TURNING 2 YEAR OLD WRITE-OFFS INTO CASH

Highlights:

• Our client was hit hard by the economic downturn and experienced a spike in delinquencies. After working the claims aggressively with their internal collections group, the client wrote off significant batches of receivables. Both our client and its investors were seeking ways to generate additional cash.

• The receivables portfolio was not promising

  • Averaged 445 days outstanding

  • 30% international claims in Europe and Asia

  • Customers were in an industry ravaged by Sept. 11th attacks

• Result: C&W averaged 42% recovery on these "forgotten" receivables

Background

Our client serviced an industry that was hit hard by the economic downturn. Because our client's products are a discretionary expense, our client experienced a groundswell of delinquencies. During a tumultuous time, our client worked their receivables aggressively trying to focus on the areas that would maximize recovery. The client ended up writing off a large number of "hard cases" through this process.

 

Over a year later, a member of our client's Board of Directors introduced C&W to the situation. As our first assignment, our client asked us to look at what we could do about the oldest write-offs, which were now approaching two years old.

 

Working closely with our client, C&W established the main points of leverage to use with debtors and began aggressive collection efforts to maximize recovery. Based on the insights C&W developed, the collections efforts were highly successful.

 

C&W was able to recover 42% on receivables that were over 440 days old on average. Our performance generated several hundreds of thousands of dollars in cash for our client that was effectively "found money." Progress has continued on additional collection efforts and the program was successfully expanded.