Confidence to continue funding
When your invoice discounting client’s sales ledger is growing older and doubts creep in about the efficiency of their order-to-collections processes, both parties will often benefit from a focused review of the receivables function.
We were instructed by a lender faced with these concerns to conduct a full receivables management review of their client and quickly found major flaws which, left unchecked, may have resulted in the company’s failure.
By conducting a full ‘leading and lagging’ review of their order-to-collections process, we were able to make a number of important recommendations to get the client back on track and reassure the instructing lender.
And after being engaged to provide a telephone-based confidential credit control service, 57% of the client’s aged balance (almost £800,000, accounting for more than half of the total ledger) was successfully recovered in the first 45 days.
The outcome saw the lender gain the confidence to continue funding the business, which was now benefiting from a much improved and more efficient order-to-collections process.
Leading and lagging outcomes
Our leading and lagging review has been developed to ensure no element of a business’s receivables management function is overlooked, focusing on eight key areas including credit policy, account setup, invoicing and training.
The recommendations made off the back of this exercise included:
- Finance to produce dashboard KPI and have a presence in or at the board meetings
- High level credit policy to be introduced
- Credit control to gather correct email addresses to enable use of e-invoicing
- A monthly invoice to cash process to be implemented
- New customer welcome pack to be issued to customers, including a letter stating credit terms, contact information and Terms & Conditions
- Flag to finance when customers reach 95% of their agreed credit limits
- Dispute management process to be implemented
Credit control service
Given the issues the leading and lagging process uncovered – which included an ongoing problem in getting invoices to customers and the fact £798,000 of the £1.47 million ledger was more than 45 days beyond agreed terms – we were subsequently engaged on an outsource basis to provide a confidential credit control service to bring the ledger back in order.
By deploying extraction technology our credit controllers were up and running in just 48 hours, allowing them to confidentially contact aged debtors, support dispute resolution, remind debtors of payment terms and service a significant number of documentation requests in order to secure payments.
This was a considerable exercise given the ledger consisted of more than 3,000 debtors with an average invoice value of just £443, but our team was able to collect £454,000 of the aged debt within just 45 days of instruction and £644,279 in the three months we provided the service.
Now, confident that their ledger is in better shape and the processes are in place to support their efforts, the client has taken their credit control function back in-house.
From debt recovery and credit control to receivables management, we can provide a range of expert debt collection services to lenders, advisers and their clients. For more information about how we can help, call 023 8070 7392 or request a call back.
