Case studies: Debt management frees up six-figure sums

Two case studies show what a huge difference proper debt management can make to a business.

November 2014-March 2016

An established professional service firm – operating in provincial New Zealand since the 1950s – had grown in a competitive market and become the leading service supplier.

A new business manager had been brought on to coordinate the client services delivered by five partners/directors. As part of her brief, she also explored smartAR as an option to coordinate essentially five different credit processes, as each partner was doing something different.

When she started, the client (with about $8 million turnover) was taking an average of 68 days to turn an invoice into cash at the bank. She turned that around in 18 months.

Outcome:

Historic Debtor Days: 68 Days – $ 1,490,410.96
Debtors 18 months later: 25 Days – $ 547,945.21
Missing Cash Returned: $942,465.75

June 2015-February 2016

An electrical services business outside Auckland provides services to the wider Auckland region.

Because of the nature of the accounts person’s role and the amount of outstanding cash, the client was open to considering another solution. The owner was mainly concerned about how to manage an external resource, and the security of clients’ data.

After a review of other smartAR reference sites and the introduction to their nominated account manager, the owner had a high level of confidence and trust in the smartAR staff and service.

The combination of an owner who was enthusiastic to improve cashflow, and a skilled account manager, saw debtor days quickly decline.

Outcome:

Turnover: $4,000,000
Historic Debtor Days: 68 Days – $ 840,154
Debtors nine months later: 48 Days – $333,967
Extra Cash Returned: $506,187

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