McGraw Outsources Financial Assurance to Vertek

By Khali Henderson

Reseller McGraw Communications has tapped Vertek Corp. to provide outsourced revenue-assurance services, becoming the first customer for Verteks Managed Financial Assurance Program (MFAP), which was launched earlier this year to provide hosted subscription-based services to small and mid-sized CLECs, ISPs and resellers.

Weve taken over for McGraw what was their back-office carrier invoice processing, said Tom Nolting, Verteks senior director, explaining Vertek gathers hundreds of carrier invoices in paper or electronic form and normalizes them into a single database that is accessible to McGraw execs from a Web portal.

In addition to consolidating the cost of goods sold, Vertek compares that information to McGraws end-user billing data to offer the reseller a detailed view of the profitability of every customer at the call level, he said.

The companies began working together last fall and McGraw will process its first full cycle of billings through Vertek by the end of this month.

We needed tools to measure the success of our billings in versus our billings out, said McGraws CFO Barbara Dunn, explaining the move to outsourcing. She said the 10-year-old companys recent and planned growth it is expanding from its base in the Northeast to the NFL cities by the end of this year combined with the voluminous invoices in varied media made the task increasingly difficult to manage in-house. We can now just run reports and see variants in bills, she said, noting the contrast.

Dunn said McGraw expects to realize savings simply from not having to manage the process. In addition, some likely areas of savings will come from being able to easily identify one-time charges, for installation as an example, that are back-billed by McGraws underlying carriers and then ensure they are passed on to customers. Similarly, she said she expects to catch billing discrepancies between the carrier and end-user billing. This indicates either I am not billing my customer properly or that the carrier is billing me erroneously for a service I havent contracted for, she said.

Monthly savings are estimated to be $10,000 to $20,000 per month, she said, adding that payback on the yearlong contract is expected to take four to five months.

Vertek charges its customers like McGraw a monthly fee based on the volume of records it processes. That fee can range from $5,000 and up, said Nolting, citing a pending contract for $28,000 per month. The startup fee is the equivalent of two months service.

Optional services include dispute-resolution. McGraw isnt using this option, but Nolting said Vertek will work with its customers underlying carriers to resolve billing problems. We identify the disputed charges and work with the carrier to get it settled. Thats a big time suck for a lot of these companies, he said.

McGraw Communications Inc. www.mcgrawcom.net
Vertek Corp. www.vertek.com