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£5m reduction in working capital for a £100m firm

Relocated billing and credit control roles out of London, realising a combined 30% wage arbitrage and efficiency saving.

10% reduction in lockup, clearing out the firm’s overdraft, by utilising new workflows and automating draft bill generation.

Context

The firm was under pressure from both its bank to reduce its overdraft facility and from the partnership to reduce the costs associated with billing and collection activities.


Consequently, we needed to improve working capital performance whilst simultaneously reducing the costs associated with the underlying processes.


Approach

I undertook a lean six sigma project, transforming the current, manual processes into streamlined ways of working within a new Elite 3E workflow.


We leveraged process variation between different teams to create a 'best of worlds' design, before piloting the new approach and then migrating the billing and collections processes from a high London cost base to a lower UK regional cost base within the firm.


Impact

Lockup was reduced by more than 10%, clearing down the £5m overdraft and enabling the facility to be renegotiated from a position of strength.


We realised cost savings on the billing and collection activities of £300,000, through a combination of efficiency savings and labour arbitrage savings.



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