When I first started at our former company, COBRA Outsourcing Company, the idea of custodial cash management was not a new concept for me. Prior to joining the management team at COBRA Outsourcing Company, I had spent many years managing the custodial cash for a regional payroll services company. The payroll of our client base represented many millions of dollars and making the proper tax payments, for example, was absolutely critical for both our clients and the company. There are obvious differences between COBRA premiums as custodial cash and payroll custodial cash, but the principals and concepts are still the same.
Upon joining COBRA Outsourcing Company, my first priority was to audit and reconcile their General Ledger to prove to our Board and ownership group that all monies were properly accounted and booked. Imagine my surprise when I discovered that the internal controls were immature and inefficient. I knew we needed to eventually prepare the company for a SAS 70 Type II review and immediately set about implementing the proper controls; systems and safeguards needed to satisfy the requirements for an exhaustive review. COBRA Outsourcing Company was a rapidly growing business (growing +40% year-over-year) and there was not time to delay.
The very first step was to audit all financial statements as well as the financial software system used in the business. Since COBRA Outsourcing Company had yet made the migration to our COBRApoint platform, I had to devise complicated, multi-step processes so not only the COBRA premiums, but also the administration fees were properly booked and remitted.
Within COBRApoint, administrators access the first custodial cash management system optimized for COBRA and Direct Billing administration. This is my dream system and one in which I am exceedingly proud. On a daily basis, my team and I work with administrators who labor under a piece-meal system of multiple spreadsheets, systems and long hand notes. Often times, we provide guidance and business process solutions that we developed for a pre-COBRApoint world.
In concert with the auditing of the custodial cash balance financial statements, I converted the company from an inexpensive Intuit financial package to a more robust SAGE financial system. This allowed us a greater degree of customization for setting up our custodial cash accounts.
My next post will focus on how our customers use COBRApoint to manage their custodial cash. In my personal opinion, I feel this is the best indicator of how well a COBRA administrator operates. An employer offers their administrator an incredible amount of trust in billing their former employees, collecting the payments, reconciling these payments and returning premiums to the appropriate party. I love the fact we help our customers live up to the trust their clients have given.