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.
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.
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.
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
How can we help?
Credebt provide a full range of expert Receivables Management Solutions to the Insolvency Profession, the Invoice Finance Industry, 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 email@example.com
“Glen and his team have consistently delivered excellent results on a number of challenging assignments across many industry sectors. It is good to know that Glen will be ready to immediately assist with new assignments, often with very little notice.”
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