Re-Engagement – How do you become a Primary Creditor…?

Client Re-Engagement

It is a cliché that we engage more with what we ‘want’ than what we ‘need’ and this was proven to us recently as we completed a client ‘Re-Engagement’ project. Our multinational client gave us a project to help them understand their default clients; learn why their payment trends were later or not forthcoming and determine what would achieve on time payment. The results were to be fed back to key Stakeholders in the business in preparation for this years AGM.

We had 1,049 accounts from across the EMEA regions which were at least 30 days beyond term and/or had a history of 3 or more late payments. Our team of Credit Directors firstly ran a series of Propensity to Pay checks and recorded key information for the report prior to making contact. This information checked for correlation between Working Capital and Debtor’s Days Beyond Term, Group Holding company and Years Trading.

We insisted on an honest approach and explained as part of our clients commitment to Best Practice within AR and Customer Service, they wanted us to learn what could they do to ensure on time payments on going. A key objective was to also learn what other Creditors these companies have within their sector and were they paying them timely….. the results took us by surprise…! We wanted to share some of the Summary points that we included in our final Report and Recommendations to the International Credit Director and EMEA Finance Director.

Reason for Late Payment and our Recommendations

Invoices went to Indian BPO Centre Prior Approver’s Review: We proposed our client now utilise E-Communication in their Dunning/ Collection software and increase the Receiver List to include contacts in the AP, Sales Team and Approver. The Dunning cycle was pushed back by 2 days to best suit company’s payment ‘run’s’. We learned end of month billing isn’t necessarily best for all profile debtors.

Demand v Supply: Seasonal demands and tough economic trading conditions means the client ‘prioritises’ profitable suppliers. We proposed our client negotiate Payment Terms, offer Ontime Payment Discount and have their Sales team negotiate exclusive regional supply and/or bulk buy discount.

Cash Flow: Unknown to our client, some companies were embarking on growth and they had instructions to lengthen payment terms by any means. We advised our client to liaise with their sales teams to secure increased future trading, provide information on new services/products that could be available on preferential payment terms IF the debtor demonstrates commitment to on time future payments.

No Communication: Debtors advised they were aware of our client’s Dunning process and that they ‘’always pay on letter 3’’ or when they know they will receive Debt Collection Letter.  We advised our client to review the Dunning process, change the frequency and importantly, review the content of the Letters ensuring they illustrated both a positive reason to pay timely and a negative consequence to NOT paying to Terms. Some debtors paid other suppliers who ‘telephoned’ them monthly first. We proposed these client’s collection process be tweaked to replace the second Dunning letter with a call.

The above are just four ‘snippets’ of learning we reported on from a month’s project and six-page Report. Baker Ing International is a Global Receivables Management and typically we engage with client debtors as a ‘consequence’ of late payment. Our client wanted to create a positive impact from this project and personal thank you letters will be sent to each client who participated with our team, advising what was learned and what the company will do better to secure timely payment. The return on investment for our client from appointing Baker Ing International is significant. Yes, we increased payments from non-performing debtor segments but more importantly, we provided intelligence and ideas that will enhance KPIs ongoing, re-engaged stagnant business relationships and contributed to an improved client experience.

Please do give me a call for references from this project and further details of what information was returned in our Recommendation Report.  More information on Baker Ing International can be found at www.bakering.global

Lisa Baker-Reynolds 0044 7717020659 lisa@bakering.global