Case Study 16 - Turnaround
Overdue debt reduced from £3.3 million (45% of the ledger) to £521k (less than 10% of the ledger) within 12 weeks of instruction and Invoice Finance switchover completed.
summary
A London based £100 million turnover Healthcare Recruitment Company with a £7.5 million ledger and nearly 1000 debtors needed to change Invoice Finance provider from a Platform Funder to a more traditional Invoice Finance Facility due to cashflow constraints from the existing Funder.
Facts
Credebt were asked by the potential new Funder to improve the ledger profile and support Credit Sanctioning of the deal.
Their 120-day-plus column was over £1.5 million, the total overdue debt was over £3.3 million and the DSO had drifted up to over 105 days.
Following our initial visit and review the business engaged us to turnaround the ledger profile and get them ready for their new Funder.
The business was under-staffed regarding Credit and Collections and needed short-term Collections assistance whilst recruitment took place to make us redundant asap.
The business had more than 7,000 outstanding invoices and many queries that needed addressing, some going back several years.
actions
Credebt took over the collections for 750 plus debtors and left the top debtors with the on-site team as they had a competent in-house Credit Manager who just needed more staff and would be able to cope in the future.
In addition, we wrote a Credit Policy and procedures for the business that would prevent the re-occurrence of any issues.
We visited the site weekly to ensure progress was being made and tasked the on-site team with an extensive query resolution project and weekly collection targets.
We also helped identify key positions that the business required including salary levels and experience and assisted with the recruitment process.
Results
Within 3 months, the DSO was reduced to from 105 to 68 days.
The 120-day-plus debt was reduced from £1.5m to £300k (including 2 legal cases on payment plans) and the overdue debt from £3.3m to £521k.
Responsibility for all collections and further progress was handed over fully to the in-house team that had been assembled.
An invoice finance facility switch-over went smoothly to allow for growth of the business.
Happy Client, Owner and Funder, a win-win-win situation.
Credebt have been retained to help with a few debt collection cases for the old debt.
An amazing, rapid growth business that had unfortunately chosen the wrong funding partner in the past now had the right one and would go from strength to strength in the future.
Overdue debt recovered
recovered in 12 weeks
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