Credit Management Consulting

A flooring business with an annual turnover of $90M+ and sixty stores was running a decentralised Collection Model with each store being responsible for its own collections. A National Credit Manager was monitoring the Groups debt exposure. WTC was engaged to formalise the approach to Credit Management and improve working capital.

Approach

We spent a fortnight consulting with various stakeholders including finance staff and sales management, reviewing existing reporting, policies and procedures and analysing collection patterns.

Key Issues Identified

  • Newly appointed National Credit Manager given little support at store level.
  • Lack of a uniform approach to credit management and collections across the Group.
  • Very limited interaction between National Credit Manager and stores.
  • An obvious need for training - many stores simply did not have the expertise to manage collections.
  • Lack of a “cash culture” at both Finance Department and store level.
  • Monthly management reporting very basic and in need of improvement.
  • Existing credit policy generally not followed and in need of revamping.

Solutions

Over a four month period WTC worked in the business focussing on:

  • Mentoring the National Credit Manager.
  • Lifting the profile of the National Credit Manager across the Group and ensuring interaction and cooperation between Credit Control and the stores.
  • Driving monthly “Collection Blitzes” to improve working capital.
  • Developing training material with the “in house” trainer.
  • Introducing a suite of debtor reports to include in the monthly board report.
  • Designing credit risk management reports.
  • Updating the credit policy and developing a procedures document.

Outcomes

Within four months the following had been achieved.

  • 10% improvement in collection efficiency with the company focussed on cash.
  • Training material finalised and training sessions organised.
  • Credit risk management reporting introduced.
  • Updated credit policy being rolled out.
  • Regular review meetings taking place between the National Credit Manager and the stores.

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