A global HVAC manufacturer experienced a high number of customer complaints and low collection performance at its newest and largest service center in Hyderabad, India—one of the company’s three global hubs. The center faced pressure stemming from high turnover rates among North American accounts they supported. Talent retention concerns also became a concern.
Our team of consultants traveled to Hyderabad to conduct extensive interviews, review processes, and assess the culture and concerns at the center. We found several deep-rooted problems in downstream billing practices, which were not the fault of the center—e.g., high percentages of distributors not obligated to pay on standard terms, premature billing instances and unearned discount abuse. The combination of issues pointed to a material percentage of past-due accounts receivable that were neither truly past due nor realistically collectable by the center.
We followed our analysis with recommendations for building in data tracking for these scenarios, allowing collections to channel their efforts more productively and providing a process to reclassify some accounts receivable. We also made recommendations for adding a milestone billing module in SAP.
