Case studies for Debtors Management
Case study of a specific customer (Service Company)
The following is a case study for a debtors management activity conducted by us for one of our clients:
One of our clients has a yearly turnover of around Rupees 8,000 million and raised about 1,250 invoices a month on around 450 clients.
Further, our client performed additional services for our client and raised debit notes on their clients for the additional services provided.
Our client operated on very thin margins and it was very necessary for the client to ensure that they got paid within the due date for payment so as to avoid interest cost and delinquencies.
The client had an internal collections team; however the team was always busy with additional activities and their focus was on always collecting the larger amounts from bigger clients and focusing on collecting the current months receivables, as a result the previous months outstanding got ignored – also if they got busy with a specific activity of a bigger client – the follows up with their other clients would not happen.
The client approached GGA to manage their overdue debtor’s process. On taking over some of their clients and commencing the normal GGA debtors management and reduction process, we identified the following issues:
- Some of our client’s customers were not receiving their invoices on time.
- Some customers did not receive their invoices at all.
- Invoices were being dispatched to the wrong addresses – due to typo errors or change of address etc.
- Invoice were being sent to the wrong coordinators/ concerned person etc
- Invoice amount did not match with the services availed
- While following up with some customers, we found that some customers did not have the sufficient funds to make payments for the current month – customers wanted a moratorium on payments
- The customer would want to delay the payment by making excuses such as the concerned person has not approved the invoice, the signatory is travelling etc.
- Customers wanted a revision in the invoices and that had not been done
- Customers had closed the business and did not have the funds to pay, but still continued using the product and the service.
- The customers’ accounts were not reconciled and even though they had paid the payments were not reflecting in their ledger account
- Debit notes raised by our clients were not received and therefore not accounted for by the customers
- Invoices were not accepted by the customers due to miscellaneous reasons – such as unhappy with the service, promises not met, service delivery incomplete etc
- Specific requirements of the customers at the time of invoicing not taken care – clients wanted the invoice to be in different format.
- Service issues informed by the customers but no action has been taken on them, so the payment was held
- The customer database of our client was not maintained on timely basis
- Customer’s one point of contact has not been provided and therefore our client did not know whom to follow up with for the payment.
- Our client was not able to collect their TDS and withholding tax certificates from their customers, leading to unnecessary revenue losses
GGA provided the following solutions to the client:
Accurate, timely and complete billing processWe assisted the client AR team to raise and dispatch the invoices on a timely basis, we checked to ensure that the invoices were sent to the correct and updated address, mentioned the name of the concerned person responsible for processing the invoice and that the invoice had all the supporting documents.
Invoice delivery confirmationsWe set a process in place to call every customer after the invoice dispatch to ensure that they have received the invoice on time, in case the customer did not receive the invoice, sending a duplicate invoice and at the same time analysing the reason for the non-receipt of the original invoice.
Updating the customer database in case of any changes in the customers address or name of the one point contact
Invoice acceptance by the clientPost the invoice receipt confirmation by the customer calling the customer to confirm if the invoice has been sent for processing. The customer is reminded about the due date, and a confirmation should be made about the expected date of payment.
Conducting customer account reconciliationsIn case the customer raises issues about payments already made or has reservations about the accounts adjustments (debit / credit notes, deductions, discounts etc) conducting customer ledger account reconciliations so that the customer account in our client books and the customer ledger account is reconciled
Dispute resolutions and root cause analysisIn case of any issues or disputes by the customer, following up to solve the disputes and escalating to the management in case of any negative feedback about the products or services.
We also identified the exact reason why the customer was not able to execute the payment and assisted the client to reach the root of the problem and solve the problem, so that the customer did not face the same issue again.
Some clients wanted invoices in a particular format or requested for additional details to be incorporated in the invoice, we informed the client about the specific customer requests and assisted the client to raise correct invoices.
Follow up for outstanding receivablesGGA commenced a process of timely follow up with the customers to ensure that the payments were made by the due dates; we identified the issues and provided immediate solutions to the issues