Manufacturing company

decreases bad debt and DSO

Case Study

manufacturer

2,000+ customers

1 receivables solution

About the Client*

  • $35 million manufacturing business operating in U.S.-Canada.
  • 2,000+ customers
  • 500+ employees

Operating in a highly competitive manufacturing sector, within the United States and Canada.

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

The Challenge

This global manufacturer’s receivables were in chaos.  Their internal credit department was experiencing high dispute levels and internal turnover.  The employee turnover negatively affected territorial billing and customer success,
leading to disputed items with customers. Due to lack of communication and systematic billing errors, customers were withholding payment.  Bad debt contributed to $650,000 – $1M of the portfolio over 120 days.

The Solution

  • Client hired TCD to manage the A/R portfolio and solve receivables issues.
  • Immediately integrated the TCD proprietary SMART system to manage receivables and queue follow-ups.

Click here to learn more about the tools and benefits of SMART technology.

Initial Actions

  • Instituted credit checks to instantly qualify or credit customers.
  • Formed internal processes and workflows for efficient dispute resolution.

Managing Days Past Due

  • Eliminated cash on delivery (COD) payments.
  • Initiated Cash flow forecasting.
  • Transitioned new and independent customers to auto pay via ACH or credit card prior to
    service.

The Results

Outsourcing the management of trade receivables resulted in:

Reduction of Past Dues

  • Reduced past due balance 54% in four months from start of client contract.
  • Reduced DSO 26%, despite business and sales expansion.

Increased Cash Flow

  • Increased sales 40% within four years, while collection outsourcing costs increased by less than half the increase.

Cost Reduction

  • Decreased bad debt 33%.
  • Exceeded goal to reduce DSO from 67 days to 40 days within 10 months.

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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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