Construction Manufacturer

sees dramatic cost reductions

Case Study

large manufacturer

350+ customers

1 receivables solution

About the Client*

  • $20 million manufacturer in the construction industry selling to contractors and wholesalers.
  • Business has approximately 350 customers with outstanding balances.
  • Company was a recent merger of two smaller companies.

*Due to the sensitive nature of the data, the company name has been omitted from this study.

The Challenge

The business had no formal credit department, experienced two larger bad debt write-offs and was suffering from high delinquency rates.  Just over 45 percent of the portfolio was past due when the customer started seeking solutions to the problem with 15 percent of the past due greater than 60 days. Borrowing costs on the receivables were $6700/month.

The Solution

  • Client hires TCD to manage the A/R portfolio and solve receivables issues.
  • Immediate integration of TCD’s proprietary SMART system to manage receivables internally, utilizing the tools and benefits of SMART technology.

Initial Actions

  • Implement credit policy and risk tolerance.
  • Formal dispute process for security instruments on high risk customers.

Managing Days Past Due

Contacting the customer to gather payment status and explain terms of  sale.

The Results

Ongoing management of the trade receivables, resulting in:

Reduction of Past Dues
Decreased over 60 day balance to less than two percent of receivables.

Increased Cash Flow

  • Borrowing costs dropped to $1,793/month, saving $58,884 in interest per year.
  • Increased sales by 20 percent during contract  with TCD.
  • Decreased bad debt  expense by $120,000/year.

Cost Reduction

  • Increased the current percentage to 80 percent.
  • Decreased bad debt from one percent to .04 percent.

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Measurable Results

  • Cash flow improvements of up to 50%.
  • Shrink day sales outstanding by 25% or more.
  • Increase unauthorized deduction recoveries by 200%.
  • Improve receivable performance management.
  • Improved financing opportunities and lender relations.
  • Live Data that improved strategic decisions.
  • Streamline aged receivable collection.
  • Improve customer communication.
Trade Receivables Management Solutions. Outsourced receivables management.​

Optimize AR

The Credit Department is the first and only true credit management outsourcing firm in the U.S., managing trade receivables for companies worldwide. We have worked in more than 100 industries to bring about change and dramatic results in our customers’ order to cash cycles.

As your strategic business partner, we become a cohesive and transparent component of your daily operations — whether you have an internal credit department or not. We also work with private equity groups to increase the value of portfolio company receivables to maximize cash flow from the asset. Our solutions integrate easily and cost-effectively with corporate systems within 24-48 hours.

If you’re ready to take control of your trade receivables management — and gain access to real-time cash flow forecasting — it’s time to contact The Credit Department.

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