Collections Management System for Correctional Industries Decreases Past-Due Accounts Receivable from 40% to 5% in Less Than One Year

Because of its manual collections process and the high volume of receivable transactions, Correctional Industries suffered from poor cash flow. The solution it chose was the Collections Management module from Microsoft Business Solutions (now Microsoft Dynamics).

Overview:
The State of Washington Department of Corrections (DOC) employs 7,000 men and women to administer and supervise more than 15,000 offenders housed in 13 institutions and 18 work training and pre-release facilities. In addition, there are more than 93,000 field cases, of which more than 61,000 are supervised offenders in the community.

Correctional Industries (CI), within the DOC, is a $35 million business with more than 31 diverse operations housed in adult correctional facilities statewide. CO provides quality goods and services for state and local governmental agencies, educational institutions and non-profit organizations. CI's products are produced by a workforce of more than 1,300 inmates supervised by a civilian staff of 200 employees in 11 locations throughout the state. Correctional Industries sells its products to other Washington State agencies and political subdivisions, certified not-for-profit organizations, private contractors supplying state agencies, and out-of-state governmental agencies.

Situation:
In September 2000, Correctional Industries was owed more than $630,000 from accounts that were 90 or more days overdue. CI employed two full-time employees just to manage the collections process. The collections system at the time involved manual processes and printed paper. Reports had to be printed weekly and compared to the prior week's reports. Changes were noted and larger overdue balances were investigated first by checking Excel logs and paper notes attached to each customer's folder. Because of the lengthy and costly process to contact overdue accounts, smaller delinquent accounts were often never contacted, and the amount owed by these smaller accounts steadily increased.

Solution:
Correctional Industries realized it needed an integrated solution to make its process more efficient and more effective; the solution it chose was the Collections Management module from Microsoft Business Solutions (now Microsoft Dynamics).

The Microsoft Business Solutions Collections Management module allowed Correctional Industries to implement a new, efficient and automated process. On a weekly basis, the manager is able to run a query on past-due amounts with a breakdown between "over 90 days" to "over 30 days." Dunning letters are automatically set up in the system and merged with the account information. CI can also email statements to contacts for quick action and have a record of that communication within the system.

With the new system, each and every outstanding account is now being contacted. Before, only the accounts past due greater than $5,000 were reached. Upon implementing Collections Management, CO improved its collections by reducing 90 days overdue accounts from 40% to 5%. Accounts Receivable more than 90 days past due dropped from $630,000 to $32,000 - a 95% decrease. The time required for issuing statements dropped from six staff days to one staff day. And with Collections Management, there are no more paper files to search through!

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