Outsourced credit turnaround yields 10% bad debt reduction and ~£10m in cash

• Challenger supplier faced difficulties with their outsourced credit partner
• Our transformation plan delivered ~£25m benefit within 4 months, with ~£20m from new debt prevention
• At the end of the 8-month project, we reduced our client’s bad debt charge by 10% and delivered ~£10m in cash

Challenge​

Following a period of rapid growth, our client required an urgent intervention with their outsourced credit operation – the cost of living crisis was having a material impact on their customers’ ability to pay, conversations with customers were becoming more complex, and debt resolution was subsequently constrained.

Our client, a Challenger supplier, was faced with a debt book of £250m, and their bad debt charge having a P&L impact of £70m.

We supported in reducing this charge by applying our credit management expertise, and experience of managing large scale outsourced relationships

​Our approach

Immediately, we deployed our best-in-class debt maturity assessment, which identified £30m of in year benefit opportunity for our client.

To realise this benefit, we recognised a need for improved visibility and performance management, alongside embedding operational excellence within both our client and the outsourced partner.

The approach to outsourcer management was relatively immature, with significant scale up in headcount occurring without a corresponding increase in capability and governance.

This created difficulties in the outsourced relationship – the client’s approach to ensuring quality and compliance was lacking, with forecasting and resource planning also noted as weak areas.

Using the findings from this assessment, we devised a clear transformation plan which brought improvements across delivered cash uplift and the amounts of debt resolved and prevented.

Results

We achieved sustainable performance outcomes for all outbound campaigns within 4 months and our client’s weekly debt resolutions improved by 1400%.

During this period, we delivered ~£25m of benefit, with ~£20m from weekly debt prevention via new direct debits and reinstatements.

At the end of the full 8-month project, we delivered a 10% reduction in the client’s bad debt charge, delivering ~£10m in cash as a result.

We made this possible by implementing a quality and compliance framework across the debt resolution operation, driving a significant uplift in agent performance during customer conversations.

In addition to this, we helped to drive accountability in the relationship by establishing operational rigour and meeting cadence, both allowing for more streamlined performance.