Case Study – Business Services: Credit & Collections

Case Study – Business Services: Credit & Collections

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Bristol helps clients to increase the effectiveness and efficiency of business processes. In today’s challenging economic environment, now more than ever businesses and organizations must constantly seek ways to increase business performance and efficiency.

Sample Client

The client, a leading office equipment and consumables distributor supplies thousands of organizations from large corporate to small local businesses in the US. The majority of customers are credit account customers.

Problem

With the challenging economic environment, the client had seen a significant increase in the length of time customers were taking to pay invoices, the number of queried invoices, and levels of bad/doubtful debt. The consequences included cash flow challenges , reduced credit insurance coverage and higher premiums, higher labour costs, and reduced profitability. Whilst credit policies were tightened, the workload within the existing credit management and collections team had increased significantly to a point of being overwhelmed.

Solution

Bristol worked closely with the client and completed a detailed study :

  • Understand and profile the existing customer base and probable source of new customers.
  • Map and review all current ‘order to cash’ processes and systems within the credit management and collection department, and cross dependent departments including online catalogue sales, field and telesales, operations, warehousing and shipping.
  • Root cause analysis of on-time, late payments, and bad debts
  • Bench marking of client to its peers across a number of factors identified as internal causes of late payment and against its customer ledger profile.

The outcome of the study indentified clear opportunities to increase the effectiveness and efficiency of ‘Invoice to cash’ process to drive the positive outcomes the business required.

Following Lean Six Sigma principles and methodologies, a project was established to manage the successful ‘invoice to cash’ business transformation.

Bristol worked closely with the client’s project team to drive the cross functional cultural and process change required to ensure a successful transformation. Critical to success was to demonstrate to the sales and marketing team the positive impact this transformation would have on the majority of customers.

The existing ERP had limited credit risk and collections risk management capabilities. Bristol worked closely with the team to complete the business transformation including the introduction of a cloud based SaaS solution to provide:

Bristol worked closely with the client and completed a detailed study :

  • Customer On-boarding and Life Cycle Credit Risk Management
  • Query Resolution and Root Cause Analysis
  • Chase Cycle workflow management
  • Automated customer communications
  • Real-time reporting and gate controls
  • Productivity KPI Metrics

Conclusion
Since inception, the project delivered a dramatic increase in performance.

Bristol worked closely with the client and completed a detailed study :

  • Customers are paying faster. Within the first 3 months DSO’s reduced by an average of 10 days and boosting cashflow by over 500,000.
  • Through root cause analysis and reporting, the number of queried invoices has reduced by over 30%.
  • In the first year, although economic conditions continued to deteriorate, bad debts reduced by 100,000 euro over the prior year.
  • Automation of Customer Communication, Chase Cycle Workflow Management, and Performance Metrics, increased credit and collections workforce productivity by 25%.
  • VOC (voice of the customer) survey results demonstrated a significant increase in customer satisfaction in the ‘order to cash’ process.
  • Employees now understand goals and productivity management has enhanced employee satisfaction by rewarding top performers.