Case Study 9
Fraud was found but the Funder was still repaid in full
summary
We successfully assisted with a significant reduction in exposure and then a Manage Away when a Midlands Recycling Company had started Fresh Air Invoicing to cover up considerable gaps in their Cashflow.
Facts
On the day we were instructed to carry out a Debtor Collateral Review the Invoice Funds Out Position was £1.2m with an alleged Ledger of £1.5m. The total debtors were over 400.
Credebt discovered that at least £350K was invoiced to companies that either no longer existed or that the client no longer traded with. A further £400K of invoices had been falsified in order to look legitimate. There were also significant queries against potentially valid invoices of £200K. The real collectable value of the Ledger was therefore £550K versus £1.2m Funds Out.
From the queried amounts we discovered that over £100K was raised to a competitor where the Directors knew each other very well and were both raising invoices to each other to maximise availability of their Invoice Finance Facilities.
actions
The decision was taken not to alert the Client to our findings, as this was more likely to result in a lack of co-operation and increase the chances of a shortfall.
Credebt took over the Collections and Monitoring of new invoices being raised, whilst working with the Client to agree and write and action write offs, and resolve all queries.
The Client was quite obstructive as they realised that we must be aware of the true reason for the issues, but we worked over the next 4 months to improve things significantly.
Only Critical payments were allowed, and the Client was given Notice of Termination and agreed to sell the business as a result.
Results
Within 4 months of our initial involvement, most invalid invoices had been written off, queries had been resolved and any new invoices uploaded were correct.
The Funds in use had been reduced from £1.2m to £600K whilst the Ledger had been largely tidied up and now reflected the true value owed to the Company at around £900K, although there was still some work to do.
This resulted in the business being sold to a business that didn’t require funding and our Client, the Funder, was repaid in full.
Funder repaid in full
%
satisfied
How can we help?
Credebt provide a full range of expert Receivables Management Solutions to the Insolvency Profession, the Invoice Finance Industry, Turnaround Practitioners, advisers and their clients, from full sales ledger recovery to outsourced credit control.
For more information about how we can help call 08456-6385256
or email our MD, Glen Morgan at glen@credebt.co.uk
“We have instructed Credebt on several occasions to either assist with a collect out or provide a detailed view of the current position and have always been happy with the approach, response times and the end result which has resulted in us recovering our client’s funding position in full. I would fully recommend Credebt’s services to any Funder needing support in a Collect Out situation where they are looking to maximise their client’s customer payments.”
Get In Touch
We work for Invoice Finance companies, Insolvency Practitioners and Turnaround Specialists throughout the country. If you would like us to contact you to discuss our services please send us your details.
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