Significant aged debt, high level of disputes and a lack of a cash culture across the business.
Debtors Ledger – circa $60M at any one time.
Number of accounts – Over five thousand active accounts.
Customer Base – Blue Chips and SME’s.
Collection Model – Centralised collection department at Head Office.
Scope of Assignment
Evaluate the capability of the National Credit Manager and Collections Team.
We spent a week at Head Office with the National Credit Manager and the Collections Team and undertook the following actions:
- Full ledger review with the National Credit Manager to understand the dynamics of the ledger and how debtors are managed across the business.
- Numerous discussions with the National Credit Manager to understand their approach to Credit, how they manage the Collections Team and how they interact with sales and operations.
- One on one ledger reviews with each Collection Officer (face to face at Head Office and by teleconference for those located interstate) to gauge their knowledge of the ledger and level of commitment.
- Meetings with senior Sales Executives to obtain feedback on their interaction with the National Credit Manager and Collections Team.
- Sharp concise report outlining our findings prepared for the CFO and CEO.
Key Issues Identified
- Although committed to the job the National Credit Manager lacked the necessary management experience for the role.
- National Credit Manager had a low profile across the business.
- Several of the Collection Officers did not have a satisfactory knowledge of the ledger and clearly lacked motivation.
- Collection targets in place were not challenging enough. Poor and unmotivated performers were achieving targets.
- Very poor interaction between Credit and Sales leading to a large number of accounts being classified as disputed for long periods of time.
- Lack of a “cash culture” throughout the business.
WTC recommended the following actions:
- General management training for the National Credit Manager.
- Lifting the profile of the National Credit Manager throughout the business by making interstate visits and attending monthly Executive Meetings to report on the debtor position and key issues.
- Performance managing a number of Collection Officers.
- Setting more challenging collection targets.
WTC is about to be engaged again to review the outcomes of the above recommended solutions.