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Published byLoreen Poppy Melton Modified over 8 years ago
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Randy Wadle, CEO
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Client Profitability Breaking Down the P&L Billable Services Measuring Cost of Service Client Scorecards
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BREAKING DOWN THE P&L
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P&L – Gross Revenue Administrative Fees – Target growth industry and geographic sectors Insurance Premium Billed – Play it safe or strong risk management critical? Taxes – Profit center or pass through? Surcharges – Any fees that are not a factor or payroll Cost of Goods Sold Sales & Operating Expense Net Income Net Revenue Gross Margin Net Revenue Gross Margin
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Revenue Adjusters Revenue class Strategic for WC or Benefits Referrals Predictability Growth potential Complexity Easy to work with, fair and reasonable – YOU DEFINE BASED ON VALUES Is all Revenue created equal?
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Adjuster Multiplier Prioritize the “adjusters” based on company goals Assign positive and negative multipliers to a limited set of scores that will be assigned to clients (1.0 being neutral) – Adjusters and their weights will be different between companies based on values
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P&L - COGS Client Payrolls – Pay frequency, off cycle runs, adjustments Insurance Premiums / Losses – Important to benchmark losses/claims against expectations Taxes – Controlling unemployment important for long term profitability Commissions Gross Revenue Sales & Operating Expense Net Income
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Containing COGS It All Starts In Underwriting – Set Performance Expectations and Measure Against
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The Importance of Underwriting Validating / setting expectations that drive pricing – Expectations for losses, unemployment, visits, complexity, service levels, etc. should be recorded Client & Industry comparison data Risk vs. Reward
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Containing COGS It All Starts In Underwriting – Set Performance Expectations and Measure Against Hands On WC Claim Management – Important for Guaranteed Cost and High Deductible Unemployment Management Benefits Reconciliation
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Gross Profit per WSE
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P&L – Operating Expenses Personnel Costs – Key Metric: WSE per Internal EE Administrative – Rent, insurance, technology, etc. Sales and Marketing Gross Revenue Cost of Goods Sold Net Revenue Gross Margin Net Revenue Gross Margin
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Sales & Operating Expenses Client Self Service
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Sales & Operating Expenses Client Self Service Efficient and Consistent Processes
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Sales & Operating Expenses Client Self Service Efficient and Consistent Processes Analytics Driven Decisions Outsourcing (sales, technology, legal,etc.)
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Key Profit Drivers Summary Higher Revenue per WSE – Command higher admin fee, value add services – High wage employees (depending on admin bill method) – Organic client growth Controlling COGS – Risk Management – Unemployment Management – Benefits Reconciliation Controlling Operating Expenses – Client Self Service – Efficiency / process automation – Analytics – Outsourcing
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WSE per Internal Employee
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Operating Income per WSE
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BILLABLE SERVICES
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Billable Services Billing for Services – Difficult to track and bill – Included services by Contract Type – Tracking time ClientSpace Steps – Determine Billing Method (time vs incident) – Define Bill Rates and Contract Type Service Levels – Client Statements
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Case Type Configuration
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Tracking Activity
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User Time Management
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Client Statements
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MEASURING COST OF SERVICE
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PEO COST OF SERVICE
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Service Delivery Cost Evaluation Service Case Cost Valuation – Time tracking Setup on any dataform Requires discipline Cost Rates by Case Type or Person – Average Cost Cases by Type Other transactions use time tracker
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Case Type Configuration
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Recording Actual Time
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Estimated Effort
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Service Delivery Cost Evaluation Visit Cost Valuation – Time Tracking – Travel & Other Costs
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Client Visit Costs
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Workers’ Compensation Costs Cost of WC Claims – Claim administration – Guaranteed Cost: Cost = Premium Cost + (Actual Incurred Value – (ELR * Premium)) – High Deductible: Cost = Premium Cost + Incurred Value – Safety visits and programs – Software & Technology Certificates of Insurance – Cost per unit
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Benefits Benefits Administration – Open enrollment, Qualifying events, Plan management, COBRA administration,Claim advocacy ACA Compliance Benefits Reconciliation – Time consuming process – Cost of billing errors – Liability of missed coverage
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Other Servicing Costs Unemployment – Unemployment claim cost, Claim appeals, Paperwork administration, Systems and interfaces FMLA Time reporting systems Systems customization per client
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Contract Expectations vs Actual EE Count Gross Payroll Expected Losses Unemployment Claims Complexity Visits
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CLIENT SCORECARDS
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Client Scorecard
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Decision Driver Service Renewals – Facts vs. Emotions – Terminating clients – Adjusting fees – Incorporating a la carte fees or deductible/transaction costs into model Prioritization Team assignments Sales & underwriting bonuses/promotions
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