Company Name and Location:
Arlington Industries,
Waukegan, IL

Description of Business:
Mid-Sized Office Supplies Distributor

Credit executive contact info:
Traci Florio, Credit Manager
847-689-2754
tflorio@arli.com

A/R $ size:
$14-25 Million

# of customers:
N/A

Customer base characteristics:
Distributes OEM and compatible copy/printing/fax supplies to re-sellers in the office supply market.

Challenges:
We were managing credit and collections using a variety of unique tools. No standard processes existed and all activity was based on of a weekly aging balances report. The approach was reactive: collectors started from the top of the list and worked downwards, and there was no follow-up tool for phone calls.

If all the weekly aging balances were not handled that week, oftentimes they were not carried to the next week and accounts began falling through the cracks. Account contact information was kept in a separate system and collectors set follow-up reminders through their email program. As a result of this decentralized processing, bad debt and DSO were creeping up and deductions were getting unmanageable.

Goals:
The goal was to implement a web-based credit scoring and collections management solution that would allow the department to work more efficiently and effectively, speeding processes, creating a tighter link between an account's risk and how revenue is collected and improving financial metrics. Arlington wanted a system that would automatically pull reports from the major data providers and then approve or decline accounts based on Arlington's own thresholds for risk.

In addition, they wanted to improve collector productivity by having tools that would allow collectors to focus on high-priority, revenue-generating activities first. Finally, Arlington wanted a subscription-based, web-based solution that would eliminate dependence on the internal IT department. All upgrades and maintenance would be performed by the vendor.

Type of scoring solution:
Rules-based scorecard using bureau data.

Vendor and Product Chosen:
eCredit Professional Edition.

Costs:
Not Provided.

ROI:
So far, this solution has yielded impressive results. Bad debt and DSO have been reduced, and the improved credit and collections processes mean that the same number of people are able to accomplish much more. Financial executives at Arlington have been particularly impressed with the reduction in past-due percentages. In fact, in March 2006, after two months of using the system, we were able to exceed our goal of 8 percent past due compared to total A/R when we reduced that balance to 4 percent.

Results:
Arlington now coordinates the credit approval process from start to finish. Users can initiate the creation of an account online, and the solution will automatically generate approval through a link to a major credit bureau. If the account meets the commercial credit score threshold established by Arlington, then it automatically creates an action item.

The solution also provides a tool set that allows collectors to view prioritized tasks and contact information in one place, facilitating the handling the high-value activities that are most likely to generate cash first. In this way, the solution has allowed us to use credit scoring to develop a more effective approach towards collections. Having the customer's risk score associated with the account ensures that each collector has all the information at his/her fingertips and can make the most informed ecisions about what collection strategies to pursue.

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