Collections Accountability Leases that Terminate Following Automatic Renewal Tom Merry September 24th, 2003

Week 3 Presentation n Project Outline  Problem Statement  Benefits n Project Review – Week 1 n Project Update – Week 2  Scope to Term Code TMDCR  C&E Diagram and Matrix  Data Collection n Red Flags n Next Steps

3 Project Outline n Problem Statement: This project focuses on improving & establishing appropriate billing processes to maximize collections for IOS Capital lease agreements that have met their obligation and have then been terminated. n Goal: To increase collections revenue while minimizing any associated incremental collections costs. n Deadline: To be completed by November 30, 2003.

4 Project Outline n Project Benefits:  Current data shows that IOS Capital does not pursue approximately $14M of charges (including equipment lease charges, late payment charges, overage volume charges, and related taxes).  Using a conservative collections rate of 3%*, and assuming no material incremental fixed collection costs, the project benefits are estimated at $420,000. * 3% was used based on Financial Analysts understanding that most of the dollars are unable to be pursued (as much as 90%) and the rest would flow thru at approximately 50% (current IOSC run rate on similar collections).

5 Project Review n Define Phase  Project Team Champion – Susan Morrow & Mark Hershey Financial Analyst – Mark Vandevere Black Belt – Tom Merry Process Manager – John Bartuska Master Black Belt – Laura Wells Team Members:  Collections -Martha Rice & Pat Brewer  Contracts - Bonnie Dillow  FSS -Ray Raupp  Order Coordinator - Pat Little  Sales - Eileen Marshall  Lease Specialist -Alpesh Patel  LEO Specialist -Lisa Harden  IT Support – Julie Lampe & Simone Kainer  Martial Arts Trainer -Big Al

6 Project Review  Process Interviews & Team Meeting  Process Mapping - No standard process - Customer often has to notify us more than once - Once terminated there is no collection method  CT & SIPOC Diagrams - Cost of Customer Dissatisfaction - Opportunity cost from delays on equipment returns  Scoping Considerations - Approximately $4 mil in SE would only result in $120,000 in benefits  Project Metric “Y”: Y = What % is collected of the total opportunity?

7 Project Update n Focusing only on Term Code TMDCR – “Contract has reached end of term (or gone into auto-renewal) or has less than 2 months left to be paid. Machine is being returned.”

8 Project Update n Cause & Effect (C&E) Diagram Cause & Effect (C&E) Diagram

9 Project Update C&E Matrix Results

10 Project Update  Data Collection  Big Y = What % of opportunity dollars is collected? - Goal is to separate opportunity dollars from total - Comments in IKONICS only real way to tell and they are very inconsistent and inaccurate - Active Sampling (day forward) appears to be the best method - Data to collect: date of customer request, buyout amount, date of RMA/PRS, date picked up, amount paid  Other Potential Data - Customer satisfaction, term code accuracy, frequency & time for sales to follow up, time from customer notification to p/u, and frequency of payment after termination

11 Red Flags  Data Collection  Big Y (% of dollars collected of total opportunity) - Very difficult process to achieve day forward sampling with current year end focus - Solution to be agreed upon by 9/26/03 BOAT ANCHOR!!!

12 Next Steps n Data Collection  Plan in place by 9/26/03 n Measurement System Analysis  On-going with data collection n FMEA  Team meeting scheduled 10/2/03 n Analyze Phase  Torture the data n Set Benchmarks n Move to Improve Phase

13 Summary  Questions?