Case Study: Optimizing Credit and Collections Management at Edward Don Company
It is standard management practice to evaluate performance in key business areas against industry norms. At Edward Don and Company, we became quite concerned when our internal performance indicators revealed that we were flagging 66.2% of our active accounts as carrying a high credit risk. Subjectively, this number stood out as a very high scoring – and therefore very suspect – result. In practice, the high level of customer credit concerns was throwing up numerous road blocks in our core business, the distribution of food service equipment and supplies in the US. Reacting to what appeared to be a very poor customer base credit scenario
· What in fact turned out to be an excessive number of orders were being placed on ‘credit hold’. This reaction had a negative effect of requiring our collectors to spend an excessive amount of time on reviewing and releasing orders, and therefore resulted in less time for value-added activities. They were primarily spending time on the phone contacting customers for payment. About 98% of held orders had to be released manually, resulting in execution delays and increased processing costs.
· The knock-on problems included growing frustration among our sales force, and an increasing risk that our customers were not optimizing their sales potential. Clearly, it would have been imprudent simply to loosen our credit standards arbitrarily, which would run the risk of increasing payment delays and counterparty failures because of inadequate credit analysis.
The resolution of this issue was clearly a very urgent corporate priority, as it was significantly impacting our core business operations.
The Base Situation
Edward Don and Company runs a decentralized 41 person set of credit and collections teams,
Our core business pattern consists of a high volume of relatively low value transactions. Our original approach to credit analysis involved the construction of generic scores, primarily based on information supplied by specialist credit bureau. These scores were used to evaluate the creditworthiness of new accounts, so that credit lines and payment terms could be assigned to each account. They were also used to monitor the existing accounts, supplemented with the team’s analysis of published, financial reports plus some internally originated account performance data.
The team also used the analysis to construct collection strategies where these were needed, in reaction to seriously late invoice payment performances. Generally, this describes a pretty standard methodology that is widely used in the credit and collection business, but it did not seem to be generating sufficiently accurate results for us. Therefore, the operation was becoming afflicted with bottlenecks, and was increasingly stressed, as I have described above. The team felt that the poor predictive quality we were experiencing with respect to accounts’ changing credit condition probably resulted primarily from a lack of accurate and timely input data. The underlying strategy then in place was, reasonably enough, quite conservative; but in practice, it was generally tending to assign far too many customers to an inappropriately high risk status, with the consequences I have outlined. One of the causes of this unsatisfactory situation was the basing of the analysis of some accounts on the ‘ship-to’ location, rather than focusing on the actual legal entity that truly reflected the risk. This approach will almost always lead to an underestimation of an account’s credit status. Paradoxically, other flaws in the analytical methodology were in some cases resulting in the underestimation of the true risk that was being carried by some other accounts.
So we were operating in an unsatisfactory environment in terms of the timeliness and accuracy of our credit management process, and were therefore experiencing growing problem issues in collections, in risk exposure, and in related fields. We were also becoming increasingly sure that we were by no means using our professional credit and collections teams at anywhere near their full potential. Something had to be done.
Problem issue and Thesis Statement
Outstanding Academic Writing Service
At MyMasterPapers.com, you are assured of professional essay writing help from the leading experts online. Quality comes at the forefront of our custom writing service to ensure that all our customers are satisfied with the work delivered. We value repeat customers. For this reason, we ensure that each task is completed to perfection for high scores.
Our hiring process is highly intensive. The writers are exposed to a strict selection procedure before hiring to ensure that we acquire the most qualified, well-educated and experienced writers. Our team of writers, professors, editors and researchers will ensure that you get incredible results.
We highly discourage plagiarism. For this reason, we have trained our writers in such a way that all the papers are written from scratch and are free from plagiarism. We also pay attention to ensure that each paper is completed as per the instructions provided. Referencing and citations are done as per the paper format selected by the customer. These include: APA, MLA, Chicago, Harvard, Turabian among others.
24/7 Customer Support
You can contact our support team via the chat window at the bottom right corner. Alternatively, feel free to email us via our support email: email@example.com. Our team is available 24/7 to respond to your queries and guide you though where need be.
Swift Delivery & 100% Money Back Guarantee
Simply choose the desired deadline when placing the order. The task is assigned to the most qualified writer as soon as the order is successfully placed. All the papers are delivered to you within the deadline selected. In case a paper cannot be delivered within the deadline selected, we request for a deadline extension within the shortest time possible.
Free Unlimited Revisions
Our customers can always request for a revision in case they feel that something needs to be added or changed after the final paper has been delivered. We do not charge for revisions. However, we highly discourage our customers from misusing this policy.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Mymasterpapers.com specializes in custom essay writing for all level of students. Simply relax as we get your paper done within the timeline indicated.
Our team of skilled writers and researchers is readily available to get any type of academic paper completed. We deliver high quality papers and projects to our customers to ensure that we maintain a long-term relationship that will shine your academic career.
Admission Essays & Professional Writing
An admission essay allows you to express yourself by providing personal details that wouldn’t have fit on other areas of an application. We have a team of experienced writers who will get you to the desired academic level through a professional and a personalized admission essay.
Editing & proofreading
Are you seeking for editing or proofreading help? We have a team of editors who will ensure that any issue within you paper has been addressed. Upload the paper to be cleaned up and relax as we get the job done.
At mymasterpapers.com, you can always ask for revision in case you want some changes in you paper. We focus on ensuring that the grammar, research and formatting are done as per the latest academic writing standards.