Case Description
A well-known lab services company was facing challenges with its accounts receivable process, resulting in significant overdue payments. The lack of a structured process had led to rising 180+ DPD (Days Past Due) accounts, affecting cash flow and operational stability.
Challenges
1. High Overdue Payments:
A large portion of receivables were in the 180+ DPD bucket, significantly impacting cash flow.
2. Lack of Process Structure:
Absence of a formal accounts receivable management system.
3. Client Retention Concerns:
Aggressive recovery efforts risked damaging relationships with long-term clients.
4. Non-Paying Clients:
No clear strategy to identify and address bad debts or pursue legal action.
VirtualTeam implemented a structured and customer-centric Accounts Receivable Management strategy to streamline collections and regularize overdue accounts.
Key Initiatives:
1. Portfolio Segmentation and Prioritization:
Analyzed the client’s accounts to segment overdue payments into buckets (30-60, 60-90, and 180+ DPD).
Prioritized accounts based on recovery potential and urgency.
2. Structured Collection Process:
Designed a multi-touchpoint outreach program including calls, emails, and reminders.
Followed a soft recovery approach to maintain client relationships while driving payment commitments.
3. Client Communication and Customer Care:
Emphasized customer care during collection efforts to ensure the lab’s reputation remained intact.
Worked with clients to develop customized repayment plans for overdue balances.
4. Identification of Non-Paying Clients:
Isolated accounts showing no repayment intent and categorized them as bad debts.
Recommended legal action for recovery in these cases to protect the lab’s financial interests.
5. Monitoring and Reporting:
Provided real-time updates and performance reports to the client.
Monitored recovery trends to optimize strategies throughout the engagement.
Our systematic approach delivered impressive results in a short span of time:
60% Reduction in 180+ DPD Accounts: Within the first 45 days, overdue payments in the 180+ bucket were reduced by 60%.
70% Portfolio Regularization: By the end of 3 months, 70% of the receivables were regularized and brought to current status.
Client Retention: All collection efforts were executed with the highest level of customer care, ensuring the lab retained its loyal client base.
Bad Debt Identification: Non-paying clients were flagged, and legal action was recommended to minimize further financial exposure.
“VirtualTeam turned our overdue receivables problem around. Their structured approach and customer-centric recovery methods not only improved our cash flow but also ensured we retained our clients. We were able to reduce our overdue payments significantly in just a few months!”
— Finance Head, Lab Services Company