Case Study – Decision Support Scenario

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 functions to provide expert advice, allowing our prospects 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.