Accounts Receivable Cycle Time Acceleration
DEFECT REDUCTION – DECREASE $’s PAST DUE

Business Issue:

Volume of accts receivable in Emerging Markets continues to increase to 60% of the total amount due from business market customers, even though Emerging Market drives about 50% of total monthly Business Market revenue. This is further demonstrated by an average of dollars greater than 60 days past due of $7,226,668, a gap of $1.2M from a target of $6M greater than 60 days past due.

Customer Needs (CTQ’s) Project Focus

The cost of poor quality associated with collections activities in support of Emerging Market Customers amounts to $630K in unrealized annual revenue and $350K in lost interest, for a total COPQ for this project of $980K.

Solutions Implemented

• Outsourcing to specialized team
• Decision tree and collection handbook development
• Implementation and tracking of performance metrics
• Revise write-off procedures

Results of Action

Reduced the normalized net total past due greater than 30 days by 17.6% from $13,635,121 to $11,231,798 resulting in $140,000 in cost savings.

Tools Used

• Process Maps
• Pareto Charts
• Cause & Effect Diagrams
• FMEA
• Voice of customer
• Decision System analysis