finance & accounting BPO in the UK public sector
Chesterfield Borough Council faced the dilemma of how to deliver an excellent service to local residents and businesses, while simultaneously making financial savings. The Council was open to looking at new ways of working but protecting the jobs of its workforce was also a major consideration.
Chesterfield was one of the first borough councils in the UK to outsource its services and this pioneering partnership of equals has already delivered outstanding results.
Chesterfield decided it could best meet the challenge by taking advantage of Arvato’s extensive public and private sector outsourcing experience. In October 2010, Arvato agreed a 10-year outsourcing partnership worth £40m with Chesterfield Borough Council. An important part of this agreement was Finance & Accounting BPO (F&A BPO) with a comprehensive list of services included: revenues, benefits, payroll, debt collection and collection of rent, accounts payable and invoice processing. Over the course of the contract, Arvato has committed to savings of £4m and is investing £1.7m in technology and infrastructure overall.
a smooth transition
Initially, the partnership had to ensure the seamless TUPE transfer of 200 staff from the Council. So successful was the transition, the partnership retained 100% of transferred employees during the process and achieved 98% of Key Performance Indicators. Indeed, a recent independent report from Investors in People praised the transition, stating: ‘One of Arvato’s key attributes is the ability of management at all levels to manage change... at Chesterfield the transition has been remarkably smooth, with staff starting to feel very much a part of Arvato and comfortable with working for a ‘private’ employer.’
To give staff the skills to engage actively in improving services, Arvato trained all transferred employees up to White Belt standard in Six Sigma methodologies. A further 15% were accredited to Yellow Belt, while a selected group is being developed to Green Belt practitioner level. Lean Reviews conducted across all transferred services enabled employees to use their new Six Sigma skills to identify process inefficiencies, streamline workflows and reduce costs. Following on from these engagement activities, ‘Champions’ have now been appointed in each service area to promote continual improvement. This deep staff involvement helped ensure a smoother process of change and exploits employees’ first-hand knowledge of where service efficiencies can be made. Further driving the continual improvement process and encouraging buy-in from all parties, the partnership developed a gain-share model, where efficiency savings will be shared 50:50, reinforcing the commitment to success.
new approaches and technologies in F&A BPO
The Lean Reviews in Finance and Accounting identified a number of areas for improvement including opportunities to streamline processes and optimise systems. The projected benefits across finance processes from the Lean Review included the elimination of the wastage caused by a manual process and ability to deliver with fewer resources, improvements in speed of payments and greater accuracy. One example is a new electronic workflow system for accounts payables, ensuring an improved and faster service where paperwork isn’t lost and payments are made on time. Almost 35,000 invoices are processed each year and the centralisation of the function has enabled capacity to be freed up within the retained service. Subsequent efficiencies in the process have resulted in a reduction in FTE of 30%. On the accounts receivables and collections side, Arvato issues more than 45,000 invoices each year and collects the associated monies, totalling approximately £40m a year in Council Tax alone. Arvato also manages third parties on behalf of the Council such as bailiff organisations. This includes the operational procurement as well as strategic sourcing activities, vendor selection, panel management, quality control and reporting. Similar to risk management in the private sector, the benefits process is focused on assessing the finances of citizens to determine their benefits entitlement and ensuring that this is delivered correctly. The streamlining of this process has delivered cost savings on the £42m paid in benefits each year. Finally, cashiering and disbursements is managed effectively to ensure compliance with strict auditing procedures in the public sector.
During 2011, the Council hit 72% of its corporate plan performance indicators, up from 65% in 2010 and 52% in 2009
Improving invoice processing created savings of approximately 27%
Approximately 98% all 35,000 invoices received each year are paid within 30 days of receipt
Streamlining benefits processes produced approximate cost savings of 17%
Total income processing of over £430m for the Council in 2011-2012 (including: cash receipting, payments via the internet and phone, direct debits, etc.)
Arvato’s finance and accounting expertise has benefited the Council, our residents and local businesses. New technologies and processes, combined with a sensitive approach to dealing with our ‘customers’ has ensured the best results all-round.Mark Evans, Deputy Chief Executive, Chesterfield Borough Council