In my career as a sales professional and value engineering expert, one common reason I have found on why projects become rejected by top management is because they did not have a solid business case. I often see extremely valuable projects get rejected because of a poor presentation to the top management.

Below are the five steps that will help you get your CFO’s attention and approval for your collections-related project:

1. Identify Where Your Team Spends Their Time

The first step in building a winning business case is to find out where your team currently ends up spending its time. This is done by breaking down the individual tasks they perform in any work day or week.

The easiest way to do this analysis is to conduct a “day in the life” exercise of your analyst. Observe your team’s work and break it down into logical units of work or tasks that each role performs. It is also important to isolate manual tasks that are low value from those that are related to reviewing information, communicating with customers, and making decisions. Then, ask your team to fill how much time they spend on each of the tasks.

Below is a sample task list. When working with our customers on “day in the life” exercises, we identify different numbers and types of tasks, depending on the business process the company follows.


2. Prepare a Cost Structure

Once you are ready with your task structure, it is time to identify the cost structure of your department. For this, you need to first capture the cost for each resource in your team.


Once this is complete, you can prorate the cost and allocate it to the individual tasks depending on how much of the analysts’ time they take. This will give you the cost of each of the task performed in your debt collection process.


3. Calculate Opex Savings by Calculating Automation Levels for Each Task

By now you should have a clear picture of the cost structure of your process and team. The next step is to determine the operational savings that your debt collection automation project can achieve. To establish the automation percentage, work closely with your IT team or the vendor who is supplying the debt collection software. In order to obtain an accurate estimate, it is essential to capture the automation rates at a task level. Take a look at the below table for an example. Plug in the minimum and maximum possible automation levels. For operational savings, take an average of the minimum and maximum savings possible. If you want to be conservative in your projection, take the minimum savings in your final ROI. In our analysis for customers we prefer to be conservative in order to show considerable ROI as well as meet objectives and overachieve.


4. Quantify Impact on Your KPIs

Any improvements to your collections process will not only reduce operational expenses, but also lead to considerable improvement in your collection KPIs. While building a winning business case, you should always include the bottom line savings that your company will see by reducing days sales outstanding (DSO).

The simplest way to determine your company’s DSO is by using the formula below. However, I feel the Best Possible DSO is more accurate as it nullifies the effect of payment terms in our analysis. But, we can talk about that another time as we stick to simple DSO for this blog article.

DSO = Accounts Receivables/ Annual Sales X 365 days

The next step is to benchmark your KPIs against your competitors.

There are multiple ways you can obtain the benchmark KPIs of your industry. Organizations such as the Credit Research Foundation (CRF) ( regularly publish industry benchmark data for various accounts receivable KPIs, such as DSO. I would recommend that you get your industry average and industry best-in-class DSO data from publications like these.

If you are unable to get DSO benchmark data from one of these sources, you can conduct the analysis on your own. Start by creating a list of 10-15 companies in your industry and determine each company’s DSO using the financial data provided in their annual statements. Once you arrive at the DSO for these companies, you can compute the industry average and best in class DSO levels.

Benchmarking your KPIs against industry averages will help you accurately understand the scope of DSO improvement that is possible. You can then take a conservative estimate of DSO savings that your collections project can accomplish.

Below is a sample DSO improvement calculation:


Note: Traditionally, we see between 5% and 20% improvement in DSO with software, depending on level of automation supported

5. Prepare a Comprehensive ROI Analysis to Present to Your CFO

Now you have all the ingredients to present a winning business case, including the operational savings as well as the KPI improvement savings, and can plug in the cost of your project and accurately determine your project’s ROI.
I have included a typical ROI presentation in the diagram below. (Note: The cost figures are generic and will vary depending on whether the software is license and maintenance based or subscription based)