Risk-Based Collections
Consider using risk-based collections instead of targeting the largest and oldest dollar amounts first. That’s the advice from Rob Olsen, VP/Chief Risk Officer, Wright Express Financial Services Corp.
The result: Wright’s DSO is 19, helping to minimize costs and maximize cash flow. “Since the end of the fourth quarter of last year and into the first quarter of this year we haven’t been negatively impacted by the downturn,” says Olsen. “We look at all the losses that are happening out there with trade creditors and we’re not anywhere near those losses.”
The problem: Wright had to figure out how to assign the 40 collectors to over 250,000 customers with credit lines ranging from $500 to $64M. “We have state transportation department fleets that we manage, and their payment terms are 90 days by law,” says Olsen. “If they pay us 90 days late they are still current,” making cash management challenging.
Look for Wright’s solution in the September issue of Payments.
