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Dynamic Credit and Collections to Slash Bad Debt

The collapse of the United States property market in 2007-8 had major implications for Lennox, with a rapid decline in construction. Dealers selling to a mixed market quickly felt the pinch, following a number of benign years for the housing and construction market.

Credit and collections had not been a major area of focus for us over this period, but we realised that to position the business successfully within a radically different economic climate, we needed to improve accounts receivable performance whilst also supporting our customers who were struggling to manage working capital.

Key Points

  • As a result of the collapse of the US property market in 2007-08, Lennox International decided it must improve its accounts receivable process while also supporting the working capital problems of its customers

  • The company worked with REL Consultancy to standardise and automate key credit and collections processes
  • Customer relations were enhanced and a closer dialogue developed with many higher-risk customers
  • Lennox is now planning to build on customer relationships and develop automation including the possibility of introducing EIPP – electronic invoice payment and presentment

 

Written by

Peter Jackson
Vice President, Finance - FP&A and M&A
Lennox International Inc.

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