Company
Computer
Products Wholesaler
Situation
Middle
market company selling into a changing industry - specifically,
how they do business. Historically, sales were conducted
on C.O.D. basis, or very short terms; however, accounts
have begun to demand open credit terms and our prospect
has little experience managing credit risk. Also, the
number of new accounts seeking credit had been growing
to unmanageable levels.
Operating
Facts
Annual
Sales: $14 million, Average Accounts Receivable: $2 million,
Gross Margin: 25%, Account Turns Per Year: 7, Credit Function
Handled By The Management Team.
Objective
Outsource
credit analysis function to provide expert advice, allowing
our prospect the ability to safely grow their business.
Solution
Implemented
a credit insurance program that provided credit risk assessment
on their medium and large accounts. The policy assumes
the responsibility of continuous monitoring on all covered
accounts - no credit "due diligence" required
by our client. The policy was customized to provide immediate
credit decisions for new medium sized accounts. Also,
marketing prospect lists were developed with names of
accounts pre-approved under the policy.
Results
The
program produced immediate results. Sales were made to
new and existing accounts on open credit terms that our
client would have never entertained prior to the adoption
of the credit insurance program. Our client successfully
grew their business by 200% during the initial policy
period and is projecting to generate approximately $35
million in revenue over the next year.
