented in the board of directors meeting and many concerns arose. Literally there were few #reliable and #consistent results. Project #sponsor, who was also CFO and board member, who was not being communicated by project leader during this project, found many issues and gaps in #viewing, #analysis and outcomes of the system. Even if this project could provide with expected results, there was an enormous difficulty and big software cost/resource to maintain, keep up to date #data and to integrate this system to the company's ERP. In board members' eyes the results of this pilot were drastically dire.

Consequences:

The Project leader received an intense punishment, #demoted and transferred to another country. Several employees in business units, especially in the Finance department, were #worn out and were exhausted, it took them a long time to recover from heavy pressure and few of them left their #job. Many sales and delivery projects did not meet the expected targets by the end of half year, #customer #satisfaction affected, yearly #revenue records collapsed and the employees’ unsatisfactory rate strongly increased as major outcomes of this #failure.

Lessons:

1- Communication is key. (In different levels of organization)
2- Right timing and plan are vital prerequisite factors for a change project.
3- Raising awareness and Training in related departments are a must.
4- Accurate delegation will ease the change process (What/Who/How)
5- Sufficient human resources are necessary to do flawless improvements.
6- Incentives and #benefits for employees are fundamentals that #encourage different stakeholders’ involvement.
 
I wrote this to #share my #viewpoints and recent experience regarding #transformation of organizations and I will be very glad to learn your ideas about this.
 

  https://www.linkedin.com/in/mohsen-derakhshan/