BFY’s debt team supported a large Energy supplier with recovering their cash position, achieving a total benefit of ~£275m through collaborative initiatives.
What was our client’s challenge?
The large Energy supplier was facing substantial backlogs of unbilled customers, leading to material delays in cash collection.
To recover their cash position, performance assumptions were factored into annual financial forecasts. However, there was little improvement over a number of months, with overall cash collection falling behind target.
Why was this happening?
Together with the supplier’s internal cash collections performance team, we sought to identify the root causes of their cash challenge.
Our collective findings included:
- Limited customer contact strategy at pre- and post-bill stage, resulting in increased re-bills and delayed cash collections
- Inconsistency in reporting of cash performance, leading to a lack of clarity for leaders on where to challenge
- Low productivity due to excessive time spent on resolving data validation queries, rather than corrective actions
Overall, cash opportunity was not maximised due to significant billing delays and unbilled backlogs – requiring manual intervention from the supplier’s internal teams, supported by BFY, to unlock cash for collection.
How did BFY help?
Our debt team helped the supplier to re-think their approach to cash collection, encouraging a focus on:
- Prioritisation of the unbilled backlog, supported by root cause analysis of challenge drivers
- Implementation of unbilled focus groups, to help resolve issues and drive a reduction in backlog volume
- Enhancing proactivity in the customer engagement strategy to help build customer relationships, whist reducing payment delays and rebill occurrence
- Implementation of engagement strategy effectiveness measures, creating performance transparency, whilst driving greater ownership and management of customer accounts
- Increasing the accuracy and consistency of cash performance reporting, leading to a step change in operational collaboration within the team and the wider business
What were the results?
Overall, these collaborative initiatives enabled a ~£275m improvement in the supplier’s cash position, with operational and leadership effectiveness maximised by enhanced performance reporting and an improved customer engagement strategy.
The supplier also reduced their aged unbilled value by ~£45m, through focus groups dedicated to addressing their backlog. This was achieved by leveraging data, identifying root causes, and shaping the appropriate account remedy for improved customer engagement.
