Reduce my outgoings and increase my receipts – I don’t believe you!
This is the typical response when someone is approached about outsourcing and particularly credit control. Outsourcing still seems to be considered a dirty word with some business owners insisting on doing duties that they are not qualified to do. Remember that expression - Jack of all trades, master of none?
Business owners may think that by keeping everything in house they have complete control over the situation and they are saving money but when it comes to outsourced credit control nothing could be further from the truth. There is a good reason why credit controllers and credit managers can command a good wage – they have had years of training, experience and on the job abuse! It takes a certain type of person to be able to do the job, although a large proportion of people assume that they can do it, and well, before they find out the hard and expensive way that they have been over zealous.
Below are four case studies of real BCS clients and they demonstrate how we can be the solution to your credit control problems no matter what size your business or what shape your sales ledger.
The 1 man band – Michael Rocks Surveying Ltd
Industry – Surveyor
Employees – 1
Location – Hampshire
Debtors – Mix of business and consumer
Work Required – Credit Control and Debt Recovery
Problem – As a one man band, it is very hard to strike a balance between earning money and running your business so matters such as credit control end up at the bottom of the pile. Never mind the fact that a lot of people find it incredibly embarrassing and/or difficult to chase their clients themselves, especially when they are likely to be approaching them for more work in the future.
Clearly a one man band will not have the need for a full time credit controller so the chasing is done on an ad-hoc basis as and when the situation becomes more serious. The expectation of most small businesses/ one man is that there are no solutions which are cost effective and still deliver.
Solution – A chasing cycle was agreed with the client and a small fixed charge per invoice is levied. Therefore the client pays us a flexible amount each month based purely on how much work he has invoiced rather than a fixed fee being charged. Debts are chased according to the client’s needs (i.e. they are involved in the escalation process) and they are reviewed on a daily basis for follow up rather than as and when.
The debtors are able to establish relationships with their account manager as there is continuous contact and the debtor knows that if they have a question they will receive an answer in a timely manner. The businesses that instruct this client are primarily solicitors so our specialist knowledge of how solicitors work and, in particular, an experts relationship with the solicitor with regards to liability, have proved invaluable in providing an efficient and effective service.
Testimonial – 'I am putting 'pen to paper' to thank you for your recent efforts in resolving my cash flow difficulties. My bank balance has never been so healthy. I would have no hesitation in recommending your firm to anyone and in fact I have already done so on a number of occasions over the past few months. I look forwards to a long lasting business relationship with you.' Michael Rocks, Michael Rocks Surveying Ltd
The Small Business – name withheld as the work is done on an undisclosed basis
Industry – Publishers
Employees - 10
Location - Hampshire
Debtors – Businesses
Work Required – Fully outsourced sales ledger
Problem - This client was using temporary credit controllers on a part-time, as and when basis which meant the debtors were not being chased regularly and they knew that if they did not pay it would not be noticed for some time. Furthermore, there was no specific person dealing with the invoicing and payment allocations etc on a monthly basis.
Solution - A chasing cycle was agreed and they outsourced their sales ledger to BCS using Sage to control the relevant information. Debtors were chased on an undisclosed basis (so they did not know that their account manager was an employee of BCS instead of the publishers) with statements and new invoices sent out on a monthly basis. Payments are allocated to Sage on a weekly basis and an update is provided to the client on a weekly basis which includes the position for each debtor and an analysis of the total debt. The account manager liaises with the sales team and business owner on a daily basis so that individual debtor problems and potential problems can be highlighted and resolved.
A fixed fee of £500 is charged per month for all of the work involved so the client knows exactly how much they will have to spend (considerably less than using temporary credit controllers!) and this will be reviewed as the business grows.
The Medium Business – Nedstat
Industry – Website Analytics
Employees – 80 in total, 20 in UK
Location – International firm including London office
Debtors – Businesses
Work Required – Outsourced Credit Control
Problem - The credit control in this company was being handled by the Office Manager who was chasing on two days per week and dealing with other duties on the remaining three days. The debts gradually grew to an unmanageable level both in terms of volume and difficult debots.
Solution - A Temporary Credit Controller was provided by BCS to bring the ledger up to date and, after spending two weeks on-site, it was agreed that the credit control work should be outsourced to ensure that the debts did not grow in the way that they had before. BCS have now worked with Nedstat for 9 months. Their account manager attends their offices once a fortnight to meet with the sales team, office manager and finance manager as required and chases all debts remotely on a daily basis.
A time based fee is charged with scope for the hours to be amended to meet the changing demands of the business. As only a few hours are required per day, this is a considerably cheaper option than having a full time credit controller but a long term relationship is still created with the clients and there is consistently in the chasing approach. Furthermore, Nedstat are able to recruit another sales person to sit at the desk a credit controller would require so it’s a very attractive solution financially.
Testimonial – 'We have been outsourcing our credit control to Bateman's Credit Services (BCS) for nine months now and are very happy with the service. Our account manager attends our offices once a fortnight to meet with the sales team and works remotely the rest of the time. This means that we do not need a full time credit controller but our debts are still chased by an experienced credit professional. BCS are doing a great job and I would happily recommend their services to other businesses.' Patrick Oudejans, Head of Administration, Nedstat
The Large Business – Cloisters
Industry – Barristers chambers
Employees – approx 60 however considered large due to turnover
Location – London
Debtors – Businesses
Work Required – Credit Management Consultancy
Problem – A complete review of all credit management policies and procedures was required to bring them in line with current economic and industry specific standards. New chasing cycles needed to be agreed, implemented and current staff trained on how to operate them. Management did not have a clear picture of the Aged Debt due to the minimal reports being used and there was a backlog of very aged debt.
Solution – A credit management consultant was provided who has specialist knowledge of how barristers chambers operate – it is a very complex financial industry compared to most with the same ‘expert’ status issue with solicitors that surveyors have. The credit function was completely revamped to bring the chasing process in-line with the Withdrawal of Credit Scheme etc that is operated by the Bar Council.
A new Senior Fees Clerk was recruited and trained by the credit management consultant, a completely new management reporting process was established and the aged debt was reduced significantly, particularly with regards to old Legal Services Commission cases. Ultimately, almost all processes and procedures within the department were changed and as a result there has been a significant increase in productivity and receipts.
Testimonial – 'Further to an in-depth assessment of our credit control department, Eleanor provided us with policies and procedures tailored to our particular needs that are easy to use and very effective. They have resulted in our debtors balance being reduced by 15% and the DSO by 25% in the year since they were implemented. Thanks to the reporting systems she designed our management board has a much better understanding of our position and we are able to be proactive instead of reactive. I highly recommend that you find out what she can do to help you.' Jagdip Jagpal, CEO, Cloisters
I hope that these four case studies have given you an idea of just how many businesses we can work with and the flexibility of the services that we are able to offer. Our aim is always provide a solution tailored to your businesses unique needs whilst making you and your customers happy. We always respond to the needs of our clients as changes occur in their business and the economy in general as that is how our clients will remain at the top of their industries. We like to be considered an honorary member of staff within the firms we work with but without any hassle or vast expense!